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Why Topgolf and Puttery Are Seen as Ways to Maintain Golf Recovery

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Don’t underestimate the power of entertainment to fuel a pandemic-boosted golf recovery.

That’s the lesson we learned from the latest financial results submitted by two companies looking to capitalize on this trend.

Dallas-based Topgolf continues to be an up-and-coming prospect for longtime golf equipment and apparel manufacturer Callaway Golf Co. It now accounts for a large share of the company’s sales, accounting for more than $403 million of his $1.12 billion in Callaway earnings from April through June.

Another Dallas company, Drive Shack Inc., operates two entertainment golf ventures. Drive Shack, a Topgolf competitor, and Puttery, a luxury indoor putt-putt course serving food and drink to customers 21 and older. The company’s branch, American Golf, which operates 53 golf courses, still delivers most of the revenue, but Drive Shack Inc. is serious about expanding the Puttery concept it launched at The Colony in 2021. It is working.

CEO Hana Khouri emphasized to analysts on a recent conference call how important the concept is to the company’s growth.

“There is a large market available for the venue-based entertainment business. We will continue to capitalize on this massive opportunity while maintaining our development plans, with a focus on the opening of our new Puttery venue. I’m going,” said Khouri.

Patalley currently has three stores in Charlotte, North Carolina and Washington, DC, and plans to open four more stores this year in Houston, Chicago, Pittsburgh and Kansas City, following its local debut. By the end of 2024, he hopes to have 50 of his Putters.

“We have a clear proof of concept for the Puttery brand and know it points the best path for our near-term growth and profitability,” Khouri said by phone. rice field.

One reason for the positive outlook is the low start-up costs and high margins of Puttery’s stores. These locations are significantly cheaper to build than the company’s four Drive Shack restaurants bars and driving ranges. A single puttery costs between $7 million and $11 million, while a drive shack costs $25 million to $40 million and takes at least twice as long to build.

Puttery’s existing stores have brought in $4.4 million in the last three months and maintain healthy profit margins. Of Drive Shack’s $87 million in quarterly revenue, $71 million is from traditional golf courses.

Callaway is undergoing a similar shift. His Topgolf, which the company acquired in October 2020, has become increasingly important to the 40-year-old golf brand.

Chip Brewer, Callaway’s president and CEO, said, “If some investors think the top golf business is initially risky or unproven, I would say that since the merger I believe that this series of consistent results should soon begin to change perspectives and evaluations.

JP Morgan analysts say Top Golf, which has more than 60 locations around the world, has prevented Callaway from being hit hard by a drop in the number of golf rounds being played. Entertainment venues also recorded a strong resurgence in hosting corporate events, with sales at the same venues increasing quarterly for the first time since before the outbreak of the pandemic.

Callaway predicts Top Golf will be the largest portion of its revenue in 2022. Topgolf is already outselling equipment sales on a quarterly basis, with revenue growth in the third and fourth quarters of 2021.