Pet Chain Breeds Loyalty Through Service

BOSTON (TheStreet) -- In 1975, entrepreneur Dave Ratner borrowed $5,000 from his dad and opened a soda shop in an empty Hadley, Mass., gas station. A few years later, he bought a puppy to help him meet women, which led to the observation that grocery stores were selling more dog food than soda.

Pop went the lightbulb. Today, Dave's Soda and Pet City employs 90 people in four Western Massachusetts locations. Soft drinks make up a mere 2% of sales, but the name stays because "When I say 'Dave's Soda and Pet City,' people say, 'what?'" he says.

Ratner, a popular speaker at small-business seminars, is the author of the new book Creating Customer Love: Make Your Customers Love You So Much They'll Never Go Anyplace Else! (Bridgeway Books 2009). He also hosts two animal shows on his local ABC and Fox affiliates and serves as a board member of the Retail Advertiser & Marketing Association, sitting alongside executives from Best Buy(BBY Quote), OfficeMax(OMX Quote) and Sears Holdings(SHLD Quote). Ratner recently launched his own product line, Dave's Pet Food, available at small retailers on the East Coast.

Earlier this week, he took the time to talk to TheStreet.com about what it takes to compete against the big guys in a tough economy and how to make your customers love you.

After years as a retailer of other brands, you decided to launch your own line of pet food. Tell me a little about your business strategy.

RatnerEvery independent retailer knows the experience of bringing out a small brand. Eventually, the brand ends up in the big stores, and the small retailer gets screwed. My thought was that the only reason a retailer would want or need a new brand would be if they owned part of it. And so I decided that 30% of the profits from Dave's Pet Food will go into a kitty for the retailers. If, in five years, Procter & Gamble(PG Quote) or Colgate(CL Quote) buys us, 30% goes into the kitty. If we go public, 30% goes into the kitty. The retailer now has a reason to get into the brand.