I’m in Las Vegas right now for the Blogworld and New Media Expo and took a cab, as I often do, cruising around from hotel to hotel, party to party. This time the driver, Frank, was in a talkative mood and revealed some very interesting information about the economics of being a cab driver here in Las Vegas.
Wondering how these guys get paid? Turns out that one of their biggest sources of revenue is dropping fares off at strip clubs. In fact, there’s a “price war” going on with the strip clubs here in Vegas and a cabbie can earn up to $100 per person for dropping people off at the door.
They drop fares off, get a “chit” from the doorman, and then park and come back to get the cash. Meanwhile, the people going into the club find out that there’s a “cover” charge (of up to $100) to cover the cost of paying off the cabbie.
I’m thinking that’s going to skew their recommendations regarding which club to visit, don’t you think? Do they have to disclose that according to the new FTC regulations?
The picture’s even more interesting because this particular cab driver, Frank, also explained how the meter revenue is split. The cabs are all owned by the cab companies and employees get health benefits and (some) vacation time, but more importantly, some companies require the drivers to split the cost of gas, while others cover it 100%.
The goal of the companies are to maximize meter-on time, and the driver (with this particular company at least) gets 40% of the meter up to the first $100, then 50% of the remainder of whatever they earn for the night, along with all of the tips.
That’s not too bad if you think that a typical 15 minute cab ride generates a $14 meter fee and a $2-3 tip. Do that three times an hour for an eight hour shift and you’ve just earned 45% (to make this easy) of $336 (24*$14) + $72 (24 * $3), or $222/night. Drop off a few fares at a strip club and even if it’s not the top-paying club, that’s another $150 or more, so we’re talking about $375 or more. Add a few airport runs, or increase the fare because you have more people in the car and it’s an easy $400/night, or $2,000/week. Not bad at all for driving around in circles all night.
Still, my Dad was a cab driver (in London) and I know from his stories that it’s a tough gig. There are jerks, drunks, people who realize they’ve no money once you arrive, and hostile folk. There’s also quite a pecking order with cabbies in most towns too: When I was last in Chicago my driver rolled down the window and started swearing at another taxi driver while we were going 50mph or so. Complaining that the other guy had cut the taxi rank, not cool. But I was sure we were going to crash.
Anyway, very interesting to learn more about the curious financial world of taxi drivers here in Las Vegas, Nevada. Now if they could only keep the cabs from smelling musty and smoky…