TopGolf CEO plans to outdrive recession risk to service businesses
TopGolf is to driving ranges what Pizza Planet was to pizza shops, except non-fictional.
The sport of golf saw tremendous growth during the height of the pandemic drove sportspeople towards socially-distanced outdoor activities. Now, during an inflationary reality for consumers, TopGolf looks to weather a cost-conscious visitor — while replicating its driving range formula at new geographic locations.
“We’re really looking everywhere globally,” TopGolf CEO Artie Starrs told “Here in the United States, we’ll open 11 venues here in the US this year. We just opened in Philadelphia. We’ll open outside of Seattle, Washington in Renton just in a few short weeks. So we view the entire market as an opportunity for us.”
TopGolf disrupted the basic model of the driving range business by infusing technology into every swing, hitting bay and transaction. The model has been received well by avid golfers, casual visitors and partygoers, presenting a wider consumer audience and prompting Callaway to acquire the service business for $2.6 Billion.
Starrs says that gameplay makes up half of the TopGolf revenues, which is complimented by the venue business, media business and technology licensing business.
However, as the company roadmaps its next phase of expansion, the management team will need to operate the service through an anticipated recession, a simmering ‘great resignation’ and inflationary economic environment.
According to Starrs, no substantive impact to the business has been viewed as a result of the macro headwinds. However, acknowledges at some point the effects will be felt by the services industry.
“There’s no doubt that we’re seeing inflation in construction and some challenges in staffing our venues,” Starrs says “But I think our team’s done an extraordinary job continuing to modernize the venue and how we build a venue, and then also doing things inside the venue to make sure that we can be open and provide great service to our players.”
TopGolf primarily competes in the same category as DriveShack (DS), which is similarly expanding its footprint across major cities, but through its Puttery venues — focusing in on mini golf or “putt-putt”. During it’s most recent quarter, DriveShack President and Chief Executive Officer Hana Khouri publicly shared that the walk-in business was normalizing and that “demand for future events remains exceptionally strong across our entire brand portfolio.”
Not everyone can be a professional golfer, but services like those of TopGolf and DriveShack at least offer enjoyable golf-adjacent services to create new social experiences and to counter the aggravating moments that also come with golf.
