When clothing is shed, some see cash appear

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Palazio Gentlemen's Club in Austin, Texas.

When most people hear of a gentlemen’s club many thoughts start going through your head. What many do not know is that the United States strip club annual revenue as of September 2016 was $3.1 billion according to information provided by the Bureau of Labor Statistics.

The average earning for a “dancer” or “stripper” as well as club managers can be anywhere from $40,000 to over $100,000 based on the club’s location, customer base and the amount you are contracted to work.

According to information from IBISWorld industry research report on strip clubs published in March 2017, the industry over the last five years has grown steadily, while per capita disposable income increased at an annualized rate of 1.6 percent contributing to consumers engaging in leisure activities such as visiting a gentlemen’s club.

Waitresses, bartenders, DJ’s, managers and general staff help to make sales and all reap the benefits of a good nights work. Tyler Kull worked at Palazio Gentlemen’s Club in Austin, Texas as a bar back for over a year and has since found work helping him towards a full-time career.

Kull said that the amount of money that is simply laying on the floor with no one claiming it can be enough for meals.

“I mean, there is the fact that I would go around and just find dollar bills on the ground and I would take them and buy myself a steak at the club,” Kull said.

Kull, 23, who owns his own music production company, explained how the DJ’s that work at the clubs are making an extremely good income based off the tips that the dancers are receiving that night.

“So basically, the strippers are supposed to tip out 10 percent of their tips. So, if the strippers make $1,000 then they are supposed to tip out $100 [to the DJ], but usually they are not as honest as they should be.

“Every night the pay scale works like this, you work with anywhere from 50 to 100 strippers and each of them would tip out anywhere from $20 to $100 [to the DJ]. So, on a good night as a strip club DJ you can walk out with $3,000,” Kull said.

The amount of revenue for a club can depend on both your customer base and on the number of dancers the club has employed as “independent contractors.” For clubs to classify their dancers as “independent contractors” they can avoid paying benefits and stay flexible when it comes to who they schedule to work.

According to Marketdata Enterprises, Inc., sales of alcohol represent 40 percent of the total company revenue. On the other hand, “services revenues” (dancers’ fees paid to work a shift, cover charges, share of lap dance fees) make up another 45 percent of company revenue.

RCI Hospitality Holdings, Inc. is the largest publicly traded company in the industry, owning close to 40 gentlemen’s clubs in Texas, New York City, Miami, Minneapolis, St. Louis and other cities.

For its fiscal year ended September 30, 2016, 80.5% of RCI’s $134.9 million in revenues came from service fees, for example, club entrance fees, and from alcohol sales, according to its Annual Report filed with the SEC. The gross profit margin was 84.8%.

That’s a percentage “only software and internet companies typically enjoy,” according to analyst Darren McCammon, writing on the Seeking Alpha investment website. “For comparison Darden, the multi-billion dollar highly successful operator of Olive Garden and Longhorn Steakhouse restaurants, considers a 22% gross margin pretty good.”

According to the Association of Club Executives, a single gentlemen’s club that is based out of a major city grosses between $10 to $20 million annually. For a smaller club in a rural area, they can generate over $1 million annually.

The 2014 report from Marketdata Enterprises, Inc. explained how this industry is a two-tiered market where the large chains have more amenities, better DJ’s, VIP rooms, more elaborate sound and lighting systems, etc. For example, Rick’s Cabaret is a public company that operates 40 clubs and reaches over $100 million in sales annually, consecutively, year to year.

The investment capital that is required to open a gentlemen’s club varies from $100,000 to $200,000 for a small local club of approximately 3,000 square feet. located in the suburbs, while a more upscale club in a city can require $1 million to $3 million in investment capital, according to Marketdata Enterprises, Inc. 2014 report entitled “The U.S. Strip Clubs Industry.”

One of the main issues that many people have with gentlemen’s clubs are the ways in which dancers, waitresses are paid. Having to give a percentage of tips to several different people including the DJ’s, managers, bartenders and general “work fees.”

Sarah Fox is a waitress for Expose Gentlemen’s Club in Austin, Texas. Fox explained the breakdown of what she is paid and how her tips work.

“I get paid $2.17 an hour by the club and keep all my cash tips and keep 95 percent of my credit card tips. The other 5 percent of my tip goes to the club. I also tip out the bartenders 15-20 percent percent because they make all my drinks and give the bar back $5 every night. On a good night, I can take home $400-$500 and on a bad night I can take home $100-$200,” Fox said.

Fox explained how she was working for a bar in Houston, Texas, but was advised by a friend that working for a gentlemen’s club would provide her with a higher income.

“I got offered a job at a bar in Houston and wasn’t making good money there, so one of my coworkers told me to go apply to the gentleman’s club that she worked at in Houston because that’s where the most money was. So, I applied there and once I moved to Austin searched for gentleman’s clubs in Austin on google and ended up at Expose,” Fox said.

While Fox makes a steady income, she explained that along with being a full-time student, she still has her loan debt from school.

“My job does make me financially stable. I can pay to feed myself, treat myself, dress nice, go on vacation and pay my bills. However, I do have student loan debt that my job isn’t able to help pay off since I am also a full-time student. I won’t be able to pay those off until I start my career,” Fox said.

Levels of revenue vary drastically from one gentlemen’s club to the next and this style of entertainment can be very costly for those who plan their leisurely activities to go to a gentlemen’s club. Yet, the people who are planning to go gentlemen’s clubs also know that they are going to be spending money and are prepared to do so.

Kull explained some of the money that he has seen go from the customers’ hands into the clubs’ hands in the matter of hours, showing how much money can be made from a single group of customers.

“Some guys would just rent out a cabana and it’s $500 for the cabana and then $500 for a bottle. And then each of your homies has a stripper and each of those can get up to $300 from the night. If you are going out there to ball out of control you can easily spend money, you can easily blow $5,000 and not even know where it went,” Kull said.