Topgolf: Reinventing the Experience Beyond the Tee
By: Ken Sue-A-Quan & Robert Zhang
The Ivey Business Review is a student publication conceived, designed and managed by Honors Business Administration students at the Ivey Business School.
Topgolf Callaway Brands (formerly Callaway Golf) operates two business lines; a portfolio of premium equipment and lifestyle brands such as Callaway and Odyssey; and Topgolf, a driving-range entertainment company. In March 2021, Callaway acquired Topgolf in an all-stock deal valued at $2.6 billion and rebranded under the Topgolf Callaway name. Despite industry growth, the company faces financial pressure. Equipment sales have remained stable, but Topgolf is weakening: same-venue sales are projected to decline 6–12% year-over-year, contributing to a 2.22% decrease in the stock price despite favorable golf market dynamics. The core challenge is a self-reinforcing cycle in which rapid expansion and discount-driven promotions deepen fixed costs without improving venue utilization.
Industry Tailwinds Battling Consumer Headwinds
The broader golf industry continues to enjoy strong tailwinds. The equipment market is forecasted to grow at a 4.43% CAGR, rising from USD 9.24 billion in 2025 to USD 11.48 billion by 2030. Meanwhile, the golf entertainment segment, which includes driving ranges and family fun centers, is expanding even faster, with revenues reaching $23.3 billion in 2024 and a projected CAGR of 6.4%. Despite this favorable backdrop, macroeconomic pressures are constraining consumer leisure spending.
U.S. consumer spending growth slowed from 3.6% in late 2024 to 1.6% in early 2025, while discretionary spending has been negative since December 2024. A cooling labor market (~22,000 jobs added in August; unemployment ~4.3%), tighter immigration policy reducing the labor force by up to 2.1 million, and persistent inflation have all weakened household purchasing power. These factors are pushing consumers toward budget-conscious behaviors, disproportionately impacting premium entertainment businesses like Topgolf that rely on discretionary spending and group outings. However, there is more to the issue faced by Topgolf than just downward macroeconomic tailwinds.
The Cracks Beneath Topgolf’s Expansion
Pre-Acquisition: Controlled Growth and Premium Positioning
From 2015 to 2019, Topgolf’s revenues doubled from $844 million to $1.7 billion, with profits nearing $190 million. Its success stemmed from pioneering “social golf”— a tech-enabled mix of golf, entertainment, and nightlife. Venues were located in major metropolitan areas such as Miami and Las Vegas, where demand from young professionals, families, and corporate groups ensured consistently high utilization.
Under private equity ownership, expansion was disciplined: 6–8 locations per year, only in markets that cleared strict ROI thresholds. This helped to preserve novelty, maintain pricing power, and support strong unit economics. Customers viewed Topgolf as a unique and novel golf experience worth paying a premium for.
Post-Acquisition: How Rapid Expansion Outran Demand
The 2021 acquisition by Callaway shifted the company’s focus toward rapid growth. To justify the merger, management ramped up expansion to 12–15 venues per year, including secondary markets with weaker demand density such as Boise, Idaho.
However, the supply surge was not matched by demand. A deeper issue resurfaced: Topgolf’s experience is highly novelty-driven. The concept was originally designed as a celebratory, try-it-once social outing—an accessible introduction to golf rather than a routine hobby. As more venues opened, the limits of this model became clear. Golf is difficult to master, gameplay variety is limited, and high prices reduce repeat visits. Unlike bowling or arcade gaming, Topgolf lacks progression mechanics or rotating content to encourage habitual use. As expansion accelerated, the one-and-done visitor base grew faster than the pool of recurring customers, leading to inconsistent demand and increased reliance on discounts.
In response to softer traffic, management introduced promotions such as “Half-Off Tuesdays” and “All You Can Play Mornings.” These drove short-term volume but weakened Topgolf’s premium positioning and margin structure. The brand now competes more directly with mid-tier entertainment chains like Dave & Buster’s, Bowlero, and small local driving ranges offering cheaper rates.
Fragile Economics
Topgolf’s business model has always been capital-intensive, with each venue requiring $20–$40 million in upfront investment, hundreds of employees, and high ongoing maintenance costs. Following the acquisition, this cost base has grown inflexible: post-acquisition, this fixed cost base ballooned where fixed/semi-fixed expenses rose to 56–60% of revenue and reached 71% in 2024. This exposes the company to severe negative operating leverage, and when traffic dips even slightly, their profits fall sharply. In 2024, for instance, operating costs rose 4.1% to $1.3 billion despite lower foot traffic, driven by wage inflation and rising rents.
At a corporate level, Callaway’s integration created a strategic and cultural mismatch. The company now straddles two fundamentally different businesses: a consumer goods manufacturer focused on product margins and a hospitality operator dependent on foot traffic and guest experience. Callaway’s traditional strengths in equipment and retail management do not translate easily to operating large-scale venues, leading to organizational inefficiency and diluted focus.
A Scaled Model without Sticky Revenue
Topgolf’s challenges stem from both strategic misalignment and a weakening value proposition. The company abandoned its disciplined, premium-focused growth model in favor of aggressive expansion that diluted brand identity, pressured unit economics, and expanded a fixed-cost base that demand could not support. Just as importantly, the core experience has not evolved to sustain repeat visits. A concept built on novelty and special occasions cannot support the footprint and utilization requirements of a rapidly scaled national chain.
The result is a business that grew in size but not in customer loyalty. Venues now depend on discounts to fill underutilized hours, eroding margins, and brand positioning, while corporate focus is diluted by two incompatible business segments.
In essence, Topgolf did not simply overexpand, it overexpanded a concept that lacks the long-term value creation needed to justify rapid scaling. Reversing this trajectory will require more than cost reductions. It requires reimagining the experience in a way that drives frequent, habitual engagement.
From One Sport to an Entertainment Universe
With Topgolf Callaway Brands planning for a spin-off in 2026, this creates an opportunity for Topgolf to realign its growth strategy from footprint-driven to entertainment-variety-driven expansion. That is, Topgolf should reposition itself not as a golf-centered venue, but as a full-scale entertainment destination.
This repositioning would transform Topgolf into a multifaceted entertainment center offering arcades, baseball batting cages, golf range, archery, bb gun target ranges, and axe throwing. Topgolf’s existing footprint, open-air range structure, and strong brand recognition enable it to deliver an expansive, modernized version of this concept for the activities. These would be perfectly designed for friends, families, birthday parties and corporate groups seeking variety, competition, and repeatable fun.
Since the brand would no longer focus solely on golf, Topgolf should adopt a new name that aligns with its expanded identity: TopZone.
TopZone Phase 1: Turning Idle Space into High-Value Play Zones (1-3 years)
The first step of phase 1 would focus on converting underused lounges into high-value arcade zones. These lounge areas often sit empty during non-peak hours and function mainly as overflow seating, leaving a significant portion of the venue underutilized. By transforming these spaces into arcade zones using rented machines, TopZone can add a low-cost, high-margin attraction that strongly appeals to families and younger visitors. This creates a more inclusive environment, broadens the venue’s appeal beyond golf, and positions TopZone as a multi-activity destination that families can enjoy together.
The second step of phase 1 is the introduction of baseball hitting bays on a portion of the lower level. Baseball participation in North America continues to outpace golf among youth and recreational athletes, supported by a thriving ecosystem of travel teams, adult leagues, and off-season training programs. By adapting existing bay infrastructure to accommodate baseball tracking, pitching simulators, and target-based hitting games, TopZone can tap into a massive adjacent market that is currently underserved by experiential venues.
A multi-sport venue helps smooth out the extreme peaks and valleys in weekly traffic. Baseball and arcade experiences appeal to different age groups, visit patterns, and seasons, which increases weekday and daytime usage. Youth sports teams can book baseball bays, corporate groups can mix golf with arcade competitions, the variety of activities appeals to birthday parties, and watch-party sessions for MLB or NFL games can be paired with hitting activities and food and beverages. This flexibility strengthens event revenue, one of TonZone’s highest-margin lines.
To fully merge the worlds of arcade gaming, baseball, and golf, TopZone could introduce a unified gamification system that turns the entire venue into one giant, interconnected arcade experience. Upon arrival, guests would purchase a bundle of tokens that can be used interchangeably, whether for traditional arcade machines, or an hour of play at the new tech-enabled baseball cages or at a golf bay. As guests participate in any activity, they earn tickets that contribute to a shared rewards balance, which can then be redeemed at a dedicated prize store called the “Topshop.” Unlike Dave & Buster’s, which relies primarily on arcade-based ticket play, TonZone’s model offers a multi-sport, multi-skill ticket-earning environment. Guests can accumulate tickets through physical skill challenges, arcade games, or baseball and golf performance, giving them more variety, more ways to win, and more incentives to stay longer. By anchoring all experiences to the Topshop rewards ecosystem, TopZone can drive deeper guest engagement, increase repeat visits, and differentiate itself with a more dynamic, high-value entertainment offering than its competitors.
TopZone Phase 2: A Full Entertainment Engine (3+ years)
If the Phase 1 pilot proves successful, TopZone should fully transition into a multi-sport entertainment destination by expanding the range of activities offered. This next phase leverages TopZone’s existing range infrastructure to introduce new experiences, specifically axe throwing, archery, and BB gun target ranges. These sports align naturally with the long-distance, lane-based layout of TopZone venues and can be implemented with minimal structural modification.
Under this model, approximately 40% of the current bay space would be reallocated to house these new activities. The lower level would be dedicated to axe throwing lanes to allow for safe retrieval, while the upper level would host the archery and BB gun target zones. The remaining 60% of the bays would continue to offer golf and baseball, with final space allocations calibrated based on customer demand and activity popularity. This diversified activity mix strengthens TopZone’s position as a venue that caters to a broader set of interests beyond golf alone.
All new sports would integrate seamlessly into the unified TopZone points ecosystem, allowing guests to earn points, tickets, and prizes across activities. Hitting a bullseye in axe throwing or striking moving targets in the BB gun range would contribute to the same rewards system used for golf, baseball, and arcade play, reinforcing the sense of progression and encouraging repeat visits.
To round out the experience and strengthen competitive positioning against players like Dave & Buster’s, TopZone should also expand its arcade footprint by introducing a wider variety of modern and classic machines. At this stage, the company should shift from renting arcade units to purchasing machines outright, reducing long-term operating costs and allowing greater control over game curation. This expanded arcade offering, combined with multi-sport attractions, creates a compelling entertainment hub suitable for families, kids, friend groups, and corporate events alike.
Editor(s): Hubert Gu
Researcher(s): Ava Testa
