Kinder-care's Standard Formula For Success

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Back in 1968, real estate developer Perry Mendel had an idea that many people he talked to thought was outrageous, impractical, and probably immoral. Mendel wanted to create a chain of child care centers -- and he wanted to use the same techniques of standardization he'd seen work for motels and fast-food chains.

The critics didn't deter Mendel. Though he didn't know the first thing about education, he did understand financing and real estate. He was also convinced that the trend toward women working outside the home would continue. And eight of the business associates and friends he approached with his plan liked both the concept and the man who was proposing it.

In the 12 years since Mendel took $200,000 in seed money and started Kinder-Care Learning Centers Inc., the company has become a dominant force in the commercial child-care industry. Today there are 720 Kinder-Care centers in 36 states and two Canadian provinces. Revenues for fiscal 1981 were $87 million and should reach $112 million by next year. Since 1976, in fact, Kinder-Care Learning Centers Inc. has grown at a rate of 57% compounded annually, and this year ranks #98 on INC.'s list of the fastest-growing smaller public companies in the country.

Kinder-Care's success caught a lot of people by surprise -- including Wall Street investors -- but not Mendel. He had looked at the marketplace and discovered a widespread demand for child care services. He found thousands of individually owned centers, many of which were profitable despite the widespread belief that taking care of children shouldn't be a money-making effort. "When I saw the pro forma numbers on one child care center, I was amazed," Mendel recalls. "If the figures were that good for a single independent center, I knew they'd be phenomenal for a chain."

From the beginning, Mendel planned Kinder-Care as a national chain. He hired a professional nutritionist and a retired school superintendent. Before the first center went up, Mendel had in hand an operations manual for Kinder-Care Learning Centers. He compiled information on state zoning and licensing requirements so that, when he hired a local architect to draw up plans for a center, the design would conform to standards in all states.

He also recognized the need to have a clearly defined market. Kinder-Care would be aimed at the middle class, at families that needed two paychecks and couldn't pay premium prices for day care. To select sites, Mendel drove through neighborhoods looking for backyard swing sets and two-car garages with both cars gone. He spoke to mailmen and located the newest elementary schools.

Each center had to be on the side of the street on which morning traffic flows from the suburbs to where people work, so that parents in a hurry wouldn't have to cross traffic to reach the center. "Look for a 7-Eleven," says Mendel, "and you'll find a Kinder-Care center."

The centers accept children as young as three months (a separate room is furnished with cribs) and as old as 12 years.They serve the children a hot breakfast, a mid-morning and mid-afternoon snack, and a hot lunch. When Mendel introduced an after-school program for older children, total revenues grew 20%. The summer camp program initiated in 1972 cut the 30% drop in summer enrollment to only 8%.

Since the first Kinder-Care opened its doors in Montgomery, Ala., the low brick buildings with red tile roofs and bell towers have popped up like McDonald's all over suburban America. The McDonald's analogy is inevitable. With their black plastic bells that make no sound, Kinder-Care centers look like one more example of the standardization of the American landscape. Mendel freely acknowledges his debt to McDonald's and Holiday Inn, saying he set out to provide the same consistency in child care that McDonald's provides in fast food and Holiday Inn in accommodating travelers.

Jokes about "Kentucky Fried Children" don't bother Mendel and his associates much either. "I don't see that as terribly negative," says Gene Montgomery, who was hired away from Burger Chef to be Kinder-Care's vice-president of operations. "Your grandmother may be able to make better fried chicken than Colonel Sanders, but most mothers can't. There may be individual centers that do a better job than we do, but most centers just don't have the resources we have."

The children at the centers certainly appear happy. They're in a world designed for them, with 35 square feet of space per child, airy open classrooms divided by rows of four-foot lockers (each child has his or her own), and a fenced in play area with jungle-gyms, swing sets, and in most cases, small swimming pools.

The stress on learning helps Kinder-Care overcome a major obstacle to success as a national chain of day care centers: the guilt that many parents feel at leaving their children to go to work. The learning materials are from leading educational publishers like Addison-Wesley and Lippincott (learning materials are also developed by Kinder-Care's own education department) and there is one teacher for every 10 children on average. The educational materials are in separate "Discovery Areas": Sound Table, Library, Creative Art, Manipulatives, Science, Construction. The mother of two children who attend a center says, "When I'm home with my children I'm very busy. Even when I do have time to spend with them, I can't afford the crafts, books, paints, and puzzles they have at the center."

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