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HOT TOPIC Investing in strip clubs

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snowbank

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I'm not looking at doing this myself, but would be curious if anyone here has done this or knows of people who have. With all the different people here interested in different businesses I figure someone has probably invested/thought of investing before. Would be interested to hear stories.
 

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camski

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Jul 24, 2007
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Never invested in one but have sold to some. The ones that are the most successful that I have seen had a woman as a manager- to deal with the dancers and all their problems. Profitable business but they come with a lot of headaches.
 

CRBFL

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Definitely thought about opening one, but then again, who hasn't?
 

Russ H

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You don't fool me for a minute, Kimber.

You took this assignment to get material for your next book.

About a uptight corporate drone who works the boardroom by day, and struts the catwalk at night.

I'm still working on a title . . .

-Russ H.
 

Russ H

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How 'bout "Talk Nerdy to Me" . . . ?

Shoot. [ame="http://www.amazon.com/Talk-Nerdy-Vicki-Lewis-Thompson/dp/0312939078/ref=sr_1_9?ie=UTF8&s=books&qid=1194628812&sr=8-9"]Already taken.[/ame]


The Good, the Bad, and the Nerdy?

Nah.

Still working on it . . .

-Russ H.
 

Russ H

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Flash Boardroom?

OK.

I'll stop.

-Russ H.
 

Redshft

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Definately a lot of profit potential. It will have more risks compared to other night clubs though(dance clubs/bars). Not stereotyping against dancers, I know quite a few of them, but they bring their fair share of drama and drugs.
 

snowbank

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Recently worked on the opening of a mega club.
Many of the owners also owned pieces of strip clubs.
'Course, I picked their brains.

Is there money in it?
Yes, if done right.

What do you want to know?

as much as you'll share. start up costs, projected profits, potential problems, etc...
 

Rawr

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How do you keep the dancers honest?
 

CRBFL

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Just to clarify, what kind of honest are you talking about?
 

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Rawr

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Well there are a couple of issues for me.

I'd want to know what the set up is for receiving cash from them. Do they get to keep all they earn? If so how to the clubs with free cover and poor bar sales keep themselves running?
If it is a cut of the dances, what is it set at. Do you wait for them to come right off the stage and count while they have no place to hide the cash? How does it work toward lapdances?

I think last I talked to dancers the ones in the city made around 400-600 a night.

And then there are drugs, alcohol abuse, backyard prostitution, secuirty, wierdos etc etc.

Kimber what's your take?
 

hawaiiloans

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Once I reach fastlane status that is something I'd like to consider. But then again what male hasn't thought of the opportunity? :)
 

irace7

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Jul 26, 2007
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1. The girls pay your bills with the house fee. House fee can be $30 to $150 a night.
2. If you take care of the girls and have 25 to 50 show up every week every dollar through the door is profit.
3. DRAMA, DRAMA and more DRAMA........anything you can do to insulate your self from the girls and their drama is worth every penny. Hire a good HOUSE mom.


In general profits are down due to operating costs and other entertainment options.
 

irace7

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Jul 26, 2007
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The club produces revenue through the girls from house fee and from certain special services like chapagne rooms and limos etc...all revenue from dances go straight to the girls.
 

kimberland

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Jul 25, 2007
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Okay I will step aside for irace7.
Sounds like he/she is in the business
and real world experience trumps second hand.

The biggest problem that the owners I talked to had
was local government officials.
No one wants a strip club in town
(they don't even want regular clubs)
so it was a constant struggle to keep them open.
Other problems including keeping the venue fresh
and hiring good and experienced management
(because as irace7 mentioned,
good management buffers the owners from the drama).

I would encourage anyone getting into the business
to develop as many streams of revenue as possible.
Door, coat, bar, house ATM, private tables, etc.
Look at what your guests need from start to finish.
 

kimberland

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Jul 25, 2007
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Question to irace7...
What do you find are the biggest differences
between running a strip club
and running a legit club?

Also in Canada,
we have the liquor control boards to contend with
(clubs are supposed to buy all their liquor through them
at increased costs of up to 30x's the regular price,
forcing many clubs to run two separate set of books,
one with the legit buys and one where their mgmt bought personally).
Do you in the U.S. have that problem?

Thanks!
 

CRBFL

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Oct 9, 2007
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I worked in a club in downtown Seattle for a while (not strip.) I must say that dealing with the liquor control board is HORRIBLE! I know they have a job to do, but wow. Quite over the top at times.
 

mglshark

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Oct 18, 2007
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Treating a patient from a beating by UFC wannabe manager (with bouncer holding this drunk guy down). Video altered according to his lawyer and club wants to settle. 3rd Lawsuit this year against club / manager for this, who now is fired. Club in court all the time with 70 different suits currently, i.e., girls not paid, infractions, drugs, various suits, etc. Plus workers stealing from the club.

Having been a driver / bouncer for strippers a long time ago these girls are mess up in the head - big money flowing in their lives, usually blown on drugs, jerk boy friends that work at the club, no other way to earn income. When looks fade from age it is either porn movies or escort services otherwise back to waitressing for little money, a seedy business period. Hence why I quit after 6 months - too much drama and legal issues!

Check out the history of these clubs and you find out all the legal / money hassles. Big money (cash!) with big headaches!

mglshark
 

irace7

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Jul 26, 2007
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Question to irace7...
What do you find are the biggest differences
between running a strip club
and running a legit club?

Do you mean a strip club vs a dance night club.

Dance Club= More overhead due to a larger paid staff. Constant updates to venue. The entire business depends on constant weekly promotions and top notch customer service. Drama factor can be controlled a lot easier than a strip club but you have to watch out for staff selling drugs and such. A dance club pays the bills from the cover at the door. Then you have to squeeze profit from liquor through shot girls, beer tubs, bottle service...etc.

Strip club= If it's a new club your probaly going to have to sue your local government to get a license. The good thing is theres lots of lawyers that specialize in leveraging dancing nude as a first amendment right. Strip clubs really have two sets of customers, the girls and the patrons. Your exactly right about the multiple revenue centers. The big one is atm's. You can charge $4 to $8 per transaction and actually get away with it. Then merchandise, vip rooms, limos, etc. As a note I'm talking mostly about small to medium sized clubs with 25 to 100 girls. The Mega clubs tend to operate a little differently. Most of the mega clubs have their own currency such as "club bucks". The patrons have to use "club bucks" for dances and such. This gives the club an opportunity to profit from every dollar exchanged.
 

irace7

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Jul 26, 2007
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Question to irace7...
Also in Canada,
we have the liquor control boards to contend with
(clubs are supposed to buy all their liquor through them
at increased costs of up to 30x's the regular price,
forcing many clubs to run two separate set of books,
one with the legit buys and one where their mgmt bought personally).
Do you in the U.S. have that problem?

Thanks!

In the USA it's different in every state. Most states operate through a whole seller system. Price depends on the volume purchased. Some states have laws which make it illegal to store product offsite, this prevents people from buying 10 years worth of product and other price fixing sceams. Most states have also started auditing systems where you have to turn in how much product you have bought and from who you bought it. This is a pain in the a$$ because they use that number and qualculate if you have been cheating on your taxes and such. They also have different size bottles for liquor stores and bars to regulate where you buy from.

My personal opinion is the purchase of liquor and beer is the most overlooked part of any bar/night club/etc. Its like the old real estate saying " you make money when you buy not when you sell". People invest thousand of dollars on tvs and art for the walls which produces no profit but will not invest $20,000 to $40,000 in purchasing product at volume to significantly reduce your costs.
 

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venom

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Aug 6, 2007
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You looking at ways to cut your expenses ?:fastlane:

My brothers friend owns a small pub back home. I had that same desire was I was younger.


Atleast one of the clubs here is rumored to have ties to the mob and they say they dont like competion.
Not to mention the cities have found ways to make life harder for many of them.
Changing closing times. How much clothes they can take off. Etc

Spidey
 

kimberland

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Jul 25, 2007
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Great insights, irace7. Really enjoying this discussion.

I hear you about the bulk buying of liquor.
The manager of the mega club I was assisting with
said that liquor cost controls can make/break profitability.

Re: suing to get the license.
The mega club had to do the same
because of the fear that it would increase violence
in the entertainment district.

The constant new with a club really increases capital costs,
especially if the venue is not originally built with this in mind.
 

Russ H

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Kimber said:
The constant new with a club really increases capital costs,
especially if the venue is not originally built with this in mind.

Huh?

Read it a couple of times and can't figure out which word is the wrong one. :confused:

It's Monday.

My head hurts . . . :coffee:

-Russ H.
 

Bilgefisher

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Aug 29, 2007
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The constant new with a club really increases capital costs,
especially if the venue is not originally built with this in mind.

I don't know a whole heck of a lot about clubs, but I saw this in Jacksonville, Fl a few years back. The most popular club in town was a place called 8 seconds. Then a place called Bourbon street opened. Within 4 months, 8 seconds was closed. Now obviously, there is more to the story, but it was very obvious that you can lose your customer base in a blink of an eye.
 

Rawr

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We still talking about strip clubs or general night clubs now?

The "sweet period" - time the club makes a LOT of money is only the first 6months - 1.5 years. As soon as the new thing is open in town, you are in trouble. Hence a lot of places close for a couple of weeks and come back with a new name.
 

MJ DeMarco

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We still talking about strip clubs or general night clubs now?

The "sweet period" - time the club makes a LOT of money is only the first 6months - 1.5 years. As soon as the new thing is open in town, you are in trouble. Hence a lot of places close for a couple of weeks and come back with a new name.

:iamwithstupid: Ditto ... I once had dreams of owning a night club/wine bar, but hate the "cyclicality" of the industry, at least in my neck of the woods.

Everyone around here jumps from the newest hot spot to the next ... regardless of food quality and service. It is somewhat frustrating. After 6 months to a year, what was hot, becomes old and something new has everyone's attention.

I can't say if its the same for strip-bars, but I'd think they'd have hot and cold phases as well.
 

kimberland

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Jul 25, 2007
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The constant new with a club really increases capital costs,
especially if the venue is not originally built with this in mind.

What I was trying to say, Russ,
is with a nightclub,
you constantly have to reinvent yourself.

You close down for a couple weeks,
switch the club up,
and then reopen with a new name.

The megaclub that I was consulting on
did one huge reno with 10 years worth of reinvention in mind.
The walls move.
The bar is in pieces (with different tops).
Etc.
Ya gotta build flexibility into the design.
 

reipro

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Sep 27, 2007
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I'm not looking at doing this myself, but would be curious if anyone here has done this or knows of people who have. With all the different people here interested in different businesses I figure someone has probably invested/thought of investing before. Would be interested to hear stories.

I have actually looked into it more than once. I say I here because my partner Stacy is not a big fan of them. The exmaple the we looked at modeling was a juice bar in Kansas just outside of Lawrence.

It is an amazing money maker. However one of the problems with a place like this there is no barrier to entry so anyone can do it. The place is a DUMP and I mean DUMP!

It is a cinder block building in the middle of no where. It is a BYOB (that is bring your own beer). There are many rules that you have to follow, but the guy that owns makes a small fortune.

The girls pay the owner $100 per night to dance and there are usually 15 girls. He is only open Thursday, Friday and Saturday. The guys pay $10.00 cover to get in and on thursday there are usually 200-300 guys per night. One Friday and Saturday they average around 500 guys per night.

So with a little math

15 girls @ 100.00 = $1500 per night X 3 = $4,500.00
Thursday night 200 guys @ 10.00 = $2,000.00
Fri and Sat night 500 guys @ 10.00 = $5,000.00 X 2 = $10,000.00

Minimal over head Security, no permits, rent, utilities.

They are grossing around $15,000 per week or about $750K per year even with $250K in over head which I know he does not have that much, the owner is making $500K per year.

Not a bad deal if your morality will let you own and run something like this!
 

hawaiiloans

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Very interesting numbers reipro.

How do strip clubs that have been around for so long stick around for so long? It doesn't seem to me they offer anything new for each club, so maybe it's the "selection"? We have a real big club out here and it's because of the types of girls. Being in Hawaii we get all types, probably more of a mix then mainland strip clubs.

In the future I'd love to be an owner of a strip club. It's something I'd like to do not for my main job, but as a side project, putting together the right people.

I have actually looked into it more than once. I say I here because my partner Stacy is not a big fan of them. The exmaple the we looked at modeling was a juice bar in Kansas just outside of Lawrence.

It is an amazing money maker. However one of the problems with a place like this there is no barrier to entry so anyone can do it. The place is a DUMP and I mean DUMP!

It is a cinder block building in the middle of no where. It is a BYOB (that is bring your own beer). There are many rules that you have to follow, but the guy that owns makes a small fortune.

The girls pay the owner $100 per night to dance and there are usually 15 girls. He is only open Thursday, Friday and Saturday. The guys pay $10.00 cover to get in and on thursday there are usually 200-300 guys per night. One Friday and Saturday they average around 500 guys per night.

So with a little math

15 girls @ 100.00 = $1500 per night X 3 = $4,500.00
Thursday night 200 guys @ 10.00 = $2,000.00
Fri and Sat night 500 guys @ 10.00 = $5,000.00 X 2 = $10,000.00

Minimal over head Security, no permits, rent, utilities.

They are grossing around $15,000 per week or about $750K per year even with $250K in over head which I know he does not have that much, the owner is making $500K per year.

Not a bad deal if your morality will let you own and run something like this!
 

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