Inside The World Of Pet Hospitality

Issue #45

February 27th, 2024

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Quick Hits:

⛷️ Nothing to see here, just a guy skiing down a mountain carrying a dog on his shoulders

⬆️ Dave Portnoy’s new rescue Pitbull is blowing up on the internet 

😭 District Dog is in the news again. One of their employees hit a puppy so hard that the puppy died in their care

🐛 Are bugs the next big thing in dog food? 

• Boring but important - ProMach has acquired Zacmi, a filling, seaming, and pasteurization technology company for the pet food industry.

• Strategic is the word - The private sector meets the federal government in an industry-first kind of partnership.

• Pet stores no more - Subscription services are altering traditional shopping patterns for some pet owners.

• AlgoGroup - The tech-enabled pet brand platform, secures $1 million in a seed round.

• J.M. Smucker - Milk Bone & Meow Mix performed strongly in 2023.

• Viva la puppy - TMA, a Mexican pet tech startup was acquired for an undisclosed amount.

• 20% - That’s how much pet products accounted for in sales last year for Nestle.

• Fresh earnings - Freshpet’s stock went up by 17%, its highest in nearly two years.

This week we chatted with Eyal Cohen & Taylor Wallace. Eyal is the co-founder and chief development officer of the Pet Resort Hospitality Group. Taylor is the co-founder and president at Paws ‘N’ Rec which was recently acquired by the Pet Resort Hospitality Group.

Question for Eyal: Diamonds to dogs, how did you go from working in the diamond industry to being the co-founder and Chief Development Officer of Pet Resort Hospitality Group?

Answer: It’s true – I’m probably the only person in the world who can say I went from being a ladies’ best friend to a man’s best friend! A friend I met in the diamond industry a long time ago was also an investor in many different industries. One of his investments was in a veterinary practice. A few years into it, he forged a relationship with a doggy daycare owner and asked if he could put one of his veterinarians into an unused office in the front of the daycare business. 

A line for both businesses started to form around the block. My friend decided to buy the doggy daycare business, and then gave me a call. My gut reaction was that the diamond business and the dog daycare business have nothing in common, but I was up for the challenge and I started from the ground on up. My title didn’t matter, or that I was a partner in the business, I needed to learn every aspect. That meant taking shifts and picking up poop at 6 am, cleaning the toilets and enclosures, checking dogs in and out, answering the phones, managing employees, and everything else it takes to run a pet business. Luckily, we had some success and continued to grow our business, ultimately reaching 14 locations before selling the platform to a national consolidator. 

Question for Eyal: You recently announced the acquisition of five leading pet resort brands in the US. Who are they? What about their business made you want to acquire them?

Answer: About a month after we sold the veterinary platform, this buyer called and asked me to join their business development team. They were growing like crazy and needed someone who had real-world experience operating a pet resort to speak the same language as the targets they were trying to acquire. It sounded compelling so I jumped in, met as many owners as I could, and learned a bunch of new best practices from smart people throughout the country. It gave me a different perspective of the industry and offered a glimpse into what large corporate buyers deem important. I identified a few challenges with the consolidator’s approach to buying pet resorts, so I approached my investor buddy, and we launched Pet Resort Hospitality Group in March of 2023. 

Our biggest differentiator is that we want to partner with leaders who want to grow their businesses, give them a ton of resources and support to actualize that growth, then share in their success when it happens. They share a few common traits. All are established leaders in their market. All are hungry for growth. All care deeply about the pets in their community and their employees’ well-being. We offer each business equity in the platform along with staff training and development, tools for staff retention, collaboration with all the other owners we’ve partnered with, and access to all our businesses and financial resources to enhance their facilities and grow. We are fortunate to have partnered with Meadowlake Pet Resort in Houston, Williamsburg Pet Hotel in St. Louis, Olde Town Pet Resort in the metro DC area, Paws ‘N’ Rec in Tampa, Playtime in Philadelphia, and Play All Day in New Hampshire, totaling 17 locations in 8 states. We currently care for over 1,700 pets a day and have 650 employees.

Question for Eyal: Who were your partners in this acquisition?

Answer: I partnered with Azhar Quader, the other co-founder of Pet Resort Hospitality Group, a successful serial entrepreneur and leader of numerous other multi-unit ventures, and Trivest Partners, a private investment firm that is the leader in partnering with founder and family-owned businesses since 1981. We found that their philosophy is very similar to ours – leverage opportunities for growth, give key employees a vested interest in the platform, and offer resources and tools to enhance their individual businesses, all while ensuring that our pets are properly cared for. 

Question for Eyal: How do you think private equity investors view the pet space? What are some of the pros and cons they see for investment in the space"?

Answer: Private Equity and other investors are hot on this industry. It makes sense for investors to stay in the pet industry after investing heavily in the veterinary space. This industry is one of the few that is resistant to Amazon’s long arms. There are numerous levers for PE groups to grow revenue while also leveraging their ability to centralize and lower common costs. 

However, pet resort owners are hesitant to sell their businesses to someone who doesn’t have experience running a facility. Owners often care more about the future of their dedicated staff than the amount of money they’ll get from the sale. It’s easier to analyze a business staring at a spreadsheet in a different state than it is to pick up poop at 6 am when someone calls out, and pet resort owners trust people that scooped poop more than ones who buy them purely for profit.

Question for Taylor: You are the co-founder of Paws ‘N’ Rec, tell us what led you to launch a doggy facility and why you decided to join the Pet Resort Hospitality Group in this recent acquisition.

Answer: Prior to working in pet services, I spent 10+ years building and growing all manner of technology startups. Early in my career, I was running a mobile app startup, and my best friend and roommate, Mike Mayleben, took an interim job at a dog daycare. Within a few months, he was running the place, and we were comparing notes every night on how to build very different businesses. We found that we both really cared about the people who worked for us, and we shared a dream that someday we’d open a pet resort together. After getting laid off from a startup at the start of COVID, I was ready for a career pivot. He was ready to run his own pet resort. We stumbled into acquiring Paws ‘n’ Rec, which was a small, single-unit business in Tampa. From there, we were off to the races, and we’ve bought and built four facilities in the last three years.

With such rapid growth came challenges neither my partner nor I had ever faced before. I’m used to tech, where your growth is generally challenged by customer acquisition, not real estate, build-out costs, and managing 80+ hourly employees. We built one of the most beloved pet care brands in Tampa, and we were hungry to keep growing. We started thinking about the types of partners that shared our vision for creating both a great employee and customer experience when we connected with PRHG. What we love about our partnership with PRHG and Trivest is that we are incentivized and supported to keep growing our brand. We have a team of experts across every discipline to help us whenever we face a problem. We’re also now working closely with other owners/operators, and we all have a vested interest in each other’s success.

Question for Taylor: What has been your most successful customer acquisition strategy? Where have you seen the best returns? What is your unique membership model?

Answer: There’s no magic bullet when it comes to customer acquisition for small, local businesses like ours – we just try to do it all and do it as well as we possibly can. We have a small internal marketing team, and we’re constantly working to get our brand in front of every possible pet owner in Tampa Bay. We attend every dog-related event, partner with all sorts of other small businesses, and offer lots of incentives to give us a try. With the help of PRHG, we’re now partnered with top-tier agencies to help manage our online advertising. But the greatest returns are found through word of mouth – if you run a great pet resort, people will talk about you at the dog park, in the halls of the apartment buildings, etc. It’s just our job to get that flywheel spinning when we open a new facility.
Our model is unique in that we’re a members-only facility – you need to subscribe to a monthly daycare or boarding membership to utilize our services. A membership gives you better access, hours, and service than most pet resorts can offer. Because of the membership model, we have one of the best dog-to-person ratios in the industry at 8:1, and we’re able to go above and beyond when it comes to customer service.

• Depressing numbers - More dogs are being euthanized, last year that number surpassed cats.

• There’s a link - Researchers have found that a common type of brain tumor in humans and dogs has a similar genetic makeup.

• Tough Love - Is your sedentary lifestyle compatible with an active dog?

• Sorry Bobi - The Guinness World Records has officially stripped the "oldest dog ever" of his title.

• Monster - A Colorado man is dead after his pet Gila monster bit him.

• Strava X Fi Smart - You can now integrate your dog's smart color to Strava.

• Great initiative - Hilton will donate over 100,000 towels to animal shelters.

• Best cities to retire with your dog - Is your city on the list?

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3 key insights from Eyal & Taylor

Question for Eyal/Taylor: Should founders build a business with an exit strategy in mind? If so what should they be doing to make their business more enticing for future potential buyers?

Eyal: I never thought about an exit strategy since we were busy building the business, not thinking about its end. In hindsight, I should have considered an exit strategy at the same time I considered my entry strategy. One way or another, we are all going to leave this profession. Some are fortunate to have their children ready, willing, and able to perform the hard work it takes to run a pet resort. Most owners don’t have that luxury. The 4 main pillars of success when you think about selling are:

• Be mentally prepared and determine the right time to sell.

• Keep a safe and well-maintained facility.

• Your books need to be just as fresh as the premises and know your numbers.

• Have a general manager who can run the business if you’re not there. 

Taylor: Again, coming from tech, it’s ALL about the exit strategy. But what I loved about transitioning to the pet services business is that unlike tech, you can’t raise hundreds of millions of dollars to open a pet resort if you haven’t proven you can generate a profit first. When we started “Paws ‘n’ Rec”, our goal was to build a great business. We knew if we could do that, we’d have options. A great business naturally does much of what Eyal outlines above. If you can do that, you’ll have options if and when you feel ready to sell. So that’s my recommendation for any business: build on a solid foundation, and the future will work itself out. For us, we wanted a partner rather than a buyer, and what’s great about PRHG, is they have options for both those of us who want to keep building and those who may want to retire.

Question for Eyal/Taylor: If I want to start a doggie daycare/boarding business tomorrow, what are a few key things I should consider?

Eyal: From an outsider’s view, it seems like an easy job, playing with dogs all day. It’s not. It takes a lot of hard work and grit to keep the dogs and parents happy, keep the staff motivated and engaged, and take on the responsibility of a family member’s life into your hands. I think it’s important to have indoor and outdoor play yards, but that’s not always feasible. It’s also extremely important to keep the dogs safe, so plan on training and developing your staff. Also, find ways to peak the dog’s curiosity and attention throughout the day, and supply them with comfortable sleeping arrangements at night. I think if it’s approached in a professional, methodical, and pragmatic way, it can be a very fulfilling career. After all, how can you have a bad day when you leave a play yard full of happy dogs?

Taylor: I speak to a lot of finance, tech, white-collar/knowledge workers who are fascinated by the idea of starting a dog daycare business. I tell them all the same thing: I’d never have done this without my partner, Mike Mayleben. He’s an absolute dog operations expert, and he’s one of the best managers of young, hourly employees I’ve ever met. Just because you love dogs, doesn’t mean you love 150 of them and the 25+ employees needed to manage them safely. If you really want to dive into the space, take the time to get the training and experience needed to safely manage a group of dogs and ensure you can create a great environment for them and the staff who will need to care for them. 

Question for Eyal: As your organization grows, how important is great communication between your team members?

Clear and transparent communication is the foundation of every great organization. Cultivating an environment where the staff’s opinion and insight are not only welcome but actively sought after is key to fostering a culture of collaboration and improvement. We create avenues for transparent communication which empower our staff to actively participate in shaping the direction and operations of the business. We do this by offering surveys, open-door policies, and dedicated feedback sessions. This empowers and engages the team, as well as gives us invaluable insights that can inform our strategic decisions. 

It’s important that the perspectives and expertise of our staff are not just acknowledged but wholeheartedly valued in our business. Frequently, general managers operate in isolation, lacking communication with counterparts across various businesses. At PRHG, we prioritize frequent interactions among all the general managers. They openly discuss successes, failures, frustrations, challenges, and then set goals for both them and their teams. This collaborative and supportive atmosphere fosters remarkable outcomes. We believe in the power of collective wisdom, recognizing that no one should navigate their responsibilities alone. 

We don’t want to hound you, but we think it’s time you subscribe. If you’ve already subscribed, well, round of ap-paws for you.

• Indie is in - Katherine Heigl’s premium pet food brand will now be in independent pet stores.

• Sausages for dogs - This Canadian butcher shop is growing its portfolio and offering Sous-Vide Sausages for dogs.

• How do you prefer your mice? - Whole or minced mice provide healthy eatin’ for Mr Whiskers.

• Supp? Lements - Anicare has unveiled a new line of soft, chewable pet food supplements for the European market.

• Purr Act - A new federal legislation could give the FDA regulatory authority over dog and cat food.

• Orange is the new… - Oranges could offer nutritional value to your dogs according to new research from Brazil.

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Finally, What happened to the dog who ate nothing but garlic?

His bark was much worse than his bite!

See you next week!

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