The Indoor Mini-Golf Race
Puttery and Puttshack are racing for market share in golf's hottest segment.
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Hey Golfers -
Last week, Puttshack announced it signed a lease for 23,000 square feet in Pittsburgh. I dove into Puttshack to better understand their strategy. It is evident; we have two companies, Puttery and Puttshack, establishing themselves as the key players in indoor mini-golf.
A quick break down of the Puttery and Puttshack business:
Indoor mini-golf
Technology-driven
World-class menu and cocktail bars
Experiential golf entertainment
Let’s dive into Puttery’s strategy to capture market share. Puttery is owned by Drive Shack ($DS), a public company in the U.S. trading on the New York Stock Exchange. A reminder, Rory McIlory’s Symphony Ventures invested $10 million in Puttery earlier this year.
Drive Shack has three business units:
Drive Shack
Puttery
American Golf
Drive Shack is a Topgolf competitor with four locations in the United States and two in the developmental pipeline.
Drive Shack’s year to date revenue is split between the three units:
American Golf - $65.1 million
Drive Shack - $10.5 million
Puttery - $.8 million
Puttery has two locations:
Dallas, TX
Charlotte, NC
Puttery plans to open three additional venues in 2021. The developmental pipeline for Puttery is aggressive; they have 48 prioritized venues to open from 2022 - 2024. Interestingly, it appears that Drive Shack is pivoting away from opening Drive Shack venues and prioritizing Puttery venues. Here is a graphic to highlight that thesis.
After evaluating Drive Shack’s investor slide deck, the pivot to Puttery makes sense. The unit economics are more attractive in opening Puttery venues than Drive Shack venues.
The unit economics in the above graphic is quite fascinating in every sense. Drive Shack can build three Puttery locations in the time it takes to build one Drive Shack location. The venue EBITDA numbers are staggering.
Drive Shack reported earnings earlier this month, and they disclosed financials on the first Puttery location in Colony, Texas. The Colony opened in September, and Drive Shack reported one month of financials on Puttery. Alcohol dominated the revenue make-up.
Let’s take a look at Puttshack's strategy to capture market share. Puttshack is a private organization with investor funding. Puttshack raised $60 million in May of 2021 from Promethean investments.
What is extremely interesting about Puttshack? Their founders.
Puttshack was founded by Topgolf founders Steven & 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. The Trackaball technology means you don’t have to keep score with a scorecard; you can even have scores emailed.
Puttshack opened in 2018 in the UK. Here is a breakdown of their venues.
Bank (UK)
Lakeside (UK)
White City (UK)
Atlanta
Chicago
Although we don’t have the same financial transparency in Puttshack as Puttery, we can hypothesize Puttshack has similar unit economics. Their developmental pipeline is aggressive.
Watford (UK)
Atlanta
Boston
Houston
Miami
Nashville
Pittsburgh
Scottsdale
St. Louis
Puttshack established its global headquarters in Chicago with UK headquarters in London.
I have written extensively about golf entertainment and the boom it is currently in. Mini golf appears to be no different. According to IBIS, the market size of the mini-golf industry is expected to increase 29% in 2021, incredible. The mini-golf total addressable market is greater than $1 billion in revenue.
The race to capture indoor mini-golf market share is on. It isn’t unreasonable to think this segment of golf will encourage the growth of the sport.
Have yourself a Monday, talk to you next week!
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Would love to know more about the actual experience in these… is it just upscale mini golf? Do you bring your own putter?
Hey Chris! I have not had the chance to visit a Puttery location. Certainly will when I get the chance!