Topless/Taxi War: Prices climb as Rick’s explains ‘strategy’

So much for going along and getting along. Multiple sources have confirmed that the recent draw-down of payouts by strip clubs to taxi and limo drivers for delivering customers has faltered. After dropping to $30 per person, the fees have begun to climb again as some strip club owners see the wisdom in outbidding the competition.

One of those is Eric Langan, boss of Rick's Cabaret, a publicly traded company that has been using driver payouts of $100 per customer to market its club and brand. That's big money, but in a recent conference call with institutional investors he assured any skeptics that his strategy was working.

Of late, one source tells me the payoffs have reached the $80 mark at Rick's and a couple of competing clubs.

In response to one question about the payouts, Langan said, " You gotta remember, in our industry it's all about the girls. So he who has the girls has the customers, and he who has the customers has the girls. So it's really a chicken and egg and which came first. The trick is keeping the girls and the customers on a platform. ... The guys will always go where the girls are."

Langan also said the club avoids attempting to offset the payout by increasing drink prices to customers and house fees to dancers. (At strip clubs, the dancers essentially pay the house for the opportunity to work the customers.)

"They've tried a lot of things to offset those expenses," he said. "We've kept right on eating the losses we've been sustaining before. We're happy."

Ah, the advantages of a bankroll associated with a publicly traded company. The losses because of the payouts, Langan contended, were less than he anticipated. And the club's sales have risen steadily despite the recession.

Langan said the club in the week of March 10 did $120,000 in sales, $400,000 in sales the following week, and $500,000 in sales the final week of March.

"We were running 60 girls and eight waitresses on the first Friday night trying to serve 1,400 guests," he said. "I don't know how we didn't lose more money."

Langan was calm and confident when fielding questions from investment analysts, but he became testy after being peppered with chiding comments and questions by David Cooper, a Las Vegan with a history in the adult business who described himself as an investor in the company. Cooper was especially critical of Langan's description of spending at least $1 million a year in "marketing expenses" that were handed to limo and taxi drivers in the form of payouts. Langan also declined to say whether the drivers received IRS 1099 forms.

In rebuffing Cooper, Langan said, "I won't discuss on an open line our marketing program. I'm not going to discuss our marketing program in any form or fashion. ... Are you from Minnesota? You sound like plaintiff's counsel."

Trouble is, he already had discussed aspects of the marketing program with earlier callers. He just wasn't interested in taking any more abuse from a critic.

Cooper, meanwhile, accused Langan of "manipulating" the price of the company stock with the payout program. The exchange provided the only fireworks in an otherwise pretty tepid conference call.