By Peter Saunders
In the summer of 2017, when it became clear the families being evacuated during British Columbia’s wildfires would be unable to return home for weeks, Canadian retail franchisor Pet Valu stepped up and donated $100,000 worth of products—including crates, cat litter and boxes and both dog and cat food—to Four Paws Food Bank and the Prince George Humane Society, which were on the front lines of the disaster to help affected pet owners.
The gesture, along with those that preceded it in 2016 for fire relief in Fort McMurray, Alta., and those that followed it for U.S. hurricane relief later in 2017, was indicative of the goodwill that Tom McNeely, president and CEO of franchisor Pet Retail Brands, has worked to develop for Pet Valu over the past decade.
Pet Valu was founded by Geoffrey Holt in 1976 and has since grown to become Canada’s largest chain of small-format pet food and supply stores, headquartered in Markham, Ont. When McNeely joined its board of directors in 2008, his background in franchising included stints as executive vice-president (EVP) and chief financial officer (CFO) for Tim Hortons and president and CEO of Herbal Magic.
After identifying opportunities both to expand the system beyond its initial territory in Ontario and to increase franchisees’ sales revenue on a per-store basis, he worked with Roark Capital Group—an investment firm whose franchising portfolio includes Cinnabon, Anytime Fitness, Maaco, Carl’s Jr., FastSigns International, Massage Envy, Meineke, Orangetheory Fitness and Carstar, to name a few—to acquire Pet Valu. He was named president and CEO.
“Pet Valu was making money back then in spite of itself,” he says. “The stores needed refreshing. They looked tired and were too small, but they had a private-label product lineup that had proven very successful.”
In 2010, McNeely and his team began relocating, remodelling and expanding many of the stores. Their average footprint grew from 2,000 square feet in 2009 to 3,700 square feet today.
“Back when there were eight to 10 dog food brands, 2,000 square feet was fine,” McNeely says, “but now there are thousands! Even though we are very selective about which we carry, avoiding byproducts and focusing on holistic and super-premium brands, there is a lot more variety on our shelves today. Our real estate ‘sweet spot’ is closer to 4,000 square feet.”
Much of this expansion involved opening corporate-run stores, rather than franchises, in plazas with larger anchor retail tenants, such as grocery stores, dollar stores and liquor stores.
“That was how we grew fast,” says McNeely. “We have a lot more corporate stores now than we used to, but we also have twice as many franchises as before. In fact, we’ve added 170 franchises in the past few years, including some resales of our corporate stores. The current ratio, for our stores within Canada, is 60 per cent franchised and 40 per cent corporate.”
The brand grew both westward from Ontario to Manitoba, Saskatchewan, Alberta and British Columbia and eastward to the Atlantic Provinces.
“We’re now in every province except Quebec,” says McNeely, “and 70 of our franchisees are multi-unit. In Kingston, Ont., for example, our franchisee has two stores and will soon open a third. He has become the town’s go-to pet expert!”