How Much Does a TopGolf Franchise Cost?

Last Updated on March 11, 2024
Written by CPA Alec Pow | Content Reviewed by CFA Alexander Popinker

As virtual golf entertainment leader Topgolf has exploded into a wildly popular cultural phenomenon and hospitality destination over recent years, uniting high-tech golf ball tracking simulation gameplay with upscale lounge spaces for an ultra-competitive and highly social experience, many entrepreneurs and investors are keenly exploring if a Topgolf franchise opportunity might represent an exciting and lucrative business investment within this rapidly growing industry niche.

However, an important fact to understand upfront is that unlike many well-known national restaurant, fitness or service franchises, Topgolf strategically operates all of its over 60 current venues through full corporate ownership under their parent Topgolf Entertainment Group brand, without offering individual site franchising opportunities to outside investors or owner-operators. So a direct Topgolf franchise for an individual to purchase is not possible currently.

But despite no direct franchising being in place, studying the financial model, capital requirements, and operational structures that a mass entertainment concept like Topgolf requires provides very useful insights for those analyzing the broader golf entertainment industry who may be assessing potential investments into launching their own large-scale sports simulation or competitive socializing venture in some capacity.

Highlights

• Topgolf specifically does not franchise – all sites are corporate-owned and operated
• Building a Topgolf-scale venue requires a minimum of $50M+ capital for construction, technology, and operations
• More affordable golf entertainment franchises exist as an alternative path to explore
• Substantial planning and seasoned leadership are very important before starting major leisure development

How Much Does a TopGolf Location Cost?

Constructing, outfitting, and launching a golf entertainment destination venue on the grand scale of a Topgolf facility with extensive gameplay bays, upscale lounges, full-service dining and lavish amenities requires tens of millions of dollars in intensive capital investment upfront during development phases, as well as strong ongoing operational funding once built:

• Land Acquisition and Construction Costs – Securing an appropriately sized tract of 10 acres or more in a prime location near a major metropolitan region, along with designing and building out an elaborate multi-story venue, can easily run a business $15 to $30+ million or more depending on factors like real estate market rates, construction labor costs, and permitting complexity.
• Cutting-Edge Golf Simulation Technology Investments – Outfitting the dozens of hitting bays with advanced radar ball-tracking systems, electronic scoring screens and software, climate controls and other technical infrastructure will cost upwards of $10 million alone at current market rates just for the average 60-bay Topgolf-style facility. Regular ongoing capital for upgrading software and equipment to stay on pace with evolving consumer expectations represents its own major recurring investment as well.
• Projected Operational Expenses Including Large Staff – With massive entertainment venues of this scale needing to be staffed by a team exceeding 200+ employees between guest services, kitchen operations, bartenders, and management, owners should realistically anticipate millions in annual operating expenses related to sizeable payroll, employee benefits, liability insurance, robust marketing budgets, facility maintenance, utilities and all other overhead costs associated with running a hyper-volume hospitality business. It takes patient capital and strict expense management to turn profits.

All said, budgeting around $50 million in aggregate for land, construction, high-tech simulation systems, and multi-year operating losses during the startup launch phase is realistic for those exploring a true Topgolf-like venture. Developing and sustaining venues of this substantial size and complexity requires patient, long-term access to very significant pools of investment capital along with sharp business management skills and strategic planning.

Topgolf’s Corporate Ownership Structure

To tightly oversee brand messaging, maintain maximum consistency around layout aesthetic and menu offerings across all venues, and facilitate highly flexible corporate financing strategies to fuel aggressive nationwide expansion goals, Topgolf strategically owns and directly operates all their current locations through a centralized corporate structure, rather than franchising opportunities out to individual investors or owner-operators.

Topgolf oversees its venue portfolio as a parent corporation, collecting ongoing licensing, royalty, and management fees from the dozens of individual golf entertainment venue entities structured as limited liability corporations or partnerships with investment groups.

This centralized corporate framework allows Topgolf to retain maximum control over branding and quality assurance standards at all sites, while more efficiently tapping financing through varied strategies like venture capital, debt vehicles, and public offerings to support growth. Direct ownership also reduces profit-sharing obligations.

Franchising sites out market-by-market would likely impede the company’s desired launch pace and introduce greater variability in execution. For brand consistency amid ambitious growth plans, the current corporate structure delivers Topgolf maximum oversight and agility advantages as they continue driving the golf entertainment sector forward as innovators.

Alternatives in Golf Entertainment Industry

For entrepreneurs and investors specifically attracted to the golf entertainment sector given its current growth trajectory and profit potential, but finding a 50+ million dollar Topgolf project exceeds risk tolerance capacities currently, several alternative routes into the industry may align better with near-term business objectives:

• Investing in Other Established Driving Range or Indoor Golf Franchises – Many reputable driving range facility franchises like BigShots Golf offer proven business models but with smaller real estate and equipment footprint requirements in the $5-10 million dollar range to get started. Indoor virtual golf concepts like Puttshack leverage high-tech golf simulator gameplay with a clubby social atmosphere and serving full dining menus, also costing an estimated $5-10 million.
• Pursuing Golf Instructional and Coaching Franchise Opportunities – For those attracted more to the golf skill development aspect versus entertainment, instructional franchise opportunities through proven coaching brands like GolfTEC provide simulator-based custom lessons and expert guidance in a progressive virtual environment, but require dramatically lower startup capital compared to any brick-and-mortar venue.
• Exploring Partnership or Sponsorship Opportunities with Topgolf Itself – Rather than owning a franchise location outright, investigate any partnership, corporate event hosting, marketing sponsorship or other collaborative opportunities that may exist directly with Topgolf corporate under their branding programs, allowing another avenue to tap into the surging golf entertainment sector.

You might also like our articles about the cost of opening a franchise for Dollar Tree, Dollar General, or Kiddie Academy.

Planning Practices to Follow

Because the financial stakes involved with building and sustaining million-dollar leisure and entertainment venues are so considerable, undertaking comprehensive due diligence and planning before moving forward is imperative:

• Conduct In-Depth Market Research and Demographic Analysis – Commission detailed market feasibility studies examining area demographics such as target age groups, household incomes, recreation budgets, and competition, while identifying the most advantageous specific site locations based on visibility, traffic patterns and accessibility. Assess risks like seasonality and changing consumer preferences.
• Construct a Comprehensive Business Plan Modeling All Financials and Operations – Build out projected financial models examining required upfront capital, ongoing operational budgets, staffing levels, multi-year breakeven analysis, realistic revenue forecasts, profit/loss scenarios and ROI timelines based on venue square footage, simulator bays, expected guest capacity and area median income levels. Vet all assumptions through hospitality industry experts.
• Consult Extensively with Financial, Legal, and Golf Industry Veterans – Seek guidance from banking professionals, business lawyers, hospitality consultants and golf industry veterans when evaluating venue construction plans, investment proposals, partnership contracts, growth models or financial outlooks. Their expertise spotlights risks and optimizes planning.

Undertaking thorough financial modeling, market research, legal due diligence and competitive analysis before committing major capital to large entertainment ventures allows leadership teams to maximize operational readiness while protecting investors against avoidable downside risks.

Potential Financing Avenues

For golf entertainment venue projects requiring tens of millions in startup capital, financing options to explore include:

• Seeking Qualified Private Investors – Pitch to individual accredited investors or investment groups able to commit $5-10 million+ in venture capital needed to fund construction and absorb initial operating losses until venues mature and turn profitable. Convey the massive market potential and compelling growth metrics within the golf entertainment sector.
• Leveraging Traditional Bank Financing or Alternative Commercial Loans – Given the real assets like property and buildings involved, tap reasonably priced commercial lending channels willing to finance a portion of the project based on strong corporate credit, personal guarantees from wealthy principals or pledged collateral assets. Compare bank loan rates to alternative financing companies.
• Researching Applicable Public Sector Business Development Grant or Subsidized Financing Programs – Check for any government-backed small business development grants, subsidized SBA loan programs or state/local economic development incentives designed to support ventures bringing sizeable new job creation and tourism dollars into local communities. Free funding assistance can serve as catalyst capital.
• Exploring Golf Brand Sponsorships to Exchange Naming Rights for Capital – Given their reach, pursue golf brand partnerships willing to exchange upfront capital, land resources or ongoing marketing budgets in return for high-profile name placement and venue branding if aligned with their target audience.

For typical franchise structures, required licensing, training and royalty fees give franchisors justification to provide comprehensive operational guidance and branding in exchange for a share of ongoing revenues. Carefully examine any obligations.

Frequently Asked Questions

How much does a Topgolf franchise make a year?

As Topgolf does not currently franchise their locations, they do not report specific revenue data publicly.

However, based on analyst estimates using average site foot traffic and factors like bay utilization rates and typical per capita guest spending, industry experts speculate annual venue revenue likely ranges between $15 million to $25+ million across most established corporate-owned Topgolf locations, with some extraordinarily high-volume urban sites potentially exceeding $50+ million.

What is the profit margin on Topgolf?

While again Topgolf’s actual financials are not disclosed publicly, entertainment sector analysts who study venue traffic patterns estimate that once firmly established, popular Topgolf sites in strong markets likely operate at approximate cash flow profit margins ranging between 15-25% on average.

However, newly launched locations often run at a loss initially until operations stabilize. Careful management and constant optimization of menu pricing, bay utilization, staffing and ancillary offerings helps mature sites hit ideal profit levels through time and experience.

How much do Topgolf store managers make?

Based on crowdsourced employee reports on sites like Glassdoor, current Topgolf Store Managers earn approximately $65,000 – $85,000 in base salary compensation, along with additional incentives and bonuses based on sales/service performance and other KPIs.

General Managers likely earn $80,000 – $120,000+ given their higher operational oversight duties and accountabilities at the venue level. Salaries also range based on tenure, local economic factors, and overall venue performance benchmarks. Management compensation reflects the complexities of running entertainment hospitality businesses.