Litehouse Inc.

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Litehouse Inc.

P.O. Box 1969
Sandpoint, Idaho 83864
U.S.A.
Telephone: (208) 263-7569
Fax: (208) 263-7821
Web site: http://www.litehousefoods.com

Private Company
Incorporated: 1963
Employees: 437
Sales: $85 million (2003)
NAIC: 311225 Fats and Oils Refining and Blending; 311513 Cheese Manufacturing; 42443 Dairy Product Wholesalers; 31142 Fruit and Vegetable Canning; 42242 Packaged Frozen Food Wholesalers; 311999 All Other Miscellaneous Food Manufacturing

Litehouse Inc. is the second largest supplier of refrigerated salad dressings in the United States. In all, their line of products—also including marinades, dips, salsa, freeze-dried herbs, caramel, and packaged salads—boasts more than 1,300 items from 600 recipes. In 1997, with sales at $31 million, Litehouse merged with another family-owned enterprise, Chadalee Farms, remaining a private company with a new presence in Michigan. In 2003 sales hit $85 million.

Salad Dressing Catches On: 1950s–60s

Litehouse was founded by Ed Hawkins in the small town of Hope, Idaho. In 1958 Hawkins and his wife, Lorena, purchased Herschel's Lighthouse, a restaurant, and renamed it The Litehouse. This was where Hawkins, a chef, created his now-famous bleu cheese dressing. Customers liked the dressing so much, they often brought in empty jars so they could take some home with them. In 1963—in response to slow business during the off-season and to help pay for his children's college tuition—Ed Hawkins started selling the dressing outside his restaurant. Scraping together $1,000 to jar 12 dozen cases of Bleu Cheese and Thousand Island dressing, Hawkins convinced Rogers Thrift in nearby Sandpoint to sell it. The Hawkinses delivered their jars of dressing in the family's Datsun station wagon. The dressing sold well, but financial success was still years away.

In the early 1970s, several new challenges faced the business. The restaurant in Hope was struggling, and a second Hawkins' restaurant, in nearby Pullman, burned down. Ed Hawkins became ill and was hospitalized, and the family was broke. At this time, Hawkins's sons, Doug and Ed, Jr., each left their teaching jobs to take over the family business, with Ed, Jr., becoming the company's CEO, and Doug stepping in as president. In 1974 the brothers began focusing on the salad dressing business. At the same time, they shared a commitment to the community in which they lived. They supported ball teams, downtown businesses, an art center, and Habitat for Humanity. They also helped with Sandpoint's annual festival and other events that brought people to their town.

Doug and Ed Hawkins promoted the dressing vigorously, traveling to supermarkets in and around Idaho. They quickly landed the dressing on the shelves of grocery stores in Idaho and Montana. In 1974, not including restaurant profits, Litehouse Dressings brought in $100,000. The brothers began approaching supermarkets further out-of-state, eventually selling their dressing to a large grocery chain in Seattle. From that point in 1977, the company moved forward at record speed, gaining more and more accounts with western grocery chains. In response to its continued out-of-state growth, Litehouse purchased three new Class 8 refrigerated tractors in 1979, which allowed the company to move its fresh salad dressing long distances in large quantities.

Explosive Growth in the 1980s and Early 1990s

Operations ran smoothly for a few years, but by 1983, Litehouse experienced a number of maintenance problems with its delivery trucks. Blown engines meant missed deadlines; broken-down tractors meant the product was stuck en route until repairs were finished. In response, Litehouse opened its own repair shop to reduce maintenance bills. Still, delivery time was wasted during repairs. A decision to lease trucks through PacLease for out-of-state deliveries saved Litehouse as much as $22,000 a year.

Shortly after Ed Hawkins, Sr., died in 1984, Litehouse growth skyrocketed. Between 1989 and 1995, sales grew from $6 million to $25 million. Much of this was due to the Hawkins's continued promotional efforts, which included traveling to new supermarkets with their product. Both Doug and Ed, Jr., spent up to 25 weeks a year traveling to new stores. Litehouse's refrigerated dressings filled a niche in the market, as only two other companies—Marie's and T. Marzetti's—offered serious competition.

In 1992 Litehouse spent $500,000 on a 21,000-square-foot addition to the facilities. The addition included new production and cold storage space that allowed the company to double its output of refrigerated salad dressings in just a few years. At the same time, new products were introduced. In 1990 Litehouse began selling two-ounce packages of dressing. In 1993 a salsa product and two dips—Ranch Veggie Dip and Dilly of a Dip—were marketed. Litehouse heavily promoted its dressings' natural ingredients, such as canola oil, while emphasizing that Litehouse products contained neither preservatives nor MSG.

More Growth and a Key Merger in the 1990s

In the period from 1992 to 1997 Litehouse's annual growth averaged over 15 percent. With a workforce of 50 increasing to 240, Litehouse soon became one of Sandpoint's largest employers. In 1994 Litehouse was recognized for its role in the Idaho economy when a group of lawmakers and lobbyists on a bus tour through northern Idaho stopped to tour the business. Those on tour not only saw modest accommodations—Litehouse did not believe in fancy, expensive office space—but also a smooth and profitable operation. The company had recently installed new computer software by Datalogix International, which, after only one year, decreased the number of shorted orders by 66 percent. By the end of the following year, shorted orders were decreased even more. As a result, Litehouse experienced a higher turnover, from five days to two, of fresh ingredients in its inventory.

In 1997 Litehouse sales hit $31 million, while its products lined the shelves of 18 percent of all U.S. grocery store chains. The company ranked third, behind Marie's and T. Marzetti, in the nation's sale of refrigerated salad dressings. In April 1997 Litehouse and its owners were featured in Entrepreneur magazine's "75 Entrepreneurial Superstars Tell How They Made Millions." It was also in this year that Litehouse merged with Chadalee Farms, Inc., of Lowell, Michigan.

Merger talks between the two began in 1995, when Litehouse approached Chadalee's president, Wendell Christoff, asking whether Chadalee would be interested in producing Litehouse's product. This would have allowed Litehouse to reduce its shipping costs to the east coast. Christoff did not wish simply to produce known products; he wanted to create a national company. Litehouse seemed an ideal mate: the two companies shared similar values, vision, and history. The Michigan family business had begun in 1951 when Christoff's parents, Clinton and Dorothy Christoff, purchased Chadalee Farms, a company started in 1932. Like Litehouse, Chadalee got its start with a single salad dressing. By the time of the merger, the one dressing had expanded to more than 1,000 products, from salad dressings to sauces, dips, and horseradish products.

Before the merger, Chadalee had 75 employees working in a 77,000-square-foot automated plant. As a result of the merger, Chadalee was able to immediately hire 25 additional employees. As for Litehouse, its projections for east coast-shipping savings were exceeded, as it saved between $200,000 to $300,000.

While the merger went smoothly, Litehouse ran into some trouble in its hometown. In 1998 the city of Sandpoint fined Litehouse $4,000 for violating city waste disposal standards 11 times between 1994 and 1996, as it had exceeded limits in dumping too much oil and fat into the city's sewer system. Earlier that year, Sandpoint itself was fined $27,500 by the Environmental Protection Agency for failure to monitor and enforce industrial wastewater discharge to its sewer plant. Much of the waste cited was Litehouse's. While each violation was minor, according to city authorities, they began to add up.

In response, Litehouse hired a food processing expert to help clean up discharge from the plant. The city credited Litehouse its $4,000 fine for any improvements it made in order to stop future violations. A dilemma loomed, however, as Litehouse faced the challenge of disposing of its daily fat waste of 2,000 gallons. The septic dump it used, the 39-acre Colburn landfill, was nearly full. When the Colburn facility closed in 1999, Litehouse was forced to haul all of its waste to a Montana landfill.

Meanwhile, Litehouse continued to grow. In 1998 it introduced a new seafood condiment line that included Traditional Tartar Sauce, Cocktail Sauce, and Surimi Mustard Dip (for crabmeat). At the same time, they marketed six new "restaurant-quality" seafood marinades, some fat-free sauces and marinades, and four dressings for its new line of classic gourmet dressings: Bleu Cheese Vinaigrette, Balsamic Vinaigrette, Wild Huckleberry Vinaigrette, and Roasted Red Pepper.

In 1999 Litehouse won 12th place in American Food and Beverage's American Taste Awards. Two of its marinades also won "best of show" awards. More importantly during this time, however, Litehouse became a known symbol in many grocers' butcher cases. Grocery chains Rosauer's and Albertson's began offering some cuts of meat pre-marinated with Litehouse products, free of charge. This move saved consumers time and was convenient, while allowing Litehouse an easy introduction to a larger audience. By this time Litehouse was selling its products in all 50 states, Canada, and Mexico, and held 17 percent of the refrigerated dressing market.

Company Perspectives:

Integrity isn't just something we talk about. At Litehouse Foods it is part of every decision we make. It comes from three generations of good old-fashioned values. And we take these values seriously, like caring for our customers, vendors and employees. The Litehouse tradition is built on great taste and exceptional products. And we believe that serving our communities by providing good jobs is as important as producing the best-tasting products. Quality you can trust. Service you can depend on. From people who care. From our family to ours, Litehouse is a name you can trust every day.

New Products in the New Century

In 2000 growth continued at record speed, as Litehouse promoted a new Veggie Dip line. Five of its new flavors—Sour Cream Ranch, Lite Sour Cream Ranch, Jalapeno Ranch, Lite Sour Cream Dill, and Bleu Cheese—won "best of show" awards at an American Tasting Institute judging.

At the same time, Litehouse continued to struggle with its waste disposal problems. Still hauling the bulk of its waste to Montana, Litehouse had also taken some to the University of Idaho, where researchers were testing a new pretreatment system specific to Litehouse's type of waste. The results of this research eventually allowed Litehouse to propose the construction of a wastewater pretreatment facility to the city of Sandpoint. The proposal, to use city-owned land at the local Airport Business Park, would require Sandpoint to apply to the state department of commerce for a $500,000 grant. In 2001 the city received the grant in full. Litehouse, which helped the city cover the additional $200,000 to $300,000 required to complete the project, would use about half of the plant's total capacity.

In 2001 Litehouse acquired the Sandpoint Cheese Factory so that it could begin making its own bleu cheese. Prior to that, the company had been purchasing 325 tons of bleu cheese a year from various vendors around the country. One problem with this arrangement was that Litehouse used only kosher cheese, which proved a troublesome requirement for some cheese vendors. Thus, the company had long been looking forward to making its own bleu cheese for its famous dressing, and upon purchasing the cheese factory, Litehouse hired six people, including a local cheese making expert, to aid in the task. The Sandpoint Cheese Factory maintained a retail outlet that sold cheese and gift products, and Litehouse decided to keep this popular store running. During this time of rapid growth, Litehouse was recognized as a "Business of the Month" by Idaho's department of labor.

More recognition came in 2002, when Litehouse grabbed the record for the "World's Largest Garden Salad" in the Guinness Book of World Records through its sponsorship of the annual Lettuce Days Festival in Yuma, Arizona. The salad, weighing 7,248 pounds, was topped with 750 pounds of Litehouse dressing. Also this year, Litehouse recorded double digit revenue growth, surpassing Marzetti's as second largest producer of refrigerated salad products, and was second only to the Marie's brand made by Dean Foods Company.

Litehouse again introduced a number of new products, including Idaho Bleu (featuring bleu cheese crumbles made in its newly acquired cheese factory), a line of organic salad dressings, and a new freeze-dried herb line. The herbs—Pasta Herb Blend and Salad Herbs—required no washing, sorting, or chopping and, as the label read, were "as close to fresh as you can get." In 2002, Litehouse also began selling its products online.

Having sold its first jar of salad dressing in 1963, Litehouse celebrated its 40th anniversary in 2003. To mark the occasion, Litehouse presented a new dressing, Big Bleu, which it deemed "a bigger, better version of the original that started it all over forty years ago." The company also marketed five new dips and dressings, including Hail!Caesar and Chunky Garlic Caesar. Adding to the celebratory mood was the year's sales, which reached $85 million. In 2003, Litehouse—a company that began with the two owners, Doug and Ed, Jr., lugging boxes of dressing into Roger's Thrift in Sandpoint—employed 367 full-time employees in Sandpoint and 70 in Michigan.

Key Dates:

1958:: Ed and Lorena Hawkins purchase the Litehouse Restaurant.
1963:: The Litehouse sells its first jar of salad dressing outside the restaurant.
1974:: Founders' sons, Ed, Jr., and Doug Hawkins, take over the business.
1984:: Ed Hawkins, Sr., dies.
1992:: A building addition allows the company to quickly double its output of salad dressing.
1997:: Litehouse merges with Chadalee Farms of Lowell, Michigan.
2001:: The company purchases Sandpoint Cheese Factory in order to make its own bleu cheese.
2003:: For the company's 40th anniversary celebration, Litehouse markets a new dressing, Big Bleu.