When it comes to running and selling a daycare centre, occupancy is everything. The number of children enrolled directly affects your income, your profitability, and the value of your business. In this blog, we explain what “optimal” occupancy means, how it impacts your centre’s performance, and what buyers look for when reviewing your numbers.
What Is Considered Strong Occupancy?
In the daycare industry, 85% or higher occupancy is considered very strong. Many successful centres run at 90%–100% capacity, with only a few open spots during seasonal changes or transitions. If your centre is full or has a waiting list, you are in a great position. Buyers will see your business as in-demand, profitable, and resilient against competition. In fact, centres with 90%+ occupancy often earn profit margins of 20–25% or more before taxes. That level of performance is highly attractive to potential buyers.
What’s the Breakeven Point?
Most daycare centres need to reach 50–60% occupancy just to cover basic costs such as rent, staff wages, and utilities. This is called the breakeven point. If you are sitting just above breakeven (for example 60–65%), your centre may be seen as risky or underperforming. However, if you have grown from breakeven to 80%+ occupancy and can demonstrate that growth with solid numbers, buyers may find the story appealing as it shows potential for further improvement.
Does Size Matter?
Yes, centre size plays a role as well.
- Small centres (under 50 places): Can be profitable, especially in boutique or community settings, but may attract fewer buyers or slightly lower sale prices.
- Medium to large centres (70–120 places): Often considered ideal, as they benefit from economies of scale, meaning more children can be cared for without dramatically increasing overheads.
- Very large centres (150+ places): Can be valuable, but only in areas with strong demand. If licensed spots are consistently unfilled, buyers may question why.
📌 Tip: If you are licensed for 90 places but only ever enrol 60, expect buyers to ask about the gap. Be ready with honest answers, whether it is due to marketing challenges or low local demand.
Are You Charging the Right Fees?
Even a full centre may not be operating optimally if fees are too low. Buyers will assess:
- How much you charge per child
- How your fees compare to nearby centres
- Whether your pricing reflects the level of quality and service offered
If fees are lower than the local average, this could be seen as missed income but also an opportunity for the buyer to raise them after purchase. If fees are higher than average, make sure your quality and programs justify the premium.
How to Maintain Peak Performance During a Sale
If you are planning to sell, avoid easing off on operations. Stay strong—or even improve—by:
- Keeping marketing active to maintain enrolments and build a waitlist
- Tracking key numbers such as occupancy reports, utilisation, and profit data to justify your asking price
- Reducing unnecessary expenses while maintaining quality services
- Demonstrating stability with happy families, reliable staff, and a solid reputation
📌 Tip: It is often better to wait and improve occupancy than to sell at a discount. However, if your centre is underperforming and you are ready to move on, be realistic and let the buyer take on the challenge.
Be Ready for the Question
Most serious buyers will ask: “If the centre is doing so well, why are you selling?” Have a clear and honest answer prepared. Common reasons include retirement, health, relocation, starting another business, or lifestyle changes. What matters most is that your answer makes sense and aligns with the strong performance you are presenting.
Frequently Asked Questions About Occupancy and Performance
1. What is the ideal occupancy rate for a daycare centre?
Anything above 85% is strong. If you are at 90–100% with a waitlist, that is ideal and likely to attract a premium price.
2. What is the breakeven occupancy for most centres?
Most centres need 50–60% occupancy to break even. Below that, they are usually losing money.
3. Is it better to have a small centre that is full or a larger one that is not?
Both can be valuable. A larger centre with room to grow in a strong demand area often has more long-term appeal. However, a small centre at full occupancy with loyal families can also achieve a strong sale, particularly in markets that value boutique care.
4. Should I raise my fees before I sell?
Only if it makes sense. Fees should reflect your centre’s quality and reputation. If you are below the local average, a modest adjustment may be worth considering. Avoid major increases right before selling, as this could unsettle families or staff.
5. How can I improve occupancy before selling?
Some strategies include:
- Offering flexible sessions or casual care days
- Promoting your centre on local Facebook groups and parenting forums
- Running an open day or enrolment drive
- Reconnecting with past enquiries or families who left
- Asking current parents for referrals
6. What if I am under 70% occupancy?
You can still sell, but you may receive lower offers. Focus on showing that there is a plan for growth, local demand, and recent improvements. Alternatively, consider delaying the sale until occupancy improves.