Millionaire Grocery Clerks: The Amazing WinCo Foods Story

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Contributed to Forbes by Mary Josephs

Mary JosephsMs. Josephs writes about entrepreneurs’ exit strategies, ESOPs and M&A. She is the Founder & CEO of Verit Advisors, a middle market investment banking firm. She has nearly three decades experience with Employee Stock Ownership Plans, and has advised, structured and closed more than 200 financings for companies representing more than $7 billion in senior credit and nearly $30 billion in enterprise value.

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In Corvallis, Oregon, a couple miles north of the Oregon State University campus, sits aWinCo Foods discount supermarket and, unless you’re in need of groceries, you might drive by without noticing it. I assure you, however, it’s an extraordinary building, a laboratory of capitalism worthy of pilgrimages by the world’s great business schools.

Inside the store labor 130 employees of WinCo – grocery clerks, shelf stockers, display builders, bakery workers – and their combined retirement savings roughly comes to an astounding $100 million. And that figure is growing rapidly, such that in a few years the average wealth of these employees could easily exceed $1 million. Quite a few individual workers already have account balances above that level.

Customers bag their own groceries at a WinCo Foods location (Credit: Joe Jaszewski/AP)

Outside of Wall Street and Silicon Valley, the WinCo store represents an unusually concentrated – and unlikely — grouping of millionaires. The secret to their wealth is employee ownership. Since 1985, WinCo, which operates 98 stores across eight states from its headquarters in Boise , Idaho, has been employee owned, with an Employee Stock Ownership Plan, or ESOP, as the vehicle for its workers’ main retirement savings. (WinCo also has a 401k and about 70% of workers participate.)

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The company is by all indications well managed, grows steadily and provides its clientele of families on a budget a combination of low prices, wide selection and efficient and friendly service. Sales for fiscal 2015 are expected at about $6 billion. Same store sales growth and expansion into new markets have propelled WinCo’s profits and thus its ESOP stock past competitors and, indeed, past most growth stocks. The shares have risen at a compounded annual rate of about 20% since 1986. Purchased for $10 million from its former owners in 1985, company workers today hold shares valued at close to $3 billion.

The Corvallis store, with a long-tenured staff, leads all other WinCo stores in accumulated wealth. But it’s hardly an outlier: workers at a Lancaster, Calif., store have piled up more than $75 million; Redding, Calif., more than $65 million; Twin Falls, Idaho, more than $54 million; and those who work at the company’s distribution centers have combined ESOP accounts valued at more than $165 million.

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