“Government is participating more than ever, and the need for high-quality early education is a constant conversation by state agencies. That will permit companies like ourselves to grow at an exponential rate.”
— Richard Weissman, CEO, The Learning Experience
Government requirements related to child care and early education are creating ample opportunity for companies offering those services to show up and attract customers.
That’s according to Richard Weissman, CEO of The Learning Experience, which finished 2022 with $574 million in sales, a 55.8 percent increase. The Learning Experience makes one of the biggest jumps on the Top 400 ranking, up 57 spots to No. 138. Weissman said nearly 90 percent of the pre-school market consists of local, mom-and-pop child centers, but larger chains like The Learning Experience are growing.
“The reason national chains are growing is because the world of childcare is changing and evolving,” Weissman said. “Government is participating more than ever, and the need for high quality early education is a constant conversation by state agencies. That will permit companies like ourselves to grow at an exponential rate, because we can afford the requirements the government puts on us.”
The Learning Experience was founded in 2002 by the Weissman family, which originally entered the child care space in the 1980s. Since it was established, the brand has steadily grown, both in sales and units.
This has been true even in the last few years through the coronavirus pandemic. The brand had $262 million in sales in 2018 and $310 million in 2019. While sales fell to $228 million in 2020, the business recovered, surpassing 2019’s amount with $368 million in 2021 before skyrocketing last year.
“The impact of COVID was certainly felt by us as much as anybody in the country,” said Ron Linares, chief financial officer. “But for us, it was a short-lived period. By about nine months, we had gotten back to the point where we were pre-pandemic. The year 2019 has been sort of a baseline we use, and we’ve exceeded those levels as a system at this point.”
The other notable economic headwind for businesses recently has been navigating inflation. Like COVID, The Learning Experience is clearing the hurdle.
“There’s no doubt child care has been invaded,” Linares said. “In our case, our approach to pricing has been to keep up with that inflation. So, we have passed along price increases to parents and we haven’t seen any impact from that at this point because the rest of the economy is going through the same thing.”
“Our ability to push through price increases and maintain margins for our franchisees has been well received by parents,” Linares continued. “With that said, we’ve used that as a tool to increase wages for our staff, too.”
Richard Weissman
Foot on the gas
One aspect that leadership points to as a key to the continued growth is consistency. David Slavny, executive vice president of development, said the model has remained largely the same since the brand was established, and that includes handling many functions in house.
“We have an internal group of real estate professionals,” Slavny said. “We have real estate meetings every week where we go over potential locations and look for overall growth in the market.”
Slavny said The Learning Experience team looks at a market’s overall population, number of parents in the vicinity, the income levels and child counts. As for where the brand is looking to grow, Slavny said it remains largely focused on the 35 states it’s in now.
“Our real estate guys love to bring us new states,” Slavny said. “Candidly, there are opportunities to expand where we’re in today. Having said that, from an operational efficiency standpoint, it really makes more sense to do infill, at least for the time being, than to open new locations where you have to hire new regional directors or go further to different locations.”
“Some don’t have the population, others don’t have the income levels to make sense for our models,” Linares noted. “You need enough people who can pay for it to make sense.”
Finding ways to grow the brand didn’t slow down during the pandemic, either, with The Learning Experience continuing to push development. It finished 2022 with 340 locations.
Ron Linares
“COVID shook up the industry and we went from tens of thousands of kids under our care every day to a handful of thousands overnight,” Slavny said. “During that time, a lot of our competition slammed the brakes quite hard. But we were fortunate to be in the position to have financial backing that said ‘this won’t’ last forever.’”
San Francisco-based private equity investment firm Golden Gate Capital acquired The Learning Experience in 2018 in a $125-million-plus deal, buying it from Norwest Venture Partners and Quad Partners.
“We went through COVID, and came out on the other side almost 100 centers larger than when we went in,” Slavny said. “There were a lot of challenges, but we took the approach to accelerate.”
Franchising makes it work
Dee Patel, a multi-unit franchisee with The Learning Experience, said the brand’s effort to develop more centers was integral to growing his portfolio through the pandemic.
Dee and Shital Patel
“We added three centers during the pandemic,” Patel said. “It was a scary time to do something like that, but support from the development team and the guidance from the franchisor made it happen.”
Patel became a Learning Experience franchisee in 2015 after a career in the quick-service restaurants. Based in Connecticut, Patel said he and his wife initially came across the brand when they were both looking to buy a child care center and find one they would want their young kids to attend.
“We learned about The Learning Experience and were drawn to the curriculum,” Patel said. “There were so many pieces we just didn’t see in the child care centers we had previously explored for our own children. When we tied everything together, we saw a lot of what we wanted for our kids and it was a lot of what we wanted to offer as owners.”
Today, the Patels have six Learning Experience centers, with a seventh expected to open before the end of the year.
“The original plan wasn’t to be multi-unit operators,” Patel said. “But over time, we started to develop the market and saw there was an opportunity for a second school after doing well with the first. I also came to find I enjoyed my time more at The Learning Experience than at my previous job and I decided it’s where I wanted to be.”
With the growing operation, Patel said they’ve built out their infrastructure along the way.
“We’ve hired a director of operations, a facilities manager and have a system in place where we’re all on the same page and consistent with what The Learning Experience’s standards are,” Patel said. “We have two more schools scheduled to open next year, bringing us to nine centers.”
Slavny said it is dedication to the existing standards set by the brand that make franchisees like the Patels an ideal fit as owners.
“From a franchisee perspective, there’s a reason you franchise,” Slavny said. “It’s because you don’t want to reinvent the wheel. We have the systems in place and the ideal franchisees are ones who want to follow our systems because they work.”
Looking ahead
Most Learning Experience franchisees are multi-unit operators. Linares said on average a franchisee owns two centers. The centers themselves usually range from 9,000 to 15,000 square feet, and include a playground, which adds to the space needed. Depending on the size, the centers accommodate 130 to 280 children.
The initial investment range to open a location is between $590,043 and $5.4 million. However, the numbers leans toward the former, as the higher end of the range comes into play when new owners build a facility from the ground up.
David Slavny
Average gross sales in 2022 for “mature” franchise centers, those open more than 48 months, were $1.97 million; for “intermediate” centers, those open between 24 and 47 months, AUV was $1.86 million, according to the company’s franchise disclosure document.
For the rest of 2023, Slavny said the brand will open anywhere from 25 to 30 more locations, and about 75 more in 2024. Linares said The Learning Experience will also develop its curriculum going forward, too.
“The technology aspect is important and we’ve adopted that as a significant portion of the way we do business,” Linares said. “We’re not reliant on third-party vendors, we’re content producers as well. The children coming to our school are six months to 5 years, and the majority of their tenure with us, technology isn’t a huge portion of what we do. But we manage our own curriculum and certainly technology is part of that curriculum.”
“We’re very focused on driving an education system that is consistent,” Weissman said. “That means that, the letter A, for example, is taught in all Learning Experience centers across the system at the same time.”
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