Golf's Next Big Business: Mini Golf

Every Monday, I write a newsletter breaking down the business in golf. Welcome to the 306 new Perfect Putt members who have joined us since last Monday. Join 3,163 intelligent and curious golfers by subscribing below.

Hey Golfers —

Coming to you a day later than usual — I hope you enjoyed your Memorial Day weekend!

Topgolf created a new category in the golf industry and flipped the traditional driving range model on its head. Several competitors have followed and entered the space.

Entrepreneurs and golf-related businesses have been paying attention — they are aiming to disrupt the mini-golf category with a significant entertainment twist. Let’s take a look at three companies that are leading the way.

• Puttery

• Puttshack

• PopStroke

While researching these three organizations, I thought each tagline was unique. It is about community and experience more than mini-golf.

• Puttery — ‘A Modern Spin on Mini Golf.’

• Puttshack — ‘An Upscale, Tech-Infused Mini Golf Experience.’

• PopStroke — ‘Eat. Putt. Drink.’

Before we dive in — it is important to note that all three companies have interesting ties to golf.

• Puttery — Rory McIlroy invested $10 million

• Puttshack — founded by Topgolf founders Steve & Dave Jolliffe

• PopStroke — Tiger Woods is an investor and designer of PopStroke courses

Validation isn’t a guarantee of future success, but it is undoubtedly important.

Mini-golf is a massive business primarily run by thousands of small business owners. Here are some quick facts.

• $1 billion market

• 5,000 mini-golf courses in the United States

• 130 million people play mini-golf every year

Let’s look at a breakdown of each business.

Puttery:

Puttery is a business unit of Drive Shack ($DS), a public company in the United States trading on the New York Stock Exchange.

Drive Shack has three business units:

• Puttery

• Drive Shack

• American Golf

Drive Shack recently reported earnings; here is a look at Q1 revenue by business unit.

• Puttery — $4.4 million

• Drive Shack — $9.8 million

• American Golf — $54.6 million

If you are interested in learning how Drive Shack is transforming its business, I wrote about it in March — you can check it out here. Let’s stick to the Puttery business unit for now.

Puttery opened its first venue in the fall of 2021; they currently have two locations.

• Dallas

• Charlotte

Total revenue in Q1 of $4.4 million is an annualized pace of $17.6 million for the two locations and an average venue revenue of $8.8 million. Puttery’s Q1 Venue EBITDA margin was 38%.

Puttery has been forecasting venue revenue between $7 and $11 million since last fall. While still early, they are hitting their forecast.

Puttery is forecasted to open seven venues in 2022.

• Miami

• Chicago

• Houston

• Pittsburgh

• Kansas City

• Philadelphia

• Washington DC

Puttery plans to open 50 venues by the end of 2024 — and the unit economics of each venue are attractive.

Food and Beverage have dominated Puttery’s revenue mix in Charlotte; 55% of its revenue came from it, and alcohol made up 78% of Food and Beverage revenue.

• Food — 12%

• Events — 14%

• Gameplay — 31%

• Beverage — 43%

One of the most interesting data points Puttery shared? It takes just over 30 minutes to complete nine holes.

Puttshack:

Puttshack is a private organization with investor funding, so we don’t have the same financial transparency as Puttery.

Puttshack raised $60 million from Promethean Investments a year ago.

Puttshack was founded by Topgolf founders Steve & Dave Jolliffe and Adam Breeden, who founded All Star Lanes, AceBounce, and Flight Club. In regards to golf entertainment, this is a dream team of founders.

Puttshack has patented Trackaball technology. The golf ball is dispensed with your game profile automatically linked to that ball. Puttshack’s theory behind this is you will spend less time worrying about who is cheating or keeping score and more time with the Puttshack community experience.

This strategy is very similar to Topgolf — Steve & Dave utilized patented RFID technology in the golf ball from an early stage.

Puttshack opened its first venue in 2018; they currently have six venues. Four in the UK and two in the United States.

• Bank (UK)

• Lakeside (UK)

• Watford (UK)

• White City (UK)

• Atlanta

• Chicago

Puttshack has eleven venues in the developmental pipeline.

• Miami

• Boston

• Dallas

• Denver

• Atlanta

• Houston

• St. Louis

• Nashville

• Pittsburgh

• Scottsdale

• Philadelphia

PopStroke:

PopStroke has a unique difference between Puttery and Puttshack — the venues are outdoors, whereas Puttery and Puttshack are indoors.

The investment details of PopStroke have not been disclosed.

PopStroke is much like Puttery and Puttshack — focusing on golf entertainment with extensive food and beverage options.

PopStroke debuted its first venue in 2018 and partnered with Tiger Woods in 2019. They currently have three venues.

• Sarasota

• Fort Myers

• Port Saint Lucie

PopStroke has six venues in the developmental pipeline.

• Tampa

• Delray

• Houston

• Glendale

• Orlando

• Salt River

Here is a breakdown of each company’s developmental pipeline.

Using Puttery’s financial information as a baseline.

• $7 - $11 million in venue development cost

• $7 - $11 million in venue revenue

It is safe to assume there are hundreds of millions of dollars of planned investment in the mini-golf entertainment category.

Puttery and Puttshack have a larger total addressable market than PopStroke based on their indoor mini-golf business model; they can build in cold weather climates. A counterpoint, and this is an educated guess — PopStroke venues may be closer to Topgolf's average venue revenue of $17.5 million versus the Puttery average venue revenue.

Puttshack has the first-mover advantage — they have a three-year head start on Puttery. They also have more venues in the immediate development pipeline.

There is something to be said about focus in the business world. It is apparent that Drive Shack is investing in Puttery as a catalyst for growth, but they still have two other business units. This has me curious.

Puttshack and Puttery will soon be competing in the same markets. It will be interesting to see how it plays out.

• Miami

• Chicago

• Houston

• Pittsburgh

• Philadelphia

With Callaway owning Topgolf, it will be interesting to see if another golf manufacturer will follow and acquire one of these companies in the future.

Have yourself a great Tuesday. Talk to you next week!

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