Blog | September 29, 2010

This article was originally published in the Globe and Mail on September 29, 2010

By Steve Ladurantaye

Edleun Group’s executives have first-hand knowledge of the difficulties of building a daycare empire.

Its head of centre operations, Marnie Testa, spent a year as the national operations manager of ABC Developmental Learning Centres, an Australian company that increased to 1,100 centres from 40 in six years.ABC was liquidated earlier this year after it fell into receivership in 2008, having fallen behind on more than $2-billion in debt. The Australian government was forced to spend millions to keep the centres open long enough for parents to make alternate arrangements and sparked calls for a return to a non-profit system in the country.

Forty per cent of the centres were unable to make money despite having a near-monopoly on the market.Kids & Co. is the largest childcare provider in Canada, but it only makes a profit because of its novel business plan. It opens centres on behalf of large corporations, which pay to have it operate in their office buildings. This extra income makes all the difference, CEO Victoria Sopik said.

“It's almost an oxymoron to say you're going to do high-quality childcare and that you're going to make a profit. So much needs to go to toys and equipment. The way we do it is unique, because companies pay to be clients. And we do that instead of looking to make a profit on the operation of the centre – we've never wanted to take on the burden of being a landlord.”

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