Pet Care Industry Faces Revenue Challenges and Margin Pressure in 2025; PET|VET M&A Reports Record Year Despite Market Headwinds
Industry Analysis Reveals Shifting Consumer Behaviors and Evolving M&A Landscape
DENVER, Jan. 7, 2026 /PRNewswire/ — The pet care industry experienced significant challenges throughout 2025, with revenues remaining largely flat or declining across most geographic markets, according to a new market analysis released today. Despite these broader market headwinds, PET|VET M&A achieved exceptional results, closing 33% more transactions than in 2024 and representing over $54 million in total sales volume. These results are a direct testament to both the strength of its seller clients and the effectiveness of its specialized approach.
Market Performance and Consumer Trends
Year-over-year growth remained elusive as the sector grappled with fundamental shifts in consumer behavior and competitive dynamics. Overall pet ownership has declined by a few percentage points since 2019, contributing to slower growth across the industry.
A significant demographic shift is reshaping the market, with Gen Z now constituting approximately 58% of all pet owners, surpassing millennials in multiple-pet ownership as this generation matures and becomes homeowners. However, “pet inflation” has reached all-time highs, with veterinary care, food, supplies, and services running 24% above 2021 levels, significantly affecting the affordability of pet ownership.
This economic pressure is driving consumers toward private label products over name brands, though affluent consumers remain loyal to their preferred brands. Despite these challenges, continued pet humanization continues to drive demand for premium care and customized services.
Margin Compression and Operational Challenges
The more pressing concern for many operators has been profit margin compression. Labor costs continue their upward trajectory, yet many pet resort operators have hesitated, or been unable, to implement corresponding price increases, resulting in squeezed profitability across the sector.
Pet owners are increasingly diversifying their spending across multiple service providers rather than maintaining loyalty to a single facility. Additionally, app-based pet care platforms continue to erode traditional brick-and-mortar market share, while Gen Z pet parents are integrating their dogs more fully into daily life—including travel and vacation plans—reducing demand for boarding and daycare services.
The M&A Landscape: Quality Over Quantity
The M&A market has undergone a notable transformation, with consolidators adopting a decidedly more selective approach shifting the purchasing mandate to “quality over quantity”. Current market dynamics don’t support exit valuations that meet return expectations forcing PE firms to consider holding on to assets longer than what is customary.
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