The Helen McArdle Group (HMC), a newcomer to Nursery Chains, looks set to become a big contender. The group has switched from running a large care homes business to starting up nurseries. They have built two 112-place nurseries in north-east England and Mark McArdle, chief executive of HMC, plans to open another three this year.
Until last November HMC's main operations were its 24 care homes in the region - a business created by Mr McArdle's mother 17 years ago. When the care home business was sold for 100 million it had an annual turnover of 20 million, employed 1,300 staff and the homes had 1,300 residents.
Mr McArdle says, 'A lot of the principles affecting both businesses are exactly the same. The fundamental principle is that you have a high quality environment to employ people and train them to care for vulnerable human beings. They are simply different ends of the age spectrum.'
He says the company decided to move into the nursery sector because it was complementary to the care home market, with many common suppliers and a similar inspection regime. 'We have been very successful with care homes and we felt that we could also be successful in the nursery business. It is probably where the care home business was 10 years ago in the sense that it is still quite fragmented. Some bigger groups are beginning to emerge, but a lot of it is basically small businesses, with nurseries created out of converted houses,' he adds.
In trust
The first two nurseries to launch in partnership with Northumbria Healthcare NHS Trust at the North Tyneside General Hospital in North Shields and Wansbeck General Hospital in Ashington opened within two weeks of each other in April last year. HMC bought the land off the trust and part of the deal involved providing 'a block booking' for hospital staff, with about half the places heavily subsidised.
Mr McArdle says that initially the Trust was concerned that it might not be able to take up its allocation of places, but they have been filled very quickly. He adds, 'Both nurseries have been very successful. Opportunities for links with NHS trusts are limited, but if we can get more we would like to because we have done all the hard ground work and have service agreements set up.'
One of the three new nurseries planned this year will involve links with an NHS trust. A main feature of the first two new-builds has been a central multi-purpose atrium area, which, Mr McArdle says, is airy, light and provides easy access to the three age groups of children. It can be used as a dining area but is quickly converted back into a space for children to play. Mr McArdle explains, 'We did not want corridors because we felt that seemed too institutionalised and would make the nurseries seem too much like school. We were also very keen that the children should be able to see from one room to the next so they would be familiar with their surroundings when they moved up a group.'
High quality
While Mr McArdle acknowledges that supply is outstripping demand in some areas, he is confident of commercial success because HMC's nursery trading arm, Kids 1st Day Nurseries, will target the upper end of the market. 'We are charging 35 a day for babies and are aiming for young professionals who are more likely to take up a full-time nursery place, rather than two half-day sessions, which is what tends to happen at the lower end of the market,' he says.
He also points out one key commercial benefit which differentiates running care homes from nurseries. He explains, 'In the care home business our fees were pretty much dictated to us as most of the residents were funded by the local authority and unfortunately they set the fees and that's what we got.
In nurseries it is refreshing that it operates more like a normal market - if people like it they are prepared to pay the fees you set.'
Meanwhile property group King Sturge is searching for more sites for HMC which, Mr McArdle says, plans to open three nurseries a year 'for the next couple of years'. These will be 'near high quality housing estates, where you could expect a double-income family with young kids, on grade A business parks or on a good commuter route where parents can drop their children off on their way to work'.
He adds, 'If you are offering good quality - and we are confident that we are - then there will be a demand for it.'
