New Harbor was early in identifying the compelling drivers of the early childhood education market and its significant potential for secular growth: the increasing importance of education in a knowledge economy, a heightened awareness of the strong causal link between early education and academic achievement, parents’ increasing desire to provide their children with competitive advantages, and accelerating demand for quality programming. We believe these sustained trends combined with the lack of public programming for early age groups (ages 0 – 3) created substantial opportunity for private-sector solutions. New York Kids Club (“NYKC” or the “Company”), a premier operator of preschool and early childhood enrichment programming with an extensive footprint in the highly desirable New York City market, is at the cutting edge of meeting this demand.
In 2015, New Harbor partnered with the NYKC founder to invest in these strong fundamental trends. From its founding in 2000, the Company had grown quickly to 11 locations and 225 employees serving approximately 40,000 children annually. The Company’s core offering of a prestigious NAEYC accredited preschool program for children ages two to four is supplemented by a diversity of enrichment classes (e.g., cooking, gymnastics, dance), camps, open-play, and birthday parties for children ages two months to ten years. The array of offerings is designed to foster superior facility utilization while expanding the addressable age group and ensuring sufficient programming novelty to retain students for multiple years. This, combined with the Company’s leading reputation for academic excellence, high-end hospitality orientation, and unrivaled geographic footprint made NYKC a standout platform in the industry.
Our investment management plan focused on accelerating the Company’s development of new locations within the existing New York market, expanding into a new geography, and further developing the leadership team to support continued growth. During our ownership, the Company approximately doubled the number of locations and created a highly replicable playbook for facility site selection and launch. That playbook allowed NYKC to consistently open multiple sites per year prior to COVID-19. In addition, the Company expanded into its first new geography (Chicago), and substantially developed the organizational leadership to effectively manage the rapidly growing operations (e.g. President, Director of Preschool, VP of Marketing, CFO, strategic board of directors). Numerous organic revenue growth and operational efficiency improvement initiatives combined to create a significant runway for growth.
Since New Harbor invested in 2015, the demand for early childhood education services continued to grow each year as anticipated. At the same time, however, the operating environment became more complicated with increased compliance requirements and greater expectations. Furthermore, the industry was severely impacted by regulations related to COVID-19, which forced many of its competitors out of business. Nonetheless, with a twenty-year track record of academic excellence, an acute focus on quality and compliance, and an outstanding reputation, NYKC is well-positioned to continue addressing the expanding market demand in a post-COVID-19 environment.
New Harbor exited its investment in NYKC in September 2021.