Though its offering sounds appealing in theory, the potential of Code Ninjas is limited by its place in a financially squeezed industry.

An Overview of Code Ninjas

Codes Ninjas is an after-school education program that focuses on coding. Students work their way up through a series of grades modeled on the colored belts of martial arts, learning different forms of coding along the way. The martial arts branding, gamification of the learning process, and coding for games all make learning more appealing and so keep students motivated.

The franchise is well placed to appeal to parents. Coding can create great opportunities for employment as well as creativity, so a franchise like Code Ninjas offers the opportunity to set kids up for the future.

Code Ninjas offers the opportunity to run two different styles of franchise. The usual model is a learning center, where the franchise has its own premises. A minority of franchises instead run on a studio center model, running a smaller operation on other premises such as community centers and schools. The studio center’s scale reduces the potential profit but lets franchisees set up in areas that might not support a learning center.

As well as after-school classes, franchises run summer camps, and these are used to provide a wider curriculum covering topics such as coding for Minecraft and creating YouTube videos.

Code Ninjas in Context – the State of the Industry

As of late 2020, there were three kids waiting for spots in after-school programs in the US for every one that was in the programs. With demand vastly out-stripping supply, this looks at first glance like an industry with potential.

Despite this, revenues for after-school programs have been stagnant at best and shrinking at worst for the past decade. Between 2018 and 2023, the market size fell by an average of 3.6% per year. This is reflected in the number of Code Ninjas learning centers: while 268 were continuously operating throughout 2021, this had fallen to 248 by 2023.

Some of this can be attributed to post-pandemic changes. Covid-related closures got people out of the habit of using these services, and more parents working from home means less need for activities that keep kids supervised. The battered economy also made it harder for people to pay.

Setting up and staffing after-school activities is expensive, and 57% of parents surveyed said that the cost of places put them off. Successful centers often cater to wealthy parents, and without better public funding, many neighborhoods will never be able to support these businesses. Many parents don’t have time to drive their kids back and forth, so if there aren’t good public transport links then they can’t use a center that’s not nearby. 53% said that a lack of safe ways to get kids to these centers stops them from using one. Because of these factors, demand in principle doesn’t turn into customers in practice.

For those in the industry, territory is therefore critically important. A location needs to be well connected by public transport to under-served kids whose parents can pay for attendance.

The Finances of a Code Ninjas Franchise

Code Ninjas estimates that the initial costs to set up one of its locations are $177,000 to $385,500 for a single learning center or $79,250 to $116,500 for a single studio center. This includes a $40,000 or $30,000 initial franchise fee. Aside from this, the largest outlay is on construction, which can cost anywhere between $60,000 and $200,000 for a learning center.

The main ongoing fees are:

• Royalty Fee:  8% of net sales for a learning center, 12% for a studio center
• Marketing Contribution:  2.25% of net sales
• Technology Fee:  $350 per month

The median gross sales for a Code Ninjas learning center in 2023, based on data from 248 locations, was $227,553. The median gross sales for a Code Ninjas studio center in 2023, based on data from 15 locations, was $167,589.

Recent Developments at Code Ninjas

Founded in 2016, Code Ninjas doesn’t have a long history to explore. The popularity of coding meant that it was able to draw positive media coverage early on, but things have been relatively quiet recently, possibly due to the industry’s wider issues. The company is innovating to keep up with the latest trends in tech and provide a more appealing offering, with initiatives such as training in using AI and working with Girls Who Code to recruit more female students. This might give it an edge over other learning programs but doesn’t deal with the underlying issues limiting the sector.

Code Ninjas provides a valuable service that’s immensely appealing to parents, but economic forces have set a limit on its growth.