Pet Supplies Plus Franchise Is Costly but Payback’s Fast (2022)
Pet Supplies Plus Stores offer a wide variety of pet food, pet supplies, pets (including small animals, birds, reptiles, and fish, but not dogs or cats), pet grooming and bathing services, and related products and services in a clean, bright, retail environment. Founded in 1988 by Harry Shallop and Jack Berry, it is now led by Chris Rowland as CEO. As of 2021, they have 603 stores.
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How Is Pet Supplies Plus Franchise Positioned in the Pet Care Industry?
Three of the biggest contenders in this market are Aussie Pet Mobile Inc., Camp Bow Wow, and Best Friends Pet Care Inc, but none of them own more than 5% of the market share, resulting in a highly fragmented market. The industry brings in $8.4billion in revenue annually, with profits of $952 million. It is expected to have an annual growth rate of 2.7% between 2022 and 2027. It also competes in the pet supplies market against big brand companies such as Walmart, Home Depot, etc.
How Much Is a Pet Supplies Plus Franchise?
The initial Franchise Fee is $49,900. You have to pay this upfront fee when opening the franchise.
Pet Supplies Plus Franchise Cost
The estimated total investment necessary to begin the operation of a Pet Supplies Plus Franchise ranges from $454,870 to $1,524,200. The following costs are part of the upfront costs included in the initial investment . Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a Pet Supplies Plus franchise in (year)
| Type of Expenditure | Low Estimate | High Estimate | Method of Payment | When Due | To Whom Payment is to be Made |
|---|---|---|---|---|---|
| Initial Franchise Fee | $49,900 | $49,900 | Lump Sum | At Signing | PSP |
| Inventory | $160,000 | $230,000 | As Incurred | Prior to Opening | PSP Distribution, LLC and other Designated Suppliers |
| Equipment | $126,700 | $275,000 | As Incurred | Prior to Opening | Approved and Designated Suppliers |
| POS Equipment Installation | $3,150 | $4,150 | As Incurred | Prior to Opening | Designated POS Installer |
| Full Store PrePrinted Shelf Labels for Product | $120 | $150 | As Incurred | Prior to Opening | PSP Distribution, LLC |
| Training | $4,000 | $8,000 | As Incurred | As Incurred | Suppliers of Your Choice |
| Advertising Grand Opening | $20,000 | $30,000 | Lump Sum, Paid via EFT / Lump Sum | 10th Day of the Month When Store Set-Up Begins | PSP |
| Insurance | $2,000 | $7,000 | As Incurred | Prior to Opening | Suppliers of Your Choice |
| Leasehold Improvements | $25,000 | $715,000 | Lump Sum | As Incurred | Landlord or Builder of Your Choice |
| Prepaid Rent/Security Deposit | $0 | $10,000 | Lump Sum | Upon Execution of Lease | Your LandLord |
| Legal & Accounting | $4,000 | $10,000 | As Incurred | As Incurred | Suppliers of Your Choice |
| Pre-Opening Labor | $10,000 | $35,000 | As Incurred | As Incurred | Employees |
| Set Up Fee | $10,000 | $10,000 | Lump Sum, paid via EFT | 10th Day of the Month When Store Set-up Begins | PSP |
| Additional Funds – Initial Period (6 Months) | $40,000 | $140,000 | As Incurred | As Incurred | Various Vendors, As Required |
| TOTAL | $454,870 | $1,524,200 |
The standard investment in the industry is $271,000 which puts Pet Supplies Plus at a very high startup cost.
Pet Supplies Plus Franchise Requirements
Owning a Pet Supplies Plus Franchise Requires Ongoing Fees
Royalty: 2% of Gross sales for first year. 3% after that
Marketing Fee: 3.5% of Gross sales
POS leasing fee: $300 – $400 per month
Technology Fee: $800 – $1,200 monthly
The royalty fee is half of the Pet Care industry standard and the marketing fee is comparable.
How Much Do Pet Supplies Plus Franchise Owners Make?
January 1, 2021 to December 31, 2021
| Reporting Franchised Stores | 1-Year | 2-3 Years | 4+ | Average of All Stores |
|---|---|---|---|---|
| Store Count | 26 | 44 | 178 | 248 |
| Average Weekly Gross Sales | $34,398 | $44,327 | $58,128 | $53,176 |
| Average Annual Gross Sales | $11,788,684 | $2,300,319 | $3,022,650 | $2,765,127 |
| Annual Gross Margin% | 40.9% | 40.6% | 37.4% | 38.1% |
| Annual EBITDA | $7,529 | $170,780 | $340,948 | $275,802 |
| Annual EBITDA Percent of Gross Sales | 0.4% | 7.4% | 11.3% | 10.0% |
| Annual Rent | $173,558 | $183,802 | $175,146 | $176,515 |
| Annual Rent Percent of Gross Sales | 9.7% | 8.0% | 5.8% | 6.4% |
| Annual Royalty and SAF Fee Expense | $54,606 | $76,852 | $83,269 | $79,125 |
| Annual Royalty and SAF Fee Expense Percent of Gross Sales | 3.1% | 3.3% | 2.8% | 2.9% |
| Annual Labor Expense | $317,329 | $331,090 | $328,487 | $327,779 |
| Annual Labor Expense Percent of Gross Sales | 17.7% | 14.4% | 10.9% | 11.9% |
2021 Average Pet Supplies Plus Franchise Sales: $2,765,127
Based on the average sales provided by Pet Supplies Plus’s franchise locations, at an average of a 10% profit margin it will take around 5 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 10% profit margin which would elongate getting a return on your investment.
Many factors affect the sales, costs and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Pet stores and the quality of management and service at your Franchised Store are also factors.
Is the Pet Supplies Plus Franchise Profit Worth the Franchise Cost?
To assign a valuation multiple for Pet Supplies Plus franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for pet retail businesses where more transaction data is available.
Under $1 Million Net Sales
- Estimated Selling Price = Net Sales – 0.55
$1 Million – $5 Million Net Sales
- Estimated Selling Price = Net Sales – 0.90
When you go to sell an Pet Supplies Plus franchise in year 5, based on the median multiple of .90 and net sales averaging between 2020 and 2021 of $2,765,127, it would sell for about $2.5 million. This is significantly higher than the midpoint investment of $989,535. On a well executed store, you could expect a 2-3X return on your franchise investment.
Franchisor Income Statement Key Insights:
Statements of Income and Equity (In Thousands)
| 1.Fiscal Year Ended December 25, 2021 | 2.Fiscal Year Ended January 2, 2021 | 3.Fiscal Year Ended December 28, 2019 | |
|---|---|---|---|
| Royalyies | $19,124 | $14,894 | $12,063 |
| Franchise Fee | 705 | 528 | 165 |
| Advertising sales and other revenues | 9,538 | 7,766 | 7,657 |
| 29,367 | 23,188 | 19,885 | |
| General and administrative expenses | 13,320 | 10,635 | 10,312 |
| Depreciation and amortization | 3,713 | 3,722 | 3,733 |
| Operating income | 12,334 | 8,831 | 5,840 |
| Interest Expense | 206 | 174 | 165 |
| Provission for state income taxes | 3 | 12 | 13 |
| Net income | $12,125 | $8,645 | $5,662 |
Pet Supplies Plus is a very profitable business for the franchisor with retained earnings of $12.1 million in 2021. Compared to $5.66 million in 2019, they saw an increase of almost 200% from 2019 to 2021. This is a good indication of high growth as a company overall.
How Many Pet Supplies Plus Units Have Opened and Closed?
System-wide Outlet Summary
| Outlet type | Year | Outlets at the Start of the Year | Outlets at the End of the Year | Net Change |
|---|---|---|---|---|
| Franchised | 2019 | 234 | 261 | +27 |
| 2020 | 261 | 302 | +41 | |
| 2021 | 302 | 374 | +72 | |
| Company-Owned | 2019 | 218 | 218 | 0 |
| 2020 | 218 | 217 | -1 | |
| 2021 | 217 | 229 | +12 | |
| Total Outlets | 2019 | 452 | 479 | +27 |
| 2020 | 479 | 519 | +40 | |
| 2021 | 519 | 603 | +84 |
Over the last three years, the company has been rapidly expanding. Both franchising units and company-operated stores have increased. Over the last three years, franchises have opened at an average rate of about 47 stores a year which is one almost every week. This is a sign that the business is doing well.
Conclusion
Pet Supplies Plus offers the opportunity to join an industry that is not going to die soon. The pandemic has had a double-edged effect on the present and future state of the industry as a whole. While pet ownership has increased during the pandemic, more and more pet owners stay at home for work, leading to a dramatic decline in the need for pet boarding services. Furthermore, the pandemic has decreased disposable income spending, leading to less money on non-essential activities like pet grooming. However, those stores that have been able to stay open are expected to experience a rebound thanks to increases in the volume of pet ownership and the return of travel.
While this may be the business for you, make sure also to check out other businesses offered on Vetted Biz and in the Pet Care Industry.
