Litehouse Foods with Kelly Prior - Only so many steak dinners
Hi. This is Ain't That Something, and I'm your host, Levi Smith, CEO of Franklin Building Supply. We're an employee owned building material supply company headquartered in beautiful Boise, Idaho. I'm a former ranch kid from Texas who found his way to Idaho and into leading this storied company. We're proud to be part of the fabric of communities we operate in and want to help share stories of other companies doing the same across this great state.
Levi Smith:In each episode of Ain't That Something, I interview founders or leaders about the stories of companies you may be surprised to learn have either had their start in Idaho or now call Idaho home. In every interview, you'll hear about an interesting cast of characters, learn about daunting obstacles, and be inspired by the persistence it took to succeed. Get ready to be surprised and entertained with each episode of Ain't That Something. Do you have a sense of when that turn happened, when they really thought they had something with this salad dressing business?
Kelly Prior:Honestly, I think they thought that from day one.
Levi Smith:They thought it from the get go. Today, I talk with Kelly Prior, the CEO of Lighthouse Foods. Now, if you know anything about me, I don't have a reputation of being a salad guy. But like you, when I do eat a salad at home, there's a really good chance that the dressing I'm putting on top is from Lighthouse Foods. They have products in grocery stores all across the country.
Levi Smith:They make product under different brands and even things beyond salad dressings. And I think most surprisingly to me, you know those kits when you're just too busy to be able to chop up some lettuce and squeeze a bottle of dressing at home and you need it all done for you, you get that kit that has the lettuce chopped up and then this little packet of salad dressing, or as Kelly describes them pillows of salad dressing. More likely than not, that is from Lighthouse Foods. It's not labeled, but it's a product that they make. So we're going to get into the history of Lighthouse Foods, how they became who they are today, and Kelly's story.
Levi Smith:So enjoy this conversation with Kelly Pryor, CEO of Lighthouse Foods. Kelly, I'm delighted to have you with us on the podcast today. Before we get into the story of Lighthouse Foods, which you're the CEO of, I think it's always helpful to understand a little bit about who we're talking to. So I would love if you would tell me some of your story and how you ended up at Lighthouse Foods in the first place.
Kelly Prior:Sure. Well, Lefei, thanks for having me today, and I'd love to share some of my background and then, talk a little bit more about Lighthouse. I was raised in a family owned business, very entrepreneurial, an arts and crafts chain of stores. So my parents invested in that company when my mom was pregnant with me. So I literally grew up in the company and really brought a sense of entrepreneurship for me as I went through high school and college as they ran that business.
Kelly Prior:I graduated from Eastern Washington University with a bachelor of arts in professional accounting. And so, I immediately went to work for Coopers and Librand, which then became PricewaterhouseCoopers, working for the big six public accounting firm where I got a lot of my professional experience.
Levi Smith:How early were you interested in accounting? So you talked about the entrepreneurial exposure with your parents in that business. Did the finance side interest you early on? Did that come later? Did you go into college knowing that's what you're gonna do?
Levi Smith:I'm just kind of curious how that that exposure to family business played into pursuing an early career in accounting.
Kelly Prior:Yeah. It's a really funny story, actually. When I was in kindergarten, my mom would pick me up, at noon, you know, whenever kindergarten was over, bring me to the business, and they needed to keep me busy. So at that time, back in the seventies, they bought they purchased bulk beads that needed to be repackaged in packages of 10. So I, would do that.
Kelly Prior:Should they sit me down and I'd count out packages of 10 and put them in their little bags and staple the header card.
Levi Smith:You were the bead counter in kindergarten.
Kelly Prior:I was the bead counter, so it's that I would eventually become the bead counter.
Levi Smith:Well, could have gone into pharmacy too. There's a lot Sure. Lot of overlap there too. When you see those pharmacists having to make sure they get the pill count right and slide it into the bag. So that's fascinating.
Levi Smith:So in kindergarten, your bead counting and math probably you're on a pathway to math getting, making sense to you. And I don't know if it's easy, but just a natural fit, it sounded like.
Kelly Prior:That's where my accounting career started with it. I
Levi Smith:love that. Okay, so let's pick back up. You graduate college with a degree in accounting, and you were saying that you you went to work for firm that eventually became PricewaterhouseCoopers.
Kelly Prior:Yeah. You know, I had aspirations at some point I would run the family business, but wanted to get some experience first. So worked in public accounting and then worked in a software development company. I worked, at my alma mater, Eastern Washington University, an internal audit, before coming to Lighthouse. Ultimately, the family business is something my brother worked into, and it just made sense for us to keep that separate.
Kelly Prior:And so I just continued to pursue my professional career and ended up at Lighthouse in February ago.
Levi Smith:What got you into Lighthouse? What was that entry point? Is it something you pursued or was it a connection that you had? I mean, how did that actually happen that you you made this entry into Lighthouse Foods that you've been at for more than twenty years now?
Kelly Prior:Yeah, it's, you know, a lot of it's professional connections. I have a son that just graduated Boise State University and tell him all the time that don't be shy of your connections. And this was the case for me. I had a former coworker that had come to work at Coldwater Creek here in Sandpoint, and I had done a small rotation, temporary assignment during September 11 to help them out. Got a lot more exposure to Sandpoint and, like, the community, and then she moved over to Lighthouse and eventually needed somebody on her team on on the finance side.
Kelly Prior:So she reached out to me, and it was an opportunity for me based on where I was at Eastern to make the move, and we relocated the family here to Sandpoint. And I started as corporate controller in 02/2002. And then couple years later, become became chief financial officer. She moved over more towards the operations side of the business and, eventually became in the role that I'm at now in 2018.
Levi Smith:So you go from controller, few years later CFO, I think if I have your background right, you had executive vice president role, include some more operational elements, is that focus still pretty much on finance? What was that transition role? I'm just curious, the transition from CFO accounting background to the broad leadership role you have today as the CEO that has to think about all the things and be the chief visionary. How did you find that transition?
Kelly Prior:I think it was a little bit of all the above. You know, with the executive vice president, I had operations under my management for a period of time at Lighthouse. You know, being a little bit smaller organization, we spread those roles and responsibilities, and we were growing. We did an acquisition, and, the team needed a little bit of help as we transition different members there. But being, you know, a CFO, I think you touch all elements of the business.
Kelly Prior:You're exposed to all of the different leaders, so I had a natural curiosity to learn, what was driving their business and some of the major decisions. And then I think just my background, being raised in a family owned business and, again, doing a lot of different roles within the company and at least observing my parents and a lot of different things that they had completed really gave me a curiosity to continue to learn and expand. I always felt that I wasn't your classic accountant. You know, we can get stereotyped in into a lot of different, personalities.
Levi Smith:No. And,
Kelly Prior:you know, my focus really has always been about the people, knowing that in organizations like ours, it's the people that make it happen. You know, it's not necessarily me or or my direct team, but there's, you know, we have a team of almost eleven fifty employee owners, and it takes all of them to make it happen. And I learned through, working with my parents' company that it was their team of people that made it all happen. It wasn't just them at the top. And so it's something I always valued, and I think that just translated to really wanting to learn all the different functions of the organization and see what made them tick.
Kelly Prior:I always felt like I had a aspiration to keep growing the company and doing better. And then when we became employee owned, right, I was an owner. We have a personal stake in the, you know, betterment of the the company's output. So Yeah. That just created a passion to continue to drive and see what I could do to contribute to make that happen.
Levi Smith:I find the connection going back to your parents' story and being exposed to entrepreneurship, you know, very early on from the bead counting days all the way forward, that you went into finance, but with this lens of really understanding how people drove the business. And I think, you know, we're sort of laughing about it here, the stereotypes and stuff. But it is true that sometimes in finance, folks can get a bit, you know, maybe myopic and think it's just the numbers that are driving the business. One of the things that we talk about is most of the numbers we talk about on a day to day basis are reflecting events that already happened that were generated by people's decisions in operations with customers in a negotiation. It's a scorecard.
Levi Smith:There's a forecasting element to it. But most of the numbers we look at are a reflection of what has already transpired and what has already transpired has been done by people. And so I love that you have that, that outlook, that vision, that lens that you were looking at financial management through and how well that's serving you in the in the in the role of day and a fun connection with your upbringing, your parents business.
Kelly Prior:Yeah. I I like to say the numbers tell a story. Right? And Mhmm. And so when you have the training and background and the exposure as much as I have on the number side, it's a little bit easier for me to read the story when I see the set of numbers.
Kelly Prior:But it is that. It's a story. It's it's more than just the number. It's what's driving the outcome to create these numbers. But I specifically remember a presentation I was doing at the University of Idaho with, my CEO at the time.
Kelly Prior:We didn't spend a lot of time rehearsing what each other were gonna talk about during the presentation.
Levi Smith:Makes it interesting.
Kelly Prior:But, you know, car ride down, let's make sure we're not overlapping. We got it all done, we gave a good presentation. But the biggest piece of my presentation to the students at the University of Idaho was, you know, leadership and success, is through the people. It is, being able to motivate and engage, and, it's the the people that make it happen. And I specifically remember on the drive home, that was an epiphany for the CEO who learned that about me because, you know, I think he had maybe put me a little bit into that pigeonholed box of a classic accountant, and it really showed to him that I can think differently about the business than just the numbers.
Levi Smith:Yeah. I couldn't agree more. And maybe we use that as a segue to talk about some key people in the lighthouse story business. So let's let's back up in time to 1949. So we're post World War II, nineteen forty nine.
Levi Smith:And in Spokane, Washington, if I have this right, Ed Hawkins is working as a chef.
Kelly Prior:Yeah, Ed Hawkins Sr.
Levi Smith:And the product that really starts what we know as lighthouse foods today came through, let's just call it what it was a vision in the night, a prayer saying, I want to solve this problem around a blue cheese dressing, and he wakes up with a recipe. Am I am I overstating that, or is that kind of the story there?
Kelly Prior:Yeah. Absolutely. You know, as we say it, it all started with a prayer, and that's what it was. Yeah. His boss at the time that he was a chef in a restaurant was to create a creamy blue blue cheese dressing.
Kelly Prior:At that time, blue cheese dressings were primarily vinaigrette, based, and they saw a need for something a little bit different. So he went home, he prayed about it, and he woke up in the middle of the night, wrote out the the formula, the recipe, the dressing, which is very close to the same, recipe that we use today, in the business, and that's where kind of things all started. He later moved to Sandpoint and opened up the Lighthouse restaurant, on the lake where he had a blue cheese dressing, a ranch dressing, a thousand island dressing, and a couple others that, you know, he made there in the restaurant. It was a classic, steak and salad type restaurant with cocktails such.
Levi Smith:Yeah. And did he think at that time, he's a chef, that their family has a deeper history related to, you know, just kind of, you know, food restaurant stuff going back, Even prior generations is kind of deep in the family there. He's a chef. He opens this restaurant in Sandpoint. Did he think at that time that the main thing was the restaurant?
Levi Smith:Or you know, how early did he start to see that maybe these dressings were the main thing and the main draw?
Kelly Prior:Well, I didn't have the opportunity to meet Ed Sr. He passed away before I joined the company, but certainly a lot of stories that have been passed down through the family. He was a chef, and he really focused on the the business, the the meals, the quality of the food, the service, and the dressing was part of that. It was really the kids, Doug and Ed senior, that started to see a vision for the dressing being something other than what was served at the restaurant. At that time, you know, Sandpoint was a logging town or logging community, and a lot of the work was seasonal.
Kelly Prior:Right? The the roads would get muddy in the spring and the fall, and and the winter was a little more difficult. So there was a lot of seasonal employment, and the boys really had a vision that they wanted to create something that was more year round employment for the community. And they started to see the patrons of the restaurant come in, bring in their own pint jars and ask to purchase dressing because it just tasted so good and it was something different than what can buy.
Levi Smith:Was that happening as you've heard the story told, was that happening frequently? I mean, is this a restaurant, you know, I know you and I are kind of speculating a little bit here, but you're, you're, you're closely stories and heard these stories firsthand. If we back up and you and I were going into that restaurant at that time, you know, is the feel that, you know, what you do is you show up at the restaurant and you have a meal and you take on some salad dressing. Was it, you know, becoming that sort of common or did they catch a vision and see that, well, wait a minute, there's, there's a, you know, there's there's enough activity around the dressing that this could be bigger. I'm just trying to get, you know, put ourselves in that place and just get a feel for, you know, what what they were seeing.
Kelly Prior:Yeah. I think the boys saw a more of the vision of, hey, there's an interest here. There's this product is not in the marketplace today
Levi Smith:Okay.
Kelly Prior:That they can purchase. The the dressings that they could purchase at that time, they didn't have as much of a fondness for. So they saw, you know, some of that activity happen. Ed senior was not, from what I understand, really passionate about the dressing business. He wanted to continue, on the restaurant side of things.
Levi Smith:He was a chef to his court, sounds like.
Kelly Prior:Yep. To his court. So it was really the boys that, really pursued that more aggressively. And they had other other jobs. You know?
Kelly Prior:Doug was, he had his own restaurant in Bonners Ferry. Ed Junior, he was a school teacher, and Doug was a school teacher at one time as well. So they had a lot of things that they were pursuing in order just to, you know, put food on the table themselves as you know, the restaurant at that time really struggled with the seasonality of traffic. I mean, there would be nights, that they would be there that they may only have one table that would come in that they serve. So and if you know anything about the restaurant business, it's hard to prep the right amount of food when you don't know how many people are gonna walk in the door then.
Levi Smith:You don't have to know anything about the restaurant business to know that one table isn't gonna make the business work. So this issue of the seasonality, seeing the opportunity to dressing, so Doug and Ed Jr. Age were they when they had these other jobs, but we're seeing the opportunity with the dressings twenties, thirties.
Kelly Prior:Yeah, they would have been in their twenties and early thirties.
Levi Smith:Okay.
Kelly Prior:The business actually sold the first jar of salad dressing in 1963.
Levi Smith:And that first jar salad dressing is just something that they kind of cobbled together and did by hand old school. We're gonna put the dressing in some jars. How did they do that the first time in 1963, as you've been told?
Kelly Prior:Yeah, it's exactly that cobbled it together, buying some jars, buying some lids, hand applying some labels Uh-huh. And building those cases out of the backroom of the restaurant. You know, they they were doing all of that work out of the restaurant initially. And, you know, the they sold the first case of dressing to Rogers Thrift Store here in Sandpoint and then saw, you know, the the repeat orders and the interest from the consumer out there, because it was a fairly new category to have refrigerated salad dressing as opposed to what was, you know, ambient temperature on the shelf. And so as as the stories continue, you know, they would produce cases of dressing and pack up the Datsun pickup, and Doug would head out on a sales trip as he was the the leader of the sales at that point, and he would just continue to drive.
Kelly Prior:You know? Maybe it was across Montana.
Levi Smith:Until until there's no more left? And he would he would have
Kelly Prior:to keep going until there was no no more left. So he would have sleeping bags to insulate the salad dressing. And Wow. When he would get to a point at night, he would pull over and take the sleeping bag and sleep on the side of the road and get up the next morning and continue until that Datsun was empty. So the family just made a tremendous amount of sacrifices.
Kelly Prior:It was really tough going, early on, you know, cash flow and trying to build a company.
Levi Smith:I
Kelly Prior:bet. But they just had this vision that they were very passionate about and just continued to to drive forward.
Levi Smith:Do you think that passion for the product, you know, you said Ed senior was a chef to his core and and the dressing was was part of the offering, but it sounded like for him, it wasn't the main thing. It was part of just what he's putting on a table. But for the boys, did they have a passion for the product that kind of came from their dad? I mean, it is a dressing. They had a business vision, but where did that passion come from to get this product into people's hands in such a scrappy way?
Levi Smith:You know, driving a truck across the West and for people that are not familiar with Idaho, Montana, driving a Datsun across that terrain is no small endeavor. These aren't interstates. This is, you know, these are two lane roads everywhere, mountain passes. You've got to want this. Where did that come from?
Levi Smith:Do you find the drive and the passion was around the business opportunity for them? Or did they also have this kind of passion for the actual product that was maybe more rooted in their dad?
Kelly Prior:Well, certainly had a love for the product due to this day. I mean, they love the product that has been created, and we continue to create new products. They believe in it. They believe it's the best product out in the marketplace. But I think their passion and, again, this is some of this is speculation, but they both have a drive and a just tenacity to win.
Kelly Prior:Mhmm. Coaches in in school, sports, and things like that. And they wanted to figure out a way to make it successful, and they were willing to make the sacrifices necessary, whether that's sleeping on the side of the road or, you know, not taking a paycheck from the organization. They knew that this could be something greater than themselves, and it could give back to the community, eventually creating jobs for the community. And in order to get there, they would have to make some of those sacrifices.
Kelly Prior:So, just their drive and passion to win and deliver the great product to consumers across the country.
Levi Smith:I I think what we've talked about here is just a great example of the core ingredients of being a really good entrepreneur. I mean, they had this vision that other people didn't have. They had a drive, basically, where failure is not an option. And then this, you know, just, you know, relentless pursuit, the scrappiness, all those things that, you know, I mean, you saw that as a kid with your parents, it sounds like, but, know, it takes a mixture of those things to make this viable. They, they have that.
Levi Smith:And so they're, they're out there selling these dressings. So 1984, I think if I have the date right there, dad dies. Is that the point at which they leave sort of the restaurant behind or the family leaves the restaurant behind and it's all in on salad dressings? I mean, help me kind of understand that transition because that's significant having the, you know, patriarch pass away and then and then what the sons are doing after.
Kelly Prior:Yeah. And again, filling in some of the gaps, just with some of the stories there. But, yes, after his passing, the boys were able to focus full time on the dressing business. That was where their focus was prior to that as well.
Levi Smith:Okay.
Kelly Prior:But they had, you know, both of those going on. And it's just something that in in the economy and where it was located, they did not wanna continue to pursue that after his passing, so they shipped those resources over to, Lighthouse and creating the you know, continuing to expand the salad dressing business. Business.
Levi Smith:So they didn't have a desire to continue operating the restaurants after their dad
Kelly Prior:Yeah. Think what was happening is they were seeing some success in the dressing business. The the restaurant business was continuing to be volatile based on the seasonality of the traffic. And so sure, that's where they felt that there was a future to be created.
Levi Smith:When do you think Doug and Ed thought that they really had a business? Right? So we go back to your story about the Datsun truck, and they're just trying to sell out salad dressings out of the back of a small pickup. You know, in conversations you've had with them, when do you get a sense that they thought we really have something here? Not necessarily that we've arrived, but we were essentially right about this.
Levi Smith:There is a business here and we're not just testing the waters. We're not just kind of, you know, experimenting here and hustling, but we've really got something here. Do you, do you have a sense of when that turn happened when they really thought they had something with this salad dressing business?
Kelly Prior:Honestly, I think they thought that from day one. They
Levi Smith:They thought it from the get go.
Kelly Prior:Yeah. I mean, they believed and they had that passion that it was gonna be successful and not that it was gonna be easy, but that they had something to be made and they were gonna do everything in their power to make it happen.
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Kelly Prior:So, yes, they knew that they hadn't arrived yet, and, they've always been very humble in, you know, not promoting some of the give back that they do to the community or the success that's been created. You know, one of the quotes that Edward had provided and heard him say many times when we sold the company to the ESOP is that, as an owner, this has exceeded my expectations wherever I thought it could go. I mean, it's just been tremendous success. And he said there's only so many steak dinners that this fella this old cowboy can eat in in my lifetime. So they were very generous in the terms that they negotiated with the sale to the ESOP just for the the fact that they wanted the company to not to be overburdened in the purge of that transaction.
Kelly Prior:Yeah. And that's just one small example of the humility that they shared, and showed over time. They never really promoted themselves even though we sponsored practically every event, in the community and gave back to a lot of charitable organizations. And you you know, you get your banner, you get your signs associated with that, but they didn't really ever wanna promote that. They weren't trying to gain consumers by doing that.
Kelly Prior:They were just trying to give back to the community that supported them.
Levi Smith:I think it's interesting how that ties back to the early part of the story that you shared that, you know, they saw an opportunity with the salad dressings in the, you know, late 50s, early 60s. But they also saw an opportunity to provide consistent employment in this town and Sandpoint that they cared about. And to have just, you know, restaurants and logging and all that, there's so much seasonality, so so much of the year that, you know, you're going with or going without and oscillating between those two. But just this idea that they cared for their community and the people around them. And part of their business vision was to create an ongoing concern that was more stable, provided more consistent, stable employment in the Sandpoint area.
Levi Smith:And then that carried all the way forward to your point about, you know, the humility that they had and how they approached even selling the companies back to the owners.
Kelly Prior:Yeah, just just tremendous experience working with them, because I had the opportunity to work with both of them before they officially retired from the company and, you know, instill the core values of the company, you know, helps guide us today in everything that we do.
Levi Smith:So before we fast forward into some other aspects of the story, I'm curious for Doug and Ed, I think they they're fascinating individuals to me hearing this story. I love that quote that you shared about, you know, I can only have so many steak dinners. Do you have a couple of stories that really stand out from either Doug or Ed over your twenty years worth sharing just something that would help us understand those, those two individuals and really kind of their heartbeat, their character and, and, you know, their personalities?
Kelly Prior:Yeah, mean, there's just a number of stories that you know, like I mentioned with Doug and the Daunton pickup certainly is one of the infamous stories that gets shared. And you know, just hearing some of the struggles that the family went through in the early years with cash flow and finances and trying to continue to keep the dressing business going with the struggles of the volatility in the restaurant. You know, with Edward, he was CEO when I originally joined the company, and he was super passionate about, leading through people as well. And that's where I learned some of what I've learned with the people. And he spent time with leadership development.
Kelly Prior:He spent time with really engaging with the people all throughout the organization from top to bottom. If he was still in the plant, he would be having coffee in the break room today, you know, if he could, and that's what he did. He walked around every day, top and bottom floor, you know, the office was above the the factory floor, and he would engage with all the people and just thank them for the hard work they were doing to help build the company. As that transitioned to the ESOP, it just really instilled all those stories that I heard with the behavior that they engaged with because, you know, they had different options. They could have sold to a strategic investor.
Kelly Prior:They could have went public. They could have done other things. And this repeatedly came back to we wanna sell this to the employees that helped build it and help build generational wealth for them that they might not have an opportunity otherwise.
Levi Smith:Let's share let's share the steak dinners.
Kelly Prior:Yeah. It just just reinforced how they thought, how they acted, how they behaved, with their action.
Levi Smith:So in 02/2006, the company became, I think, partially employee owned 30%, then 2014, a % since before you transitioned as CEOC. What have you seen, particularly maybe after 2014 as a % employee owned company, you're one of the employee owners, as you said, how did the culture change or shift or evolve or mature as employees were brought into that and really saw this opportunity for building wealth by working for Lighthouse over some extended period of time? You've seen it for ten plus years a % employee owned. I'm just curious what your thoughts are about how the company changed or evolved as a result of ownership changing.
Kelly Prior:Yeah, of course, you know, in an ESOP, it starts small. You know, you get your allocation of shares the first significant balance, but it grows over time, not only in the number of shares, but as the share price increases. So initially, out of the gate, you know, there's just a lot of curiosity. There wasn't a lot of us that had experience with ESOPs, but we talked about it a lot, and we shared the difference of an ESOP company versus, you know, privately owned company and how those dollars are reinvested back in the company or they're used to buy out employees as they leave. So it it really is the work that they're doing that's helping it grow, making it more profitable is in turn going back to them.
Kelly Prior:It's not going anywhere else. And we we just talked a lot about that. We did a lot of training and development on how it works in an ESOP company. And I think where I saw the most noticeable differences when we, you know, had a downturn one year, and we had to make some cuts. Whether that's cuts in travel or professional development or, you know, we had to, you know, cut some positions that we previously had.
Kelly Prior:That was something that was always a little tough for the organization, just because it was so, you know, relatively small and everybody knew each other and, you know, they were having to make sacrifices. Mhmm. Well, once we were employee owned and those sacrifices needed to be made to get through that year, we really saw the organization rally behind that. And we had people at all levels of the organization come in and ask how they could help. And, you know, it was a very friendly environment to begin with, but once the ease hop was in place, we just saw that, you know, really on steroids with employees looking for, hey.
Kelly Prior:This is my company. How can I help get across the finish line so we can get to the next year where maybe it'll be a little better?
Levi Smith:Truly in it together. I mean, we're we're all all on this boat together. Gotta figure it out.
Kelly Prior:Yeah. So that that was probably the most noticeable difference. And, you know, every time we've had economic downturns since then, we see that same rally from the workforce that, you know, I didn't see in some of the other companies that I work for that weren't employee owned.
Levi Smith:Interesting. I think it's so, you know, Franklin Building Supply is 100% employee owned as well in that same position is Lighthouse Foods. It takes owners who see a vision for that ownership change, and some humility and generosity and even making that transaction possible. But on the other side, the opportunity for the people that are delivering the work to customers, delivering the product to customers is significant. And so I love hearing about that from other companies and from other leaders, how employee ownership is working for them and how they're seeing that positively affect culture and create significant opportunities for people.
Levi Smith:Y'all are headquartered in Sandpoint, Idaho, but you're in Michigan and Utah and Virginia as well. You've got more than 1,100 employees today. I mean, the reach is significant. And to think about what started in the early 60s. I think you told me that maybe from the early 60s to mid 2000s, you know, it took forty years to reach $100,000,000 And then in the twenty years since you've dramatically exceeded that you're well over $500,000,000 today and have products all over The US.
Levi Smith:And what a great story for the founding family, but then also now the employee owners today.
Kelly Prior:Yeah. It's been so fortunate to be able to expand our reach. You know, we produce about 25,000,000 gallons of product every year.
Levi Smith:That's a lot of product, Kelly.
Kelly Prior:A lot of product in batches. As you mentioned, 1,150 employees or so. You know, we have manufacturing here in Sandpoint, both in a dressing factory and cheese production where we make our own blue cheese. And then we have, dressing plants in Lowell, Michigan, Danville, Virginia, and Hurricane, Utah. So I think that's one thing a lot of people don't know is how expansive our reach is, how much we've grown.
Kelly Prior:But by doing those facilities, you know, allowing us to be able to get our products to our customers faster and less expensive by not having to transport them across the the country, we've also expanded our footprint of employee ownership. And, you know, we did a merger to get the Michigan plant in 1997, and we acquired the Danville, Virginia location in 2019, and I was on-site at the time that that was being announced to all the employees of the company we acquired, which was Sky Valley Foods. And I remember somebody in the front row, an employee that was listening to this news, which, you know, for them, it was a significant change. New owners were here, and it's a new company name, and what's gonna be next? And this lady in the front row, you know, she asked a question and then followed with a comment, and her comment was, I never imagined when I woke up this morning that my life was gonna change.
Kelly Prior:And she immediately grasped the concept of employee ownership and what that was gonna be able to do for her over the rest of her career that she didn't have that opportunity with a previous company. And it was just like one of those, yes, you know, we we are continuing to make the right decisions and expand our footprint to, more employee owners of the company.
Levi Smith:And, you know, employee ownership, if we think about it really broadly without going deep into this, can take on a number of forms. An employee owned or ESOP company is maybe the purest form. There's some other ways to include some people in equity and some profit share and other things. But to put employees in a place where they get to share in what they're building every day, I think is such great alignment for customers and the organization and for co workers. It's everybody pulling in the same direction for the right reasons.
Levi Smith:And to your point about that woman seeing the opportunity to be welcomed into ownership, and what a what a life change that can be. I just want to challenge other companies to really, really seriously consider how to embrace a model that brings employees, the people you're counting on every day, going back to what you shared at the very beginning, Kelly, seeing business through your people, embracing an opportunity to really bring them into the fold. By sharing more with more, you get more as a company, as customers. And so, you know, it's just such a significant opportunity with employee ownership rather, you know, similar forms or structures that allow employees to be welcome into that group instead of it being, you know, just a just a small group of people who were there at the beginning or were able to provide capital as is the case in lots of companies.
Kelly Prior:And one of the great events that we have, is tomorrow for us, which is the the annual shareholder meeting where we have all of our employee owners across the country. We're doing a simulcast where we will talk about how we performed last year as a company. We will talk about where we're going for the future. We will give a lot of annual awards, to employees that had some great achievements in 2024, but it culminates with the release of the share price. And, you know, it's just one number, and it only changes once a year, but it's an indication to the employee owners about our success and our growth.
Kelly Prior:And, you know, it feeds their stock accounts for the retirement plan, and it's just such a great event
Levi Smith:Yeah.
Kelly Prior:And one that gives me a lot of energy because I get to talk to all of these owners, all of these employee owners.
Levi Smith:You get to talk to them as owners.
Kelly Prior:Yeah. Exactly. And share this news with them both about how we performed and where we're going. And it only happens once a year, but it's a great callous to set us up for here's what's next and, you know, we all can row the boat, same direction.
Levi Smith:Yeah. Let's use that maybe to to as a segue to talk about two things I want to hit on before we wrap up our conversation today. And that's when I think we take a step back Lighthouse today, people in refrigerated sections of grocery stores across the entire country, you've got lighthouse refrigerated, lighthouse branded refrigerated dressings, but the company has other brands that people may not realize are lighthouse brands. They may not realize that oftentimes your salad dressing is what's part of that prepackaged salad kit that they're buying. You've got licensed brands.
Levi Smith:Can you just kind of run us through the brands that people would see today that Lighthouse is behind producing? So it's more than just a Lighthouse brand. What are those other brands? Some of are house brands, some of them are licensed. What else are y'all behind the scenes on producing that may surprise people?
Kelly Prior:Yeah, sure. I'd love to, because we produce a lot of products that the consumers aren't aware of.
Levi Smith:How many gallons did you say? 25,000,000. 20 five million gallons. All right. How's that 25,000,000 gallon split up in packaging?
Kelly Prior:So most people are are familiar with Lighthouse dressing, veggie dips, caramel dips, freeze dried herbs that we sell, and they go in the produce stores around the country and throughout Canada. But the other brands are a little less known, and people just may not know we produce those. So Sky Valley, that's, a series of Latin and Asian sauces that you'll find in the center of the grocery store. Organicville, so those are all organic products, shelf stable dressings or ambient temperature dressings in the center of the store, pasta sauce, pizza sauce, and condiments like ketchup and mustard, all under the Organicville brand. We have a brand called Veggie Craft, probably the most unique item in our portfolio because it's a gluten free protein enriched pasta with a serving of vegetables in every serving of the pasta.
Kelly Prior:So it's dry pasta on the shelf, better for you category that we like to say because it is gluten free, and it really has a great taste and texture that you don't get in some of the other gluten free pastas. And then we have four licensed brands that we are currently managing. California Pizza Kitchen, which is a shelf stable salad dressing as well, so a restaurant brand there that we've taken to market and distribute. HealthNut, it's a very small restaurant chain right now, but growing in California, where there's a refrigerated dressings, in the market under the HealthNut brand. They happen to have a pretty large consumer following through the Kardashians.
Kelly Prior:They've their restaurants are located near some of their homes, and the Kardashians have found that product and have done a lot of social media posts. And so that brand has kind of claimed a fame, if you will, just through their social media.
Levi Smith:Did you ever anticipate that you're gonna be talking about Lighthouse and Kardashians?
Kelly Prior:No. Never. Okay.
Levi Smith:I I didn't. I just wanted to make sure I wasn't alone.
Kelly Prior:But it's it's a really interesting element. Right? Yeah. Of how brands come to life and how they're propped up.
Levi Smith:Yeah. And get the exposure.
Kelly Prior:Zaxby's. So Zaxby's is a Oh, yeah. A chicken chain. We don't know as much about it up here in the Northwest, but it's primarily in the Southeast, but they're growing pretty rapidly. And we, produce their sauce and sell it within retail for them.
Kelly Prior:It's actually some of the highest velocity items sold per week.
Levi Smith:And in a situation like that, just a quick question, do you also produce the sauces they're using in the the the restaurants or they still produce those and you're just doing the the packaged version?
Kelly Prior:Right now, we are producing the ones on the retail shelf, and then we do produce, some of their limited time offerings in the restaurants. And then our final brand that we license is becoming one of the largest, which is Flavortown, and that's Guy Fieri's brand that he's brought to market in a lot of different categories. We're managing condiments, barbecue sauces, and rubs and spices for the Flavortown brand. So that product, just started to be released in '24 and expanded that product line in '25 and has just seen some great success out in the marketplace, with, you know, everything packed with that Flavortown flavor.
Levi Smith:Right. Bold, zesty. So I think that's fascinating because I think most folks, even if they really, even if they know something about Lighthouse, they're assuming that it's just salad dressings. And what you've described is so broad and expansive. It's just extremely impressive what you and the team do and what you have been, you know, building over the past, you know, especially twenty years.
Levi Smith:It's really interesting the array of products that you're putting on shelves today. And starting with someone getting a creamy blue cheese dressing recipe from a prayer and being woken up and writing it down in the middle of the night and that that sort of origin to sons having a vision to what it is today. It's really remarkable.
Kelly Prior:Yeah. Know, Levi, we look at the business and, refrigerated salad dressing is only so big. We wanna reach more consumers. And so we put the same great taste elements and the quality into these other brands that we do lighthouse so that we can reach consumers across the entire grocery store. And then what, again, most people don't know is half of our business is in unlabeled and clear packaging that most consumers would never know that we produce that goes into
Levi Smith:half your business in volume or dollars, or is that both?
Kelly Prior:In dollars.
Levi Smith:In dollars. Half of your dollar volume is in stuff that doesn't even really have your label on it.
Kelly Prior:Correct. Wow. And it's it's in kits of salad, salad bowls, vegetable trays, where we sell to a customer that could be the likes of Taylor Farms or Fresh Express or Ready Pack. Many customers within the industry that then combine it with their other package of items and then is ultimately sold to the consumers. And we in a way, we calculate estimate about 60% of the market share of that business, upwards of about 800,000,000 units of little cups and pillows that feed into those kits every year.
Levi Smith:So I can go the difficult route by my head of lettuce, chop it all up and then grab your bottle. Or if I want to make it easy, just rip open the package and get into the salad and your dressing either way, you know, essentially two thirds of the time, if anywhere across the country, I'm probably opening up a little pillow, as you described, of dressing from Lighthouse Foods.
Kelly Prior:Yeah, we want you to get that great tasting quality dressing no matter how you get your salad.
Levi Smith:So I think that's fascinating. That's half of your business. And again, be it another piece that really surprises people that maybe don't know much about this industry or dressing. And I include myself in that category as we came into this conversation. One of the reasons I thought it'd be fun to talk with you.
Levi Smith:As we wrap up here, what are you excited about in the future? So you see more of those licensing opportunities or a product category that we're not even thinking about right now that is emerging or that you're developing? What are you excited about in the future from a product standpoint?
Kelly Prior:Yeah. There's a lot to be excited about, Levi. I would say that, you know, innovation is something that we're investing a lot in now to identify not only just flavor changes with the you know, as the consumer shifts some of their buying habits and desires, you know, things are right now going a little spicier than they have in the years past, but also different forms of products, you know, something like you said, maybe you don't even know you want yet. So we're investing in that, trying to learn, identify where some of those products are. As we work with Lighthouse and some of the other brands, you will see us explore those brands and expand them in the marketplace.
Kelly Prior:We may, do some acquisitions and acquisitions and and work with other brands as well. But what we're most excited about is continuing to study the consumer and think about what is it that they have a problem with there that's not been solved yet, and how can Lighthouse come to the table and help them solve that problem? Since 2020 and COVID, the buying habits of consumers have shifted significantly. There's been a lot of inflation, and it's just changed the dynamic. And we wanna be listening to what the consumers are looking for and helping solve those problems for them.
Kelly Prior:And I would say that's what we've really focused on the last five years since I've been in this role is thinking about the consumer, thinking about where they're going and how we solve that problem. We will continue to maintain a strong presence in refrigerated salad dressing, but we wanna offer our great tasting products in many other avenues as well. And so I think what you'll see from us is that we'll continue to expand. You'll continue to see new products and new brands under our portfolio that allows Lighthouse to continue to grow and give back to our employee owners.
Levi Smith:Well, I think that journey is going to be fun to continue to stay tuned to and observe and watch and love that Lighthouse has got such great leadership under your care and stewardship. I appreciate you telling the story of the Hawkins family, Ed Sr. And Doug and Ed Jr. And the vision and the trials and tribulations and challenges to get Lighthouse where it is today. None of these companies that we look at are born overnight.
Levi Smith:And I love talking to leaders of companies that are doing, you know, things that people just don't maybe spend a lot of time thinking about. They don't have as much brand awareness around, but are fascinating stories of, you know, people building that business over decades and it becoming what it is today. And then add on top of that, the opportunity for employee owners at Lighthouse today. And as you just shared in the future, you continue to figure out how to expand your offerings and meet more the needs of consumers. So thank you for your time.
Levi Smith:And thank you for sharing your story and the company's story.
Kelly Prior:Yeah, for sure. And I'll leave you with a quote from Doug Hawkins. It took us over sixty years to become an overnight success.
Levi Smith:I think what we covered sounds like we've just proved that, that it takes some time. If you're patient, resilient, don't take no for an answer. You can build something great. Love ending on that quote. So again, thank you for your time.
Levi Smith:I really appreciate you sharing your story and story of Lighthouse.
Kelly Prior:Thanks, Levi. It's been my pleasure.
Levi Smith:Thank you for listening to this episode of Ain't That Something. If you enjoyed the episode, please consider subscribing to the podcast in your listener and sharing the podcast or this episode with others. Thanks again to our season TrustJoyce, and to our guest for graciously sharing their time and story. So go start, create, or build something surprising so I can share your story. Until next time.
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