Making Millions by Baby-Sitting

While Mom works, Kinder-Care plays part-time parent

The idea was as obvious as the mess created by a six-year-old tackling a bowl of spaghetti. If Holiday Inns sanitized and made respectable the once tacky motel, and McDonald's gave the nation hamburgers without heartburn, why couldn't the same techniques of standardization and mass marketing be applied to day-care centers for children?

Today, at 250 locations in and near major cities, the green Holiday Inn marquee and the yellow McDonald's arches have company: the red steeple housing a black plastic nonringing bell, the symbol of Alabama-based Kinder-Care Learning Centers, Inc. By offering a service that is safe, uniform and reasonably priced, it has become the largest network of places where parents can deposit offspring for a few liberating hours a day.

Kinder-Care is the prodigy of Perry Mendel, 56, a stocky, effusive former real estate developer whom some call the Colonel Sanders of child care. He opened the first center in Montgomery in 1969, pouring in $15,000 of his own money and $185,000 from assorted investors. The company has spread to 23 states, swamping immature competition (La Petite Academies, with 115 units, is a distant second). Kinder-Care is growing almost daily, and two weeks ago, Mendel announced that his company will acquire for stock Living and Learning Centers. Inc., which now operates 33 centers in New England.

With weekly fees of $28 (in Rome, Ga.) to $42 (in Columbia, Md.) and with 22,000 kids under its wing, Kinder-Care had revenues last year of $12.8 million, up 41% from the year before. Earnings have grown for seven straight years, to $745,180 in 1977; for the first nine months of this fiscal year they were up 65%. Kinder-Care stock, first offered in 1972, jumped from less than $1 in 1976 to $29 last week before a two-for-one split Friday. It has made a million dollars for each of 14 ground-floor investors from Montgomery; Mendel alone has stock profits of more than $5 million. Says Montgomery Investment Banker Nimrod Frazer, whose holdings are worth $335,000: "Kinder-Care is the biggest piece of capitalism that Montgomery has ever had."

The company has ridden several big social and economic changes. The women's movement, the divorce epidemic, inflation--all beckoned mothers to seek jobs outside the home. Even the decline in the birth rate boosted Kinder-Care. As school enrollments dropped, laid-off teachers were quite willing to work for Kinder-Care at the federal minimum of $2.65 an hour. Forty percent of Mendel's 2.300 day-care employees are former teachers; many of the rest are housewives in need of extra cash. Center directors receive only $11,000 a year, but Mendel offers them a plum: their kids can attend free.

Kinder-Care caters to a diverse and finicky clientele--infants in diapers to twelve-year-olds who participate in after-school programs. During the centers' eleven-hour day (7 a.m. to 6 p.m.), the young customers are offered hot breakfasts and lunches, swimming in a standardized 12-by 20-ft. pool, kindergarten-style teaching and Kinder Kits containing weekly study themes. Two staple objects of modern kid culture are missing: television and junk food. Mendel believes that kids thrive without them. The squealing children seem to enjoy the place, and parents appear to have no qualms about sending them there. Says Mendel: "We took the guilt [of leaving her child] away from the working mother."

Franchising, in which outsiders paid for operating rights to a Kinder-Care center, was tried and abandoned after service declined. Today the company owns about a fifth of its centers and leases the rest from developers, who pay for land and construction. This allows Kinder-Care to operate all its centers and expand with a minimum of cash. At the Montgomery headquarters building, in a sleek office park, a staff of 26 tracks purchases of everything from modeling clay to transportation vans. Center directors send in seven forms a week, reporting on matters as varied as attendance, roof repairs and bad checks. A supervisor visits each center every week, and Mendel, tooling around in a white Cadillac, often makes unannounced inspections.

Already the company is "diversifying." For sale at the centers are toys, T shirts and dancing lessons: insurance policies for kids are coming in the fall. Mendel is not worried about competition from any larger company that may try to enter the field, for it seems big enough for all comers. The nation is overflowing with 5 million preschool children of working women, and Mendel's law is that most of those kids could use better care than they are getting.

This file is automatically generated by a robot program, so viewer discretion is required.