Thinking of starting a pet bakery? Are they profitable? Do you need a license? In this article we’ll cover all these questions. Plus we’ll show you all the steps to start your pet bakery business.
Disclaimer: This article is for educational purposes only. We are not lawyers or CPAs nor do we pretend to be. Seek appropriate legal or tax advice for your specific situation.
Table of Contents
- Pet Bakery Pros and Cons
- Checking Your Competition
- Create Your Own Recipe
- Testing Your Recipe
- Make It Better
- Packaging and Labeling
- Pet Bakery Supplies
- Naming Your Business
- Register Your Business
- How To Handle Sales Tax
- Setting Up a Website
- Are Pet Bakeries Profitable?
- Do You Need a License to Sell Pet Treats?
- Should I Sell Online or In a Local Store?
- Why To Start a Pet Bakery Business
- How to Start A Pet Bakery Business
Pet Bakery Pros and Cons
Pet Bakery Pros
- Low Startup Costs
- Can be run as a home-based business
- Commercial kitchen NOT usually needed (check your city and state)
- Baking supplies are easily available
- FDA Recipe Approval NOT needed
- Tax Benefits
- Ability to Sell Online and Grow Quickly
- Ability to sell at local farmers markets
- Ability to sell through distributors to local pet stores
Pet Bakery Cons
- More competition with online selling
- Specialty pet treats not in demand in all areas
- Online marketing takes money and practice
- More regulations than other dog businesses (e.g. dog walking, pooper scooper service, dog training). See our State by State list of licensing requirements.
- Small home-based kitchens means small production and limited growth
Checking Your Competition
Pet bakeries can go two routes. You can sell online or you can sell locally. In fact, many do both.
In either case you want to check your local competition.
Checking Your Local Competition
Google “gourment pet treats near me” to see a google map of all the local bakeries near you.
Read their reviews.
What are they doing well?
What are people complaining about?
Take notes. You’ll start to get an idea of how you can possibly stand out from the competition.
You’ll test that idea in one of the steps below.
For now, you can get a lot of information about your competition just through Google Maps.
I recommend making a spreadsheet of all your local competitors. At a minimum add their name, address, website, and some notes about each one.
Check all their websites.
Are they ugly?
Do they sell through their website?
Do they ship fast?
Do they sell on Amazon, Etsy, or Ebay as well?
By noting all these things in your spreadsheet you’ll get an idea of 2 things:
- Is there a market for pet treats near me?
- How much work will I have to do to compete with those that exist?
Knowing that now will save you a lot of heartache later if you decide you didn’t want to work as hard as was really required.
Checking Your Online Competition
Before checking your online competition we recommend checking your local competition first and starting a spreadsheet of notes.
Then when you check to see if they sell on Amazon you can start looking at other sellers for the same treat categories.
Add those competitors to the spreadsheet.
Use Jungle Scout’s free Amazon Sales Estimator Tool to find out how many they sell of each product.
How many reviews do they have?
Read the reviews just like you did above for local Google listings.
What do the good reviews say? What’s working for your competitors?
What do the bad reviews say?
How can you stand out?
In either case – selling locally or online – you want to find out how you can stand out.
Do this through checking your competitors and brainstorming ways to be better.
Once you have a few ideas we move on to the next step – creating your first recipe and testing it with a small market.
Create Your Own Recipe
After you’ve completed your competitor research you should have at least 10 – 20 ideas of ways to stand out and be better.
Now create one recipe based off one of these ideas.
This section won’t be long. You can google similar recipes and make something of your own based off those.
Be sure to use FDA approved ingredients which we’ve covered more fully in this article.
Testing Your Recipe
Next you’ll want to test your batch and test it fast.
Make 10 batches. Use gift wrap boxes or some kind of easy but decent looking packaging.
Don’t design a logo. Don’t do any graphic design.
Just make them look reasonably good with party store packaging and add your business card.
Keep the branding basic but keep it there. Super simple.
Skip to the section below on choosing a business name. We cover how to check if it’s available and make sure you don’t get sued for trademark infringement. We’re not lawyers so seek your own council!
Then…sell them. Don’t give them away to friends or family and ask for feedback.
Sell them. Start high then go low.
Sell them to your friends and family and wait.
Do they ask for more? No? Your recipe sucks or something is missing.
Followup after 2-3 weeks and see what they think.
This is the research, development, and testing phase.
If you can’t make this work don’t bother with the rest.
Nothing is worse than doing tons of work to setup an ecommerce site, pay for the graphic design, pay for a bunch of facebook and google ads, and just hear crickets.
Make great food first that people are willing to pay for.
Then take it up a notch.
Once you have a recipe that your friends or family ON THEIR OWN ask to buy more of, then make a larger batch. Say 50 units.
Try and sell 50 units using one of the following:
- Sign up for your local farmer’s market and sell there.
- Too much paperwork to sell at your farmer’s market? Make friends with an existing vendor and see if they will do consignment. The goal is to get it quickly in front of people who aren’t your friends and family.
- Drive to local pet supply stores and do the same thing – try and sell through consignment. Or just give them to the store for $1 each and ask them to sell it for $20 (or whatever your gourmet price is).
- Try to sell through your local vets, dog groomers, or dog training businesses in your area.
DO NOT make an ecommerce store, Amazon store, Ebay store, Etsy store or anything like that. That step comes later.
Make It Better
Keep iterating till you have a recipe that can easily sell in large batches through some local avenue. See examples above (e.g. farmer’s market, local pet stores, local dog trainers, etc.)
Once you have that it’s time to build your brand.
Packaging and Labeling
Next up is to hire a designer and do a little work to make better branded packaging. Of course, be sure to follow FDA requirements for your packaging. Use VISTA print or possibly a specific dog bakery supplier to make your packaging.
Continue to experiment with pricing till you find the sweet spot. This is hard to do locally in the beginning. You’re nervous about making sales so you keep your prices low.
Or you think you’re products are the best so you keep your prices too high.
Plus moving things locally is slow and feedback is slower. It’s much easier to get this kind of information and run pricing tests when you sell online through your own store or via an Amazon storefront.
Pet Bakery Supplies
We cover pet bakery supplies in depth in another article. You already know the basic bakery supplies you’ll need but do you know where to get higher production professional units cheaply?
We cover that plus packaging, FDA requirements, and all the other supply side information you need to know in that article.
Naming Your Business
We cover naming your business fully in this article. Plus we offer business name generator tool that we use to help us come up with ideas.
Register Your Business
At the minimum you’ll need to register your business with your state and possibly with your city. In addition you may need to register each product or at least your kitchen with your state. For regulations state by state see our article here.
How To Handle Sales Tax
You’ll need to worry about sales tax if you sell either locally or online.
The best place to figure out what to do about sales tax if you sell online is to learn from the specialists at Taxjar.com. They have tools you can add to your ecommerce site or your Amazon store to help you collect and pay sales tax.
You’ll still need to get a sales tax license for each area you sell in. It’s one of the huge drawbacks of selling online.
Setting Up a Website
Before setting up a website consider a few things.
First, you don’t need a website to have a successful local pet bakery.
There’s a ton you can do through local businesses and farmer’s markets with just business cards and some basic branding.
Setting up a website will require some tech skills and learning.
Watch this video on building a pet business website and go down the rabbit hole a bit and watch some suggested videos after it.
Take it from us, it’s a lot of work to build and run a successful website.
If you just have it for branding and as an online business card it’s not that bad.
If you plan to add a shopping cart and sell through your website expect a learning curve.
If you want to go that route we suggest you check in with how much technical learning you want to do.
If you love tech stuff we recommend setting up your ecommerce site using a popular, free, open source tool call OpenCart.
If the tech aspects scares you then you can use a simpler tool via Shopify. Keep in mind you’ll pay a bit more and you’ll still have a lot of tech learning to do.
With either ecommerce website option we recommend you get good training on running your online store.
Are Pet Bakeries Profitable?
Absolutely. Pet bakeries can be super profitable. We cover this topic in depth in another article but we can summarize it here as well.
If you start small as a home-based business you can keep your costs of production low.
If you target local markets and test recipes to perfection to ensure demand you can grow slowly and steadily.
If you keep your gross profit margin (Total Revenue minus Cost of Goods Sold) over 66% you can be sure you should take home a tidy 30% profit after staff costs, taxes, and marketing.
So what does a 30% return look like?
For every $20 bag of mixed gourmet treats you keep $6. Say you can fit about 80 treats in your oven and bake them in 20 minutes. Let’s say that same batch takes about 10 minutes to mix and prep the batch then 20 minutes to add icing.
That’s 40 minutes per 80 treats. 80 treats makes 4 mixed bags. At $6 each that’s $24 per 40 minutes or $36 per hour.
$36 per hour is about $72,000 per year using the standard 52 week year with a 2 week vacation.
Note this doesn’t include time spent at a farmer’s market or time spent shipping through your Etsy store or other marketing means.
Plus you may be able to bake more or less than this depending on the size of your kitchen.
And clearly, you’ll be baking far more than one batch of 80 treats a day during production.
This just gives you an idea of roughly how profitable a home-based pet bakery business can be.
Do You Need a License to Sell Pet Treats?
You need a business license to sell pet treats in your state, a Federal EIN for tax purposes, and to follow FDA regulations regarding labelling and food ingredients.
You’ll need to check your state and local regulations for other licenses. We have a full article on each state’s licensing requirements.
Should I Sell Online or In a Local Store?
That depends on your risk tolerance and what you want to get out of this.
Selling online goes well with home-based businesses but you’ll have greater competition.
Anyone can sell their gourmet pet treats online through Amazon, Ebay, or Etsy.
Plus setting up your own online store will take some technical training.
Still, for introverts who want to learn online marketing, selling online can be a path to super fast growth.
Just check out our full article on dog treat businesses for examples of online treat bakeries that make over seven figures.
Why To Start a Pet Bakery Business
How to Start A Pet Bakery Business