STATUS UPDATE: Two high-profile technology conferencesare heading to Southern California this year. Page 2MADE IN O.C.TODAY’S

FOCUS

WEDNESDAY, JAN. 8, 2014

BUSINESS

a new bath?Is it time for

AFTER

TUB TO SHOWERCONVERSIONS

BEFORE

AFTER

BATHERLINERS

BEFORE

AFTER

WALK IN TUBS

BEFORE

AS LITTLE AS $63 MONTHBath makeover includes:

Tub or shower liner, acrylic wall surround, valve replacement,showerhead, corner caddy and curved shower rod

Expires 1/31/2014

at

bow

pi

th makeover includes:

or shower liner, acrylic wall surround, valve replacement,werhead, corner caddy and curved shower rod

ires 1/31/2014

714.660.4764CALL TODAY FOR YOURFREE ESTIMATE

LICENSE #946455 | LIABILITY INSURANCE | WORKERS COMPENSATION | CREDIT CARDS | 12 MONTHS, NO PAYMENT, NO INTEREST

“Everything went as they promised us with no glitches. And the end result

was a very attractive bathroom” George W., Laguna Woods, CA

It wasn’t just the union movement thatsuffered a blow over the past weekend. Itwas the wallets of many American work-er bees.

Boeing aerospace factory workers inand around Seattle voted to accept signif-icant compensation cuts to keep produc-tion of the next-generation 777X jet in thePacific Northwest.

Now if this was a typical labor negotia-tion tale, one might conclude that theunion’s vote was a savvy tactic for bothworker bee and boss. Saving jobs that re-portedly pay, on average, $30 an hour,isn’t a shabby deal. But this isn’t yourtypical labor story.

Two months ago, the same members ofBoeing’s Seattle International Associ-ation of Machinists and Aerospace Work-ers voted roughly 2-to-1 against conces-sions that Boeing demanded if it was tokeep the 777X manufacturing near itsSeattle base. Boeing – while highly profit-able – says it needs the cuts to fight itslong-running sales battle with Europeanarchrival Airbus.

Boeing surely knew that its “take it orwe’re leaving it” stance would have a two-pronged impact. Obviously, some work-ers would fear the company’s threat tomove jobs was serious. And governmentoffers from other states trying to woo theplane maker would follow.

Perhaps Boeing couldn’t see how wellits ploy would work: Promises of tax dol-lars, free land and more came from asmany as 22 states. That included a pushfrom usually worker-friendly California,a bid to move the jobs and productionwork to Boeing’s longtime aerospace hubaround Long Beach.

National leaders of the same Machi-nists union then got a queasy feeling – es-sentially knowing that moving jobs out ofSeattle would 1) likely cut union jobs and2) fuel fears that unions don’t always havea community’s best interest at heart.

So the Machinists’ national leadershipessentially forced a revote, over Seattle

JONATHAN LANSNERREGISTER COLUMNIST

Boeingwins, weall lose

SEE LANSNER ● PAGE 5

The dinner menu this evening featuresbaked cod and freshly steamed broccoli ac-companied by diced sweet potatoes driz-zled with olive oil. Forget about serving it at

the dinner table or with afork and knife, because it’snot for you. It’s for yourdog.

The recipe comesstraight from Shawn Buck-ley’s kitchen at Just Foodfor Dogs in NewportBeach, where the ingre-dients are fit for humans,but the meals are balancedfor canine nutrition.

In Mission Viejo, dog breeder OliviaHudson’s team whips up fresh meals fea-turing lamb, broccoli and apples. But thoseitems won’t be baked, browned or boiled

because all meals are made, packaged andsold raw through retailers.

These two Orange County entrepre-neurs used the growing demand for premi-um pet food to create their own growing en-terprises.

Americans spent more than $20 billionon pet food in 2012, a figure that was ex-pected to rise to more than $21 billion in2013, according to the American Pet Prod-ucts Association. But mass-market petfood sales have actually stagnated, whilepremium and “super-premium” foods, likeBuckley’s and Hudson’s, have grown tre-mendously along with trends such as grain-free, “meat first” and human grade prod-ucts, according to a report by market re-search Packaged Facts.

MINDY SCHAUER, ORANGE COUNTY REGISTER

Dakota, left, and Storm, right, eye a piece of OC Raw Dog food. Olivia Hudson, CEO and president of the Mission Viejo family-runcompany, says OC Raw Dog went from $36,000 in total sales in 2010 to more than $1 million in 2013.

TWO RIVAL PET FOODALPHAS Orange County entrepreneurs use the

growing demand for premium productsto create growing enterprises.

SEE PETS ● PAGE 3

MARNIUSHEROFF

REGISTERWRITER

CHRISTINE COTTER, ORANGE COUNTY REGISTER

A blackboard at Just Food for Dogs inNewport Beach posts its specials.

MARKETRECAP

S&P 500IndexClose: 1,837.88Change: +1 1.1 1

10-yearTreasury:Close: 2.94% Change: -0.02

Oil perbarrel:Close: $93.67Change: +$0.24

O.C. gasprices:Gallon: $3.68 1Change: +$0.002

DowIndustrialsClose: 1 6,530.94 Change: +1 05.84

MORE ONPAGE 4

NasdaqIndexClose: 4,1 53.1 8Change: +39.50

JPMORGAN FINEDJPMorgan Chase will pay more than$2.5 billion for ignoring obviouswarning signs of Bernard Madoff’sPonzi scheme. The bank will pay $1.7 billion to settle criminal chargesand a $350 million civil penalty forwhat the Treasury Department called“critical and widespread deficiencies”in its programs to prevent moneylaundering. Page 8

WALL STREET COMEBACKStocks halted a three-day slide. TheStandard & Poor’s 500 Index added0.6 percent after losing 1.2 percent inthe first three sessions of 2014. TheS&P index rallied 30 percent in 2013.Page 4

SONY PLANS WEB TVSony will begin testing an Internet-based television service in the U.S. thisyear, which will combine live programswith an on-demand library of films andTV shows. Page 5

RETURN OF CHILI DOGLocal Carl’s Jr. restaurants arehonoring founder Carl Karcher’sJanuary birthday by reintroducing thefast-food item that launched his empire:the chili dog. Page 5

MORE INSIDE

California Insurance CommissionerDave Jones said Tuesday that a 9.8 percentJan. 1 premium increase by Blue Shield ofCalifornia was “excessive and unreasona-ble.”

The increase affects 81,000 Blue Shieldmembers in health plans that were grand-fathered in under the Affordable Care Act,also known as Obamacare. Jones said therate hike amounts to an average increase of22.6 percent over 12 months and 32.3 per-cent over two years.

Jones has no authority to reject the rate

increase. Blue Shield disputed Jones’ math but

said its rising rates reflect an 11 percent in-crease in the cost of care for members inthe affected plans as well as new taxes andfees under the federal health reform actthat it said add 3.6 percent to premiums.The company said the new rates meet thefederal requirement that at least 80 per-cent of premiums be spent on medical care.

The higher rates show that costs contin-ue to rise for some who held onto their oldpolicies under Obamacare. Some policy-holders have complained that they had topay higher rates on new policies after theirexisting ones were canceled.

State official slamsBlue Shield on rate hike

By BERNARD J . WOLFSON

ORANGE COUNTY REGISTER

Orange County Register Wednesday, Jan. 8, 2014 Business 31

BUSINESS

Pet Adoption SectionMonday, January 27th

Th ank you to all of our supporters for participating in our monthly pet adoption section. In the past with your help,

we have seen as high as 45% of our pets fi nd loving homes. Th e Orange County Register is looking forward to continue

helping these animals in need.

WE NEED YOUR HELPin making this section possible, by asking for public sponsorships.Give your hearts to helping these pets in need.

Deadline: Friday, January 17th at Noon$20.00 per Pet Sponsorship

Call 714-796-6723Monday – Friday 8am-5pm

or email mgarcia@ocregister.com

Showcase your pet in the next

For only $10 your loved one can be featured in the ‘New Years’ issue.

Contact Mabel 714-796-6723 | mgarcia@ocregister.com

OC PET Gallery

HURRY DEADLINE IS JAN. 17

PUBLISHING MON., JANUARY 27TH

Pet diets are sounding ev-ermore like those of theirowners, part of the “human-ization of pet food,” accord-ing to Molly Maier, a senioranalyst at market researchfirm Mintel. “It relates tothis concept of people see-ing pets as part of the fam-ily,” Maier explains. Sheadds that in Mintel’s mostrecent pet food report, 80percent of pet food buyerssaid that the quality of petfood is as important as thequality of human food.

This is a tale of two petlovers who were dissatisfiedwith available dog food op-tions, opted to make theirown and eventually spuntheir creations into thrivingbusinesses. Here’s how theydid it.

JUST FOOD FOR DOGSAt the helm: Shawn Buck-ley, 49, founder and CEO The product: Buckley’skitchen storefronts in New-port Beach and West Holly-wood make treats andmeals for dogs using USDA-certified ingredients andadded supplements, whichBuckley says are necessaryto round out the nutritionalbalance. Just Food for Dogs’offerings include dailymeals, a line of prescriptionfood sold through veterinar-ians and the kitchens, aswell as custom formulationsusing veterinarians’ labwork for dogs that havemultiple diseases or aller-gies.

Oscar Chavez, a veterin-arian and professor of ca-nine clinical nutrition,works full time for the com-pany overseeing nutrition.The food has been formulat-ed to the latest National Re-search Council standardsand is independently testedto prove the nutritional ade-quacy of the regular diet us-ing yearlong feeding trials.The daily meals use ingre-dients such as beef, lamb,fish, chicken and turkeypaired with potatoes, rice,whole wheat macaroni and

produce including carrots,peas, spinach, blueberriesand apples. Ingredients arebrowned in a skillet, cookedin an oven or boiled, cutdown to bite-size and com-bined in a mixer. The food ismade without preserva-tives, frozen and put in vac-uum-sealed pouches orlined boxes for the bulkfoods. But about a quarterof customers buy it freshthe day it was cooked at thekitchen.Getting started: Buckley, aserial entrepreneur whoseprevious companies includ-ed a public relations firmand an upscale stroller busi-ness, was dismayed by theingredients allowed in com-mercial dog food. He decid-ed to make his own andstarted Just Food for Dogsin 2010.How much it cost: Startupcosts totaled about $1 mil-lion by the time Buckleyopened his first location inNewport Beach in 2011. Thefeeding trials alone ran al-most $200,000. Buildingout the empty 1,150-square-

foot space and converting itinto a kitchen also was a sig-nificant expense. For exam-ple, an industrial mixer ranhim about $22,000. The ma-jority of the startup moneycame from his own cash; theremainder came from threeminor partners. Price point: Daily mealscost about $90 a month for a30-pound dog. That’s about$25 to $35 more per monththan premium kibble, ac-cording to Buckley. How it grew: Growth hasbeen mostly word of mouth,which Buckley attributes tothe culture of dog owner-ship, explaining that strang-ers won’t just randomlygreet each other on thestreet, but dog owners will.“We’ll stop, and the dogswill say hello,” he says.“These are people that justtalk to one another withoutprompting.”

The company has alsogained visibility by doingevents such as dog walksand rescues. A number ofrestaurants, coffee houses,hotels and car dealersaround Orange County andLos Angeles give out freetreat samples to patronswho bring their pets. Vetrecommendations havehelped, too.

When the NewportBeach location opened inJanuary 2011, the companymade 500 pounds of food aweek. By September 2011,that location was up to9,000 pounds a week andhasn’t made less since then,Buckley says.Biggest challenges: “Justtons,” Buckley says. He saysdealing with the regulationsand oversight of building akitchen for dog food ratherthan human food can be dif-

ficult. City planning depart-ments “don’t know what todo with you so everythingtakes longer and that meanscosting more.”

Another challenge iscoming up with nutritional-ly balanced food that dogslove to eat. He says you canwork really hard to cali-brate the ingredients andnutrition, but a dog may notlike it.

Finding the right people,training and keeping themis also a challenge. Buckleystarted with five or six em-ployees and now has 58. Advice for starting pet foodbusiness: Do it right.“They’ll learn what that isvery quickly along thepath,” Buckley advises.“Make sure it’s healthy andnutritious. Do the research.Do the feeding trials.”What’s next: A third loca-tion is set to open in SantaMonica this summer, andhe’s looking to open a fourthin Sherman Oaks after that.“We will have dozens ofthese in years to come.”

OC RAW DOGAt the helm: Olivia Hudson,36, president and CEOThe product: Based in Mis-sion Viejo, OC Raw Dogmakes raw dog and cat foodand treats with USDA-cer-tified ingredients and with-out preservatives. The foodis sold by independent re-tailers nationwide.

The company offers eightformulations made withbeef, turkey, chicken, fish,lamb, rabbit and goat – eachmixed with produce includ-ing carrots, apples, brocco-li, spinach, acorn squash,beets and blueberries tosupplement nutrition in-stead of synthetic vitamins.

Ingredients such as rose-mary and papaya are addedfor extra vitamins and min-erals. The final productcomes packaged as patties,bite-size pieces or in bulk asa big block of food.

Food is made, packagedand sold frozen. For exam-ple, the chicken arrives atOC Raw Dog’s facilities inlarge frozen blocks, whichare broken apart in a largechipper. Next, they gothrough a heavy-duty grind-er and are mixed with fruitand vegetables.Getting started: Hudson,who bred and showed Span-ish mastiffs and Englishbulldogs, became con-cerned about their diets.Nutrition plays a criticalrole in how good the dogslook and their overallhealth. Starting around2005, Hudson and hergrandmother, parents, sis-ter and brother would hold“grind fests” on her parents’driveway once a month to

make the food. They wouldput down a tarp and take asledgehammer to blocks offrozen meat and put the in-dividual chicken parts in agrinder. Friends and newowners of her puppies alsowanted the food and de-mand grew beyond whatthe family could do on thedriveway.

Hudson incorporated thebusiness in 2009 and con-verted part of her hus-band’s office space at thetime into a commercialkitchen. She relied on herfather, Stephen F. Lindsay –a vascular surgeon and for-mer chief of staff at HoagMemorial Hospital Presby-terian with a background inchemistry – to help herbreak down the guide fordog and cat nutrition pub-lished by the National Re-search Council. “It took usabout a year to really dial in

the formulations,” Hudsonsays, adding that they test-ed the food in a lab to makesure it was nutritionally ad-equate.

In 2010 Hudson startedselling her food, delivering itin coolers in a car for a peri-od before getting a local dis-tributor. Hudson owns thecompany with her father;her husband is now incharge of sales and strate-gic outreach.How much it cost: The ini-tial investment was around$50,000. The funds wenttoward packaging andequipment such as a walk-infreezer and an industrialgrade, 15-horsepowergrinder. Hudson’s fatherhelped with startup costs.Price point: OC Raw Doghas carved out a niche thatHudson says is nutritionallycomparable to the top, mostexpensive brands but sever-al dollars cheaper. It wouldcost about $100 to $120 amonth to feed a 30-pounddog eating almost a pound aday.How it grew: OC Raw Doggrew through word ofmouth and by aligning withretailers who also helpedspread the word. The com-pany looked strategicallyfor new markets and dis-tributors that wanted togrow their raw food busi-ness.

The company initiallyworked with about 10 localretailers and now has about18 distribution points with600 independently ownedretailers in 46 states. OCRaw Dog went from$36,000 in total sales in2010 to more than $1 millionin 2013, according to Hud-son. She now has a nearly3,000-square-foot facilitywith a commercial kitchen,packaging area and freez-ers. “We started out verysmall and grew incremen-tally,” Hudson says, likeningit to a slow and steady mara-thon.Biggest challenges: “Try-ing to start a business in oneof the worst economies hasbeen a financial struggle,”Hudson says. “My dad hasbeen instrumental in help-ing us grow financially. He’sreally been the financialsupporter.”

Handling the food frozencan be a logistical issue, es-pecially in the summer be-cause they need to usefreezer-equipped transpor-tation and storage. Hudsonadds that hiring and train-ing the right people is also achallenge. Advice for starting pet foodbusiness: Hudson recallsbeing teased for her dog-theme Reeboks in thefourth grade and has loveddogs for as long as she canremember. She advises tofind something you’re trulypassionate about and con-vert that into a business.What’s next: In March, OCRaw Dog will move into a5,000-square-foot space inRancho Santa Margaritabecause the company needsa larger facility with biggerfreezers. The company alsowill branch out into morefood options with a greatervariety of proteins. Hudsonis working to set up feedingtrials.

CHRISTINE COTTER, ORANGE COUNTY REGISTER

Shawn Buckley runs Newport Beach-based Just Food for Dogs, which has grown to 58 employees.

PETS: Creating food that’s a breed apartFROM PAG E 1

CONTACT THE WRITER:

7 1 4-796-7920 or

musheroff@ocregister.com

CHRISTINE COTTER, ORANGE COUNTY REGISTER

Fresh fruits and vegetables are used to prepare dog foodmade by Newport Beach’s Just Food for Dogs.

Make sure it’s healthyand nutritious. Do theresearch. Do the feedingtrials.”S H A W N B U C K L E Y

C E O O F J U S T F O O D

F O R D O G S

‘‘

MINDY SCHAUER, ORANGE COUNTY REGISTER

OC Raw Dog employee Jake Hagadorn sorts produce thatwill go into pet food at the Mission Viejo kitchen.

Pet food oversightThe Association of American Feed Control Officials

establishes the nutritional standards for complete andbalanced pet foods. But it’s the pet food company’sresponsibility to formulate products according to thosestandards. AAFCO, however, doesn’t regulate, test,approve or certify pet foods, according to theassociation’s website. It’s up to state feed control officialsto regulate the manufacture and sale of pet foodproducts.

In California, the state’s Health and Safety Coderequires that people who manufacture processed pet foodand treats (meaning they use heating, drying and othermethods) must first obtain a license from the CaliforniaDepartment of Public Health. Fresh and frozen pet foods,however, are regulated by the California Department ofFood and Agriculture.

The state health department says people cannotlegally manufacture pet food in private residences. Theymust work in commercial kitchens and are required toobtain a license from the department before they begin.

Source: Association of American Feed Control Officials and theCalifornia Department of Public Health