# Childcare Model See how enrolment, tuition, staffing, and capacity shape a childcare business. - Canonical: https://finamodel.com/templates/childcare - Excel download: https://finamodel.com/templates/childcare.xlsx - Category: Consumer - Model type: Operating model - Difficulty: Intermediate - Audiences: Investors & analysts, Founders & operators, Private equity associates, Childcare operators, Corporate development teams, Lenders, Childcare and early-education operators, PE associates and partners, Investors and analysts, Multi-site platform CFOs - Tags: childcare, daycare, early-education, operating-model, dcf, early education, staff ratios ## Overview This model helps you plan a childcare centre or group of nurseries. It links enrolment across age groups, tuition, and ancillary services to the educators, facilities, meals, and supplies needed to provide quality care. Use it to assess a new centre, an acquisition, or an expansion plan. Test occupancy, fees, staffing levels, and opening timing to understand the effect on cash flow and business value. ## What's included - Capacity inputs: Year-1 centers, new centers per year, licensed places per center, occupancy with ramp and ceiling - Enrolment mix: infant, toddler, preschool, and school-age shares of enrolled children - Staffing ratios: regulated children per teacher by age band - Tuition and fees: per-place tuition by band, escalation, registration fees, government subsidy - Cost structure: teacher salary, benefits, wage growth, admin, food, occupancy, marketing, SG&A, depreciation, tax - Capital and working capital: maintenance capex, build-out cost per center, NWC, base-year revenue - Valuation: WACC, terminal growth, net debt, shares outstanding - Enrolment sheet: center roll-forward, licensed places, occupancy, enrolled children by band, teaching-staff build - Revenue sheet: tuition by band, registration fees, government subsidy, total revenue - P&L sheet: revenue to net income with headcount-driven labour and depreciation, margins, identity check - FCF sheet: NOPAT, depreciation add-back, capex, change in NWC, unlevered FCF, discount factor, PV - Valuation sheet: sum of PV, terminal value, enterprise value, equity value, value per share, implied EV/EBITDA - Dashboard with centers, enrolled children, occupancy, child-per-teacher ratio, EBITDA margin, EV, per share, revenue mix - Tuition and fees: per-place tuition by band, escalation, registration fees, government subsidy % - Cost structure: teacher salary, benefits, wage growth; admin, food, occupancy, marketing, SG&A, depreciation (% of revenue); tax - Capital and working capital: maintenance capex %, build-out cost per center, NWC % of revenue growth, base-year revenue - Enrolment sheet: center roll-forward, licensed places, occupancy, enrolled children by band, and a teaching-staff build - Dashboard with centers, enrolled children, occupancy, child-per-teacher ratio, EBITDA margin, EV, per share, and revenue mix - Center roll-forward (opening + new = closing) with occupancy ramp and practical ceiling - Enrolment build by age band (infant, toddler, preschool, school-age) from licensed places x occupancy - Regulated teaching-staff headcount derived from per-band children-per-teacher licensing ratios - Revenue build: tuition by age band, registration & activity fees, and a government subsidy as a percentage of tuition - P&L from revenue through headcount-driven teaching labour, admin, food, occupancy, marketing and SG&A to EBITDA - Unlevered free-cash-flow bridge and DCF to enterprise value, equity value, value per share, plus a one-page dashboard ## How the Childcare Financial Model Works: Enrolment, Staffing Ratios and Valuation This childcare financial model projects a multi-centre early-education operator over seven years and values it with an unlevered DCF. It connects licensed places and occupancy to enrolled children by age band, derives teaching headcount from regulated ratios, and carries the result through revenue, costs, free cash flow and enterprise value. ### What Drives the Estate and Enrolment Build The operating engine starts with the centre roll-forward: opening centres plus new greenfield openings equal closing centres, and closing centres multiplied by regulated places per centre give licensed capacity. - Occupancy begins at a Year 1 input, ramps by a fixed number of percentage points each year, and stops at a practical ceiling, since centres rarely fill completely because of waitlist friction and mismatches between age-band capacity. Enrolled children are simply licensed places times occupancy. - Enrolment is then divided across infant, toddler, preschool and school-age bands using mix shares, so the age profile of the estate stays visible rather than being averaged away. That matters because each band carries a different economic weight, and the model lets you flex the build pipeline and the occupancy ramp to see how quickly enrolment compounds. ### The Staffing Engine and Why Labour Is Headcount-Driven Required teachers by band come from band enrolment divided by the licensing ratio for that band, with infants the tightest and school-age the loosest. - Total teachers is the sum across bands, and the blended children-per-teacher ratio is reported as a headline operating metric. - The consequence is that teaching labour, the dominant cost, moves with headcount and age mix rather than sitting as a flat percentage of revenue. - An infant-heavy enrolment therefore carries far more teachers per dollar of tuition than a preschool-heavy one, because wider ratios apply to the youngest children, where supervision and room setup are most intensive. ### Revenue, Costs and Operating Leverage Tuition is built band by band from enrolment, per-place tuition and compounded escalation, so both the infant premium and preschool volume show through. Registration and activity fees scale with total enrolment, and a government subsidy is layered on as a percentage of tuition. - On the cost side, teaching labour follows total teachers, salary, wage growth and benefits, while admin, food, occupancy, marketing, corporate SG&A and depreciation are set as percentages of revenue. Because tuition escalates faster than wages by default, the EBITDA margin expands modestly across the horizon. - That is the operating leverage scaled childcare platforms depend on, and it is the relationship most worth flexing when testing an expansion plan. ### Free Cash Flow, Valuation and Practical Use The cash flow bridge starts with EBIT, applies unlevered tax to reach NOPAT, adds depreciation, and deducts maintenance capex as a percentage of revenue plus growth capex for the year's new centres. Working capital is treated as favourable because tuition is billed in advance. - Unlevered free cash flow is discounted at WACC, and the valuation sums the present value of explicit cash flows and a Gordon-growth terminal value to reach enterprise value, then subtracts net debt for equity value and value per share, with implied EV/EBITDA shown. The dashboard gathers centres, enrolment, occupancy, child-to-teacher ratio, revenue, EBITDA and value per share. - Use the model to compare a new centre, an acquisition or an expansion, adjusting occupancy, fees, staffing and opening timing. It is an unlevered valuation, so financing structure is excluded by design. ## Ratios and occupancy drive the model Revenue scales with enrolled places, but labour, the dominant cost, is set by the staff-to-child ratios licensing imposes on each age band, so the infant-heavy end of the mix carries far more teachers per dollar of tuition than preschool. Enrolled children equal licensed places times occupancy, required teachers equal band enrolment divided by the band ratio, and the blended child-per-teacher ratio is a headline operating metric an analyst can flex against the cost stack. ## Designed for one-edit responsiveness Every input, the build pipeline, occupancy ramp, age mix, the full tuition and cost stack, capex, working capital, and the WACC, is a named-range cell. Edit one and the enrolment build, revenue, P&L, free-cash-flow bridge, valuation, and dashboard all recompute. No formula rewrites are needed to test a pricing, wage, or expansion scenario. ## An unlevered DCF, not an EBITDA shortcut Childcare carries real depreciation and capex on leasehold fit-out and FF&E and favourable working capital because tuition is billed in advance, so the model bridges to unlevered free cash flow and discounts it at a WACC with a Gordon-growth terminal value. Enterprise value bridges through net debt to equity value and a per-share figure, and the implied EV/EBITDA falls out as a sanity check against the high-single to low-double-digit sector range. ## Workbook structure ### Cover Workbook overview, sheet legend, units, and tab-colour key. - Title and scope framing - Sheet-by-sheet purpose summary - Units and tab-colour legend ### Assumptions Every driver in one sheet: capacity, mix, ratios, tuition, costs, capital, valuation. - Year-1 centers, new centers per year, licensed places per center, occupancy with ramp and ceiling - Infant, toddler, preschool, and school-age shares of enrolled children - Child-per-teacher ratios by band - Tuition by band, escalation, registration fees, government subsidy - Teacher salary, benefits, wage growth, and the percent-of-revenue cost lines, tax - Maintenance capex, build-out cost, NWC, base-year revenue - WACC, terminal growth, net debt, shares ### Enrolment Centers, places, children, and staff. - Opening plus new centers equals closing centers - Licensed places equal closing centers times places per center - Occupancy ramps from a Year-1 input, capped at a ceiling - Enrolled children equal licensed places times occupancy - Enrolment by age band and total enrolled - Required teachers by band, total teachers, blended children per teacher ### Revenue Revenue by stream. - Tuition by band equals band enrolment times per-place tuition times escalation - Registration and activity fees on total enrolment - Government subsidy as a percent of tuition - Total revenue ### P&L Revenue to net income. - Total revenue from the Revenue sheet - Teaching labour equals total teachers times salary times wage growth times a benefits load - Admin, food, occupancy, marketing, and SG&A as a percent of revenue - EBITDA equals revenue less total operating costs - Depreciation, EBIT, tax on positive EBIT, net income, margins, identity check ### FCF Unlevered free cash flow bridge. - EBIT and unlevered tax from the P&L - NOPAT equals EBIT less unlevered tax - Add back depreciation - Maintenance capex on revenue and growth capex on new centers - Change in net working capital on revenue growth - Unlevered free cash flow - Discount factor and PV of UFCF ### Valuation Discounted cash flow. - Sum of PV of explicit UFCF - Gordon-growth terminal value and its PV - Enterprise value - Less net debt to equity value - Shares outstanding and value per share - Implied EV/EBITDA ### Dashboard Headline metrics and revenue mix. - Centers, enrolled children, occupancy, child-per-teacher ratio - Tuition per place, revenue, and EBITDA - EBITDA margin - Enterprise value and value per share - Revenue mix across tuition, registration, and subsidy ## Features - **Ratios and occupancy drive the model:** Revenue scales with enrolled places, but labour - the dominant cost - is set by the staff-to-child ratios licensing imposes on each age band, so the infant-heavy end of the mix carries far more teachers per dollar of tuition than preschool. Enrolled children equal licensed places times occupancy, required teachers equal band enrolment divided by the band ratio, and the blended child-per-teacher ratio is a headline operating metric. - **Headcount-driven labour, not a flat percent:** Teaching labour is built from total teachers times salary times a wage-growth factor and a benefits load, so the model captures the operating leverage that scaled childcare platforms rely on: because tuition escalates faster than wages by default, the EBITDA margin expands modestly over the horizon. Every other cost line is a transparent percent of revenue. - **An unlevered DCF, not an EBITDA shortcut:** Childcare is leasehold and fit-out intensive and carries favourable working capital because tuition is billed in advance, so the model bridges EBITDA to cash through NOPAT, depreciation, maintenance and growth capex, and the change in working capital, then discounts the unlevered free-cash-flow stream at a WACC with a Gordon-growth terminal value to a defensible enterprise and equity value. - **Ratios drive labour, occupancy drives revenue:** Revenue scales with enrolled places while labour - the dominant cost - is set by the staff-to-child ratios licensing imposes on each age band, so the infant-heavy end of the mix carries far more teachers per dollar of tuition. - **Age mix as a margin lever:** Shift the infant / toddler / preschool / school-age mix and watch the blended child:teacher ratio, labour cost and EBITDA margin move together. - **Subsidy and prepaid economics:** A government subsidy as a percentage of tuition is modelled explicitly, and working capital is favourable because tuition is billed in advance - a cash tailwind for scaled operators. ## Use cases - **Intrinsic valuation:** Set the build pipeline, occupancy ramp, tuition, the cost stack, and a WACC, and read the enterprise value, equity value, value per share, and implied EV/EBITDA. Sense-check the multiple against the high-single to low-double-digit range scaled childcare platforms change hands at. - **Roll-up and pipeline planning:** Flex new centers per year and the build-out cost per center to see how the development pipeline consumes cash and lifts enrolment, and watch the blended child-per-teacher ratio and EBITDA margin respond as the estate scales. - **Wage and pricing stress test:** Push wage growth above tuition escalation, or cut the occupancy ceiling, to model a tight labour market or a soft-demand year, and read the EBITDA-margin and valuation impact as labour intensity moves against pricing. - **Platform underwriting:** Flex the build pipeline, occupancy ramp, tuition escalation and wage growth to test whether a childcare platform clears the equity hurdle. - **Capacity and staffing planning:** Use licensed places, occupancy and the per-band ratios to size required teachers and the labour bill across the estate. - **Board and IC reviews:** Hand the dashboard to a board or investment committee as a single-page view of centers, enrolled children, occupancy, child:teacher ratio, EBITDA and value per share. ## Frequently asked questions ### What is a childcare model? A childcare model captures the seven-year operating economics and intrinsic value of a multi-center childcare (daycare / early-education) operator. It rolls a center count forward, converts licensed places and occupancy into enrolled children by age band, derives a regulated teaching-staff headcount from per-band ratios, prices tuition by band plus registration fees and a government subsidy, runs the cost stack to EBITDA, and discounts an unlevered free-cash-flow stream to enterprise value, equity value, and value per share. It is how a private-equity associate, operator CFO, or lender values a childcare platform. ### Why are staff-to-child ratios so important? Licensing sets a maximum number of children per teacher for each age band, typically about four-to-one for infants and far looser for school-age, so the staffing cost of a center is driven by its age mix, not just its headcount. The model derives required teachers band by band and reports a blended child-per-teacher ratio, which is why the infant-heavy end of the mix carries more labour per dollar of tuition than preschool. ### Why is teaching labour headcount-driven instead of a percent of revenue? Teaching labour is the largest cost in a childcare center and is set by enrolment, mix, and the licensing ratios rather than by revenue, so the model builds it from total teachers times salary times a wage-growth factor and a benefits load. Because tuition escalates faster than wages by default, the EBITDA margin expands modestly over the horizon, the operating leverage scaled operators rely on. ### Why an unlevered DCF instead of an EBITDA multiple? Childcare runs healthy EBITDA margins but carries real depreciation and capex on leasehold fit-out and FF&E, so EBITDA overstates cash. The model bridges to unlevered free cash flow, NOPAT plus depreciation, less capex, less the change in working capital, which is favourable because tuition is collected in advance, and discounts it at a WACC, then adds a Gordon-growth terminal value. The implied EV/EBITDA falls out as a sanity check rather than as the valuation input. ### Can I make it a levered or single-center model? The template is a single-entity unlevered DCF. For an equity-IRR view, add a debt schedule and bridge to levered free cash flow; for a single center, set the estate to one center and size places, occupancy, and the age mix to that location. The net-debt line already bridges enterprise value to equity value, so a financing layer slots in cleanly. ## Related templates - [Pet Care Roll-Up Model](https://finamodel.com/templates/pet-care) - [Senior Living Facility Economics Model](https://finamodel.com/templates/senior-living-model) - [Gym and Fitness Studio Operating Model](https://finamodel.com/templates/gym-model) - [DCF Model](https://finamodel.com/templates/dcf-model)