Wonderstate Coffee Questions Norms through Profit-Sharing Program

At the Wonderstate Coffee bar on the Capitol Square in Madison, Wisconsin. All images courtesy of Wonderstate Coffee.

While coffee roasters and retailers everywhere are feeling financial strains, a new profit-sharing program from Viroqua, Wisconsin-based Wonderstate Coffee appears to have produced favorable returns all around, boosting financial health and cultural capital. 

Launched in 2024, the program covers 80 non-leadership staff across Wonderstate’s three cafes and production roastery. The in-house program follows the two-time Roaster of the Year’s long-running commitments to sustainable coffee sourcing, including minimum prices for green coffee and a 5% profit reinvestment model. 

Under the profit-sharing program, eligible employees collectively receive 10% of the company’s net profits every six months. Individual payouts are based on hours worked.

Wonderstate Coffee co-founder and co-owner Caleb Nicholes said that the program has opened the company’s books, both literally and figuratively, to positive effect thus far. 

The program — which has not involved changes to base wages — paid out nearly $45,000 in extra compensation to employees over four quarters from mid-2024 through mid-2025.

The Wonderstate production headquarters in Viroqua, Wisconsin.

“The program has created a really wonderful infrastructure for us to be able to have transparent conversations about the financial health of our organization,” Nicholes recently told DCN. “It really helps employees see where and how they are a significant part of that broader financial outlook.”

Being “part” of something greater is one of the many potential benefits of profit-sharing schemes, according to numerous academic studies over the past 20 years. 

One major meta-analysis from 2019 found that profit-sharing was associated with a small but positive effect on overall productivity. According to that review, profit-sharing schemes were most successful when combined with complementary practices related to employee satisfaction, such as clear training pathways and increased transparency. 

Yet studies within that same review found that profit-sharing schemes can fail when poorly designed. Pitfalls can include a lack of “line-of-sight” management and unclear payment schedules. 

Nicholes suggested that Wonderstate’s program has been grounded in employee satisfaction, with the broader goal of improving organizational success. 

“Everyone’s going to have a unique voice on how to help raise the bar in an organization to help make that company more efficient and profitable,” he said.

Nicholes and other company leaders conduct a thorough budget analysis of anticipated annual costs, sales and profit expectations. Ultimately, a portion of net profit is split among current employees based on hours worked. Employees must have worked for at least three months to be eligible.

The Wonderstate production headquarters in Viroqua, Wisconsin.

The program continues to be refined. After initially paying out quarterly, leadership shifted to biannual (twice-yearly) payouts.

“By virtue of the business we have, which is seasonal, some quarters are more profitable than others,” Nicholes said. “After having quarters that weren’t profitable, we decided to pay out biannually to ensure that everyone could count on having that payment.”

Yet for Nicholes, the payout represents something larger, a broader investment in the company’s culture. 

“I think there’s something kind of magical about that – how to switch on people’s creative, hardworking mentality to make the place better, more alive and more efficient,” Nicholes said. “That’s what we’re trying to do.”

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