Financials for the childcare industry over the last year have continued to demonstrate an uncertain ebb and flow of outcomes. While more centers were open in 2021 than 2020, enrollment was still well under pre-COVID numbers. This was due to many caregivers still being unemployed or working from home. In the fall of 2021, people were starting to go back to their workplace, however many childcare centers were not able to hire enough qualified individuals to open enough rooms to support the demand. This resulted in the majority of childcare centers having to turn away new enrollments.
For the second year in a row more childcare centers declined in revenue (41%) versus those reporting growth (36%)2021/2022 Childcare Benchmark Report
Revenue and net income growth year over year
In our recently released Childcare Benchmark Report, we found that for the second year in a row, more centers declined in revenue (41%) versus those reporting growth (36%). Of those responding to the survey, 22% stated their revenue stayed the same. Net income results closely mirrored the revenue performance with 42% of the reporting providers showing a decline compared to the 33% of those that grew, while 24% of reporters stayed the same.
This trend of declining revenue will more than likely continue as long as staff shortages keep centers from growing their enrollment. The rising cost of labor, goods, and services will likely also cause a further decline in the growth of net income. The survey participants are very aware of the risks they are facing as they identified their top two risks for 2022 as financial and labor.
Revenue growth strategies for 2022
Due to the staffing crisis and subsequent under-utilization of potential enrollment slots for children, childcare business owners know they are facing an uphill battle when it comes to revenue. Therefore, it is no surprise that 57% are considering price increases for 2022 compared to only 35% in 2020. In spite of the difficulty in recruiting and retaining qualified staff, 17% are considering expanding their locations and 11% are looking at acquiring new locations. These are the individuals looking ahead to when everything returns to “normal”. Hopefully, many of these new or expanded locations will be located in the many communities that lack an adequate supply of licensed childcare, commonly referred to as ‘childcare deserts.’
Childcare centers going into the spring of 2022 are most focused on parent satisfaction and employee retention. These two priorities go hand in hand as parents form deep, special bonds with their children’s educators and want to see consistency in who is looking after their children year after year. The more staff childcare owners and operators can retain and keep motivated, the more enrollment they can support and revenue they can generate. Not to mention keeping parents happy!