First let's decide what we are talking about. Is it a pitch and putt course or an executive course? It seems like everyone wants to talk about the expenses of a pitch and putt course due to the lower land requirements but then you talk about the revenue of an executive course. So let's talk about a pitch and putt course.
First, good golfers won't play a pitch and putt course for the exact reason mentioned: golfers want to hit driver. Period. I own an executive course and we see about 1/2 the rounds of a full length course for just that reason. So that means you're talking about very limited demand from kids and beginners unless you are in a totally unserved market like New York City, in which case you can't afford the 10 acres to begin with. If a typical public course in the market has 35,000 rounds, a pitch and putt will have maybe 10,000 rounds. What's the greens fee? If it's a flat piece of land with some greens mowed in it, it's probably less than $10. So 10,000 rounds x $10 is $100,000. In the US, by the time you pay electricity, insurance, property taxes, and course maintenance, assuming you want even decent conditions, you're looking at no less than $200,000 to run the place. What's land cost these days - $300K an acre? Even 10 acres is a $3M investment. Throw in a million or so to build the course and you're in for $4M. Good luck making $600K PROFIT to get a 15% return on that. You would need revenue of $800K or so, which is about $80 a round. And, if you want to get a better greens fee by making an interesting course, your investment just went into the multiple millions, you will need more land, and your maintenance cost went up.
For the same amount of land, you can build a driving range for less, and have more revenue and lower expenses. The math is really quite simple. And if you have the land to build a driving range, you can sell it for development and make even more money with no risk.
As for the TopGolf argument, it is a bar that happens to have a driving range. It isn't full on a Friday night because people want to practice, it's full because 20 somethings are getting loaded on $10 cocktails and having fun. Unless you can sell $10 cocktails on a pitch and putt, it's a totally different deal. That's why you see these bars coming out with putt putt courses like Puttshack. The bar is where the money is. I applaud any city looking to build courses like this because we need places for people to learn golf, but I can't imagine how a private developer would make any money today.