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spk02: Good morning. My name is Keith, and I'll be your conference operator today. At this time, I'd like to welcome everyone to DriveShack's third quarter 2021 earnings conference call. Currently, all lines have been placed on mute to prevent any background noise. After the prepared remarks, we will have a question and answer session, and instructions will be given at that time. Today's call is being recorded, and if you should need any operator assistance, please press star zero. At this time, I'd like to hand the call over to Kelly Buckhorn, head of investor relations. Ms. Buckhorn, you may begin.
spk00: Thank you, Keith, and good morning, everyone. I'd like to welcome you to DriveShack's third quarter 2021 earnings conference call. Joining me today is our president and chief executive officer, Hannah Corey, and our chief financial officer, Mike Nichols. We've posted the investor supplement on our investor relations website at ir.driveshack.com under the events detail link on the landing page. Please take a moment now to download the presentation if you haven't had a chance to do so already. I'd like to point out that certain remarks made today will include forward-looking statements. Actual results may differ materially from those considered by these statements. We encourage you to review the disclaimers in our press release and investor supplement and to review the risk factors contained in our annual and quarterly reports filed with the SEC. And with that, I'd like to now turn the call over to Hannah.
spk01: Good morning, everyone, and thank you for joining our third quarter conference call. The third quarter was a historic quarter for our company with the launch of Puttery, our new competitive socializing and immersive entertainment experience. Our Puttery concept has been in development for more than two years, and we're proud to have debuted our first location in our home market on September 3rd in the Colony, Texas. Guests are responding favorably to our inaugural Puttery, and the feedback on their experience remains overwhelmingly positive. I'm beyond proud of the countless team members that worked hard to deliver our first venue and thank them for their unmatched dedication and commitment to bring our Puttery brand and vision to life. We have learned a lot already with our first venue open, and we're gaining proof of concept. That, along with revenue growth in our core businesses, creates significant opportunities for our future. But before I move further into that discussion, I want to first give a brief update on our financial results. We delivered total company revenue of just over $76 million for the third quarter. This was the highest total quarterly company revenue achieved in the last three years. DriveShack revenue came in at around $10.5 million this quarter, down $1 million from last quarter, which was expected due to seasonality. Q3 revenue for AGC was $65 million at least over last quarter, even with total number of rounds being slightly down, which I'll speak to shortly. And finally, puttery generated total revenue of just under a million in one month of operation for the quarter. While we had an operating loss in Q3 this year that was relatively similar to last year's Q3 operating loss, I want to point out that we had significantly higher pre-opening costs this year versus last year, given our puttery venue openings this year. Additionally, our operating expenses this year are more normalized, including G&A, now that we're beyond the peak COVID impacts from this time last year when we were operating below historic levels. With that, we delivered our fifth consecutive quarter of positive adjusted EBITDA at just about $3 million in this year's third quarter. We ended the quarter with $64 million of unrestricted cash on hand and ample liquidity to fund the development of our first seven puttery venues. Today, we have one puttery open in the Colony, Texas, and we expect to open Charlotte in early December. Behind those, we have D.C., Miami, and Houston currently under development and are planned to open in 2022. Given our current development plans for puttery in 2022 and beyond, we expect to access the debt capital market in early 2022 to secure additional capital to fund our growth plans. I'll discuss more about our development strategy in more detail shortly. Let's quickly now turn to page six for those of you that are new to our story. Over the past three-plus years, DriveShack, Inc. has undergone a significant transformation from a traditional golf business to an entertainment operating company. During this time, we sold a majority of our owned course portfolio to fund the growth of our entertainment golf business, namely to fund the development of our DriveShack venues that we operate today. We opened our first DriveShack venue in Orlando in April 2018, which serves as our beta site. We took our learnings from Orlando, specifically technology-related, and opened three Generation 2.0 venues in August, September, and October 2019 in Raleigh, Richmond, and West Palm Beach. These three venues opened strong, significantly outperforming 29 expectations and beating their initial plans that year by 14%. We've since developed a new entertainment golf experience, Puttery, which is indoor, tech-enabled putting within an immersive experience. We opened our first Puttery in the Colony, Texas, just outside of Dallas about two months ago. Our goal is to open a total of 50 Puttery venues by the end of 2024. Let's turn now to our current results and future near-term goals. As I mentioned earlier, and as you'll see on page seven of the supplement, Q3's total revenue of $76 million was the highest quarterly revenue achieved since Q3 of 2018. Our courses and venues have largely returned to pre-COVID levels, this even with our events business still slightly down from prior periods, yet we continue to see demand for this business continue to increase, which I'll speak to more in a few moments. We currently expect to finish out 2021 with a goal of $280 million in total company revenue for the year and around $17 million in total course and venue EBITDA contribution, both of which would be milestone records for the company since our transformation into an entertainment operating company. Looking ahead into 2022, we're projecting total revenue of $320 million, or an increase of $40 million versus our 21 goal of the $280 million I just mentioned. The revenue increase mainly comes from the growth in new puttery venues, which we are currently targeting to have 15 operational by the end of next year, including the Colony and Charlotte opening this year, and 13 additional venues opened in 2022. I'll speak more to those development plans here shortly. With that, and given the attractive putter unit economics, we expect our course and venue contribution and EBITDA goals to be significantly higher in 2022 and 2023, as you'll see on the chart on page 8. Our fiscal 2022 total course and venue EBITDA goal is $33 million, which is double the course and venue contribution we expect this year. As a reminder, we view our AGC business as a cash contributor to our core entertainment business. Looking ahead, we plan to aggressively develop and open new puttery venues over the next two to three years. Given our current venue opening projections, our total run rate course in venue EBITDA is modeling around $60 million in 2022 and $105 million in 2022, a significant earnings growth trajectory over the next two years. As such, we're planning to access the debt capital market in early 2022 to secure approximately $85 million to fund our near-term development plans. We also expect to access the debt capital market again in 2023 to secure additional capital for future openings. Turning now to page nine for a summary and timeline view of our courses and venues. On the American Golf side of our business, we held 56 courses across nine states in Q3, with one owned, 33 leased, and 22 managed courses. With our DriveShack Entertainment Golf business, we currently have four venues in Orlando, Raleigh, Richmond, and West Palm. We are additionally committed to leases in New Orleans and Manhattan. With Puttery, we've now opened in the colony, Texas, and plan to open Charlotte in December. We're also currently committed to venues in Washington, D.C., Miami, and Houston, all of which will open in 2022. Behind these five locations, we have three additional sites that are currently in or nearing lease execution. Taking a step back, I just want to address we previously targeted to open seven puttery venues in 2021. As you all know, we did not meet that goal for a wide variety of reasons, including COVID and supply chain-related impacts. While it appears we are moving a bit more slowly than expected, we're really taking the time to incorporate learnings from the first puttery to improve those that follow. We know from investor feedback that gaining proof of concept is important, and we need to get it right early on, and that's what we plan on doing. Having said that, we will have two venues open by the end of 2021 in Charlotte. The five additional sites we promised in 2021 will be delivered and opened in 2022. These include D.C., Miami, Houston, and two future sites. On top of that, we plan to open eight additional locations in 2022, bringing us to a total of 13 new openings in 2022 and ending the year with 15 total putteries. We have a robust pipeline of future puttery locations we are actively pursuing in prioritized markets across the U.S. for 2022 and beyond. We're in active lease negotiation on three additional locations in major markets and remain actively engaged with landlords and brokers in multiple markets across the U.S. I'll speak more to our development plans and timeline in a few moments. So Puttery, the newest brand in our portfolio, and as we've described on page 11, it's an adult-focused modern spin on putting, redefining the game and creating an immersive experience supported by innovative technology and really focused on competitive socializing. We're very focused on not only the gaming experience, but also on the food and beverage experience. With a high-energy atmosphere, we've curated exceptional culinary offerings and inventive craft cocktails that are all centered around a lively bar with great music. Our guests can relax and enjoy their evening before, during, and after their tea times. We've included actual images, not renderings, of the interior of our venue in the Colony, Texas to show the incredible vibe and experience that we've created. So as mentioned earlier, we debuted our first puttery venue on September 3rd in the Colony, Texas, just outside of Dallas. While we've only been open for just over two months, the guest response to the overall experience continues to be overwhelmingly positive. This particular venue is just under 21,000 square feet, spanning two floors, with four nine-hole uniquely themed golf courses. Those are Rooftop Lodge, Library, and Illusion. We have three bars, a patio terrace, multiple lounges, and seating areas throughout the space. We're pleased with the early results we've seen so far, and when you take a look at page 12 in the presentation, you'll see that we delivered 800K in total revenue for just one month of operation in the quarter. While it might be tempting to annualize that result for a yearly revenue number, there is seasonality at play in our venues, and puttery is no exception. We do expect holidays to be busy, Januaries to be slower, etc. So in short, we really expect puttery to follow the seasonality trends that the rest of the indoor hospitality and entertainment space has, at least loosely. The colony opening itself was a huge success with lots of lessons learned, as we expected. Over the $800K in total revenue, our revenue mix consisted of gameplay at around 40%, alcohol at around 40%, food at 12%, and events at 8%. The data we've collected so far indicates that over 60% of our walk-in guests plan their visit in advance, mainly through online reservations with gameplay. We're seeing that they're spending around two hours on average in our venue, and that Saturday late evening is the highest traffic day and time of the week. We know our guests look to us as an experiential bar, and with that comes the opportunity to improve in a couple of areas to further drive revenue opportunities. We have an incredible food menu today, which we'll continue to highlight in the future in order to raise our food revenue. We also know there is room for improvement in the events revenue mix, here as well as in our other brands. While we intentionally did not pre-sell events at the Colony in our first month of operations, I'm extremely proud of the sales and event teams to deliver 8% of our total revenue and events in our first month open. While we're still early in our grand opening phase, we do expect momentum to continue and look forward to the future success, not only here in the colony, but also in all of our puttery venues to come. When we look at the projected venue-level economics that we put forward several quarters ago, we remain confident that puttery was and will continue to be the best path of growth for our company. As you'll see on page 13, both drive shack and puttery venues have very desirable economics. Puttery is an adjacency to our current business and gives us the ability to grow quickly with less capital risk and higher returns than a big box drive shack venue. Drive shack venues are quite large. They require about 12 to 15 acres of land with an 18 to 24 month development timeline due in part to the complexities of building a venue from the ground up. The development cost is between $35 and $40 million, with each drive shack venue generating site-level EBITDAs of between $4 and $6 million. While these are great numbers, these venues require quite a bit of time and capital to get to revenue-generating status. In contrast, puttery venues require around 20,000 square feet of existing retail space. Development time is between six and nine months, and development cost is between $7 and $11 million, with expected EBITDA returns of $2 to $3 million. Puttery is a path forward for our company to generate more revenue on a faster timeline with less capital risk. We're pleased to report that our actual venue-level economics for Puttery are currently in line with our projections to date. Turning now to a deeper discussion on our Puttery portfolio, the development timeline and process for Puttery is really critical to our future success and valuation. As you can see on page 14, we provided a different view of our development timeline to better convey the end-to-end development process of a puttery venue. First, as you can see on the timeline chart on the left side of the page, well, in 2021, with the two venues open in Dallas and Charlotte, the Colony, as you know, is already open, and we expect Charlotte will open by the beginning of December in time for the holiday season. In 2022, we expect to open a total of 13 new puttery venues. We currently have three least committed venues in development, D.C., Miami, and Houston, all of which will open in 2022. Behind those, we currently have 12 additional sites that are currently in active LOI status or in active lease negotiation with landlords. From this phase, these additional sites being negotiated would move into lease signing and construction phase. We expect another seven leases by Q1 or early Q2 of next year, which would give us time to successfully open a total of 13 venues next year for a total of 15 venues by the end of 2022. As you will see by the development timeline chart on the right side of the page, our 2022 venue opening target is supported by a very robust and expanding pipeline of available locations. These potential sites are in key priority markets across the U.S., and the number of available sites to evaluate continually increases as new leads are identified. Looking at the chart, we have 22 potential sites today that are either in evaluation or have been identified as a prime location for a new puttery venue. On top of that, we have 12 additional sites that I just spoke to that are currently in active LOI or in active lease negotiation with landlords. We are confident that we will secure leases and begin development in the coming months to deliver the remaining sites for our 2022 venue opening goals. Finally, in order to complete our development and venue opening plan for 2022, we will need to secure around $85 million in funding by the end of Q1 of next year. We currently plan to access the debt market and are confident we can obtain the necessary funding to complete our plan, especially as Charlotte comes online before then and our proof of concept will be further supported. Mike will speak to this more in a few moments. Moving now to our DriveShack venues, which have had some major wins in Q3, with those venues delivering another quarter of strong results. As you'll see on page 15, total revenue for Q3 was $10.5 million, with walk-in revenue up 42% versus the same quarter last year, and generated $3 million in EBITDA versus about $1 million a year ago. While revenues have largely returned to pre-COVID levels, our events business is still down but rebounding quickly. I also want to point out that Orlando once again broke even in Q3, which is the second consecutive quarter of break even, and we still expect them to be even to positive for a full fiscal year, for the first full fiscal year ever in 2021, since they opened nearly four years ago. The teams are doing an incredible job there, and as the Lake Nona community where they are located continues to grow and fully develop in the coming years, we know our Orlando venue will continue to thrive. You can see by the chart on page 16 how well our entertainment venues performed this quarter. Our total walk-in business was 81% of total venue revenue for the quarter and over 25% higher or roughly $1.5 million better than last year's third quarter. Our events business continues to gain momentum and sequentially was over 30% higher or roughly $500K higher than last year. We have a growing events pipeline that we feel confident will continue to improve. More on that in a moment. Turning now to page 17, our new development team has done some incredible work on reimagining our gaming technology and improving the aesthetics of our gaming package graphics. These improvements have led to not only superior graphics, but also better accuracy of the game and more reliable performance. We continue to utilize TrackMan technology across all of our proprietary game packages, such as darts, Shack Jack, Monster Hunt, and all of our pro golf courses. While our software development team has done a great job to enhance the gaming experience, they've also been hard at work setting the foundation for quarterly game refreshes by seasonalizing some of our games. We recently introduced new pumpkin graphics, monsters, and our monster hunt game for the Halloween time period, and we'll soon introduce snowman building as we enter the winter and holiday season. I'm extremely proud of this team and know they'll continue to deliver unique tech-forward initiatives to keep content new and fresh for our guests. Moving now to the traditional golf arm of our business on page 18. American Golf continues to deliver strong results versus their pre-COVID levels. For Q3, AGC delivered $65 million in total, driven largely by a 7% increase in revenue from green and cart fees at our public courses, as well as private course membership levels held at 99% of their max capacity. We did see a slight decline of 8% daily fee rounds on our public courses, mainly due to construction and wildfires at or near three of our public courses. The 6% decline in total rounds at our private courses was fully impacted by a planned private club renovation that was ongoing for the duration of the quarter. Traditional golf is still seen as a safe outdoor activity since the onset of COVID. Our American Golf team continues to do a tremendous job in delivering strong results quarter after quarter, and we expect to continue delivering great results, especially as our events business begins to return closer to pre-COVID levels. Speaking of events, and as you have seen throughout, we're seeing demand across three of our brands strengthening. We know this is in large part due to the recent restructure of our sales and events team to help facilitate the increase in events demand and to enhance more direct and timely engagement with guests and businesses. As you'll see on slide 19, to further support this, we hired a new head of national sales position at the corporate level in August to help manage our sales nationally across AGC, DriveShack, and Puttery. Tyree Thomas joined us in this position at the beginning of Q3. She was most recently running national sales at City Winery, and prior to that, she held national sales roles across Barton G., Fatina Restaurant Group, and Hard Rock International. She's been an incredible asset to the team and has already produced measurable results with her teams across the country at our properties. We expect this trend to continue, especially with her tenured support and direction. Under Tyree's leadership with the teams, we have a very active and growing events pipeline across all three of our brands. We have multiple leads in the 2021 pipeline for November and December, and we expect many more leads before the end of the year for these months, as many leads are booked as events within days of inquiring. Additionally, we also have a strong 2022 event pipeline, which is currently exceeding our full-year 2020 total event revenue. While this is expected, given the impact from COVID that year, we do expect that 2022 event revenue will be significantly higher in the year in 2021, given the strength we see in next year's pipeline. You can see that in the graph illustrated on page 19. So with that, I'll now hand it off to Mike to go through the detailed financial results for the quarter. Mike?
spk05: Thanks, Hannah, and good morning, everyone. Let's start on page 21 in the deck for a summary view of our financial performance for the quarter. On a total company basis for the third quarter, we generated revenue of $76.4 million, the highest quarterly revenue since the third quarter of 2018. We reported an operating loss of $5.9 million and adjusted EBITDA of $3.3 million, our fifth consecutive quarter of positive adjusted EBITDA. At the business unit level, our entertainment golf segment generated $11.3 million of revenue, of which our drive shack venues delivered $10.5 million, and Puttery delivered $800,000 for its first one month of operation. Total walk-in revenue at our drive shack venues was $8.5 million versus $6 million in the third quarter of last year. As a reminder, we opened our Orlando venue in December of 2020, and as such, they had no revenue to report in the third quarter of last year. Excluding Orlando this year, walk-in revenue was up $1.5 million, or roughly 25%, versus Q3 last year on a comparable basis. On the traditional golf side, AGC generated $65.1 million of revenue, including managed course reimbursements of $14.7 million. Excluding managed course reimbursements, American quarter revenue was up approximately 20% this year versus the same period last year. As I mentioned, we reported an operating loss of $5.9 million for the third quarter this year versus an operating loss of $6 million last year. While relatively flat on a year-over-year basis, this year's operating loss included significantly higher puttery pre-opening costs compared to last year. Additionally, our SG&A expenses this year are more normalized relative to the third quarter last year when we were tightly managing expenses and operating on a reduced headcount from previously furloughed positions as a result of the onset of COVID-19 earlier in the year. Moving on to our summary financial results on page 22. The net loss applicable to common shareholders for the quarter was $10.2 million, or $0.11 per share. For the nine months ended September 30, 2021, the net loss to common shareholders is $25.9 million, or $0.29 per share. There was an approximate $0.04 benefit in Q3 this year, resulting from the roughly $24 million of additional shares issued earlier this year as part of our follow-on common equity offering that settled in February. Moving to page 25, our total company venue adjusted EBITDA contribution was $11.9 million for the third quarter, which includes $3.1 million for entertainment golf, encompassing both drive shack and puttery, and AGC's adjusted EBITDA contribution of $8.8 million for traditional golf. Last year, our total company venue adjusted EBITDA contribution was $9.3 million, which included $1.1 million for entertainment golf, and AGC's adjusted EBITDA contribution of 8.2 million for traditional golf. Core SG&A for the third quarter this year was 8.7 million compared to 6 million last year. As a result, our total company adjusted EBITDA for the third quarter this year was 3.3 million, relatively flat compared to the third quarter last year. Looking to liquidity and future capital needs, at the end of September 2021, we had approximately 64 million of unrestricted cash, As a reminder, we received approximately $54 million of net proceeds from our follow-on common stock offering that settled in February. This cash provided the capital we needed to complete the execution of our growth plans for our first seven puttery venues, the first of which is open, but the second substantially complete. As we look ahead to our capital plans to fund future growth plans for additional puttery venues in 2022, We currently estimate that we will need approximately $85 million of additional capital to fund this development. We expect to access the debt capital market in the first quarter of 2022 to secure the necessary capital to fund our near-term development plans. Finally, I am pleased to announce the DriveShack Board declared dividends on the company's preferred stock for the quarterly period ending January 31, 2022. The dividends are payable on January 31st, 2022 to holders of record on January 1st, 2022. With that, I'll turn it back to Hannah for closing remarks.
spk01: Thanks, Mike. Before we turn it over to Q&A, I just want to take a moment to reflect how far we've come since the early days of our transformation to an entertainment operating company, as well as through COVID to where we are today. Today, our American golf business remains incredibly strong and and our drive shack venues continue to deliver a solid performance and gain momentum as their events business returns. As I said earlier, Q3 marked a historic moment in our company's history with the launch of our first puttery venue. None of this could have been accomplished without the incredible teams we have across the entire organization whose unwavering commitment and tireless efforts to drive our business forward is unmatched. I thank each and every one of them and know they will continue to contribute to our success as we further drive growth and profitability for our company. Thank you all for joining us today. I'd like to now turn the call back to the operator to open the line for questions.
spk02: And at this time, if you have a question, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. When posing your question, we ask that you please pick up your handset to allow optimal sound quality. We'll take today's first question from Alex Furman with Craig Hellam. Please go ahead. Your line is open.
spk07: Great. Thanks very much for taking my question, and congratulations on the opening of the first pottery unit. You know, I wanted to ask about the event site. I'm glad to see that that is coming back nicely. I'm curious what types of groups you've been seeing, both at Pottery and DriveShack, and how that mix of business compares to what you had coming in before COVID.
spk01: Hey, Alex. Yeah, thanks for the question. Thanks for being on. Great question. We are actually, I think I said last quarter that our events business was really impacted by the lack of corporate event business. We're starting to see that come back slowly on the DriveShack side and on the Puttery side. We've had quite a bit of corporate business coming back on those, both DriveShack and Puttery. Puttery, we are experiencing some more social events and which is fantastic, groups of 10 to 12. But we've also had a couple of just buyouts and other things that have been for corporate companies. DriveShack, we're starting to see the holiday season pick up a bit with holiday parties for both corporate events as well as smaller social groups. And then I know you didn't specifically ask about this, but on our American golf side, we do a lot of weddings, and we're starting to see that business kind of pick back up along with tournament business.
spk07: Okay, that's really helpful. Thank you, Hannah. And then it looks like, you know, puttery is going to have a pretty nice contribution to the year mostly. I assume the unit in March. Texas there, how is the mix of revenue evolving as that concept has had more time to get known in the market between food and alcohol and game play? And are you expecting something similar when you open Charlotte next month?
spk01: Yeah. So as I said, the food is only about 12% of our revenue right now, which tells us that people are coming to the puttery and really looking at us as a bar and an experience, which is fantastic. We take a lot of pride in what we put together, both from the gaming perspective as well as from the food and beverage perspective. People love our cocktail program. They also love our food when they happen to eat it. So we are, in the future, we're really doing things to push our food menu to the forefront of our guest experience in the hopes that people do kind of start to look at us as more of an overall end-to-end food, beverage, and gaming experience versus really just the beverage and game component. That said, our SPV is still on track because the amount of alcohol sales we have in our pro forma we considered as F&B sales total. So it really doesn't matter to us, the mix, as long as we're reaching that pro forma metric, which we are. I expect Charlotte will follow in the same footsteps as the colony. And I think that we're just going to have to be really kind of focused on making sure that we're marketing our food menu and ensuring that people and our guests know that they can come in and eat as well as enjoy their experience. So 40% gameplay and then 40% alcohol is not a bad day for us. We do expect that, again, to continue. with hopes that maybe that 40% alcohol potentially, you know, gives another 20% or so to food. And we'll see how that works out.
spk07: Okay, that's really helpful. Thanks. And then as demand, you know, comes back for Puttery and DriveShack and just other more, you know, dining and entertainment concepts in general, are you still seeing that? strong demand on the American golf side. I think you've commented in the past that a lot of your private courses have weight lists for membership. Is that still the case?
spk01: Yeah, we're still at 99% capacity in our private clubs for memberships, which is great. Our revenue from green and cart fees in our public courses is up 7% still. I did mention our total rounds, both our public courses and our private courses are down. The public courses are down 8%. That is completely in part or due to the wildfires as well as planned construction on some of the roads in a couple of the cities that we have public courses at. And then the private course decline of 6% in total rounds. was 100% due to a clubhouse renovation that we had going on. So we're not seeing a ton of slippage, and the slippage that we are seeing, we're able to very clearly explain which we've done here.
spk07: Great. Thanks very much, Hannah, and looking forward to the opening at Charlotte soon.
spk01: Yeah. Thanks, Alex. Thanks for being on.
spk02: We'll take our next question from Peter Sella with BTIG. Please go ahead.
spk04: Great. Thank you. And I echo the comments on congrats on the quarter and the puttery reopening. And I want to come back to the growth pipeline, development pipeline for the puttery. I think you guys mentioned, you know, you plan to have 15 putteries operational by the end of 2022. That's a pretty sizable step up in the development that you're planning over the course of the, I guess, coming quarters. So can you just talk about what gives you the confidence that you guys can get to those numbers by the end of 2022? And I'm assuming a lot of that is very much back end weighted into the year.
spk01: Yeah. Hi, Peter. Thank you for the question. We have – what gives me a ton of confidence is we have D.C., Miami, Houston, and two additional venues from this year that are going to be open next year. So we're really looking at an additional eight. We have 22 sites that we're identifying. Twelve of those are in negotiation right now, again, four in construction. So with the 12 in negotiation – I have great hope and confidence that by Q1 or very early Q2 of next year, we will have 10 venues that we still kind of need in order to get to that 15 signed up. We learned a lot in the colony as well as in Charlotte around what we needed to do potentially slightly differently to accelerate our timelines, specifically on the negotiation side. And those are things like landlord improvements that we're asking for. Sometimes that adds a sizable amount of time to our development timeline. So we're looking at ways, and we've come up with a number of ways to kind of squeeze our timeline to make sure that we have the capability of opening those 15 next year. Again, five of those 15 will be well underway by the end of the year, and a few of them are in Washington, D.C., Miami, and Houston. So, yeah, I think that we're in a good spot. We're also starting to really ramp up our construction and development teams. Given the size of our pipeline and the number of sites that we have in negotiation right now, we're starting to, you know, flex a bit on our G&A from the development and construction side just to give them a bit more bandwidth to be able to handle all of the negotiations that we're doing across both general contractors and landlords, brokers.
spk04: Great. And then just a couple more questions on my end. The reviews for the pottery in the colony have been overwhelmingly pretty positive. I think there have been a handful of reviews or concerns about pricing or value. Just curious if you're looking to make any changes either to the pottery in Dallas in terms of the bundling or the pricing, or any changes on future venues as you open them?
spk01: Yeah, that's a great question. We are. That's the short answer. We're looking at both. We are not looking right now at doing any kind of price incentive, bundling incentive, because we want to really get a firm understanding of who our guests are, what the spend per visit is, et cetera, before we start discounting or bundling courses. though that is something that we're talking about doing in the near future. One of the learnings that we had with the colony, obviously whenever you do anything for the first time, you really realize once the golf holes were actually in, we started to realize, okay, well, you know, the library could take, you know, 45 to 52 minutes potentially if you're there on a Saturday night, whereas the illusion course has a much faster speed of play at times. depending on the time of day and the day part. We are doing things around revising the complexity of our holes, the obstacles, the turf, the speed of the turf. We're being very intentional about that stuff. You're not going to see those improvements in Charlotte because we are obviously too close to the opening date, but you should expect to see those improvements in Washington, D.C., and beyond. And I do expect there will likely be a third iteration. There are a few things we can do in the colony, like replacing the turf and other things that will help manage the play time, the time that it takes to play through. But yes, again, we are absolutely also looking at doing some price bundling, and we'll probably look at doing that going into Q1 versus going into the holiday season in Q4.
spk04: Got it. Understood. Very helpful. Okay, just lastly on the puttery, I think the guidance for this year implies about $875,000 of revenue per month, if you're assuming about $3.5 million for the year, and it's been open for about four. But that seems like it's an acceleration from what you did in September, which I think you announced about $800,000. Is that fair to assume that you've seen an acceleration in in revenue at the puttery and not a, call it a weakening, a post honeymoon? How should we think about that?
spk01: Yeah, so good question. Those numbers that you're referring to include Charlotte and the Charlotte opening. So when we, like on page seven of the deck, when you look at the roughly $1 million in revenue that the puttery will generate, is that right? Yeah, that includes The $3 million, I'm sorry, that includes Charlotte in that number. When you look at the $800K that we did in September, again, it's tempting to annualize that number. We can't really do that just because of seasonality. I will tell you that we have not seen a significant drop off due to honeymoon to date that we can report. It just hasn't happened yet. Do I expect to see it happen? You know, January and Q1 is always a bit of a slower time for everyone in the hospitality industry. So I do expect to see a bit of a pullback then. I could be wrong. This is just me guessing. But I would expect to see a pullback in January. And whether that's going to be attributed to honeymoon phase being over or to seasonality, we'll have to kind of wait and see. But we're watching it very closely so that we can give you that data.
spk04: Understood. Okay. That was very helpful. Just for one quick point of clarification. Do you expect it to open earlier in December or is it later? Just trying to understand how the modeling should work here.
spk01: Yeah, right now we are planning on early December.
spk04: OK, thank you very much.
spk01: Yeah, thanks Pete.
spk02: Our next question from Eddie Riley with EF Hutton. Please go ahead.
spk06: Hi Anna, I appreciate you sharing some of your learnings from the colony openings. I just had a question on cost. So for pre-opening costs in the quarter, does this include mostly Colony and the Colony in Charlotte, or are there more venues included in this figure?
spk01: Hey, Eddie, welcome to the call. Nice to hear from you. The number includes Colony and the Colony in Charlotte, no other venues.
spk06: Okay, gotcha, gotcha. That's really helpful. And should we expect this figure to decline per venue going forward? as you guys apply your learnings towards those pre-opening costs?
spk01: I would expect, yes, that those pre-opening costs should decline. We had a great deal of resources dedicated to the colony opening. We wanted to make sure it went perfectly well, and we were trying to account for all of the variables that we didn't know would come up because we were doing it for the first time. So we really had a lot of support from other venues to help train our team there, to help train our staff. We also hired the management team pretty early just due to the fact that we wanted to make sure that they got trained and that they knew the venue. And then on top of that, we had several delays for things that were not in our control. So I would expect that number to decrease, and I would probably expect it to decrease starting next year as we have some of the learnings. Again, with Charlotte, it was so close to the colony that we were able to apply a lot of our learnings, but not completely. So you should expect to see the number go down, but it will take us just a little bit of time for you to see that.
spk06: Okay, great, great. Thanks and congratulations. That about does it for me.
spk01: Yeah, thanks, Eddie.
spk02: And it does appear we have no further questions. I'll return the floor to Kelly Buckhorn for closing remarks.
spk00: Okay. Thank you, everybody. We'd like to thank you for joining us on the call today. As always, we look forward to catching up with you next quarter if we don't speak with you before then. Thanks and have a great rest of your day.
spk02: Thanks for your participation. You may now disconnect.
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