Sep. 10, 2013 at 11:49 AM ET
If feeding your dog homemade venison mixed with organic quinoa sounds like the sort of California new age food fad Woody Allen famously mocked in "Annie Hall," it's just a new take on the way Americans used to feed their dogs -- with scraps from the table. Except now, the scraps are really good.
People are spending more money on specialized diets for their pets to improve health and longevity. Pet food sales are expected to grow 3 percent this year to top $21 billion, according to the American Pet Product Association. And one of the fastest growing categories is natural and organic pet food.
"Consumers increasingly perceive pets as family members, so products for pets can be considered nondiscretionary," reported IBISWorld earlier this year. "Though pet ownership growth will slow, demand for premium items will support growth."
And it's no wonder. Nearly 57 million American households have dogs. We own more than 83 million dogs. (There are actually more cats—95 million, and more pet fish—145 million. But a cat and a fish aren't going to wake you up if the house catches fire.)
We love our dogs…sometimes more than we love ourselves. For proof, look no further than the touching obituary that comedian Sarah Silverman wrote for her dog, Duck, who died last week at age 19.
One small business in Southern California is hoping to carve out the highest of the high end—Just Food For Dogs (JFFD). The company was founded by Shawn Buckley, who got his start in advertising and PR. "About six years ago he came to realize what was actually in dog food and was appalled," said JFFD managing partner Rudy Poe. "It had not previously dawned on him that 'meat in a bag at room temperature for two to four years' was a very unhealthy prospect for his dog."
Buckley formed JFFD to make dog food from ingredients certified by the USDA for human consumption, "but nutritionally balancing the food for dogs." The company, which makes everything from fresh ingredients, is operating one store in Newport Beach, with plans to open two more in the Los Angeles area soon. All dog food is prepared in a kitchen inside the store, so customers can see how the food is made. Just Food For Dogs estimates its food retails for about $25 a month more than other premium kibble, though the company also provides customers with a do-it-yourself kits to make their own food for less.
Poe said sales are growing 4 to 5 percent a month on average, and revenues this year should be close to $2 million. "On a store level basis, we were profitable after about 14 months."
What kind of premium dog food are we talking about? The menu may make you reconsider what you're feeding yourself and your children.
Just Food For Dogs offers special combinations such as free-range bison and organic millet, or pork tenderloin and Fuji apples. "We routinely use rabbit, halibut, venison, bison, line caught wild Alaskan salmon fillets (same as you could get in a Newport Beach restaurant), tapioca, broccoli, organic quinoa and occasionally we use clams, duck breast, split peas, ostrich," said Poe. However, "We don't use novel or even high quality ingredients as a marketing gimmick." Instead, Poe said, these foods allow dogs to absorb more nutrients with less effort.
There are also a variety of specialized prescription diets to help dogs with skin conditions or cancer. These account for 15 percent of sales, while "custom formulations" make up about another 10 percent.
(Read more: Pet tech: Wearables aren't just for humans anymore)
The business has been growing so quickly that Just Food For Dogs decided it needed help figuring out how to scale. In a unique and cost-effective twist, the company tapped students in the MBA program at Pepperdine University's Graziadio School of Business and Management. Poe had taken some business classes at Pepperdine, and the school offered a group of students.
"Each team presented potential solutions that would help us overcome some of our operational issues we have been experiencing with such fast growth," Poe said. "We are currently in the process of implementing two of the solutions, ... one was for something we had no idea existed." The best part? The cost. "How could we say no—work with smart, young minds ... for free."
—By CNBC's Jane Wells. Follow her on Twitter @janewells
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