Since opening its first American location in 2005, Topgolf has grown from ingenuous novelty to entertainment powerhouse with 26 U.S. locations, 11,000+ employees and international expansion planned for 2017.
And its model is thriving despite a lull in the sport’s popularity overall—the number of active golfers in America has dropped 20% since 2005.*
VP of Construction Kevin Miner shared details of the company’s approach to expansion and scaling its model for international and smaller domestic markets at RetailSpaces '16.
A Microchip in Every Ball
Though it’s taken off in the states over the last decade, Topgolf was launched in the UK by Dave and Steve Jolliffe, twins who developed the model around the concept of tracking golf balls by embedding radio-frequency ID chips in them. In 2000, they opened the first of their three English Topgolf locations in Watford, north of London.
The property features holes fifty feet in width with flags in the center, serving as targets; points are awarded on distance by yards and accuracy, based on proximity to the hole. The scoring process resembles upscale bowling. Players get 20 balls for each round and, after each shot, receive screen reports showing their scores, yardage and where their ball landed.
In 2005, Erik Anderson, now CEO of Topgolf Entertainment Group, brought the concept to the U.S. opening the first U.S. location in Alexandria, VA. Chicago and Dallas locations followed in 2007.
Learning from the Lehman Collapse
The first locations were doing well, but 2008’s “Lehman Crash” gave investors pause. Miner believes the market correction actually helped refine Topgolf’s U.S. business model—expanding from 100% family-friendly around-the-clock, Topgolf diversified its approach, targeting adults at night and corporate event planners for day-time outings.
“The Lehman Crash taught us where the revenue streams were coming from. We ran those three sites on a concept that had originally been opened as a family fun center. So we had kids there more often. We were developing it with mini golf, batting cages and arcade games. So we were busy on weekends but not Tuesday at noon,” Miner says.
“In 2008/2009 we tweaked the model a little bit by adding corporate events and turning it into a nightclub at night. We were (actively) refining the product, creating a more refined experience,” Miner says.
“Since then, that’s what we’ve been rolling out.”
Putting its new model into practice, in 2011, Topgolf opened a “new generation venue” just north of Dallas and within weeks business was booming. Innovations included expanding venue size to 65,000 square feet, replacing buckets with motion-sensing ball dispensers and adding TVs not only in bar/lounge areas, but also in each bay.
Now there are Topgolf locations in Denver, Chicago, Miami, Philadelphia, Charlotte, Atlanta and Sacramento, among other locations.
Recently, they’ve developed “super” properties in Las Vegas and soon Nashville. Appropriately, the music city property will feature a large venue for live music, while the sin-city location provides more of all the features Topgolf and Vegas are famous for.
Partnering with the MGM Grand Casino and located right behind the MGM Conference Center, Topgolf Vegas is “Topgolf on steroids,” with four private suites, 109 hitting bays, cabanas, pools, a stage for live music and an event space that can host up to 2,000 guests.
''Topgolf Vegas is Topgolf on steroids.''
Magic on a Smaller Scale?
While they do have some design and construction managers on staff, Topgolf continues to collaborate with Chicago-based Aria Group Architects and the design-build contractor Arco Murray, rather than bringing these services in-house.
They’re also working to scale their model to smaller metropolitan regions, like the Greenville-Spartanburg area of South Carolina and Huntsville, Alabama.
Miner told the audience that Topgolf is actively analyzing renderings for smaller venues. “The hope is that we will get a building with the same outfield, maybe on 10 acres instead of 15 acres with a smaller parking lot. We don’t ever want the real world targets to go away and make it a virtual game.”
He adds, “We don’t know the answer yet.”
Overseas Expansion Plans
For 2018, Topgolf plans to open properties in metropolitan New York, Los Angeles and San Francisco, filling in the large population centers it has overlooked until now, says Miner. The long-term goal is between 100 and 120 locations.
One factor could put the brakes on Topgolf’s ambitious expansion plans—rising construction costs. “They’re going up and at our last board meeting, two projects got deferred because construction costs were too high and revenue projections flat.”
Topgolf doesn’t franchise now, Miner says franchising will be part of its overseas expansion as it moves into Australia, Mexico, Dubai, Korea and other markets.
“We’ve been trying to control the early evolution of the brand and we needed to know what we were before we start selling in other locations,” Miner says. “We will franchise internationally and we’re working to become franchise ready.”
For now, the focus continues to be on refining – but not tinkering with – its successful design.
“Lets make global change about things that save money or substantially increase the experience, but lets not change for the sake of change so that engineers with OCD can say now things line up.”
You can watch Kevin's full presentation below. Enjoy!