Discovery Zone to expand operations

March 01, 1994|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

The Chicago-based Discovery Zone FunCenter chain of children's play centers said yesterday that it will open five more Baltimore-area locations by June, as part of a drive by the company to more than double in size to 400 locations by the end of 1994.

Discovery Zone Inc., the parent company, said it has leased space in shopping centers in Bel Air, Glen Burnie, Annapolis, Catonsville and Owings Mills. Spokesman Rick Grossberg said the company is still looking for additional sites in the area. Discovery Zone opened a Golden Ring location last year.

"We may add others, but we don't comment on specific locations," Mr. Grossberg said. But he acknowledged that Columbia and the Towson/Timonium area are under consideration.

Discovery Zone is an indoor playground that pushes fun and fitness to kids ages 12 and under. Customers can frolic in "ball baths"; jump around on the "Moonwalk," a kind of inflatable trampoline; play on ropes or crawl through tunnels that Dain Bosworth Inc. analyst Michael T. Moe jokingly called "a sort of human HabiTrail."

"The concept Discovery Zone was founded on is that American kids are getting less and less fit," Mr. Moe said.

Mr. Grossberg said the chain isn't a day-care center and requires parents to stay in the building with their children, even giving customers ID bracelets to make sure no one walks off with the wrong child. "Parents play free," he said.

Mr. Moe said Discovery Zone, which has more than 180 stores and is 20 percent owned by Blockbuster Entertainment, is locked in a market share battle with competitor Leaps and Bounds, owned by McDonald's Corp. The company also competes with local operators, including Kids FunJungle, which has locations in Perry Hall and Ellicott City.

Mr. Moe said individual Discovery Zone locations become very profitable very quickly -- a center that costs $700,000 to build can earn $250,000 on $1 million of revenue the first year. But the parent company's earnings have struggled under the pressure of funding ambitious growth plans, he said. The company earned $3.5 million or 8 cents a share last year, its first year of profitability.

The company's stock has fallen 22 percent so far this year. It dropped 50 cents a share yesterday to close at $16.50 a share.

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