The Learning Experience’s David Slavny On Child Care As a Credit Tenant

Meanwhile, an enrollment at The Learning Experience can cost $26,400 a year for a pre-K child. Infants can cost $30,000 to $36,000 a year.  

David Slavny, Deerfield Beach, Fla.-based Learning Experience’s executive vice president for development, was a major player in selecting those 12 New York-area locations. As of Feb. 9, the chain — owned by private equity firm Golden Gate Capital out of San Francisco — had 378 locations, including two in the United Kingdom.

Each of the New York-area locations cost between $3.2 million and $3.5 million, according to the company’s national averages. Each will employ up to 40 staff members, serving upward of 180 children per location ranging in age from 6 weeks to 6 years. There are three sites in Brooklyn, one on Bushwick Avenue opening this month, and two more on the way in late 2024 and early 2025. There are also sites in Manhattan, Queens and Staten Island; Farmingdale, Smithtown and Port Jefferson in Long Island; and New City and Poughkeepsie upstate.

Slavny jumped on a call earlier in February to explain the ins and outs of siting a Learning Experience location. There’s more to it than just opening the doors and letting kids in. 

This interview has been edited for length and clarity.

Commercial Observer: Talk to me a bit on what makes for a good Learning Experience location.
David Slavny: So New York City is a bit of a different animal. We’re in 35 states nationwide. I would tell you that our typical setup is 10,000 square feet, with a 5,000-square-foot playground.

In New York City, there’s no place to build that. So, as you can imagine, we’re on the ground floor of office buildings. In New York, they are all typically 10,000 square feet, the playground can be a challenge as you can imagine because sometimes they’re inside the buildings, sometimes they’re on the top of the building; you have one where the playground was part of the parking garage; and there are cases where we use a local park, but that park has to be extremely close and accessible.

Typically, you will have 10 rooms. And, typically, they would be broken up by infants, toddlers and pre-K. And they also include a larger room, which we call Make Believe Boulevard. And that room is more of a recreational room inside the location. Sometimes that room will have what we call our board — a large-screen interactive monitor in each location, our virtual learning and educational board, which is run by our curriculum.

In New York City, you have to work with what you have, but the basic premise remains the same: We’re looking for high incomes, we’re looking for density, none of which is a problem in New York City; traffic flow, which, again, is never a problem in New York City. In the middle of Oklahoma, obviously it’s a different challenge.

So you’re saying locating in the New York area presented certain challenges, but you were able to find 12 locations. A few, of course, were in suburbia but quite a number were within New York city limits. What were those challenges and how did you overcome them?
To be clear and to add a little more to the conversation, we today have 34 locations up and running in the state of New York. Some of those are upstate, some are downstate, some are on Long Island. So that’s another 12 on top of the 34.            

To your question about the challenges, clearly there were challenges when you’re looking at a 20-year-old building, a 100-year-old building. We looked high and low for good opportunities for them to be affordable. We had to look at how much would be spent on tenant improvements to make sure the numbers work. And we have been lucky to find great developers.

Our model is not to build buildings, nor do we do tenant improvements. We identify locations that meet our criteria. The developer is really the one who is doing the buildout to our specs.

These days keeping people coming to the office seems to be a challenge. And there’s lots of talk about amenities helping to make that happen. I can think of no more powerful amenity than having a place you can leave your children and not have to worry about them — and that they might learn something while you’re trying to bring home the bacon. So I’m wondering if the market is coming to you?
You’re dead on. There’s no more powerful use of space than child care for many reasons. 

One, as COVID pointed out, it is an essential need. Two, if you’re going to work, you have to put your child somewhere. Three, it’s called the Learning Experience for a reason. We have our own proprietary curriculum that includes philanthropy — we’re a big supporter of Make-A-Wish — and we support all sorts of things like music and coding that we do in early education.

Our parents are a really sought-after demographic. So, we are really activating the neighborhood. You do the simple math: You have 150 kids, which means you have at least 150 parents, which is really 300 parents, plus grandparents that are coming to drop off their children in the morning, then maybe go get a cup of coffee or a doughnut or go by Walgreens, and then in the evening do it all over again. So we bring what we consider a very valuable demographic.

I notice that you are a chain, you’re marketing a brand, and there are many one-off centers out there. So talk to me a little bit about franchising and why you think it’s actually superior to all the one-off providers.
Let me give you some background. The company was actually founded in Northern New Jersey — the first location was in Ramsey. We are based in Deerfield Beach, Fla. And we also have a very unique model in that we are roughly a 90-10 mode, meaning we franchise 90 percent of our locations, and we actually operate the 10 percent of our locations corporately, which makes us extremely unique in the franchising world.

This allows us to understand where we’re operating. We operate corporate centers in New York, Florida and California. We have a feel for these different markets on a corporate level.

You’re getting the standardized brand, but you’re also getting local ownership. Every field is slightly different. We’re not quite McDonald’s, where every single McDonald’s looks exactly like the other. Each of our locations is slightly different, built to the same standards, and operates the same from everything from our door access to our financial platforms — everything built internally. But everything is customized.

We were recognized as the fastest-growing child care franchise in the United States, the most profitable, the most innovative. So it would appear that it’s working.

With the decline that we have seen in retail, has that made it easier for you guys to locate your businesses?
Other than in the New York City boroughs, we don’t do tenant improvements very often. I’ll never say never. We have renovated pre-existing buildings that have just happened to have been in an amazing Main-and-Main-type area. But 90-plus percent of what we do are ground-up built. We’re not the builders. We have a stable of developers we work with across the country who deliver turnkey locations. However, the New York boroughs are very different, and most of our locations are tenant improvements.

Are we closing the door? Maybe because a Walgreens or a CVS is closing down, maybe that would open up a door for us. We don’t really know that market. And, everything we do, with a few exceptions, is really about identifying a site and building a brand-new building.  

It sounds like with you looking at 10,000 square feet, I would imagine your competition might be large restaurant chains on the outparcels of regional malls. Am I correct in that?
We as an organization are looking for the same clientele as a Lowe’s home improvement store, an Applebee’s, or a Chick-fil-A. And when we’re doing our site selection, we do pretty thorough work, we look at what else is around, who else is in the area. Oftentimes, we run into the same people who were across the street at a Lowe’s or down the street from a Starbucks.

Oftentimes, too, it’s another sign that we’re probably looking in the right spot. They did relatively the same homework. They’re looking for incomes, large lots, growth areas, and lots of people.

Do you find yourself desired as a tenant? A good credit?
Without a doubt. It’s very desirable for landlords because landlords might also have drugstores and beauty stores and other things that that same parent is looking for. I’m sure there’s a fairly high percentage of parents that after they drop their kid off or pick them up are also picking up food on the way home, or going to the grocery store, or picking up medicine or doing something else. We drive a lot of a very desirable demographic to the mall.

We are over 20 years old. Our default rate is less than 2 percent. We’re a very desirable tenant. Our typical lease is a 15-year lease, with one or two five-year options. So it can be 25 years long.

One thing I noticed is that you chose to have two locations in or around the Bushwick section of Brooklyn. So it feels like you are tracking trendy areas that are changing, gentrifying, that people from an older generation probably wrote off. Talk about what drives you to a Bushwick.
You said it perfectly. The areas are changing, they’re growing. There were developers saying, “Let me build something new. Let me build a restaurant.” Now they come in and they say, “Bushwick is hot, there’s a new trendy restaurant, there’s a new club.” And that starts developers reaching out to us. You really should be looking at Bushwick. There’s a new age group moving in.