Nursery Bankruptcies at Record Pace: The Era of "Selection" Approaches Due to Declining Birthrate and Rising Costs

2025年07月09日 13:50

Introduction
Latest Data on Bankruptcies and Closures (First Half of 2025)
Background ① Drastic Changes in Demand Structure Due to Declining Birthrate
Background ② Shortage of Nursery Teachers and Rising Labor Costs
Background ③ Inflation and Fixed Cost Pressure
Case Study: Pitfalls Observed in the Closure of Small and Medium-sized Nurseries
Survival Model: High Value-Added and Transition to Certified Childcare Centers
Government and Local Government Support Measures and Their Limitations
Impact on Parents and Local Communities
Future Outlook and Recommendations
Conclusion

1. Introduction

The nursery industry has been moving towards "shrinking equilibrium" at an unprecedented pace in recent years. The latest survey by Teikoku Databank (TDB) vividly illustrates the severity of the management risks facing the industry.tdb.co.jpThis article provides an overview of the trends in bankruptcies and closures, while examining structural issues and survival strategies from multiple perspectives.

2. Latest Data on Bankruptcies and Closures (First Half of 2025)

Sharp Increase in Numbers—In the first half of 2025 (January to June), there were 22 cases of bankruptcies, closures, and dissolutions, a 70% increase compared to the same period last year. It is highly likely that the annual total will reach a record high.tdb.co.jp
Scale of Liabilities—The average debt per case is 36 million yen, which is small, but the impact is greater on operators with weak management strength.prtimes.jp
Regional Distribution—Polarization is evident between suburban areas and regions where population decline has become apparent. In urban areas, competition is intensifying, while in rural areas, demand is dwindling.

POINT
About 40% of bankruptcies and closures are due to "voluntary withdrawal," not just "business failure." The main reasons are the lack of successors and difficulty in securing personnel.

3. Background ① Drastic Changes in Demand Structure Due to Declining Birthrate

The total number of births fell below 700,000 in 2024, and further decline is expected in 2025. The number of children on waiting lists has decreased from over 80,000 at its peak to 2,944, with 90% of municipalities achieving "zero waiting lists."mhlw.go.jpAs a result, competition to attract children has intensified, and the disparity in operating rates among nurseries has widened.

4. Background ② Shortage of Nursery Teachers and Rising Labor Costs

The effective job openings-to-applicants ratio for nursery teachers is 2.77 times the national average (as of May 2025).
In fiscal 2023, 29.1% of nursery operators were in the red, and 25.2% experienced reduced profits.tdb.co.jp
The average monthly wage increase for securing personnel is 38,000 yen. The wage cost ratio reaches 73% overall, squeezing profits.

5. Background ③ Inflation and Fixed Cost Pressure

The cost of food ingredients for school lunches has risen by 18% compared to 2021, and utility costs have increased by 23%. With the "free provision" for 3-5-year-olds, raising entrance and childcare fees is difficult, exacerbating profitability deterioration.prtimes.jp

6. Case Study: Pitfalls Observed in the Closure of Small and Medium-sized Nurseries

6-1 Closure of JP Holdings' Certified Nurseries

Even the industry giant JP Holdings closed multiple nurseries in Tokyo at the end of fiscal 2024.jp-holdings.co.jp

6-2 Voluntary Closure of Small Rural Nurseries

A small certified nursery with a capacity of 19 in a mountainous area closed in March 2025 due to the inability to secure nursery teachers. The capacity utilization rate was below 50%, making sustainability impossible.

Lessons
① A personnel cost ratio exceeding 80% is a danger zone
② It is difficult to achieve economies of scale with single-facility management
③ An alternative childcare network is essential in emergencies

7. Survival Model: High Value-Added and Transition to Certified Childcare Centers

Introduction of Specialized Programs—Investing in becoming a "chosen nursery" with English, STEM, gymnastics classes, etc.
Transition to Certified Childcare Centers—Increase in grant unit price and securing operational flexibility.
Joint Purchasing and ICT Implementation—Collaborative corporations purchase meals and consumables in bulk, reducing costs by 10%. There are also cases where cloud-based time and shift management reduced administrative work by 600 hours annually.

8. Government and Local Government Support Measures and Their Limitations

Expansion of Treatment Improvement Additions II—Continued wage increase equivalent to an average of 10,000 yen per month in the 2025 budget. However, the financial resources are limited due to national treasury subsidies and user burden reductions.
Universal Nursery Attendance System—While expanding use reveals latent demand, additional costs arise for system adaptation.

Limitations
Subsidies are often "earmarked for personnel costs," making it difficult to allocate them to capital investment or DX expenses. There is also significant disparity between municipalities.

9. Impact on Parents and Local Communities

Cases where parents are forced to transfer their children due to sudden nursery closures are increasing, with 24% of families experiencing a commute time extension of more than 30 minutes one way. The impact on single-parent families is particularly severe, raising concerns about increasing workplace resignation rates.

10. Future Outlook and Recommendations

M&A and Networking—Fostering regionally collaborative corporations that consolidate small nurseries and share management departments.
Acceleration of DX—Optimizing personnel allocation with AI and eliminating paper forms to reduce annual labor costs by 3-5%.
Introduction of Outcome Evaluation—Visualizing facility evaluation through "children's developmental outcomes" to enhance the objectivity of subsidy allocation.
Strengthening Governance—Mandating financial disclosure to build a scheme where parents can pre-check the soundness of management.

11. Conclusion

The increase in nursery bankruptcies and closures is a consequence of the dual challenges of declining birthrates and rising costs, as well as a selection process that promotes the reallocation of facilities, personnel, and funds. Nurseries that continue to be "chosen" by focusing on large-scale operations, high value-added, and efficiency through DX will survive, and redesigning regional childcare infrastructure will be key to a society where raising children is secure.

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