SANDPOINT – Thirty-eight years ago, the Hawkins family of Hope, Idaho, blended salad dressing in the back of their struggling restaurant and sold it to area grocers, generating $100,000 in annual volume.

Last year’s volume was $3 million … per week.

Ed Hawkins Sr. deserves credit for creating Litehouse Foods’ signature chunky bleu cheese dressing. But it was his sons, Ed Jr. and Doug Hawkins, who turned the brand into a household name.

Doug Hawkins was Litehouse president from 1984 to 2008, and now is chairman of the board. Ed Hawkins Jr. served as chief executive officer from 1989 until 2010, when he stepped aside to become “Keeper of Values.”

Jim Frank joined the company as director of sales in 2006 and was appointed CEO in 2010.

Ed Hawkins Jr. and Frank discussed the company’s rise, its values and its prospects during a recent interview at the company’s headquarters.

S-R: Ed, recount how your family got into the dressing business.

Hawkins: Back in 1963, we were struggling financially. We had a restaurant on Lake Pend Oreille that was busy in the summer but so slow in winter that we generally closed January and February. Plus we had one kid in college and one soon to be. Dad and my brother, Doug, decided to figure out a way to make some more money. Restaurant customers liked our bleu cheese dressing. So Doug and Dad got some jars, had some labels made, bought ingredients at a local grocery store and made a few cases to sell to grocers. They’d sell it by the case, the half case, whatever. In those days, there were lots of independent grocers who could make the decision right there in the store to buy something. The chains don’t allow that to happen anymore.

S-R: What inspired your dad’s recipe?

Hawkins: Prayer. The owner of a Spokane restaurant where Dad had worked wondered why someone couldn’t make a good bleu cheese dressing. Dad prayed about it and woke up in the middle of the night with this new recipe. Instead of oil and vinegar, he used buttermilk, mayonnaise, garlic salt, salt and bleu cheese – that’s it. It was a great recipe, because the cost of ingredients was low.

S-R: What happened next?

Hawkins: By 1968, we probably did $100,000 in volume, and in ’74 we did the same – we’d maxed out the Spokane market. I’d just graduated from college and Dad was in the VA hospital in Spokane. His priority had always been the restaurant, so Doug and I decided to make the dressing our priority.

S-R: What made you believe in it so strongly?

Hawkins: I’d had a goal, a vision, a dream – whatever you want to call it – that the business would take off, from the time it started when I was 10 years old. I loved making the stuff. I’m the only one in this company who has done every job there is, from cleaning toilets to making the dressing and selling it, doing the books and then leading it as CEO for 25 years.

S-R: What was the company’s first big break?

Hawkins: Early in 1975, Doug and Dad called the head of the produce division for Albertsons in Boise. He’d gotten mad at our competitor, kicked them out and brought us in. That was huge. In one year, we went from $100,000 in volume to about $250,000. Then the next year, he encouraged his counterpart in Salt Lake to bring us in. That put us up to $750,000.

Frank: Getting into a chain was the big thing, versus single stores placing orders.

Hawkins: The next big break was getting into Safeway in ’77 – that meant a minimum 1,000 cases a week.

S-R: Once you landed the Albertsons and Safeway accounts, were there any tough times after that?

Hawkins: Oh, yeah. There still are tough times. We peaked in 1984 at about $6 million, and then we didn’t grow for six years. It was a function of focusing on retail dressings – the stuff you see in the produce department. So we made a decision in 1989 to get into the food-service and member-store business. We went out on a limb and got a pillow machine (which makes single-serving packages), set a $20 million goal, and hit it in five years.

Frank: Some of the tough times were when sales would stagnate. Other times, the profit side wasn’t so good. We just came through a tough time in 2010-11 because sales grew so fast – runaway, almost – that it was difficult to get our arms around the profit side.

S-R: Did the recession affect business?

Hawkins: Historically, some of our best sales growth has occurred during recessionary periods. In the old days, when we were just retail, recessions were a great opportunity for us, because instead of going out to dinner, people stayed home and ate good stuff.

S-R: Has anyone tried to buy the company?

Hawkins: Every day of the week. Still.

S-R: Why did you resist that?

Hawkins: It goes back to our values and principles. Doug and I have always said we could sell this company or go broke, and, either way, the impact on jobs in this community would be the same – they’d go away. Whomever we sold to would most likely have production facilities elsewhere. Going all the way back to 1972, one of my family’s goals was to create good, steady, year-round jobs in Sandpoint.

Frank: For 100 years, North Idaho has been a difficult place to make a living, because it’s seasonal.

S-R: How much do your employees make?

Frank: Entry level is 50 cents to $1 higher than anything comparable.

S-R: Do people tend to stay here?

Hawkins: We had four people retire in January – one at 31 years, one at 30 years, one at 24 and one at 22.

S-R: Jim, when you joined Litehouse in 2006 as director of sales, this was a family-dominated company. What was that like?

Frank: Some people might not have been able to handle it, but for me it was like coming home. I went to work at the age of 10 in my dad’s grocery store, and when I was 20-something I went to Albertsons, which back in the day had a family atmosphere.

S-R: Ed, what brought about your brother’s and your decision in 2006 to sell the company to the employees?

Hawkins: It fit with our values. We now have three communities we’re responsible to – we went into Michigan in 1997, and have been in Utah for almost a year. We felt if we sold it to our employees, then those plants are going to stay in those communities and continue to provide good jobs.

S-R: What are the implications for employees?

Frank: It’s really a great pension plan. Each year, the company buys stock from the founding owners and gives it to all employees – the equivalent of about 10 percent of their salary – for free. And if we’re doing the right things for the company, the value of the shares they already own go up.

S-R: Ed, since stepping aside as CEO, you’ve taken on the unofficial title of Keeper of Values. What are those values?

Hawkins: They’re on our Guiding Principles cards: faith, stewardship, integrity, commitment to excellence and accountability. It goes back to how we got here. My family was broke most of my life, up to ’74 and ’75. Faith and perseverance gave us the drive to continue when we should have quit. One of the things at the core of our company and our family was to create jobs for our community. If this company is to succeed and go forward, we have to adhere to these guiding principles.

S-R: What’s the biggest challenge the company faces?

Frank: It’s the unpredictable costs of ingredients. You hear about the biofuel industry using corn to make fuel, sending prices up. Our oils follow that rise. The other challenge is preserving the company’s traditional values as it goes from being small and family-run to being big, and making the changes necessary to succeed on that scale.

S-R: You mentioned the past several years have been a bit of a roller coaster. What’s Litehouse’s outlook?

Frank: I think the roller coaster is gone. We’ve taken initiatives in the last six months that will level out our business. With our three plants, we’re now in a position to accept a lot of growth without having to do abnormal things. Our sales volume is stellar, so the future looks good.

S-R: Your Sandpoint headquarters are rather modest for a corporation your size.

Hawkins: You want to stay connected to your employees, and these are modest people.

Frank: And anytime we spend money, we half to ask ourselves: Did it sell another jar of dressing or make more profit? If it doesn’t do either of those things, then why make the spend? We’re responsible to 500 families, and we want to give them the biggest retirement we can.

Spokane freelance writer Michael Guilfoil can be reached via email at mguilfoil@comcast.net.