It’s been said that there are more dogs than kids in the City, and there are numbers to back that up. According to the San Francisco Animal Care and Control Department (ACC), there’s an estimated 120,000 dogs, compared to upwards of 113,000 children.  One neighborhood in particular – where the Mission, South-of-Market and Potrero Hill converge, at Harrison and 15th streets – has become a node for catering to pets and their owners.  The Society for Prevention of Cruelty to Animals (SPCA) – and its new Leanne Roberts animal hospital – Petco, PAWS (Pets Are Wonderful Support), ACC, Franklin Square park – a favorite of dog walkers – are all located within a ten minute stroll.

Two years ago business partners Ritu Raj, a former Accenture financial consultant, and Joel Leineke, from the construction trades, opened Wag, a high-end pet boarding facility, in the neighborhood.  They chose an industrial site behind Rainbow Grocery and OfficeMax, for the second location – the first is in Sacramento – for what they hoped would become a chain of posh pet hotels. Raj and Leineke jump-started Wag by acquiring K-nine to Five, a small local pet care business.

With its gleaming glass and brick exterior, Wag looks more like a swanky spa than a kennel, featuring high-end finishes and plenty of chrome.  The facility includes easy-to-hose down epoxy floors; stainless steel cleaning, laundry and food serving systems; a swimming pool; plush, branded bedding; live-fish aquarium; and flat screen televisions offering four-legged boarders cartoons and Animal Planet programming.

With 35,000 square feet of space, including 3,000 square feet of retail, and more than 5,000 customers, Wag is one of the City’s two largest privately-owned boarding facilities.  At peak times, Wag can house more than 275 dogs, and has 20 two-story cat condos that can accommodate 40 felines.  An overnight stay at Wag costs $48 for a four by four foot glass enclosed box, a steep price when compared with Pet Camp, Wag’s nearest competitor in terms of size and amenities, which charges $45 a night for a space twice as big.  For an extra fee, customers can check in with their pet via “wag cam.” Wag recently added pet grooming to its menu of services.

Pet care in San Francisco has traditionally been a family affair, populated by mom and pops.  Although Bayview-based Pet Camp recently launched a companion facility in Pacific Heights, Cat Safari, Wag has bigger aspirations, hoping to become a nationwide chain.  Industry statistics indicate that fewer that one percent of the more than 9,000 boarding facilities in the United States generate annual revenues in excess of $1 million.  Both of Wag’s facilities are in that one percent, according to Chief Executive Officer (CEO) Richard Groberg, who joined the company last fall.     

One happy customer swooned over Wag on the SF CitySearch website.  “My little Zoey went to Wag and I was incredibly nervous. My husband found the place and it all checked out. All I know is that when we got back to pick her up she was the happiest dog ever...she seemed relaxed, like she was on a super-fun vacation.  She had swim time in the pool, a peanut butter-filled kong toy, many play group sessions and oh, a bath. Everyone was accommodating, friendly and incredibly professional.  Even though I thought Wag was pricey, it was definitely worth it.”

But not every customer thinks Wag is worth the price.  According to a complaint posted on the same website, the facility has “a nice facade...you can dress it up but it’s still a kennel. What’s really annoying is that they try to get you to pay for all the extras (like offer belly rubs, massage and private walks) which really should be included.  I mean, come on, I have to pay to have my dog’s belly rubbed after she’s been in a cage for 22 hours? There should be unlimited dog walks and play time for these prices.”     

One thing that did seem unlimited was the amount of money Wag’s owners initially spent promoting their new San Francisco venture.  Pursuing an aggressive, dotcom-style marketing approach, Wag’s owners conducted a media blitzkrieg, pouring money into splashy television and print ads, billboards, Muni bus posters and even a Wag opening party at AT&T Park.  In the wake of this spending spree Wag failed to honor its commitments to local nonprofits, and left bills unpaid.  Over the last few years Wag has been sued by multiple parties, including its web designer, electrical contractor, Dogster –

a social networking website for dog owners – and its landlord, according to San Francisco’s Superior Court records.

Groberg, who, with a Wall Street background, was hired for his expertise running a chain of 250 Veterinary Centers of America hospitals, is dedicated to making good on Wag’s debts.  The new CEO quickly negotiated “amicable solutions” and payment plans for most of Wag’s creditors.  For others, Groberg said, “We were able to convert debt to equity, procure concessions from our landlord and arranged to re-pay nonprofit sponsors with a combination of money, in-kind donations of retail product, free pet boarding, giveaways and other services.”  Groberg added that he’s been able “to raise more capital, bringing in new money from existing Las Vegas-based investors.”  

Groberg is now in the midst of launching “a subtle re-branding campaign.  We’re lowering our prices slightly and getting more involved in community building.”  According to Groberg, who commutes to the City with his pet Akita from his home in Las Vegas, “Wag was guilty of generating a reputation as a high-priced, Ritz Hotel of pet boarding, where pets could get blueberry facials and zen massage along with luxury rooms.  The reality is that we are quite competitively priced, especially given the quality of care, cleanliness and the level of customer service we provide.”

The City hosts seven licensed animal boarding businesses, with many more illegal overnight facilities, which are monitored by the San Francisco Department of Public Health, with unofficial assistance from the ACC.  Businesses catering to pets gravitate towards cute names, including A Lucky Dog, Bon Voyage, Call of the Wild, Dog Gone Good, Fetch, Hightail Hotel, Reigning Dogs & Cats and See Spot Run. 

With more dogs than you can throw a frisbee at in San Francisco, there’s significant demand for boarding, even in the current recession.  The poor economic climate, however, has taken a big bite out of Wag’s plan to build a third luxury pet hotel in Silicon Valley.  The builder/developer on that job fell behind schedule, said Groberg, and Wag filed a lawsuit for non-performance, leaving Wag’s Sunnyvale location on hold.  Today, of Wag’s original two founders, only Leineke is still actively involved, serving on the board of the privately-held enterprise.