An Industry Analysis of Go-Karting

by Julie Davoren; Updated September 26, 2017
Boy in go cart

Go-kart customers can have fun indoors or outdoors, which means businesses can operate all year. The go-kart industry falls under the sports and amusement category and faces competition from other low-cost amusement channels such as miniature golf courses, laser tag arenas and bowling alleys. Revenues reached $51 million in 2013, according to the research firm IBISWorld.

Types

Go-kart enthusiasts of all ages can find machines that fit their taste and skills. For example, companies such as Jiang Dong, Robin-Subaru and Tecumseh produce entry-level vehicles for children younger than 14. Older children and adults might prefer machines with higher horsepower and advanced features. Racers and thrill seekers often choose professional go-karts that can reach high speeds within short periods. For example, a 125cc shifter kart can reach 115 miles per hour and can accelerate from 0 to 60 mph in a little more than three seconds. Some customers might enjoy go-kart kits that they can assemble in order to build their own contraptions.

Factors Affecting Revenues

The go-kart industry is largely dependent on economic conditions. The industry showed a downfall during the recession because people didn’t have money to spend on entertainment activities. However, the industry began to regain footing in 2013 as the economy recovered. With improving income levels, people began to choose go-karting as a recreation outlet. Even so, profits didn’t reach projected levels because companies attempted to attract customers by offering cheaper club memberships and discounts on multiple races. This strategy led to somewhat lower profits, according to analysis by IBISWorld.

Business Concentration

Small businesses capture about two-thirds of go-kart revenues. Each of these companies typically owns only one go-kart business. Setting up a go-kart establishment is relatively easy, so many new businesses popped up during the five years following the recession. This is because go-karting doesn’t require large spaces. The financial outlay is also moderate, and you can expect to see returns in a short time. You can set up your operations near already established recreational centers and capture many of the same customers. However, you might need to invest more money because these locations are often pricey. Consider locations where rent and construction costs are lower.

Regulatory Issues

To establish a go-kart business, check with the local municipal authorities. They often set regulations to prevent noise pollution and activities that might be a nuisance to residential communities. For example, New Jersey has stringent laws that govern track characteristics. Certain municipal regulators in California only allow racing tracks. Authorities also might have ordinances that require protective barriers to separate viewers from the tracks. They also might mandate certain safety gear for the go-karts and drivers. You might need to store gasoline and other fuels in a specific way, and you may need insurance coverage.

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