Pet: 5. Happiness and feeding
Pets have three different stages of happiness…
Happy – A green smiley face – Your pet will cause 125% damage
Content- A yellow straight face – Your pet will do 100% damage
Unhappy – A red unhappy face – Your pet will cause 75% damage.
Your pet loses happiness in different ways. If your pet dies it will lose a lot of hapiness. It will either go from happy to content or content to unhappy. Dismissing your pet will decrease your pets happiness by a smaller amount. Then simply having your pet out will decrease it’s happiness and it is believed the more it is hit the quicker it’s happiness will decrease.
To increase your pets happiness you must feed it. To see what types of food your pet eats go to your pets details by right clicking on it’s portrait and check out it’s character. At the top left will be a green smiley face and if you hover your cursor over it it will list what foods your pet will eat. The higher the level of food you feed your pet the more it’s happiness will increase and the less you will need to feed it. Lower level food will increase the happiness less and you will need to feed it more to increase it higher.
When you feed your pet it will get a feed buff for 20 seconds increasing you pets happiness every few seconds. This buff will stop if the 20 seconds finish or if your pet enters combat.
So feed your pet the highest level food it can eat, make sure you carry a stack or 2 of the food around with you at all times to feed it and make sure your pet doesn’t enter contact when you feed it otherwise you’ve wasted your food. The best time to feed is when you need to drink so your not wasting time. Always keep your pet on green – happy so you get maximum damage out of your pet.
Note: i find when leveling up yourself, to choose a pet that eats fish. This will push you to fish yourself every so often and then to cook these fish and feed to your pet. This means for starters you get to slowly level your fishing over time which believe me is much better than trying to start at 1 at the top level. Fishing is very helpful later on in the game and can be a very good way of making gold. It is also a very nice way of leveling your fishing which once again is something very nice to have and lots of people get stuck in points of cooking just because they need fish to level and they just aren’t at the AH. Lastly you will save an absolute fortune over time.
To think an average player will get from 1-70 in about 15days play say. Saay the average cost of a stack of food is 50s. Again say that you use a stack of food every 8 hours play. 0.50g(stack cost)x8hours(every time you need a stack)x3(to make a day)x15(days time it takes to get 70)= 180g. This is being very generous as a stack can be used a lot faster – withing 2-3 hours – and the cost although fairly cheap to start can get up above 2g a stack later on and will only rise in price. Even just 200-300g is a lot of money when leveling. And think after that when playing at level 70 how much food you must go through and how much gold you could save by catching your own food and selling rare catches you get.
Artanis's Hunter Guide 
You overestime the cost needed to feed pet with normal food.
I created new hunter and hit lvl 20 with still first stack of Jerky Meat being at at 13 food left. And I haven’t bought a single item – all gained as rewards from Qs or as drops. As I made good use of various other meat items during my leveling (such as Strider’s Meat which isn’t usefull in any other way).
Also I found that lower level food in many cases as good as your level food.
So if you use pet which has quite wide diet you can feed it easily with your drops.