In this episode, Carl Allen dives into the growth potential of a unique pet retail business specializing in health-focused products, grooming services, and community-centric offerings. With two thriving locations in Phoenix and Scottsdale, this business has established itself as a go-to destination for pet owners seeking specialty health foods, self-wash stations, and even custom pet bakery items.

The company’s niche lies in catering to health-conscious pet owners who value expertise and quality over convenience or price. This strategic positioning differentiates them from big-box competitors and generic pet stores. Carl and the team explore how the business has built a reputation for personalized service, a curated product selection, and a welcoming atmosphere, garnering over 1,400 Google reviews with a strong 4.6-star rating.

A key highlight of the episode is the strategic roadmap for growth. The current owners, with 20 years of dedication to the business, are preparing to step back, creating an opportunity for new leadership to scale the company. From leveraging underutilized grooming services, which currently account for 30% of revenue, to introducing online sales and subscription models, the potential for expansion is immense. Plans include streamlining the workforce, refining inventory management, and ramping up marketing efforts to engage a broader audience.

The podcast also touches on opportunities for geographic expansion. With proven success in two high-traffic locations, the business is poised to replicate its model in new markets. The hosts discuss plans to strategically position stores near veterinary clinics and other complementary businesses, driving foot traffic and enhancing customer convenience.

Listeners will appreciate the deep dive into operational challenges, including inventory gaps, inconsistent customer engagement, and staff inefficiencies. The team identifies actionable solutions, such as better sales training and inventory management, to enhance efficiency and customer satisfaction.

Carl and the presenters provide a holistic view of the pet industry’s growth trajectory, highlighting its resilience and rising demand post-COVID. This episode is packed with actionable insights for anyone considering investing in the pet retail industry or scaling a niche business into a national brand.

Full Transcript:

Okay. So here we go. We have a multilocation pet retail and grooming stores.

The business overview, so they focus right now on specialty health foods. They are the shop to go to when you can’t find something that you need for your pets.

Puts us in a u unique spot against the big box. They also have grooming, self pet wash is a big thing for them, and they even have a little pet bakery.

Target audience, as I mentioned, health conscious, pet owners. These are not these customers are not people that are looking for the cheapest or sometimes even, the most convenient. They’re looking for a place where they can bring their dogs. They they trust.

They know that there’s experience and knowledge with the staff on the store in the store to help them get the right food for their dogs.

So when we talk about competition, obviously, there’s a lot of competition in the space, but we’ve carved out a this company’s carved out a unique niche in the in the industry.

Grooming services, we’re gonna talk about that.

We have a a great plan to expand that. And then, obviously, just pet lovers in general. So besides the accessories, you can come get some birthday cakes.

By the way, for you to know that this is little shout out to the Dumb and Dumber fans out there. Had to slide that in there. Here are the locations, Phoenix and Scottsdale.

Heavy, lot of foot traffic on the Phoenix one. Let me get to say it. And not so much on the Scottsdale one. However, Scottsdale does have forty thousand cars a day going by. Phoenix has about twenty eight to thirty thousand.

So really great locations.

Sales. Current sales right now.

Primarily, all in store. There is no online sales.

So right now, like I said, they’re known for specialty health foods, grooming, self wash, and some other services.

Vijay here is going to build out the infrastructure for the online sales.

Here are the numbers.

So you’ll see here, this isn’t just a small little pet shop. They’ve got two locations. They’re pumping through some good numbers, and we feel we can, absolutely double this company, if not more, over the next three to five years, which we will get into in a moment.

Current owners. The reason we like this company a lot is, one, the owners are passionate, which, so is, obviously, our team. I mean, my animal my wife, this is her office. She even has animals on the wall, so I can’t get away from it in my house, which I love, by the way.

So the management team, they have thirty seven people total in this company.

We feel that’s a little heavy.

I actually went in and visited the stores yesterday just as kind of a secret shopper and learned a ton. They seem to be under the impression that they have an amazing customer experience. When you walk in there, it’s second to none.

Yeah.

I would beg to differ.

As a sales guy, man, we didn’t get spoke to one time. Nobody pitched us a product. Lot of opportunity there to really increase the the, engagement with the customers.

So we think we can trim down some of that management team. We think they’re a little too heavy.

But currently, the owners, they’re brothers.

They’ve been in the the business for just about twenty years. They’re cool to stay on and support us. They’re gonna be the landlords as well. And the reason they’re selling is they wanna retire.

They’ve been doing this for a while. The, one seller wants to go play music, and we already asked him to play a concert when we buy this from him as a transition event. And, he’s on board with that. And the other brother wants to go ride dirt bikes around South America and and, you know, Pan Am and all that.

So I think Vijay and I are gonna go do that with him.

So now we’ll get to the market overview, and this is VJ’s section. So go ahead, VJ.

Thanks, Dan. You did great so far.

So market, as you guys can see, from the market, it’s, expanding and it’s doubling from global, globally.

And the market is doubling from five to six years with the services that we are trying to add to the business from customer, service experience to online business, online sales, adding more on doubling down on, on grooming, that will make us go tenfold, and, we can double the business. We are targeting to doubling the business in three to five years, adding more stores to our footprint, and, expanding locally and globally as, later on.

And the market is not just increasing in US and UK also, so we might go as international later on, maybe start with Canada, Mexico, and then other parts of the country. So that is a the long term plan for us to to grow globally. Next one, Dan.

Current marketing trend and tooling, which the company is, using at this point, they are, I will not say, leveraging the whole social media. Their their spend is barely, I would say, minimum, like, less than one percent on, of their revenue on it. For Facebook, Instagram, TikTok, they only have four fourteen hundred eighty Google reviews, but a good rating of four point six.

However, we are usually, how marketing works is, like, you need to put at least, thirty to forty percent into marketing. So because the turnover rate is is less when the reach you have to reach more people and the people will come back to you is based on marketing is is low. So you have to spend heavily on marketing so you can increase that and reach more people, to to get, and align with them and, get get them come to you, on your side, on your in your store, and and whatnot.

Next one, Dan.

So I’ll talk about competition here.

Big Box, we mentioned that, on our team hangman, call yesterday.

The only team, by the way. So, we had some great feedback about big box retail.

So like I mentioned earlier, we’ve this this company’s carved out a niche where the big box don’t carry these specialty food brands.

And a lot of the customers are coming back because the environment.

We have a little video at the end here that’ll show you exactly kinda what the stores are lay how they’re laid out and what a lot of their focus is on. Other boutique pet stores, a lot of these are small little franchises. This is not we have an advantage over them. And then grooming salons. We’ll talk about this.

That industry is pretty fragmented. It’s difficult to kinda keep people. However, right now, there’s already eleven groomers on staff, so we kinda have a stable of these to pull from.

As far as the grooming services, so this is where something, interesting happened yesterday.

Again, on our team hangman call, I am the, what is it? The, unofficial recruiter for team hangman, by the way. So if you’re looking for a new team, come on over. So, this is all Jerry and Kelly’s fault.

They’ve told me to shout out team hangman. So, but something interesting happened yesterday. Ty Bohannon asked. He said, why are your products so much more than your grooming?

Why are your why are your services only half of your products? And we didn’t really have an answer. And so we went to the stores yesterday, and we noticed that their focus is on the self pet wash.

Self pet wash is less than ten percent total of their revenue.

Grooming is about thirty percent. Products are about seventy percent. Sixty sixty to seventy percent depending on the store. So they don’t focus on the grooming. It’s all about the pet wash. They they profile the pet washes. It’s these beautiful glass surrounded, sectioned off area, but the grooming is kinda up away, not focused on, and, that’s where we think they’re really missing here.

After we visited these stores, Emily and I went to our local store and asked, the staff there, which we’ve known for over ten years, what drives their revenue?

And they said and they just got acquired, by the way. They grew to five stores and got acquired, by PetPerfect, and they said grooming.

Grooming drives the revenue of this store hands down.

So after talking to Emily and kinda sitting down and looking at where do we think we could absolutely optimize, the revenue, Emily, being someone who’s in these stores daily, I feel like she’s at the pet store.

She believes we need to expand the grooming services, which I agree with her. There needs to be more of a focus on sales and selling products within the grooming. She had a great comment. She said treat it like a salon.

Oddly enough, I grew up in a salon because my mom owned one, and that’s actually how Emily and I met.

My wife introduced me to Emily when she was working at a salon. So, that made sense to me, and I and I thought she really nailed it on the head. So focusing on that grooming, if we could double just the grooming, we can add about one point five million to their revenue.

In addition to that geographic expansion, we think we can absolutely crush it with adding stores. We’ve already identified markets in the area with similar demographics to these two.

Also, they have great locations, as I mentioned earlier, but I actually think we can do better than that. We wanna put these in shopping centers right next to vet clinics. We’ve already identified one in Glendale, Arizona that will work great for this, right next to a vet who is actually the vet that performed surgery on my dog. So, we’ve got a lot of idea we’ve got a lot of paths to growth here, and, it’s not just grooming. It’s not just what BJ is about to talk about. We feel like we can actually, grow this into a national brand.

Community involvement, this is where, like I mentioned earlier, Emily is phenomenal at. She knows how to get out, engage the community, and just get people coming to the store. She had a great idea. She said, we could host canine demonstration days for the police departments. Something like that alone would drive more foot traffic.

We’re going to, the last thing here I have is increased product range. So we’re gonna look at, what’s selling, what’s not, and bring in some more high margin, high ticket, items.

There’s even stuff as far as mortuary services.

You know, obviously, you put your little Fido in a box. We know that happens eventually.

And, also, there’s there’s some unique, products, with higher margins that we could focus on as opposed to what they already have in the store.

Vijay?

Thanks, Dan.

So, the current app the business is having, it’s it’s a very vanilla app. We are looking to, upscale the app, also revamping it completely, adding more product range to it so that we can currently, there are no online sales. So we are looking to add bring that to online and, make, and also work with our vendors, product vendors, and build some maybe, data ware data houses or data warehouses where we can ship it from. Either it can go directly from there and, create us I would not say not the same like Amazon, like, two day two day shipping, but definitely to start with something coming online first, start to partner with the vendors and ship directly from them.

So a huge, huge, group opportunity there.

Hey. How are you? Good.

One of them is Along with that, we are also looking to add subscription models.

How people can, based on the grooming or based on the products they are, purchasing, how we can make sure that they can keep on, like, grooming you need every two weeks, three weeks. Right? There are other services which people need often. So coming, make sure, tie the customers into a subscription model so we keep we can increase our revenue, from there as well. Another is segmentation and personalization.

Everything is about personalization. Like, people want something personalized to them, something customized to them whenever they feel more connected to you as a business.

Looking to, touch down on that as well.

Sending offers, they do have a royalty system, but we are looking to upscale the royalty system also so people can make more out of it, and then we can also make more more out of it. Sending them offers, like, suppose somebody, purchased something for the cat, and, or the dog, and they want to refill it, like replenishment services.

They will be getting the notification, hey. You guys purchased this two three weeks back. It is a time to replenish. Do you guys want to order? And they can click right there, and it can they can order directly from there. So adding more services, adding more, from the online perspective, that will, have us, go into the customers reach customers more and bring them to our store, based on the services, based on the events that we are going to engage, hold up there and, bring more in customer engagement.

Back to you, Dan.

Alright. So that concludes our presentation side. So thank you, guys. Thank you, team Hangman, and everybody that’s helped us get to this point.

We are going to jump over to the numbers now. Here we are.

Should have this size properly for everybody.

So, current adjusted EBITDA, we’re looking at about seven fifty slight dip here.

We actually put an email to the broker to find out why the what the reason for that is. Well, they did go through a little rebranding, and, we suspect that was the issue. They’re asking three point four million.

We feel more comfortable on two point four to two point eight. However, they are going to be our landlords.

And, we think if we structure this properly, we can talk them down on that. We also know that they’ve gotten some lowball offers after talking to the broker.

And it’s been on, this business has been listed for a while. So I think we can go in there with the right structure and and get this deal.

Also, the reason we brought Emily on specifically for her knowledge, but she’s also just knows how to connect really well with people. And after the call, the broker said, they’ve talked to a lot of people, but they really loved Emily’s, passion and her product specialty knowledge. She understands these nutritional labels like I I don’t. Let’s just put it that way. So moving down here to the MUD score, as we mentioned earlier, they want out.

You know, it’s a great business with a somewhat distressed seller. They’ve realized that we’re not gonna be here forever, and so they wanna get on. And one wants, like I said, pursue his music career. The other one wants to just get out and live life and and, drive motorcycles around the world, which I can’t argue with.

And then over here, just what we talked about earlier, the retirement, we feel like the biggest strength is their reputation.

They have four point six, stars over fourteen hundred reviews.

They have no online sales as a weakness and no focus on the grooming.

So our opportunities there is grooming, community outreach, online.

Their biggest threat being other local pet stores and online food delivery. But as we mentioned earlier, the people are coming in to get our our vision is that they’ve already nailed down the product sales. Now we need to get now we need to be known as a grooming salon. And, that foot traffic, it’s gonna trump people going online all day. They’re gonna come in, buy their food right there. It’s a one stop shop.

So we are looking to be owner investors. As we mentioned, they have a director.

They also have a general manager, and then they have two store managers. They have eleven groomers and twenty two part time employees. We are absolutely going to trim that down, pay these people a little bit better, and then bonuses and incentives for sales. They need some sales processes.

Is it in our lane? Yes. We have owned retail stores in the past. VJ has his retail experience.

And then just the pet industry in general, Emily brings a she brings a competitive advantage there for us. No licenses, two owners, been around for eighteen years. They’re about sixty, and you can read the rest. So with that said, we will open it up to questions unless Vijay has anything else.

And, currently, the we have the business has good cash on hand, but owners are trying to keep it, and, we are looking to talk to talk them out and, make sure that the cash on hand stays there.

Awesome. Thank you for the presentation, and thank you, Jack. I love seeing all the pitch decks. That was a really good pitch. So, you know, we look at it. Businesses add growth in rep well, it had a little bit of a decline from twenty one to twenty two, it looks like, from a revenue perspective.

But otherwise, everything’s pretty stable. You’re looking at it about four x.

Well, it’s four times EBITDA, cash on hand.

The the business so three hundred and sixteen k in inventory is really eighty days of inventory for that business.

So yeah. So their food, they turn around their food in seven to ten days, actually, depending on whether it’s, sitting on the shelves or goes in the refrigerator.

It’s a little bit difficult right now because it’s kind of a blended average because they’re carrying accessories, leashes, dog crates, toys. So that’s a little misleading on their inventory.

We asked about that. And like I said, it’s seven to ten days on the food.

Got it. Okay. Yeah. I mean, the cast looks looks fine. It just looked a little low on inventory because you’d think, right, at four million in revenue, I know some of that’s gonna be services, but, you know, you’d think that they’re doing probably, you know, seven hundred k, six hundred k a month in in sales. So you’d think it wouldn’t be eighty days worth of inventory.

But, and what I’d say Otherwise, I liked it.

It was good presentation. Like you said, it’s good business. Pet market’s growing. You know, saw the big pop during COVID. All these people got pets. I mean, there’s there’s demand for pets. I don’t think the demand for pets is going away, so I like the industry.

Like I said, I personally don’t do a lot of retail, but you’re in a good market, Phoenix and Scottsdale. High income growing markets. You know, like I said, it’s not in my lane because I, again, I try and stay away from retail, but I like the business. I would give it another green light. Good presentation.

Does any if anybody has questions, raise your hand. But those are my thoughts on the business. I know there’s some a lot of action in the chat, a lot of great presentation, great presentation.

Jamie Busby, question from him. A good question too. How do the owners feel about you trimming the staff?

So, the part time, not so they’re not as worried. Most of the staff has been hired within the last two to three years. There are a lot of, kinda lower level associates. They come and go. The four managers at the top, I think they’re a little bit more attached to.

They’re not paying them much. And so we need to get in there and find out really what is the role of the top operations manager, and why am I walking into a store, where there’s you know, I walked in yesterday. I didn’t even get we didn’t have anybody engage us. The groomer is sitting down looking at her phone. Like, what are those managers doing? So we think they’re a little top heavy.

But, you know, that we’ve talked to the the seller, and, yes, they wanna see people stay, but only two of them have been there for more than five years. So we think we can work that out.

I think there’s one person who is, in the business from from a long time. I would say ten plus years, operations manager, I guess. And others are, as Dan mentioned, pretty, you know, there’s a there’s a good turnaround, of people coming in and going. We’ll look we’ll look to see how we can, keep and, you know, let the business, grow and have that also how we can keep the knowledge. And, owners did a good job on, on keeping the document documentation on how to train people and what the business and how it works and whatnot. So So that will definitely help us in adding more stores, and, increasing our footprint in other, markets.

And and, Kyle, back to your inventory question. The the the site visits we went on yesterday, I thought that was pretty low too, and I and I was a little curious as to why. And I walk into the store, and each store probably had ten to fifteen tags that said product not available.

So there’s obviously some issues there and, as far as the ordering and inventory management that we can work on.

Yeah. I was gonna say, I don’t know if that’s an inventory management issue or supply chain issue. I know certain industries I don’t know if you’ve been following. There’s there’s a massive backup at the Panama Canal, and there’s some issues at other ports specifically on the West Coast of the US. So I don’t know if there’s starting to be some, you know, sporadic supply chain issues again or if it’s just poor inventory management. But, you know, honestly, hopefully, it’s poor inventory management because you can approve it, make it much more efficient, and, you know, improve sales without too much of a CapEx spend.

Yeah. That’s funny. They boast about having the products that nobody else has, and my wife and I couldn’t find the exact flavor that our little Pomeranian likes. So, yes, they’re spoiled.

But we had to go to another store because they didn’t have the flavors, and, I do I do chalk it up to some poor poor inventory management.

Yeah.

Then I think we can keep this one of our, top topic to talk also with the owners on, what’s going on. Maybe they are checked out. Who knows?