Philly Deals: From Romney (via Wawa), a taste of private equity

Mitt Romney in early May. He customized his sandwich, but it may be challenging to apply his logic to the Wawa business model. JAE C. HONG / AP
Mitt Romney in early May. He customized his sandwich, but it may be challenging to apply his logic to the Wawa business model. JAE C. HONG / AP
Posted: June 24, 2012

Meatballs in sweet tomato sauce. With pickles? And vinegar peppers?

That's what Republican presidential hopeful Mitt Romney ordered, in a Shorti hoagie, at a Bucks County Wawa last weekend, as my colleague Tom Fitzgerald reported.

Whatever that particular mix of sweet and sour is supposed to be, it's not Philly food. My mother-in-law, Eileen Schach, who grew up feeding a farm household and whose sister became one of the most feared caterers on Pittsburgh's North Side, assures me the German Pennsylvanians she grew up with don't pile those things together on their serving boards, either.

Then again, why not? "One of our strengths is we offer dozens of condiments that allow people to customize to their tastes," as Wawa spokeswoman Lori Bruce reminded me.

Still, no one has yet called Wawa's corporate office demanding "a Romney," the way that other famous hoagie-eater, Ed Rendell, got a Rendelli fund-raiser sandwich (chicken strips, Buffalo-spiced cheese spread) named for him in 1999, when he was mayor of Philadelphia, followed by a Rendelli Wrap in 2003, when he was governor.

After his Wawa visit, Romney, meeting cheery voters in Lebanon County, admired the convenience chain's touchscreen sandwich-order board, and said that if the federal government faced "direct competition," as Wawa does, we could maybe replace annoying government "red tape" with a few screen taps, too.

It was easy for national reporters to poke fun at the sophisticated candidate working the sandwich circuit. Bloomberg's new columnist, Josh Barro, reached a little further with a piece titled "In Praise of Mitt Romney and the Wawa Economy."

Barro saw in Wawa "one of the best defenses" Romney can make of his work at Bain Capital, the buyout fund where Romney earned tens of millions, while extracting billions for the firm's clients, from companies Bain bought, consolidated, and reorganized.

"What Romney praised Wawa for doing is pretty Bain-esque: It found a way to replace low-skill workers with machines," Barro continued. "Innovations like that are good for the public. Improved efficiency (including doing the same tasks with fewer workers) doesn't just mean increased profits, it also means lower prices and/or higher quality for consumers."

Unfortunately for the comparison, Wawa and its touch screens aren't funded by buyout funds like Bain. It's owned by the founding Wood family, company executives, and employees; financed by PNC Bank and other lenders, and works to stay that way, keeping in-and-out investors away.

It's also true, as the Bloomberg piece acknowledged, that Wawa's brand of corporate efficiency can threaten low-wage workers replaced by machines — as well as small-business owners, such as mom-and-pop hoagie delis, who see chain stores as a threat and have mobilized against big new Super Wawas. Maryland, for example, enacted minimum gas prices and banned freebie coffee at gas stations after Wawa rival Scheetz and other convenience store/gasoline chains underpriced local operators.

"Romney tends to defend his private-equity record by pointing out all the people who now work at firms he was involved in creating, like Staples and Bright Horizons," Barro wrote. "What he should really emphasize is that Bain created enterprises that make things we want — and that it shut down enterprises that were inefficient, so that economic resources could be better allocated to places where they created more value." Barro even urged Romney to "fight back against the assumption that plant closures and layoffs are bad, rather than an essential part of a dynamic economy."

Vote for Romney, while jobs are scarce, because he'll let more jobs go away — for America's good?

I think Romney is more of a politician than that. Addressing the crowd in the ex-iron-mining town of Cornwall, instead of assuming local loyalties, Romney asked what his consultant must have thought would be a good Eagles-vs.-Steelers-type question: Where do you buy your hoagies, "Wawa, or Scheetz?"

Neither, it turns out: "The deli," they yelled back, sensibly.

Contact columnist Joseph N. DiStefano at 215-854-5194, JoeD@phillynews.com, or @PhillyJoeD on Twitter.

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