The group will close its 100-place flagship Lowestoft nursery in two weeks'
time because occupancy levels have dropped to less than 30 per cent.
The Ipswich nursery, which is registered for 78 places, will also close in early April.
The closures coincide with the end next month of the three-year Government subsidy for neighbourhood nurseries.
Wind in the Willows continues to operate 13 neighbourhood nurseries. It also has a partnership in five children's centres.
Company secretary Brian Pearce told Nursery World that the Lowestoft setting had needed to be running at 60 per cent in order to be a viable business. He said he could not pinpoint one factor for the nursery's failure.
'I can't understand why it wasn't fuller. There is a suggestion that the demographic (the number of under-fives) in the area has fallen,' he said.
'Government funding was designed to get us through two-and-a-half years.
The uptake was slower than expected. We struggled to keep the fees down.'
However, the rise in the minimum wage, which has gone up more than inflation, compelled the chain to put its fees up to cover staff costs.
The group took on board the fact that parents using the nursery would be on low incomes, many working close to the minimum wage themselves, he said.
Wind in the Willows also closed its 80-place Dudley nursery just before Christmas.
Mr Pearce said, 'Perhaps we should have closed some nurseries earlier, but we had hopes. We've reached the point where we had to take action. Numbers may rise to the right levels (in the remaining settings).
One Neighbourhood Nursery in Tameside, Manchester, had 'filled up quite quickly' and was operating at 85 to 90 per cent.
Mr Pearce said, 'The priority for the business is to ensure its continued viability. We're working closely with local authorities in the other areas to meet the needs of everyone.'
Mr Pearce said a small group of directors now managed the nursery group, after former chief executive Tom Hobbs became a non-executive director last year.
Neil Leitch, director of communications at the Pre-school Learning Alliance, which has over 30 neighbourhood nurseries, said that the majority of NNI providers faced similar dilemmas with sustainability and that the take-up of daycare in the areas of deprivation where they were set up had not been anything like the levels anticipated.
The Alliance neighbourhood nurseries were operating at around 50 per cent occupancy, but in order to offer affordable, flexible childcare, it should be more than 60 per cent, he said.
Mr Leitch called on the Government to prioritise funding for neighbourhood nurseries in the Comprehensive Spending Review.
He said, 'The funding is coming to an end and continued funding is critical to the ongoing viability of these nurseries. Early intervention is often talked about and this is definitely one case for early intervention.'
