It’s yappy hour as local company expands
Friday, July 13th, 2007American Pet Resort LLC is embarking on a regional and nationwide expansion plan that could make it one of the largest high-end pet boarding and day care businesses in the country. The Ponte Vedra Beach company hopes to open five to eight nationwide locations a year for three years, CEO Fred Goldsmith said.
American Pet Resort, a holding company formed in October 2002, bought Pet Paradise Resort Inc. in St. Augustine in December 2002. The company, now doing business as Pet Paradise Resort and Day Spa, soon began adding locations, first buying a boarding kennel in Palm Coast in May 2003 and opening at Jacksonville International Airport in December 2004. In February 2006, it opened new buildings in Holly Hill and St. Augustine, which replaced the original location. A new Pet Paradise is under construction on University Avenue near Interstate 95.
In August 2006, the company opened in New Orleans at Louis Armstrong Airport, and a third airport-based site is under construction at Houston’s Bush International Airport. The JIA location is being expanded by about 80 pet suites. The company’s expansion to date is a warm-up act for what it believes it can accomplish as it pushes its ambitious agenda to become a market leader.
“I’ve seen what branding does,” said Goldsmith, who bought a Wendy’s franchise in 1975, three years after the first Wendy’s franchise was sold. “There’s a lot of value in owning several places that have the same look and feel.” For Pet Paradise, that look and feel include such features as synthetic grass to avoid using pesticides, a dog bone-shaped swimming pool and services like supervised play time and specially formulated ice cream treats.
Pet boarding, a more than $4 billion industry with about 9,000 locations in the U.S., consists largely of small-business owners who each have one site. More and more, however, businesses are operating multiple locations, with an emphasis on large-scale and high-end accommodations, said James Krack, executive director of the American Boarding Kennels Association.
“We’re seeing [a company's] business model being replicated over and over again,” Krack said. “The industry is coming out of the mom-and-pop mode and becoming big business.”
Indicative of that, Krack said, is the money being spent on boarding businesses compared with what it typically cost to start a kennel not long ago. “In the old days you could get into the industry for $30,000.”
Goldsmith wouldn’t say what Pet Paradise’s new kennels, which average about 12,000 square feet, cost to build. But he said, “you can’t build anything for under $100 per square foot,” making each location a million-dollar project. Those kinds of costs have Goldsmith working with a venture capital firm and individual investors. “For us to expand at the rate we want, we need a certain amount of equity financing,” he said. “We’ve found that’s been with private investors.”
That’s another big change from years past, when financing, along with zoning, was a major obstacle for would-be owners, Krack said. Now, with high-end kennels charging $30 or more a night and extra for premium services like televisions and web-cams in pet suites, lenders are eager to fund such businesses, including venture capitalists.
“The profit margin in the kennel business is now large enough,” Krack said. “Investors are interested.”
Pet Paradise’s strategy for choosing locations has two prongs. One is to extend its network in Florida, particularly down the East Coast. “We would like to see locations every 30 miles, assuming you still have sufficient population,” Goldsmith said. Outside Florida, the company is looking at busy airports in warm-weather areas. The idea is to establish its brand at airports and expand outward into populated areas as the company is doing in Florida. Its target list includes Atlanta, Dallas, Phoenix and Charlotte, N.C.
“We know where we want to be,” Goldsmith said, adding that the company has been negotiating with some airports for up to two years about leasing land. “We’re making progress because now we’ve got a full development team. I would expect that we’ll be in another five airports under construction within a year.”
SOURCE: Jacksonville Bizjournal
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