"I always joke with our employees: It's not the best business model to say no over and over to people who want to buy your products." That's how Scott Ragan, president and "chief dog lover" of Three Dog Bakery, explains the impetus for the company's first foray into selling its baked foods and treats outside its bakery franchises.
"We've been in business for over 20 years, but our focus up to this point has really been on uniquely serving our small boutique network of retail bakeries," Ragan says. "Over the years we've had people contact us very regularly and ask if we would sell them our products. And we've always said, 'No thank you.' We're a small company, we're privately held, we've always been focused on quality and it's not necessarily been about scale."
But, as Ragan points out, continually saying no is not usually a path to success. So, to complement its bakery network, the company is shipping three new lines to independent pet stores across the US this month:
- Bake to Nature, a complete range of baked kibble products for dogs;
- Gracie's Gourmet, a wet line named after one of the company's canine founders; and
- A range of nearly 20 baked treats under the Three Dog Bakery brand.
The kibble is a superpremium, all-natural line that hews closely to the company's philosophy and business model built on oven baking. This slower, controlled process has a "carmelizing" effect that locks in vitamins and ingredients, naturally enhancing palatability, the company says. Since protein is not diminished in the process, its biovailability is high, increasing nutritional value and digestibility.
"I think there are a lot of fine companies in the petfood industry, but that's not the business we're in," Ragan says. "They make petfood. We've always defined ourselves as a bakery that makes food for pets."
Ragan characterizes Three Dog Bakery's new product development as a completely different orientation than most companies have. "When we sat down to talk about our new Bake to Nature line, what we wrote on the big whiteboard was, what would Thanksgiving dinner look like for your dog? Immediately people put cranberries and sage on the list. It had to focus on the aroma. And we don't do any extrusion because we think oven baking is better. It's the way you would cook for your family at home. No one extrudes things in their kitchen."
The home kitchen metaphor carries through to the type of ingredients and equipment Three Dog Bakery uses. "It's generally the highest food and ingredients," Ragan says. "We describe it as coming from grandma's cupboard, so whether that's wheat, molasses, honey or eggs, it's things you can read and pronounce, all grown and made in the US. Then we do boutique or hand mixing. We have a big dough mixer that looks like-it would surprise you-it's just a much bigger version of the Kitchen Aid mixer that you have on your counter at home."
Oven baking caps the products' creation, says Brad Allen, VP and general manager of independent pet business. "Baked is not the way most foods are made, and the reason why is it takes longer and it's simply more expensive. Most companies focus on how big can they get, how much volume they can do. We certainly desire to grow, but our focus is on doing the highest quality food."
Because of this focus, Ragan believes consumers have turned to and stayed with Three Dog Bakery, especially since the 2007 petfood recalls. "We've had more and more interest in not just the ingredients but where our products are made and how they are made," he explains. "So today on our packaging, we talk a lot about oven baking and its benefits: more natural aroma, more natural taste; we don't have to add preservatives or artificial colors; we don't put any artificial tastes or sprays on afterward.
"I think a lot of consumers have really embraced us because of that," Ragan continues. "They see us doing for pets like they do for other members of their family. They really embrace that notion: 'You're a company that really gets me. You get that I want to take care of my four-legged family members just like my two-legged family members.'"
Thanks to this acceptance, the company has grown more than 30% a year since Ragan and his partners took over in late 2006; he says they enjoyed their best quarter ever in the beginning of this year. And with the aggressive new products strategy, Three Dog Bakery is expanding its facility in Kansas City, Missouri, USA, investing and hiring up to 110 more employees over the next five years, according to the Kansas City Business Journal.
The company may eventually develop a cat food line-despite its name, it does have a couple cat treats in its bakeries under the name We Pity the Kitty-as well as distribute to Europe and other parts of the world. For now, Ragan says, they're focusing on doing this launch well while continuing to slowly grow the bakery business, which now numbers nearly 50 retail outlets in the US, Canada, Hong Kong and Japan.
"Our bakeries have always been the foundation and heart of our brand and are really one of the best places to experience our products," Ragan explains. "But we will never be a fast food-like concept. The bakery network will continue to expand at a modest rate. We will complement that in a lot of territories where we probably will not have bakeries with this new line.
"Doing oven baking and all-natural products is not the biggest part of the pet industry," Ragan adds, "but it's unique, it's something we do exceptionally well, we were the first to do it and we think the next couple years are going to be very exciting."
