I have been a loyal WinCo shopper for more than 30 years. I love their low prices and their bulk section. The cons? You can’t pay with a credit card and you have to bag your own groceries. Slightly inconvenient, but it’s a trade-off many are willing to make.
Jim Hertel, managing partner of consulting firm Willard Bishop, says WinCo is “probably the only competitor Walmart is really afraid of.” WinCo is able to offer their low prices because they often cut out distributors and purchase straight from farms and factories. Although their stores are large, WinCo doesn’t offer as much variety as other grocery stores to keep costs down.
According to Salary.com, the wage of an average produce worker at WinCo is $36,089. But the surprising thing? This produce worker might also be a millionaire. The secret to their wealth is employee ownership.
Employee Owned and Operated
Based in Boise, Idaho, WinCo Foods began as a privately owned grocery store chain in 1967 but became employee-owned in 1985. It now has 138 no-membership grocery stores in 50+ cities and 6+ distribution centers with locations in Washington, Oregon, California, Arizona, Utah, Texas, and Nevada. Boasting 20,000 employees, WinCo currently has the fourth-largest Employee Stock Ownership Plan (ESOP) in the nation.
“WinCo’s employee owners are our greatest business asset and our most potent resource for growth,” CEO Greg Haag said recently. “Our focus is on finding and motivating next-generation leaders who want to make the lives of both our customers and our fellow employee owners better with our low-price model. We want smart, motivated people who want to work hard, own the company, and take us into the future.”
A Tale of Two Sisters
Cathy was a young mother looking for a steady income for her family when she started working at the WinCo in Corvallis, Oregon, at age 19. Initially she was only employed part-time while she continued to work 40 hours a week for a local fast-food chain. After a year in that industry, she was offended by the 5-cent-an-hour raise she was offered and decided to work at WinCo full-time.
She has since worked at a variety of jobs at WinCo, including checker, shelf stocker, and inventory orderer. At the age of 42, she had almost $1 million in WinCo stock. Cathy says she could retire any time, but is planning to work another 15 years or more to fund a comfortable retirement for herself and her husband.
Cathy’s sister Deborah, also a young mother, applied for a job at WinCo at the same time as Cathy but was not hired due to an anti-nepotism policy Winco had in place at that time. Deborah ended up finding employment at a local telephone company, a department store, a pharmacy, and eventually at a doctor’s office for the next 17 years.
By 2008, Cathy had only $30,000 in her retirement account, mostly in stocks. The market collapse of 2007-2008 cut that figure in half. At the age of 42, she decided to start her career over at a federal agency that offered a pension. After 25 years, at the age of 67, she will finally be able to retire comfortably.
MORE FOR YOU
While many employers offer a 401(k) plan to their employees, they are not required to by law. According to the U.S. Bureau of Labor Statistics, 67% of private industry workers had access to a 401(k) or another defined contribution plan in 2020.
Twenty percent of what each WinCo employee makes goes into an ownership account, so they own part of the company. In six years, it is theirs to keep whenever they leave or retire. One employee said “knowing it’s there and it’s continuously growing is a huge contributing factor to me staying here to further my career.”
How an ESOP Works
Roughly 32 million employees participate in an ESOP. Most of the estimated 4,000 majority employee-owned companies have ESOPs.
Companies set up a trust fund for their employees and then contribute cash to either buy company stock, contribute shares to the plan, or the plan borrows money to buy shares. Contributions to the plan are tax deductible. Employees don’t pay any tax on the contributions until they receive the stock when they leave the company or when they retire. They can either sell their shares on the market or back into the company.
A recent Ernst and Young study that analyzed trends in S Corp ESOP retirement plans from 2002 through 2019 found ESOPs distribute 25% more per participant than 401(k) plans, on average.
WinCo employees are eligible to participate in their ESOP after working at least 500 hours in the first six months of employment, are 19 years of age, and have accumulated 1000 hours each fiscal year. Employees are not required to contribute to the ESOP; all contributions to the ESOP are made by the company.
According to WinCo, stock values have averaged increases of 18% compounded annually since 1986. This means that an employee who received a contribution of stock worth $5000 in 1986 now has stock worth almost $863,000 just from that year. In addition to stock in the company, WinCo also offers its employees tuition assistance, a 401(k) program, as well as an Employee Assistance Program.
In one employee attitudes survey, almost half of all workers are looking for a new job or plan to soon. U.S. inflation was reported at 7.7% in October, making it hard for people to save and invest in their futures. At a time when workers are looking for stable employment, WinCo is doing its part to reflect the communities they serve and create equal opportunities for people to make a difference, both in their own lives, and in their company.