Pickleball, Anyone? Growing sector could be a smash hit

Just in the past two years, eight new franchise brands have emerged in the pickleball industry, driven by skyrocketing consumer demand, diverse business models, and robust growth projections. More brands are to come certainly.

FRANdata has recently had an opportunity to study this growing sector. We found that these brands offer a compelling opportunity for franchisees because of their extremely fast growth trajectory, but just as interestingly, they offer a variation in revenue models that provide the franchisee with options.

Consumer demand

Pickleball’s rapid ascent in popularity is nothing short of remarkable. According to the Sports & Fitness Industry Association, more than 13.6 million people played pickleball across the U.S. in 2023, marking an 85.7% year-over-year increase from 2022. This surge is primarily attributed to the sport’s accessibility and appeal across various age groups. Initially popular among older adults, the average age of pickleball players has decreased from 41 years in 2020 to 38.1 years in 2021, reflecting its growing appeal among younger demographics.

The Covid-19 pandemic further accelerated pickleball’s popularity as a socially distanced activity that allowed people to stay active and socialize safely. Cities across the U.S. have responded to this demand by converting tennis and basketball courts into part-time or full-time pickleball venues. The participation rate of pickleball increased by 159% from 2019 to 2022, making it the highest for any sport in the U.S.

Booming growth

These emerging pickleball franchises are in aggressive growth phases with projected unit growth reflecting strong investor confidence. Together, these eight brands project to add more than 1,000 units this year and next. Most of them are looking for relationships with multi-unit franchisees. 

For example, Ace Pickleball has recruited franchisees from established brands like Hand & Stone Massage and Facial Spa, Orangetheory Fitness, Papa Johns, and others. It has already successfully signed up 24 different franchisees to open 86 locations. The Picklr announced in April that it sold 276 total units to 36 unique direct franchising groups and is looking to develop in Canada. Similarly, Pickleball Kingdom plans to expand to more than 140 units and has recently signed up with a developer in India.

Variations

One of the things that makes this industry interesting is that it is characterized by two primary business models: court-focused and entertainment-driven.

Court-focused model

This model prioritizes sports and fitness enthusiasts by focusing on pickleball courts and maximizing occupancy. Facilities typically feature eight to 15 courts with revenue driven by court occupancy through membership models and pay-per-use options. Brands like Ace Pickleball and The Picklr exemplify this model, offering limited food and beverage options but focusing heavily on the sport itself. This model benefits from recurring membership fees, similar to established fitness concepts, and allows for rapid national expansion due to its straightforward operations and low initial investment costs.

Entertainment-driven model

This model combines pickleball with food, beverage, and other entertainment activities, creating a more diversified revenue stream but requiring larger real estate and more complex operations. Brands such as PKL and Crush Yard exemplify this approach, offering extensive kitchen setups and dining areas in addition to pickleball courts. While this model provides a unique dining and entertainment experience, it demands greater expertise from franchisees to manage both fitness and food-service operations effectively.

The investment for each of these models varies significantly, and though these brands are still new enough not to have consistent returns, early statements imply that AUV for the entertainment model is three to four times that of the court-focused model. Time to develop, ease of financing, and time to see a return will vary.

Opportunity

The pickleball industry presents a compelling opportunity for multi-unit franchisees due to its explosive consumer demand, adaptable business models, and significant growth projections. As a sport that appeals to a broad demographic, pickleball offers a unique blend of fitness and social interaction, making it a lucrative investment. Franchisees can choose between court-focused and entertainment-driven models, each with its advantages and challenges, to best align with their expertise and market strategy.

With the sport’s popularity showing no signs of slowing down, now may be an ideal time for savvy investors to capitalize on the burgeoning pickleball market. Whether through dedicated pickleball clubs or integrated entertainment venues, the potential for success in this dynamic and rapidly expanding industry seems to be immense.

Paul Wilbur is COO of FRANdata where he is instrumental in building the company’s research and consulting framework. He manages the research, information management, marketing, and IT departments and plays an integral role in the strategic development of FRANdata’s suite of franchise solutions. Contact him at 703-740-4700.