topgolf business plan pdf

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Why Topgolf’s Business Model Is A Hole In One

BY Manouk Akopyan

Bright lights, brassy beats, billowing bars and the bare pleasure of launching a ball into the night—Topgolf is not your grandfather’s driving range.

In a handful of years, Topgolf has turned the glorified game’s grandeur on its head and reimagined sports, and in essence, flipped the traditional driving range model to create a new high-tech entertainment category for millennials.

And it’s just getting started for the rapidly expanding, natively social brand. In September, the chain secured $275 million in funding to facilitate its aggressive expansion plans throughout the US. Topgolf plans to build 7 to 10 locations a year with its sights set on 50 US locations by 2017.

Their roots are originated in Watford, England, the location where they first started serving a digital golf audience in 2000. They quickly expanded stateside shortly afterward and have since grown to 29 venues and serve 13 million guests annually.

With golf courses around the country accelerating toward a decline , those numbers are even more impressive considering the amount of golfers in the US has dropped 20 percent, from 30 million to 24 million since 2005, according to the National Golf Foundation .

With its nightclub-like vibe, Topgolf is far from being a ghost town. It’s the closest thing to unearthing the next Happy Gilmore.

Susan Walmesley , vice president and sales and marketing for Topgolf, joined [a]listdaily to discuss the fast-growing company’s aggressive strategy in building a unique integrated entertainment and sports experience.

How do you describe a Topgolf experience for someone who has never had one? 

The games can be played by anyone—any age or skill level. Players use real golf clubs and hit microchipped golf balls, aiming for giant targets on a 215-yard outfield. In the classic Topgolf game, the farther the target and the closer to the center of the target you hit, the more points you score. Your yardage and score is instantly relayed to a TV screen in your hitting bay. The hitting bays are covered and climate-controlled for year-round comfort. While you play, you can enjoy music and delicious food and drinks brought to your bay. Each venue offers other entertainment options, such as pool tables, shuffleboard and Xbox Kinect. The venues also offer golf instruction, leagues, tournaments, kids-only events, theme parties and more. There’s something for everyone.

How does Topgolf intersect with the traditional sport’s elements?

Topgolf is a great entry point for traditional golf. People who might not otherwise pick up a club jump right into playing at Topgolf because the environment is fun, casual and non-intimidating. We offer golf instruction for all ages to help promote that transition to green grass.

Who is the demographic you are trying to reach?

Topgolf appeals to all ages, but the majority of our guests are ages 18-to-34. Female visits have increased by 13 percent in the past three years, and we are excited to see that fan base grow for us. Approximately 32 percent of Topgolf players are women.

How are you leveraging a purely social approach to further build on your brand? How do you judge the success?

Topgolf is an inherently social and shareable experience because of the interaction the environment fosters. In fact, the average group size is four people. With our private-events business, we bring together diverse groups of people who bond over the playful competition. The majority of our visitors are non-golfers, and they are eager to share photos and videos of their swings on social media. We make sure that we engage with our guests online and remind them to interact with us on social media through in-venue advertising, our social wall that populates near real-time content, step-and-repeat photo backgrounds, Snapchat geofilters, and more. Topgolf’s popularity was largely built on word of mouth and social media. We judge our success on social based on quality and quantity of engagement activities with likes, comments, shares, retweets, follower growth, referrals to Topgolf.com and several other KPIs.

What is Topgolf’s approach to social? Are there any platforms you’d like to test further?

Up until this year, we had a decentralized marketing model in which each venue had its own social media accounts. This year, we faced maintaining more than 150 accounts and decided that it would be best to post from only one main corporate account on Twitter and Instagram. The venues will maintain their Facebook accounts so they can still share local content and guests can ‘check in’ locally. Our new approach will help us track and respond to guest service issues as well as share higher-quality content. We are excited to explore Snapchat further in the near future. We’ve experimented with geofilters and have had huge success with them, so the next step is creating our own Snapchat account to share the Topgolf experience.

What is your approach and strategy in telling the Topgolf story? What works? What hasn’t?  

Topgolf has gained significant brand awareness through earned media. Our story has evolved so much over the years—we started off focusing on being a really cool driving range then evolved to become a sports entertainment venue. Our relationships and partnerships within the golf industry have evolved over time as the industry grew to embrace Topgolf for how it could help grow the game. This year, we are thinking beyond the venues to foster Topgolf as a lifestyle brand that fans can tap into in-venue or online. In terms of PR, we find it’s critical for reporters, tastemakers and influencers to experience Topgolf firsthand so they can help tell the story from their unique perspective. It’s hard to explain Topgolf to someone who has never heard of it—visuals are necessary to tell our story and convey all that we offer.

Topgolf recently secured $275 million in additional capital to execute an expansion plan across the US. Where will we be seeing new Topgolf locations?

We are opening in Jacksonville this month and Edison, New Jersey in December. Next year, we will be opening in Charlotte, Orlando, Nashville, near Indianapolis, near Philadelphia and in Fort Worth. In 2017, we will also open our first location in Australia.

Which of your current markets have been performing the best? And why?

Our Centennial venue near Denver is a top performer. The Denver culture embraces outdoor recreation activities, and Topgolf is a place where you can play outside year-round. Our Tampa venue is another high-performing location. Its food and beverage sales have broken company records; there aren’t as many casual dining restaurants in the vicinity as some of our other venues. Our Scottsdale location usually leads the pack in terms of our private events business because its tourism industry is so strong. And of course, Las Vegas is our flagship venue that opened this year and is performing extremely well. It features swimming pools, a concert venue, a Callaway fitting studio, a retail shop and many amenities that aren’t available at our other venues.

Is there a non-location-specific experience you’re looking to offer? Or is it only for fans within a region?

We are actively working on creating a Topgolf experience that can be enjoyed in markets where we don’t yet have a location. There will be more details to come on that soon. Our fans can also play Topgolf 24/7 on the WGT Golf app . The game is incredibly realistic and has gotten rave reviews.

Where do you see Topgolf in five years?   

I see Topgolf moving beyond being a great brand to becoming a noble brand. We are focusing more than ever on giving back to charity and helping grow the game of golf. In five years, I also believe Topgolf will be a household name regardless of location. Topgolf has always been a digital-first company, and I’m excited to see how we will innovate and personalize the guest experience as technology advances.

Follow Manouk Akopyan on Twitter  @Manouk_Akopyan

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Topgolf Business Model: Unveiling the Success Behind the Swing

Updated: May 14

Welcome to the immersive world of Topgolf, where entertainment meets golf in a revolutionary way.

In this article, we'll delve deep into the Topgolf business model, uncovering the elements that contribute to its unparalleled success. Drawing on my experience as a former consultant at both MBB and Big4, I'll dissect the revenue streams and highlight what makes this business truly exceptional.

Table of Contents

What is topgolf, what makes topgolf unique, topgolf in numbers, how topgolf makes money, topgolf venues business model, expansion and global impact, topgolf consulting services.

Topgolf is a premier entertainment and sports venue that combines the traditional game of golf with cutting-edge technology and a social atmosphere. Unlike conventional golf courses, Topgolf offers a unique experience where players aim microchipped golf balls at giant targets on an outfield.

The facility uses advanced tracking technology to score each shot, turning the game into a point-scoring and interactive experience. With a focus on inclusivity and entertainment, Topgolf appeals to both avid golfers and newcomers, making it a popular destination for social gatherings, corporate events, and family outings.

Topgolf enjoys a significant advantage by providing climate-controlled and heated hitting bays, enabling golf enthusiasts to play in every season. This unique feature ensures year-round accessibility, allowing people to enjoy golf even in unfavorable weather conditions like snow. For avid golfers, this presents an excellent opportunity to continue their training during the winter months.

Topgolf stands out as a unique concept that has successfully blended golf's social and sporting appeal with cutting-edge technology. This innovative approach has expanded the allure of Topgolf beyond traditional golf enthusiasts, capturing the interest of both golfers and non-golfers alike.

Here are five key factors that contribute to Topgolf's exceptional success:

Social Aspect

Topgolf goes beyond traditional golf by adopting a family-friendly approach and offering a vibrant nightlife experience. Nearly half of its guests identify as "non-golfers," showcasing its broad appeal beyond the conventional golfing community.

Contrary to its traditional image as an elitist pastime, golf has shed its stuffy reputation and become undeniably cool. The conventional association of polos and khakis at exclusive country clubs no longer defines the sport's aesthetic. This shift can be largely attributed to a pandemic-induced surge, expanding golf's appeal and drawing in individuals from diverse cultural and economic backgrounds who were once excluded from the golfing scene.

Millennials, in particular, have embraced golf with enthusiasm, drawn to live events featuring DJs, a dynamic sports atmosphere, and a diverse menu of excellent food and drinks. In this regard, Topgolf stands out as a prime destination, offering a blend of entertainment, social engagement, and culinary delights that align perfectly with the evolving preferences of the modern generation.

Topgolf Open 2023

The pinnacle of this surge in popularity climaxed at the recent Topgolf Open, a glittering event in Los Angeles commemorating the city's hosting of the U.S. Open Championship for the first time in 75 years. This gathering emerged as the premier golf celebration of the year, showcasing Topgolf's extensive influence by drawing almost every notable figure connected to golf in Southern California.

Moreover, the event underscored the significant expansion of the game by attracting iconic skaters, elite athletes, and the renowned LA graffiti artist OG Slick, who painted a monumental mural at Topgolf's El Segundo location. You can catch the highlights below, courtesy of COMPLEX :

The Entertainment Experience Reinvented

Topgolf delivers a comprehensive entertainment package beyond the average consumer's expectations. Topgolf revolutionizes the golfing encounter by introducing innovative formats such as the Angry Birds game and providing diverse entertainment facilities. This strategy ensures that Topgolf remains pertinent in the ever-changing landscape of the golfing world.

Turning Challenge into Opportunity

Overcoming the challenges of traditional golf, Topgolf provides an easily accessible and affordable format for both golf enthusiasts and casual players. National Golf Foundation (NGF) notes that while traditional golf metrics trend negatively, Topgolf's approach has created a positive scene, countering issues of accessibility and affordability.

Information from Topgolf Callaway Corp (from November 2021) indicates that the average cost per visit/person to Topgolf is $36. This cost, when compared to other entertainment venues such as Six Flags, musicals, or fine dining restaurants, is relatively moderate and does not stand on the higher end of the spectrum.

Competition

High-tech features, including RFID Technology for tracking shots, make Topgolf ideal for friendly competition. The array of games available caters to a diverse range of abilities, ensuring that even those who aren't skilled golfers can enjoy the experience.

Topgolf Callaway Brands Corp. (referred to as "the Company" or "Topgolf Callaway Brands") ( NYSE: MODG ) has disclosed its financial outcomes for the fourth quarter concluding on December 31, 2023.

Let's deep dive into the figures for Topgolf.

Topgolf Key Metrics & Outlook

Topgolf Callaway undergoes diversification, branching into three distinct segments: Topgolf, Golf Equipment, and Active Lifestyle. Our primary focus will be on assessing the performance of Topgolf.

The Company experienced a 5.4% surge in net revenues, attributed to the positive revenue growth observed across all operating segments. Notably, there was a 7% increase in revenue for Topgolf, a 5% rise in the Golf Equipment segment, and a 3% uptick in the Active Lifestyle segment.

Specifically focusing on the Topgolf segment, revenue witnessed a noteworthy increment of $29.5 million or 7.2%, reaching $439.0 million, predominantly propelled by the addition of new venues. Despite an anticipated -3% Same Venue Sales, the actual performance surpassed expectations, attributed to the robust showing in our 1- and 2-bay consumer business.

Moreover, the Segment's operating income experienced a significant boost of $20.6 million, reaching $23.1 million. The Segment Adjusted EBITDA also saw a substantial increase of $30.0 million, marking a remarkable 69.4% rise to $73.2 million. These improvements were primarily a result of increased revenues and enhanced operational efficiencies within the venues.

In summary, after the challenging year of 2019, greatly affected by the COVID-19 pandemic, Topgolf's revenue has demonstrated a steady and remarkable upward trend, achieving a record-breaking $4.28 billion in 2023.

Topgolf Venue Economics

Topgolf features two types of venues, classified as Small-Medium and Medium-Large. The primary distinction between small, medium, and large venues is the number of hitting bays each venue offers. However, it's worth noting that large venues may also have additional space, potentially accommodating more events.

According to Topgolf Callaway, the size of venues is measured as follows:

Large Venue

Target population of >1MM in 25 min catchment

100+ bays across three floors

Example: Las Vegas, NV

Medium Venue

Target population of 500K-1MM in 25 min catchment

70 - 100 bays across 2-3 floors

Example: Baton Rouge, LA

Small Venue

Target population of 200K-500K in 25 min catchment

30-60 bays on a single level powered by Toptracer

Example: Chattanooga, TN

For simplicity, let us refer to them as small and large venues. As indicated in the revenue report, Topgolf Callaway also classifies venues into two categories: Small-Medium and Medium-Large.

The majority of Topgolf venues fall into the category of large venues. The cost for small venues typically ranges between $20-27 million, whereas the expense for large venues can begin at $30 million and extend up to $40 million. The venue revenue ranges from $13-18 million for small venues, while for large venues, it varies between $20-28 million.

Notably, the estimated payback period stands at an impressive 2.5 years, as indicated by Topgolf Callaway Corp. This factor positions Topgolf as a potentially excellent investment, provided that all factors align favorably.

Topgolf Venue Count

The primary revenue source for Topgolf is its venues, and their growth rate is notably rapid. As evident in the table above, over the past three years, an average of approximately 10 venues opened annually in the US.

By the close of 2023, the total number of venues reached 89. It is reasonable to anticipate that they may reach the milestone of 100 venues by the end of 2024 or the first quarter of 2025.

Out of the total 89 venues in the US, approximately 76% (68 venues) are owned and operated directly by Topgolf Callaway Corp. The remaining 21 venues operate under a franchise system.

Topgolf's business model is segmented into three primary categories: Topgolf Venues (Incl. Swing Suite), Toptracer, and Topgolf Media. The predominant share of revenue is generated through Topgolf Venues.

Topgolf Venues

A Topgolf venue is a specialized entertainment facility that combines elements of golf with cutting-edge technology to create a unique and engaging experience. At a Topgolf venue, guests can enjoy a variety of golf-based games in a social and vibrant atmosphere.

The venues typically feature a multi-level driving range with individual hitting bays equipped with high-tech sensors and microchipped golf balls. Players can take shots at targets on the range, and the technology accurately tracks the distance, accuracy, and speed of each shot. This data is then used to score the games and provide feedback to the players. The venues are designed to cater to individuals of all skill levels, from seasoned golfers to those trying golf for the first time.

In addition to the golfing experience, Topgolf venues often offer a range of amenities, including bars, restaurants, and event spaces. This creates a social and entertainment-focused environment, making Topgolf a popular destination for friends, families, and corporate events. Overall, a Topgolf venue aims to provide a dynamic and enjoyable experience beyond traditional golfing.

Topgolf Swing Suite

Topgolf Swing Suite is an immersive virtual experience that brings the excitement of Topgolf to various settings, such as hotels, resorts, and entertainment venues. It offers a state-of-the-art simulator where participants can enjoy a range of virtual games, including golf, baseball, football, and zombie dodgeball.

The technology accurately replicates the feel of a real sports environment, allowing users to take swings, throws, or kicks and see the impact in the virtual world. Topgolf Swing Suite provides an entertaining and social experience, making it suitable for various occasions, from casual hangouts to corporate events. It enhances the accessibility of Topgolf's interactive and engaging entertainment beyond the traditional Topgolf venues, extending the brand's reach to new and diverse audiences.

Toptracer Technology

Toptracer technology represents an advanced ball-tracking system employed in golf. It offers real-time data and analysis of a golfer's shots, utilizing high-speed cameras and sophisticated algorithms to meticulously trace the golf ball's flight path from the moment of impact to its landing. Beyond measuring essential metrics like ball speed, distance, and launch angle, the technology visually represents the shot trajectory on a screen. While Topgolf incorporates this technology within its venues, it also develops and sells it to other interested driving ranges or golf facilities.

This technology mirrors the one featured on television, displaying the trajectory, distance, and ball speed of each shot, and was showcased during +200 national TV broadcasts every year. Additionally, Topgolf extends the use of this technology by licensing it to individual driving ranges. Currently, +700 driving ranges across +30 countries, encompassing +20,000 bays, are actively utilizing this advanced tracking technology.

Topgolf Media

Topgolf Media operates on regional, national, and global scales, tailoring packages and creating innovative opportunities to achieve diverse business objectives. This may involve organizations acquiring advertising space or partnerships with corporations, which are then showcased in Topgolf Venues and other platforms.

In summary, Topgolf Media focuses on generating original content to engage and cultivate audiences for the brand, manages the development and operations of the Topgolf app, and maintains a profitable business in the innovative media segment. Additionally, it explores e-sport opportunities, such as the PGA Tour 2023 game, and collaborates with major brands for co-marketing initiatives to reach a broader audience for Topgolf.

Interestingly, only one-third of Topgolf Venues' revenue is generated from gameplay. The remaining two-thirds come from various sources, including events, food and beverages, and merchandise sales. These venues offer a versatile and enjoyable experience, serving as ideal destinations to socialize with friends, watch sporting events like the Super Bowl, celebrate birthdays, and host corporate events.

Some Topgolf Venues go beyond traditional offerings, providing specific areas for meetings and business events. Additionally, venues may feature rooftop terraces and patios, enhancing their appeal as excellent choices for corporate gatherings and events.

Topgolf takes its culinary offerings to a remarkable standard, providing an elevated experience. With an impressive wine selection, including champagne for special events, and a diverse menu ranging from burgers and finger foods to more sophisticated options, Topgolf has become a destination for those seeking exceptional food and drinks.

Beyond traditional golfing, people frequent Topgolf primarily for its signature food and beverages, such as Golf Bag Cocktails and injectable donut holes. In essence, the entertainment factor takes precedence, with golf being a secondary consideration for many visitors to Topgolf.

Synergy with Callaway

As an integral part of the Topgolf Callaway company, Topgolf opens up synergistic opportunities with Callaway, a producer of golf accessories. Within Topgolf, Callaway Clubs are not only utilized but are also available for purchase at select venues.

The collaboration extends further, with professional golf players receiving endorsements featuring the Topgolf logo on their attire, along with commercials for Callaway showcased within Topgolf premises.

The significant exposure that Callaway receives through this collaboration, introducing the brand to a vast audience, creates a remarkable synergy between Topgolf and Callaway, offering substantial marketing benefits.

As per the National Golf Foundation's 2023 report , on-course players numbered 12.1 million, while off-course players reached 18.5 million in the United States. Considering that more than half of off-course play likely originates from Topgolf, this is a staggering figure.

With Topgolf reaching around 25% of the US population, the market penetration opportunity is evident. The introduction of golf to new players, including younger generations, women, and diverse communities, further adds to this potential, positioning Topgolf and golf itself for increasing popularity in the years to come.

Yet, the scope extends globally. Currently, Topgolf's international venue count is relatively low. Looking ahead, envisioning venues in densely populated cities worldwide—such as Tokyo, Rio de Janeiro, Istanbul, Paris, Moscow, and more—could have a significant global impact. This may lead to the possibility of world Topgolf tournaments, where champions from each venue compete on an international stage. Additionally, countries like China, India, and other Southeast Asian nations present tremendous potential.

In summary, the combined factors of market penetration opportunities and the trend of introducing new players to golf position Topgolf for substantial growth in the upcoming years, both domestically and on a global scale.

Undoubtedly, there are certain challenges. Topgolf pioneered a global trend known as "EATertainment," emphasizing venues where patrons can dine, drink, and engage in games. This innovation sparked a new market globally.

While some may draw parallels with bowling alleys, the distinction lies in the significantly higher quality of food and beverage offerings at Topgolf. Moreover, all TopGolf locations boast expansive parking lots, ensuring easy accessibility, with some even providing valet services. The venues also offer ample space for events and have gained popularity among students, given their proximity to colleges, eliminating the need for expensive transportation.

This trend has given rise to various spin-offs, with venues like Topgolf of Pickleball, Topgolf of Baseball , Topgolf of Soccer , and Topgolf of Bowling & Bocce emerging. There are even discussions about the potential introduction of Topgolf of Basketball, as well as ventures into sports like F1 and football.

Can Topgolf get Dethroned?

Predicting that people will consistently prefer golf over other sports is challenging, especially considering the widespread introduction to golf through Topgolf experiences. The market share might fluctuate if a new and compelling sports concept gains popularity. According to World Atlas , golf ranks as the 10th most popular sport globally, which opens the door for other sports to follow suit.

While challenges exist, such as the potential high cost of building Topgolf venues for sports like hockey, and the dominance of team sports in popularity, opportunities still abound for diversifying into other sports. The significance of Topgolf's Toptracer technology cannot be understated, as it enhances gameplay.

However, there remains a risk that a competitor could introduce superior technology, enabling players to explore additional functionalities. Though various risks must be considered, as of now, despite the emergence of similar venues, Topgolf appears largely unchallenged in its domain.

To dethrone Topgolf, a competitor would need to offer a significantly superior and innovative experience, addressing key aspects like venue ambiance, technology, and overall customer satisfaction. As of now, Topgolf remains a leader, but the competitive landscape may evolve in the future.

The Topgolf business model is a harmonious blend of innovation, entertainment, and community engagement. As we've explored its origins, mechanics, and prospects, it's evident that Topgolf's success is rooted in its ability to transcend the traditional golfing experience.

Whether you're a seasoned golfer or a newcomer, Topgolf offers an inclusive and captivating space that continues to redefine the intersection of sport and entertainment.

If you require consultancy for the establishment of a new Topgolf venue or an EATertainment concept, feel free to reach out to me.

As a full-time Strategy and Management consultant, I offer comprehensive consulting services, providing valuable insights, market research, and strategic guidance to ensure the success of your venture.

Feel free to utilize the contact form on this website , and your inquiries will be directed to me promptly.

FAQs About Topgolf Business Model

Is Topgolf only for experienced golfers?

No, Topgolf caters to individuals of all skill levels, from beginners to seasoned golfers. The technology and interactive games make it enjoyable for everyone.

How does Topgolf ensure customer safety during gameplay?

Topgolf prioritizes customer safety by implementing safety measures, trained staff, and secure gaming facilities to provide a worry-free experience.

Are there any age restrictions for enjoying Topgolf?

Topgolf is designed for all ages. Families, friends, and even corporate groups can enjoy a day at Topgolf, making it a versatile and inclusive destination.

What makes Topgolf different from traditional golf courses?

Topgolf distinguishes itself by combining technology, entertainment, and socializing, creating a vibrant atmosphere beyond the typical golf course setting.

Can I host private events or parties at Topgolf?

Yes, Topgolf offers private gaming suites at some venues and event hosting services, making it an ideal venue for birthdays, corporate events, and other celebrations.

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Topgolf: Building a Global Sports Entertainment Community

By: George Foster, Cor van der Wal

Topgolf started with the simple concept that it was time to rethink the "joyless mud fields" of golf-and apply microchip technology to create new frontiers in the game. Topgolf Watford, the company's…

• Length: 32 page(s)
• Publication Date: Feb 28, 2020
• Discipline: Marketing
• Product #: SPM57-PDF-ENG

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Topgolf started with the simple concept that it was time to rethink the "joyless mud fields" of golf-and apply microchip technology to create new frontiers in the game. Topgolf Watford, the company's first facility, opened in 2000 northwest of central London. Topgolf differentiated itself from traditional driving ranges by offering covered bays, multiple screens, patios and cafés-in addition to new golf accuracy challenges based on scoring tied to technology, and a broader entertainment model.

Learning Objectives

This case study takes students through the expansion process, providing insights into the thinking behind Topgolf decisions. The case takes a step-by-step approach, after the realization that a "build it and they will come" philosophy would not generate the desired results.

Feb 28, 2020

Discipline:

Geographies:

United Kingdom, United States

Industries:

Professional sports industry, Recreation and fitness industry

Stanford Graduate School of Business

SPM57-PDF-ENG

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Technology and Operations Management

Mba student perspectives.

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• Assignment: The TOM Challenge: TOM…

Topgolf Fore the Win

Topgolf circumvents the declining trend of the golf industry by effectively aligning its business and operating models.

While the golf industry in the United States enjoyed tremendous growth in the 1990s and early 2000s as it rode the success of superstar Tiger Woods, participation in the sport has declined in recent years. According to a study by the National Golf Foundation, the number of golfers has dropped from 30 million in 2005 to 24.7 million in 2014 (1). While the economic recession certainly played a role in this decline, a shift in consumer behavior is also responsible as today’s consumers demand more value out of their golfing experience than offered by the traditional golf infrastructure.

Business Model

A Topgolf driving range leverages technology to create a game out of the experience. Its golf balls contain microchips that can track the precise outcome of a player’s shot, allowing golfers to keep score and compete against one another as they aim for targets much like a game of darts. While the driving range is a key piece of Topgolf’s business model, the company differentiates itself from the incumbent driving ranges and golf courses by positioning itself as “a global sports entertainment community creating the best times of your life” (company website). Topgolf has been able to fight the overall downward trend of the golf industry by effectively aligning its operating model with its business model.

Operating Model

Facility Design 

Pathways to Just Digital Future

While the size and specs of Topgolf facilities vary slightly by location, a facility will typically include pool tables, shuffleboard, flat screen TVs, bar tables, couches, fireplaces, private event rooms, a rooftop terrace bar, and of course a 3-story driving range (5). While wait time for driving range bays can sometimes be as long as 3-4 hours, Topgolf is able to create and abstract value from customers who are waiting in line (much like Benihana’s) through these various other entertainment outlets. This strategy seems to be paying off as over 60% of its customers are not prior golfers (4).

Hiring Process

In order to deliver on its claim to offer its customers an end-to-end experience as opposed to merely a place to hit golf balls, Topgolf must ensure it is hiring the right people. In order to accomplish this goal, Topgolf utilizes a unique hiring process that encourages candidates to show their creativity, passion, and ability to entertain. Applicants are asked to brainstorm ideas for events, come up with unique business plans, or even sing and dance on the spot (4). Employees at a Topgolf facility are constantly interacting with customers in order to create an entertainment community, making its people a key ingredient in the business model.   

Food & Drink

95% of all food at a Topgolf is made in-house from scratch. Each kitchen is led by an experienced executive chef who coordinates with corporate to determine a menu. Even the hiring process for the executive chefs aligns with the business model, as Topgolf hosts a Chopped- style competition in order to screen candidates (2). As a result of a focused effort on its operating processes within the kitchen, 60% of Topgolf’s revenue now comes from food and beverages (4).

Growth Strategy

Topgolf’s decision to engage in strategic partnerships to fuel growth has allowed the company to benefit from economies of scale. For example, Topgolf commonly works with the same 3 companies when opening a new location:

• real estate investment trust EPR to secure financing for new properties (3)
• Aria Group Architects as architect with specialties in entertainment, restaurant, and hospitality (3)
• ARCO/Murray National Construction Co. as general contractor (3)

While the high fixed costs associated with this business already serve as a barrier to entry, these strategic partnerships give Topgolf an even greater advantage over potential new-comers to the market. Through these partnerships Topgolf has been able to create a streamlined design template that can be used for its new openings. However, in order to continue to align on its promise to deliver the best experience to the customer, Topgolf also engages with local partners to customize the look and feel of each location to match the culture of the local market (3).

(1) http://www.golfdigest.com/story/number-of-golfers-steady-more

(2) http://www.atlantamagazine.com/dining-news/alpharettas-newest-entertainment-complex-topgolf-revs-up-its-menu/

(3) http://urbanland.uli.org/development-business/traditional-golf-fades-hybrid-sports-life-topgolf-tee/

(4) http://www.golfdigest.com/story/topgolf-luke-kerr-dineen

(5) http://klnbretail.com/topgolf-ashburn-opening-tomorrow/

Student comments on Topgolf Fore the Win

Great post David. I had my first Top Golf experience over the summer at home in Florida as they recently opened one in Tampa. It was a fantastic experience and I would definitely go back again. It was interesting learning about their operations. I had no idea most of their food was made from scratch! Or that they took hiring so seriously. I think it definitely shows, as I was impressed with how great the service was despite the crazy amounts of people there. I couldn’t tell if Top Golf was just a new fad or if this place was actually going to maintain this level of business. It was all the buzz when I was at home so I had to check it out. I think they definitely do a great job of getting people in and providing them other avenues of entertainment as they wait to golf (which can be long, as you mentioned). However, the wait is still fun and I didn’t mind it. And even while you golf I thought it was great that we got to eat and drink by our bay. The whole experience reminded me of those eat, drink and bowl type of places – except for golf. They translated that concept well. The only thing that concerns me is that the investment required to build a Top Golf is clearly high. Do you think they will have the strong consistent user base required to get returns on this investment? Or is this just a fad?

I love this idea! I want to visit one! As you mention, they are positioned as an entertainment alternative rather than a practice alternative. This struggles me, because (I think) it does not align to the causes of the downward trend on the number of golfers. Practicing golf is expensive and time consuming, so I would imagine Topgolf as a great alternative for amateur golfers. I can imagine executives practicing after their long workday or during lunch hours… That would lead to more loyal customers while not forgetting the customer base that they are currently serving. While doing so, I think that some changes of their operating model might be necessary, such as confirmed reservation and personalized service.

Hey Arturo – thanks for the feedback! I completely agree that Topgolf needs to strike a balance between attracting new customers (non-golfers) to the game without simultaneously neglecting its customer base comprised of true golf aficionados (myself included). They do currently offer membership options with varying benefits, most notably of which is the ability for cardholders to skip the line upon arrival. While these membership options have sufficed to date, it will be interesting to see if Topgolf finds a need to further differentiate its operating model in order to cater towards its different customer segments as the user base continues to expand.

Great post, David. Topgolf is a such a fantastic idea, and it’s amazing how quickly it has grown and been successful in each new market. However, I am curious as to it’s ability to maintain it’s current growth trajectory and how rapidly it will try to expand given the large amount of remaining market white space (it’d be great if they put one in Boston already…). Likewise, it’s brand name and some of the key aspects of it business model you highlighted such as the strategic partnerships give it a great head start, but I wonder how long the model can remain unique and if a well capitalized and aggressive competitor could quickly start challenging.

Hi David, enjoyed reading this and am certainly keen to try one of these if they ever set one up in Boston! I usually end up playing competitive mini-games when I’m on a driving range, but the lack of microchip-enabled balls means there’s invariably a lot of arguing about who actually got closer to the pin…

I like how they’ve designed the facilities so as to encourage new golfers but I do wonder whether the business will stand the test of time. People have combined casual sports entertainment with good food and cold beer on tap for years (bowling alleys, pool or ping-pong bars etc.) but I can’t think of many off the top of my head that have managed to be consistently successful over the long haul. Perhaps there is a risk that more casual golfers flock to Topgolf as a fad of current times before moving on to something else? Topgolf might need to keep innovating its offering to keep them coming back, but like Arturo above, I do wonder whether the business is doing enough to retain serious golfers. While it can try to balance its offering somewhat, at the end of the day it might need to make call on whether its core target market is serious golfers looking to hone the specifics of their swing or groups of amateur golfers looking for something other than just going to their local bar.

David – very interesting post. While I’ve never been, it sounds like something I’d love to do.

My only concern is the major capital investment needed and whether they need a big box location to delivery a cool/new golf experience, especially in the broader context of other cheap/accessible golf experiences coming to market. Golf simulators that allow you to play famous courses have plummeted in price and space requirement Lately. You have apartment buildings and offices installing them in 100-200 square foot locations and give the virtual experience of playing the premier golf courses in the world. Is this a threat? Or can they find a way to leverage this as add an additional product to their portfolio without cannibalizing the core. Maybe they offer the “lite” experience in airports, office buildings and other short-attention span locations and use them as a hook to draw additional traffic to their bigbox locations.

David, I’ve never heard of Topgolf but it sounds awesome! It’s fascinating that 60% of its customers are not prior golfers – that has to be in stark contrast to other driving ranges and golf courses. It leads me to wonder, is Topgolf’s target consumer someone that has never played golf but always wanted to try? Or is it someone looking for a fun, activity-based experience like a bowling alley, etc, and Topgolf fits into that entertainment category? If it really is the former, then perhaps Topgolf should consider partnering with nearby courses and golf professionals. By making the introductory experience more comfortable to new players, it would definitely be a valuable service for the sport!

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