Pet Franchise Industry Profile
Franchises in the pet industry provide products and services, with the exclusion of veterinary care, that relate to all types of animals. As the number of U.S. pets grows annually, pet franchises have benefitted from an expanding market with increasing options for diversification in products and services. Specialty offerings such as premium accessories, mobile services and natural-based foods have contributed to new revenue streams. The market also remains healthy for necessities such as boarding, training and grooming services as new pet owners contribute to a consistent customer base. If you're a pet lover, you'll enjoy the opportunity to combine your passion for pets with a sound investment. Even if you've never had a pet of your own, you can succeed with a franchise in the pet industry by gaining expertise through franchise training or hiring pet-loving employees to interact with clients.
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Pet ownership in the United States has been on an upswing for three decades. In the 2017-2018 edition of the American Pet Products Association (APPA) National Pet Owners Survey, analysts reported that 68 percent of U.S. households owned pets. The total translates into 84.6 million residences that are homes to dogs, cats, birds, fish, reptiles, horses and small animals. The number represents significant growth from 1988, when the APPA reported U.S. pet ownership at 56 percent of U.S. households.
In 2016, about 62 percent of millennials were pet owners, according to Packaged Facts, a market research company. In that year, APPA reported that millennials represented the largest percentage of U.S. pet owners, totaling about 35 percent of that group. Of millennials who didn't have a pet, 43 percent told researchers that they wanted one in the future. At the other end of the demographic spectrum, baby boomers accounted for 32 percent of U.S. pet owners in 2016, with those over age 70 changing the norm for pet ownership among older Americans, according to Packaged Facts. In 2006, 34 percent of people age 70 and older owned pets; ten years later, pet ownership increased to 40 percent for those over age 70.
The pet industry also has been impacted by the addition of new demographic groups taking the lead in pet ownership. According to Packaged Facts, about 61 percent of the growth in the dog owner population between 2006 and 2016 was attributable to increased ownership among multicultural demographic segments. The impact also was evident among cat ownership. During the same decade, the number of Hispanic cat owners increased 71 percent, while the number of white, non-Hispanic cat owners remained relatively consistent. Hispanics also were more likely than other cultural demographic groups to own birds during that time.
When identifying pet ownership by species, the APPA found that 46 percent of current pet-owning households have more than one type of pet. Additional data on ownership trends and species popularity can help franchises in the pet industry identify key marketing opportunities:
- About 60.2 million households owned dogs in 2017 versus 47 million households that owned cats.
- When counting total number of pets by species in 2016, the APPA tallied 94.2 million pet cats, outnumbering the total number pet dogs, which stood at 89.7 million.
- The number of households with more than one dog increased by five million in the decade between 2006 and 2016, according to Packaged Facts.
- Freshwater fish ranked first in total number of pets by species in 2016, followed by cats, dogs, birds, saltwater fish, small animals, reptiles and horses, according to the APPA.
Total pet spending in the United States is growing at a rate that is about 50 percent faster than the retail sector as a whole, according to ITR Economics. In 1994, the APPA reported that Americans spent $17 billion on their pets, an amount that nearly quadrupled to $66.75 billion in 2016. Between 2010 and 2016 alone, the amount of money spent on pets increased by 10 percent. However, the total number of pet owners grew by just 3 percent during that time. The increased spending followed a pattern in which the amount of money consumers spend on their pets has increased every year since 1994, even during the recession of 2007-2009 when the industry grew by 10 percent. Researchers at Packaged Facts estimate that overall U.S. pet industry sales will climb to almost $100 billion by 2020.
Part of the increase in pet industry spending can be attributed to the humanization of pets, say industry analysts at APPA. In a 2015 Harris poll, 95 percent of pet owners said they consider pets to be part of the family. As a result, consumers are more willing to provide their pets with some of the same types of goods and services they would provide for human children. In treating their pets as cherished loved ones, owners seek out ways to feed their pets as they do themselves, creating a growing demand for premium and organic food as well as vitamin and nutritional supplements. However, that's just the beginning. Much of the gains in pet spending are attributed to the popularity of high-end pet products and services such as spa treatments, custom clothing and organized play dates. U.S. pet owners spend an average of $11 billion annually on pet pampering, according to The Washington Post. In a Mintel survey of 2,001 adult pet owners, 33 percent reported buying toys for their pets; 17 percent purchased costumes; and 10 percent paid for pet strollers.
Franchises in the pet industry can succeed by marketing to those most willing to spend money on their pets. The idea of pet humanization is significant among millennials, 69 percent of whom agree that pet ownership is a good way to prepare for a family, according to Packaged Facts. Proof that millennials are a prime market for pet services includes:
- In 2014, millennials spent almost $11 billion on their pets, accounting for almost 15 percent of all pet spending. (Packaged Facts)
- Seventy-six percent of millennials say they are more willing to indulge in expenses for luxuries, such as premium treats or custom beds, for their pets rather than themselves. (Wakefield Research)
- Millennials are twice as likely as baby boomers to buy clothing for their pets. (Wakefield Research)
- In 2016, 64 percent of millennials said they were spending more on pet products than previously. (Packaged Facts)
Industry experts emphasize that the pet industry is positioned for continued growth. Individual pet franchises can access this growth by accommodating the preferences and needs of key demographic markets. Opportunities include using social media, mobile apps and Internet marketing to reach millennials since they prefer these types of communication. Reaching local multicultural communities through bilingual promotions or community outreach can help develop relationships with the growing number of pet owners in these groups. Other strategies, such as accommodating the needs of baby boomers with mobile and delivery services, can make a specific pet franchise convenient and user-friendly for older pet owners.
Common Business Models for Franchises in the Pet Industry
Franchises in the pet industry offer many types of business models that provide everything from traditional food and supplies to custom clothing and spa services. Success in the pet industry involves catering to pet owners who want the same type of variety and choice in pet products and services that they demand for themselves. Offerings that help customers solve specific problems in areas such as feeding, appearance or behavior can provide a steady customer base of pet owners searching for solutions to problems that often resemble human experiences. Franchises in the pet industry can succeed by catering to the "pets are people too" perspective of their customers and ensuring that their products and services provide a quality experience for both owners and their pets.
Some of the most common business models for franchises in the pet industry include:
Animal Training: Franchises such as Always Faithful Dog Training and Canine Dimensions help pet owners learn how to control and train their dogs. These franchises sell measurable results by using proprietary training programs to produce dogs that demonstrate obedience and good behavior.
Daycare and Boarding: Franchises including The Dog Stop and Preppy Pet offer daily daycare and long-term boarding services. These franchises can create repeat customers by catering to the individual needs of pet owners who want their pets to be happy and safe in their absence. Premium and personalized services can increase revenue by giving customers a way to indulge their pets when they have to be boarded.
Natural Feeding: Franchises such as Earthwise Pet Supply and Pet Depot specialize in premium and natural pet food products. These franchises can create a loyal customer base of pet owners who prefer premium products or use natural formulations to address pet allergies or dietary needs. Additional revenue streams such as self-wash and grooming can expand on the relationship between franchisees and pet owners.
One-Stop Retail Stores: Franchises including Pet Supplies Plus and The Dog Stop offer pet owners food, accessories and self-service dog washes all in one location. These types of franchises also serve a range of pets, including fish, lizards and guinea pigs. In doing so, they are able to access a customer base across species and increase sales by offering convenience to multi-species pet owners.
Pet Grooming: Franchises such as Wag N' Wash and Wag'n Tails provide bath and grooming services that are a necessity for some breeds of dog. The in-house dog-treat bakery at Wag 'N Wash adds a unique revenue stream, while Wag'n Tails stands out with mobile services that accommodate busy or homebound pet parents. Both types of franchises meet traditional pet grooming needs with unique offerings that appeal to specific types of pet owners.
You can find a pet franchise that may work for you by searching Franchise Opportunities' Pet Franchises category.
Financial Matters of Franchises in the Pet Industry
Franchises in the pet industry are available at every investment level. Some businesses in this industry, such as dog training or mobile grooming, can be started as home-based franchises that require minimal set-up costs while offering flexibility. However, pet industry franchises that demand physical space, especially extended outside areas to accommodate kennels and boarding, can reach investment levels of several hundred thousand dollars depending on the real estate market in your area. The purchase of proprietary equipment, program materials and inventory also can contribute to high start-up costs.
Other expenses can vary according to the types of products or services you are offering. If you are housing pets, you may be required to secure specific permits or modify your space to meet local zoning regulations. Industry experts also emphasize the importance of securing the proper insurance to protect both employees and the pets receiving care or services. Additional expenses can include costs related to properly cleaning and maintaining pet-friendly areas. In addition to costs specifically related to the pet industry, you will have expenses that apply to franchises in any industry. These fees typically include a franchise entry fee and lifelong payments related to franchise royalties. You also can expect ongoing costs for lease/mortgage payments, utilities, employee benefits and training, marketing and advertising and physical maintenance.
While the expense involved in starting any franchise may seem daunting, franchise owners in the pet industry have access to financial benefits not available to independent operators, including:
- Franchisor referrals to franchise-friendly third party lenders
- Franchisor assistance in leasing or purchasing equipment from approved vendors
- Access to franchise group discounts that can save you money on equipment, inventory and professional services
- Better financing opportunities because the proven business plan behind your financial investment reduces the risk of failure
Benefits of Franchises in the Pet Industry
As the owner of a franchise in the pet industry, you'll benefit from being in an industry that business analysts consider virtually recession-proof. Analysis of long-term historical spending on pets reported by the APPA indicates that pet owners continue to spend consistently on their pets, even in times of financial crisis. The more pet owners humanize pets and treat them like children, the more likely they are to cut back on other expenses to keep their pets healthy and happy. As pet ownership continues to grow, you can count on having a steady stream of potential new customers.
Your investment in the pet industry also will benefit from having a reduced risk. As a franchise owner, you'll be executing a proven business plan that positions you for success. By taking the guesswork out of decisions related to planning, setup, programming and marketing, you'll be ahead of independent operators who must succeed by trial and error. With specified franchise territories, you won't have to compete with other franchisees for customers. In addition, the name recognition of a national franchise ensures pet owners that they can expect a certain standard of products and services. Even without the benefit of name recognition, your association with a franchise implies reputability to pet owners who want the best for their pets.
You also can expect access to expert input and guidance from your corporate franchise team since your franchisor wants to ensure your long-term success. This group of experienced professionals can give you valuable direction in:
- Identifying and securing the best location for your franchise
- Obtaining necessary permits, licenses and insuranceFulfilling zoning, insurance and legal requirements
- Training for you and your employees in franchise programs and practices
- Targeting and reaching the appropriate target markets
- Addressing challenges related to your individual franchise
- Connecting with others in your franchise network to share solutions
Important Considerations for Franchises in the Pet Industry
While franchises in the pet industry can look forward to healthy industry growth, considerations of growing competition from online retailers and independent contractors can't be ignored. However, despite potential price and convenience advantages of online retailers, industry experts say that franchises in the pet industry can succeed by providing what online retailers can't, which is personal attention and connection with pet owners and their pets. By tying into the intimate relationships pet owners have with their pets, franchises can become part of the extended family, allowing owners to justify their continued loyalty.
While independent contractors can offer competition for services, franchise owners have the benefit of a sound reputation with proven results from the start. Of course, it's up to you to work to maintain that reputation, even when neighboring franchises may falter. It's also important for franchises in the pet industry to continually ensure that their marketing is appropriate for the changing demographics of pet owners. With millennials leading the numbers of pet ownership, considerations for reaching this group via social media and mobile apps is key. Maintaining an online presence can help attract this valuable market since 62 percent of millennials report using social media to share their pet parenting experiences, according to Packaged Facts.
Many franchises in the pet industry require the purchase or rental of a facility that can accommodate the unique needs of pets. This can create challenges that can include:
- Establishing a safe and secure area for daily or long-term pet care
- Maintaining healthy environments for fish, reptiles or small animals for sale
- Storing food in appropriate temperatures, including refrigeration, to avoid spoilage
- Providing 24-hour coverage for care and feeding of animals
Characteristics for Success: Who Should Consider a Pet Franchise?
If pets are your passion, you can find a franchise in the pet industry that matches your investment goals and interests. While animal experience isn't necessary, you'll be best prepared for the unique challenges and demands of the pet industry if you enjoy being around animals. Having some of these abilities and skills may increase your potential for success in a pet franchise:
- You enjoy working with animals. Having a sincere interest and concern about the well being of animals will come through as you talk with clients and handle their pets. You'll need to convey this to establish relationships for repeat business.
- You have an educational background or experience in business management or marketing. You'll need to ensure that your business remains profitable and be able to recognize where problems exist if it begins to falter.
- You can remain flexible. If your primary customers are animals, it's hard to plan and predict what will happen next. Having a plan to handle illness, emergency escapes and accidents will help to minimize your losses and impress your human customers.
- You have an educational background or practical knowledge regarding the products or services you're providing. Whether through first-hand experience or franchise education, recognizing what works and what doesn't will save you valuable time and establish credibility with your customers.
- You can deal with the concept of "pet parenting." Since the majority of pet owners consider their pets to be members of their families, you'll have to respect their perspective and be willing to treat their pets as though they were members of yours.
- You can hire and retain employees who love animals. Working in the pet industry, it's inevitable that your employees will come face-to-face with creatures of all shapes and sizes, even if they're not responsible for hands-on care. You'll need to ensure your staff isn't intimidated or set off by the types of animals you serve.
Industry Snapshot*:Minimum Cash Required: $ 40,000
Average Cash Required: $ 70,000
*Based on currently active listings at FranchiseOpportunities.com