Topgolf Entertainment Group is still expanding globally — it recently broke ground on a venue in Germany — on the heels of its merger with Callaway Golf Co. and the COVID-19 pandemic, CEO Dolf Berle said.
Berle said based on company analyses, there’s room for 200 venues in the U.S. and 250 internationally — in addition to the 63 that currently operate in four countries. The next stop is Dubai, where a venue will open in December or January. The company broke ground in Oberhausen, Germany earlier this month, and opened its Monterrey, Mexico location in September.
Berle said the company had originally planned to go public in the spring. But since the pandemic hit, Topgolf revised strategy and announced last month a merger with Callaway.
The chief executive said the merger, which began in conversation during the summer, allows the company to fund eight to 10 company-owned new venues in the U.S. per year. Berle said he expects the merger to be completely finalized near the end of Q1 2021, and will also help increase Topgolf product sales.
Here’s what else Berle had to say about global expansion, the merger and his transition out of the CEO role in 2021:
Why is global expansion a priority? Have global expansion plans changed or shifted since COVID-19?
Once we had established a strong base starting in the UK and then subsequently here in the U.S., it became clear to us that there was international appetite for our venue concept. Over the years, what we’ve developed is a set of franchisee relationships, which revolve around development agreements that are multi-year and multi-venue in nature, typically for either individual countries or adjacent countries in regions across the world.
To answer your question regarding COVID, there really hasn’t been much impact on the pace of our international work. Clearly the venues that are up and running are facing some of the types of restrictions that we also face here in the U.S.
We expect that it will take some time before we’re open at full capacity in Australia and in Monterrey. However, so much of the work that is being done to establish these countries and the future growth relates to real estate. The pace of exploration and analysis around sites across the world with our various franchisees has continued. I think that bodes well for the venues that will open in the coming years.
In June you told the Business Journal you had a goal of running all venues profitably by year end. Has that goal changed?
That goal has not changed. We opened or reopened all of the venues in the system by early September, essentially Sept. 7. Since that time, there have been smaller-scale individual venue closures and then reopenings, El Paso being an example most recently.
At the moment we are closed down in the UK and also in Portland. But we believe that the likelihood of a system-wide closure is lower because the jurisdiction around the closures is local. We’re working very actively with health departments everywhere that we operate.
As part of the journey that is 2020, we did take significant efforts to reduce the cost structure for the business, not only from a corporate overhead standpoint, but also at the unit level for our venues. I’m very happy to say that most recently we’ve been running between 80-85 percent of prior year, same venue sales.
Transitioning to the merger with Callaway, it sounds like Topgolf operations will stay in Dallas?
That’s correct. Callaway has a tradition of bringing companies under the Callaway umbrella and having them operate essentially intact. There is no plan to move the Topgolf office in Dallas and we will continue to run a significant portion of our business from there.
You will lead Topgolf through a transition and then step away from the company. When will that happen and what does that entail?
I have agreed to stay on for a number of months that will go into the middle months of next year, most likely to ensure that good transition. I’m tremendously optimistic about the future of Callaway and Topgolf together because there are so many synergies and I believe the cultures will be a good mutual fit.
I have a lot of good feelings about this merger and what it will mean for our team and our shareholders and also for the guests that the combined companies will have across the world. As you can imagine, the test that COVID brought this year was pretty energizing and fairly challenging.
The future of our company and companies like ours was something that was hanging in the balance when it came to good stewardship through the crisis. I’m very grateful to have had the experience to be part of that and to successfully put the company in a place where it can prosper and grow at a significant rate going forward.
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