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http://www.businessweek.com/stories/1992-07-26/discovery-zone-fitness-for-the-latchkey-set

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Discovery Zone: Fitness For The Latchkey Set


Enterprise: HOT GROWTH COMPANIES, ENTREPRENEURS, AND SMALL BUSINESSES

DISCOVERY ZONE: FITNESS FOR THE LATCHKEY SET

Three years ago, Ron Matsch heard about a disturbing trend. According to a gymnastics coach who rented space in Matsch's Kansas City (Mo.) fitness center, many of the kids in beginner-level classes were so out of shape they couldn't even perform the most basic exercises. So Matsch teamed up with the coach, Al Fong, and opened their own fitness center for kids 12 and under. They called it Discovery Zone.

Kids took to it like chocolate ice cream. They don't so much work out as "play out," clambering up Discovery Zone's vinyl mountains, running through its swinging bridges, and schussing down its spiral slides. Today there are 39 Discovery Zones operating in the U.S. Each indoor playland is about 8,000 to 9,000 square feet. Some 138 franchises have been sold at a cost of around $35,000 each. Among the buyers: tennis ace Billie Jean King.

To oversee the daily operations of Discovery Zone, Fong and Matsch hired retailing veteran Jack V. Gunion as CEO. Gunion, 48, pegs total 1991 revenues of Discovery Zone at $5.4 million. He says the chain, which charges $5 to $7 per child for a two-hour visit, will turn a profit this year. What makes the centers such a hit? Says Matsch, 37: "We live in a latchkey society where parents are afraid to let their kids outside to play. It's go home, lock the door, and sit in front of the television."

The playland concept has attracted some other companies, including Kidsports International Inc. Last year, McDonald's Corp. began testing indoor playgrounds, too. But Gunion says he's not scared of the Golden Arches. McDonald's is "the greatest validator we could have," he says. "We became a real business overnight."Monica Roman in New York EDITED BY PETER FINCH


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