Q3 2021 Drive Shack Inc Earnings Call
Yeah.
[music].
Good morning, My name is Keith and I'll be your conference operator today.
At this time I'd like to welcome everyone to drive Shack third quarter 2021 earnings Conference call.
Currently all lines have been placed on mute to prevent any background noise.
After their 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 Buck Horne head of Investor Relations Ms. Buck Horne you may begin.
Thank you Keith and good morning, everyone I'd like to welcome you to drive Shack 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 Dot drive shack dot 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.
Carriage 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 Hana.
Everyone and thank you for joining our third quarter conference call.
Third quarter was a historic quarter for our company with the launch of pottery or new competitive socializing and immersive entertainment experience.
Pottery 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.
Yes are responding favorably to our inaugural pottery and the feedback on their experience remains overwhelmingly positive I'm beyond proud of the countless team members that work hard to deliver our first venue and thank them for their unmatched dedication and commitment to bring our pottery Brandon vision to life.
We've learned a lot already with our first venue opened and we're gaining proof of concept that along with revenue growth in our core businesses create significant opportunities for our future, but before I move into that 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 drive Shack revenue came in at around 10, and a half million this quarter down 1 million from last quarter, which was expected due to seasonality.
Q3 revenue for AGC was 65 million up 3 million over last quarter, even with total number of rounds being slightly down which I'll speak to more shortly and.
And finally pottery generated total revenue of just under a million and 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 preopening costs. This year versus last year, given our pedigree venue pedigree venue openings this year.
Additionally, our operating expenses this year are more normalized including G&A now that we're beyond the peak COVID-19 impacts from this time last year, when we were operating below historic levels.
With that we delivered our fifth consecutive quarter of positive adjusted EBITA 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 cut or even yet today.
Today, we have one pottery 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 putting in 2022 and beyond we expect to access the debt the debt capital market and early 'twenty two to secure additional capital to fund our growth plans I will discuss more about our development strategy in more detail shortly.
Quickly now turn to page six for those of you that are new to our story.
Over the past three plus years drive Shack, Inc has undergone a significant transformation from a traditional golf business to an entertainment operating company <unk>.
This time, we sold the majority of our own course portfolio to fund the growth of our entertainment golf business, namely to fund the development of our drive shack venues that we operate today.
We opened our first drive shack 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 two point over 10 years in August September and October 2019, and Raleigh, Richmond, and West Com Beach.
Three venues opened strong significantly outperforming twenty-nine expectations and beating their initial plans at year by 14%.
We have since developed a new entertainment golf experience pottery, which is indoor tech enabled putting within an immersive experience.
We opened our first putting the colony, Texas just outside of Dallas about two months ago. Our goal is to open a total of 50 pottery 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 Q3s 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-19 levels. This even with our events business still slightly down from prior periods, yes.
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 in venue EBITA 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 'twenty. One goal of the 280 million I just mentioned.
The revenue increase mainly comes from the growth in new cutter venues, which we are currently targeting to have 15 operational by the end of next year, including the colony in 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 unit economics, we expect our course and venue contribution in EBIT goals to be significantly higher in 2022 and 2023 as you'll see in the chart on the chart on page eight.
Our fiscal 2022 total course convenient EBIT 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 pottery venues over the next two to three years given our current venue opening projections. Our total run rate course in venue EBITA is modeling around $60 million in 2022 and $105 million in 2023, a significant earnings growth trajectory over the next two years.
As such we're planning on it 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 submarine 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 in 'twenty two managed courses with our drive Shack Entertainment Golf business. We currently have four venues in Orlando, Raleigh, Richmond, and West Palm, where additionally committed.
Two leases in New Orleans in Manhattan.
With pottery, 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.
These five locations we have three additional sites that are currently in or nearing lease execution.
Taking a step back and I just want to address we previously targeted to open seven part or even use in 2020. One as you. All know we did not meet that goal for a wide variety of reasons, including Covid in supply chain related impacts.
It appears we are moving a bit more slowly than expected, we're really taking the time to incorporate learnings from the first pottery to improve those that follow we know from investor feedback that gaming 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 opened by the end of 2021 the colony in Charlotte the five additional sites. We promised in 2021 will be delivered and opened in 2022. These include D C. Miami Houston into future sites on top of that we plan to open eight additional locations in 2022, bringing us to a total of 13 new opening.
<unk> in 2022, and ending the year with 15 total putters.
We have a robust pipeline of future putter relocations, we are actively pursuing and 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 timelines in a few moments.
So pottery and 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 focus on competitive socializing.
We're very focused on not only the gaming experience, but also on the the complete food and beverage experience with a high energy atmosphere, we've curated exceptional colorant 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 by the experience that we've created.
So as mentioned earlier, we debuted our first cut every 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 venues just under 21000 square feet spanning two floors with four nine hole uniquely themed golf course.
As those of rooftop large library and illusion, we have three bars of patio terrorists 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 800 K in total revenue for just one month of operation in the quarter well it might be tempting.
To annualize that result for a yearly revenue number there is seasonality at play in our venues and pedigree is no exception, we do expect holidays to be busy January has to be slower et cetera. So in short, we really expect pottery 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 800 K 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 walking.
Guests plan their visit and advance mainly through online reservations with gameplay, we're seeing that they're spending around two hour two hours on average and our venue and that Saturday late evening as 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 will continue to highlight in the future in order to raise our food revenue. We also know there's room for improvement and the events revenue mix as well as here as it as well as in our other brands.
While we intentionally did not pre sell events at the colony in our first month of operation I'm extremely proud of the sales and event teams to deliver 8% of our total revenue and events in their first month open while we're still early in our Grand opening phase we.
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 country that needs to come.
When we look at the projected venue level economics that we put forward several quarters ago. We remain confident that Perry was and will continue to be the best path of growth for our company and.
As you'll see on page 13, both drive shack in pottery venues have very desirable economics putter. He is an adjacency to our current business and gives us the ability to grow quickly and with less capital risk and higher returns in our 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 four and $6 million. While these are great numbers.
These require a bit of a quite a bit of time and capital to get to revenue generating status and contrast put or even use require around 20000 square feet of existing retail space development time is between six to nine months and development cost is between seven and $11 million with expected EBITA returns of $2 million to $3 million, but.
So there 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 recovery are currently in line with our projections to date.
Turning now to a deeper discussion on our pottery portfolio the development and the development timeline and process for pottery is really critical to our future success in valuation as you can see on page 14, we've provided a different view of our development timeline to better convey the end to end development process of a cut or even your first.
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 to 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 putter. Even years. We currently have three lease committed venues and 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 negotiations with landlords from this space. These additional sites being negotiated with 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.
First 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, then you're 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 cut or even you on.
On top of that we have 12 additional sites that I just spoke to that are currently in active LOI or in active lease negotiations 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 in venue opening plan for 2022, we will need to carry 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 in our proof of concept will be further supported Michael.
Speak to this more in a few moments.
Moving now to our drive shack venues, which had had some major wins in Q3 and with.
With those venues delivering another quarter of strong results and 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 EBITA versus about $1 million a year ago, while our venues have largely returned to pre COVID-19 levels. Our events business is still down but read.
Rounding quickly.
I also want to point out that Orlando once again broke even in Q3, which is the second consecutive quarter of breakeven and we still expect them to be EBIT 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 where they are located.
It 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 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 500 K higher than last year.
We have a growing events pipeline that we feel confident we'll continue to improve more on that in a moment.
Okay.
Turning now to page 17, our new development team has done some incredible work on re imagining 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 seasonal I think some of our games.
We recently introduced new Pumpkin graphics monsters, and our Monster Hunt game for the Halloween time period, and we will soon introduce snowman building as we enter the winter and holiday season I'm extremely proud of this team and they'll continue to deliver unique.
Tech forward initiatives to keep content, new and fresh for Rguest.
Moving now to the traditional golf arm of our business on page 18.
American golf continues to deliver strong results versus their pre COVID-19 levels for Q3, AGC delivered 65 million in total revenue 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% and our daily.
B rounds on our public courses, mainly due to construction and wildfires at near at or near it.
At or near three of our public courses excuse me the 6% decline in total rounds that are 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 mode. 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-19 levels.
Speaking of events and as you've heard me mentioned threw out 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 event team to help facilitate the increase in events demand and to enhance more direct and timely engagement with guests and business 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 drive shack and Puttering, Harry 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 had national sales roles across Barton G patina rest.
Strong group and hard rock international She's been an incredible asset to the team and has already produced measurable 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 Terry'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 inquiry enquiring.
Additionally, we also have a strong 2022 event pipeline, which is currently exceeding our full year 2020 total event revenue.
This is expected given the impact from Covid that year, we do expect that 2022 event revenue will be significantly higher than where we will end 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.
Thanks, Anna 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.
An operating loss of $5 9 million and adjusted EBITDA of $3 3 million, our fifth consecutive quarter of positive adjusted EBITDA at.
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 powdery delivered 800000 for its first one months of operation.
Total work 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 the 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 20.
5% versus Q3 last year on a comparable basis.
On the traditional golf side AGC.
<unk> generated $65 1 million of revenue, including managed course reimbursements of $14 7 million.
Excluding managed course reimbursements American Golf's third 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 pottery preopening 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 head count from previously furloughed positions as a result of the onset of COVID-19 earlier in the year.
Moving onto our summary financial results on page 22, the net loss applicable to common shareholders for the quarter was $10 2 million or <unk> 11 per share for the nine months ended September 32021, the net loss to common shareholders was $25 9 million or 29 per share.
There was an approximate <unk> <unk> 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 thats settled in February.
Moving to page 25, our total company revenue adjusted EBITDA contribution was $11 9 million for the third quarter. This year, which includes $3 1 million for entertainment golf encompassing both drive shack and pottery 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 in Agc's adjusted EBITDA contribution of $8 2 million for traditional golf.
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 of 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 need to we need to complete the execution of our growth plans for our first seven pottery venues. The first of which is open second substantially complete.
As we look ahead to our capital plans for to fund future growth plans for additional pottery 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.
Ali I am pleased to announce the drive Shack board declared dividends on the company's preferred stock for the quarterly period, ending January 31 2022.
Dividends are payable on January 31, 2022 to holders of record on January one 2022.
With that I'll turn it back to Hana for closing remarks, thanks, Mike before we turn it over to Q&A I just wanted 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 our drive shack venues continue to deliver.
Solid performance and gained momentum as there had been as business returns.
As I said earlier Q3 marked a historic moment in our company's history with the launch of our first pet or even you. 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.
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We'll take today's first question from Alex Fuhrman with Craig Hallum. Please go ahead. Your line is open.
Great. Thanks, very much for taking my question and congratulations on the opening of the first unit.
Wanted to ask about the event.
EBITDA is coming back nicely.
Curious what types of human being.
Pablo pottery and drive Shack, and then how that.
Compares to what you had before.
Hey, Alex Yeah. Thanks for the question thanks for being on.
Great question, we are actually I think I said last quarter that our <unk> business was really impacted by.
The lack of corporate event business, we're starting to see that come back slowly on the drive shack side and on the <unk> side and.
We've had quite a bit of a corporate business coming back on those both drive shack and powdery.
Powdery, we are experiencing some more social events and which is fantastic groups of 10 to 12, but we're also we've also had a couple of just buyouts and other things that has been for corporate companies drive shack and we're starting to see the 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 aren't on our American golf side, and we do a lot of weddings and we're starting to see that business kind of pick back up along with tournament business.
Okay. That's really that's really helpful. Thank you.
It looks like your artery.
You're going to have a pretty nice contribution.
Year, mostly.
Okay.
The mix of revenue.
The exact positive melanoma.
Known in the market.
And alcohol and game.
Are you expecting something similar.
He will be followed.
Yeah, So as I said the food the food is only about 12% of our revenue right now, which tells us that people are coming to the pottery and really looking at us as a bar and an experience, which is fantastic and we take a lot of pride and what we've put together both from the gaming.
Respective as well as from the food and beverage perspective.
People Love, our cocktail program and they also love our food when they happened to eat it.
So we are in the future, where 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.
And food beverage and gaming experience versus really just the beverage end game component that said, our SPV is still on track because the amount of alcohol sales that we have and our pro forma we considered as F&B sales total and so it really doesn't matter to us that the mix is.
Long as we're reaching that pro forma metric, which we are.
I expect Charlotte will follow in the same footsteps as as the colony.
Yes.
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 in our guests know that they can they can come in and eat as well as enjoy their their experience. So.
40% gameplay, and then 40% alcohol is not not a bad day for us and we do expect that again to continue.
With hopes that maybe that 40% alcohol potentially gives another 20% or so to food and we'll see how that works out.
Okay. That's really helpful. Thanks, and then.
That comes back.
Marine drive Jackie just other more dining and entertainment and content in general or are you seeing that.
Strong demand on the American golf.
Comment a.
A lot of your party member.
Membership is that.
Still the case.
Yeah, we're we're still at 99% capacity in our private clubs.
So for memberships, which is great and our revenue from Green Green and cart fees and our public courses is up 7%. So I did mention our total rounds at both our public courses enter private courses are down the public courses are down 8% that is completely in part due to the wildfires.
The wildfires as well as planned construction.
On some of the roads and a couple of the cities that we have public courses that and then the private course decline of 6% in total rounds with 100% due to a clubhouse renovation that we had going on so we're not seeing a.
A ton of slippage and the slippage that we are seeing where we're able to very clearly.
Explain which we are which we've done here.
Great. Thanks, very much and I'm looking forward to.
Thank you Charlotte.
Yeah, Thanks, Alex Thanks for being on.
And we'll take our next question from Peter <unk> with <unk>. Please go ahead.
Great. Thank you.
Comments on congrats on the.
Quarter on the part of reopening.
And I wanted to come back to the the growth pipeline development pipeline for the pottery.
As mentioned.
Do you plan to have 15 potteries operational by the end of 2022.
Pretty sizable step up in the development that you're planning over the course of the 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 backend weighted into the year.
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.
And so we're really looking at an additional eight.
We have 22 sites that we're identifying 12 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 those 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 and to accelerate our timelines and specifically on the negotiation side.
And those are things like you know landlord improvements that were asking for sometimes that add the sizable time, a sizeable amount of time to our 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 and we have the capability of opening those <unk>.
<unk> 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 <unk>.
Next 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 all of the negotiations the negotiations that we're doing across both general contractors and landlords brokers.
Uh huh.
Great.
And then just a couple more questions on my on the.
The reviews for the.
Pottery and.
Colony had been overwhelmingly pretty positive I think there's been a handful of reviews or concerns about pricing or value.
If you're if you're looking to make any changes either to the pardon me in Dallas in terms of the bundling or the pricing or any changes on future venues as you open them.
Yeah. That's a great question. We are that's a short answer and we're looking at but we are not looking right now at doing any kind of price incentive 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.
So that is something that we're talking about doing that 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 and we started to realize okay well the.
The library could take you know 45 to 52 minutes potentially if you are there on a Saturday night, whereas the illusion of course has a much faster speed of play at times.
Pending 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 tariff, we're being very intentional about that stuff youre 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 and there.
There are a few things we can do in the colony.
Yes.
Replacing the turf and other things that will help manage the play time that 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.
Got it understood very helpful. Okay, and just lastly on on them on the pottery.
The guidance for this year.
Implies about.
875000 of revenue per month, if you're assuming about $3 5 million for the year have been open for about four.
That seems like that's an acceleration from what you did in September which are you.
Announced about 800000.
Is that fair to assume that you've seen an acceleration in revenue at the pottery or not.
Call it a weakening a post honeymoon how should we think about that.
Yeah. So good question the numbers that you're referring to include Charlotte and the Charlotte opening so when we look on page seven of the deck. When you look at the roughly $1 million in revenue that the pet are able to generate.
Is that right, yes that includes.
The $3 million I'm, sorry that includes Charlotte and that number when you look at the 800 K that we did in September and again, it's tempting to annualize it 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 just hasn't happened yet do I expect to see it happen.
January in 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 than I could be wrong. This is just my guessing.
But I would expect to see a pull back in January and whether that's going to be attributed to.
A honeymoon phase being over or to seasonality, we will have to kind of wait and see but we're watching it very closely so that we can give you that data.
Understood. Okay. That's very helpful and just one quick point of clarification do you expect Charlotte to open earlier in December or is it later or just trying to understand how the modeling work here.
Right now we are planning an early December.
Okay. Thank you very much yeah. Thanks Pete.
And our next question from Eddie right away with Houghton. Please go ahead.
Hi, Ana I appreciate you sharing some of your learnings from the colony openings.
I just had a question on costs. So so for pre opening costs in the quarter does this include mostly colony in the colon and in Charlotte or they're more venues include hemisphere.
Hey, Eddie and welcome to the call and nice to hear from you. The number includes the colony and.
The colony in Charlotte no other vignettes.
Okay Gotcha, Okay, that's really helpful.
And should we expect this.
Bigger decline per venue going forward as you guys apply your learnings towards.
Pre opening costs.
I would expect yes, those preopening costs should decline.
We had a great deal of resources dedicated to the colony opening and 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 we really had a lot of support from.
From other venues.
To help train our team there to help train our staff. We also hired the management team.
Pretty early.
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 <unk>.
<unk> that we were able to apply a lot of our learnings.
But not 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.
Okay, great great.
Thanks and congratulations.
Yeah. Thanks, Eddie.
And it does appear we have no further questions I'll return the floor to Kelly Buckhorn for closing remarks.
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.
Okay.
This does conclude today's program a bunch for your participation you may now disconnect.
Okay.
Okay.
Yeah.
Yes.
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