Strip clubs in Las Vegas have long paid bounties to cabdrivers who deliver customers, but Rick's didn't grasp the payments' importance when it bought the former Scores strip club in September. By February, the Las Vegas club was registering only $257,000 a month in sales.
Moving to reclaim its share of the slumping tourist trade, Rick's boosted its payments to as much as $100 a customer from the usual $30. By April, it was notching nearly $1.9 million in monthly sales in Las Vegas. The club still lost money that month, because it paid the cabbies about $1 million, but the loss was smaller than in previous months.
Eric Langan, Rick's chief executive, blames the bounty inflation on other clubs' recession-induced desperation. "The pie got smaller, and everyone started trying to steal each other's piece," he says.
-Wonder if any other cities operate this way...
Rick's is a nice club but it's really in an awkward location. You can't even see it from a main road unless you know where to look. If a franchise like Scores (that had brand equity in that location) couldn't make it work, it might just be a bad investment given this economy.
Good question on the bounty angle in other cities. One of the European towns I was in recently had a similar setup, but I can't think of any other U.S. towns where it's a prevalent as Vegas. But I'm rarely in cabs enough to give a firm answer.