Despite its popularity among the single-digit set, indoor playground operator Discovery Zone on Monday filed for bankruptcy protection from its creditors.
The company, which started in 1990 and now has about 350 outlets, said it grew too fast and will have to renegotiate rents on many of its storefronts and close other money-losing centers.Under the Chapter 11 bankruptcy law, the company will be able to continue operating while it revamps.
Part of Discovery Zone's problem may be that it caters almost exclusively to younger children.
The centers appeal to a very narrow slice of the population - a group that depends on adults to get them to the store and spend money, said family entertainment consultant William Haralson. And while they might be jammed on the weekends, business can be slow during the week.
"It's a lot of fun, but it's more fun for the kid than the guy trying to make a living running the thing," said Haralson, of William Haralson & Associates Inc. in Dallas.
Discovery Zone's new chief executive, Donna Moore, said the operation is a viable concept and the bankruptcy filing gives the company a chance to revitalize the business. Discovery Zone's previous chief executive, Steven R. Berrard, resigned last week.