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Thread: what does real estate, restaurants, and 'strip clubs' have in common ?

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    Banned Melonie's Avatar
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    Default what does real estate, restaurants, and 'strip clubs' have in common ?

    (snip)"Discretionary Spending "

    "No one (well just a few of us deflationists) expected to see price drops. Well here they are, first in housing and now in restaurants. What's next? I expect we will see all kinds of drops in the price of goods and services. Someone emailed me just a few days ago about a price drop at the nail salon from $10 to $9. Hmmm. Is that a 10% drop? Why yes it is. Discretionary spending in all kinds of things is likely to go out the window. Prices will drop with falling demand, and it will not matter one iota what input costs are doing. Ask yourself if Bennegan’s is paying 37.5% less for ground beef that it was last week. Did it matter? Think this through one step further. What will that mean for home prices, the value of businesses unable to pass on cost increases, the stock market, jobs, etc? It will be interesting to see just how much we overbuilt retail stores, nail salons, Home Depots, and restaurants of all kinds.

    Psychology is shifting from consumption to saving in the US and from saving to spending in Japan. What we are really talking about is a SECULAR change in "Time Preference". There is likely to be a lot of pain associated with that change, especially in the US.

    Bernanke’s worst nightmare took another big step forward today with these price cuts. If those price cuts do not attract consumers, job cuts will follow"(snip)

  2. #2
    Lola Rose
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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    I would hate to give price cuts in my club, b/c I think it would lead to dancers charging what they want, and custys wanting lower and lower. I don't think incomes would increase at all.

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    ^^ in clubs that offer contact lap dances, I tend to agree. The basic price will probably remain fixed, but customers will want more and more contact without spending more money. This would roughly be equivalent to housing markets where several $1 million dollar homes are all for sale, but one homeowner is throwing in a new Mercedes Benz to the buyer.

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    Of course, there's that one significant difference between a mainstream business and a strip club.

    When the economy is good, a mainstream business knows it can charge whatever it can for the goods/services it sells. When the economy is bad, it has to resort to promotional pricing on those goods/services to attract customers. Should the promotions not work, they either have to lay off employees or go out of business.

    In a strip club, when the economy is good, much like a mainstream business it knows that it can charge whatever it wants for lap dances, VIPs and champagne, but when the economy is bad, it knows there will be no shortage of women willing to pay a house fee to work there because the bad economy has either cost them their mainstream job, or has otherwise put them in a state of financial difficulty.

    Sadly, a lot of the women who turn to dancing in these times don't seem to realize the very same economic downturn which pushed them towards working in a strip club, is what is keeping their primary customer base from frequenting it.
    ___________________

    Along these same lines, has anybody hit a movie theatre this past summer? Granted, that industry has other problems going for it, but everytime I have gone, I'd estimate anywhere from 70-95% of the seats are empty, even during prime time showings. You can't sell popcorn to empty seats.
    Former SCJ now in rehab.

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    Banned Melonie's Avatar
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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    When the economy is bad, it has to resort to promotional pricing on those goods/services to attract customers. Should the promotions not work, they either have to lay off employees or go out of business.

    In a strip club, when the economy is good, much like a mainstream business it knows that it can charge whatever it wants for lap dances, VIPs and champagne, but when the economy is bad, it knows there will be no shortage of women willing to pay a house fee to work there
    ^^^ well, that's the ultimate rub for 'independent contractor' dancers compared to 'employees' ... because, other than the cover charge and bar sales, the clubowners are able to pass along much of the financial risk to the 'independent contractor' dancers. This fact also lends some creedence to the likelihood that clubowners may indeed start to lower prices for private dances / VIP room - because lower prices would maintain the customer 'head count' at the door and at the bar which helps the clubowner, while cheaper private dance pricing would (primarily) affect only the dancers. There won't ever be an issue of dancer layoffs, but some dancers may indeed start to question a take-home pay remaining after paying out stage fees and mandatory tipouts that approximates minimum wage being worth their time !

    However, tipped 'employees' in the restaurant business will also see a direct decline in gross earings because, even though they have an hourly base pay, the majority of their earnings comes from tips, and fewer customers = smaller tips.

    Sadly, a lot of the women who turn to dancing in these times don't seem to realize the very same economic downturn which pushed them towards working in a strip club, is what is keeping their primary customer base from frequenting it.
    Again a distinction has to be drawn between super-upscale show clubs (where rich customers ALWAYS seem to be able to spend big money) and neighborhood / blue collar clubs (where all customers seem to be on a budget). Of course there is always 'big money' to be earned in dance clubs, but to earn that big money may require that the dancer do more than just dance !

    Along these same lines, has anybody hit a movie theatre this past summer? Granted, that industry has other problems going for it, but everytime I have gone, I'd estimate anywhere from 70-95% of the seats are empty, even during prime time showings.
    exactly the same financial phenomenon. Going to the theatre, like going to a restaurant or going to a strip club, are 'luxury' spending items. When Joe Sixpack's take home pay is stretched to the limit keeping up with rising ARM mortgage payments, rising credit card payments, rising state and local taxes, rising fuel / energy / utility bills, rising insurance premiums, rising food prices etc., the obvious way for Joe to keep making these 'necessary' expenditures is for Joe to stop spending money on 'luxury' items.

    I would also add the distinction that super-upscale restaurants and theatres and retailers will not run short of 'rich' customers any more than the super-upscale 'show clubs' will. The businesses that will be hurt by a cutback in Joe Sixpack's 'luxury' spending will be franchise restaurants, mall theatres, middle of the road retailers.

    It's all about 'discretionary spending' ... with Joe Sixpack being left with less and less 'discretion' in regard to where his take-home pay must now be spent.
    ~
    Last edited by Melonie; 08-30-2006 at 09:49 AM.

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    At my club (which is middle of the road), there seems to be widening gap between those that bank relatively speaking and those that dont. Miss D is still taking home 400 to 600 when she works (my contributions help but my tips havent changed) and her fellow higher earners also seem to have experienced no change in their earnings. OTOH the gals that historically were on the lower end (200-300 a night on average) are now struggling to walk out with $100 after tipouts.

    Customer traffic in terms of volume looks the same to me but the demographics seem to have changed. The good spenders (the $500-800 guys) are still around but from what I hear and see they are focusing more on the specific gals they like and are less inclined to just tip and do dances with any gal that asks. Ive noticed a lot of what I call Jackson dudes...their entire evening SC budget consists of 20 bucks. And they are not all youngens. That gets you two beers to nurse all night with $15 left for one dollar at a time stage tips. Nothing wrong with that I guess but it takes more than 5 Jacksons to pay a strippers bills. What seems to be missing are the middle of the road custies who buy several drinks and 9 or 10 dances. They seem to have vanished...at least at my club.

    FBR
    Once again I have embraced my addiction and have put off the moral dilemma to another day.

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    ^^^ no mystery about this, FBR. The former 'middle of the road' customers you speak of who used to spend a fair amount of money in clubs are the same guys that have now become 'Jacksons' ... because where last year they might have spent $200, this year $20 is all that they can afford to spend on 'luxuries' now that their more necessary costs i.e. mortgage payments, credit card payments, gasoline, taxes , insurance etc. have increased while their paychecks have not ! With every uptick of interest rates and with every downtick of the US dollar exchange rate, more and more 'middle of the road' club customers will be forced into Jackson mode.

    As always, there will be 'rich' guys who can afford to spend $800 or more at a club and not blink an eye. But these guys tend to latch on to the 'best' girls that the club has to offer, leaving the other girls to fight amongst each other for Jackson dollars. Same phenomenon is happening in the restaurant scenario ... with expensive super-upscale five star restaurants doing business as usual, with middle of the road franchises like Applebees and Outback losing customers, but with McDonalds and Burger King gaining customers who can no longer afford Applebees and Outback ! Unfortunately, were dancers are concerned, a small percentage qualify as 'five star' material, and the remainder can't really earn enough to keep dancing long term on McDonalds and Burger King profit margins !

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    ^^^ And to add job losses - they are still happening out there. Most new jobs taken by the out of work - less pay. I think in the last five years, we have really started to see the end results of a "service" economy.

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    we have really started to see the end results of a "service" economy
    Many businesses are indeed finally seeing enough 'hard evidence' that middle-class customer spending is drying up to prove the trend. However, in terms of the 'strip club' industry, IMHO very few clubs have come to terms with the anecdotal evidence that this is happening in terms of club customers as well. However, as was recently posted in the Stripping General area, one particular club in Atlanta has obviously identified the trend, and is positioning itself to 'prosper through the coming bad years'.

    The basic approach seems to be that some clubs are trying to 'stake out their territory' as super-upscale show clubs and are targeting 'rich' customers using a VIP room business model - like the Penthouse Executive Club. After all, with more and more middle-class customers turning into 'Jacksons', from the club's standpoint they're better off driving away 100 'Jacksons' in order to attract 10 new 'rich' customers ... because the 'volume' losses in cover charges and beer sales to the 'Jacksons' will be more than offset by the sale of VIP's, brand name mixed drinks etc. to 'rich' customers, and a probable eventual stiff increase in cover charge down the road. Similarly, clubowners are better off driving away 25 'average' dancers in order to attract 5 'five star' top shelf dancers ... because the 'volume' losses on stage fees and tipouts will be more than offset by the sale of VIP's and the club probably charging a much higher stage fee at some point down the road.

    Besides the direct cash spending aspects, there are also a whole bunch of 'intangible' advantages for a club to chase away / price out the 'Jacksons'. #1 - fewer Jacksons in the club, and fewer dancers who catered to this type of customer, means more appeal to 'rich' customers as well as to 'five star' dancers because dancer sales techniques, customer conversations, and physical appeal will all be more upscale . #2 - many of the 'secondary effects' factors i.e. girls using drugs, customers fighting, parking lot risk factors etc. will also be greatly reduced (i.e. 'rich' customers will no longer be scared to park their Beemer or Porsche in the club parking lot). #3 - local politicians are loathe to make waves with super-upscale clubs because many of the 'rich' customers are also their political contributors !!! In today's world this can translate into $100's of thousands of dollars worth of avoided legal fees for the clubowner !

    Any dancers who have the 'goods' to be hired at a super-upscale club, i.e. physical appearance + social / conversation skills + sales technique, are going to do very well catering to 'rich' customers while the middle-class economy deteriorates. Unfortunately, probably 4 out of 5 current dancers are not going to 'make the cut' and get hired at a super-upscale club, meaning that a whole lot of dancers are likely to see large declines in their earnings potential as more and more middle-class club customers turn into 'Jacksons'. There is pretty good anecdotal evidence to indicate what will then happen to the clubs and dancers that did not make a successful transition to show clubs, and did not successfully cultivate a customer base among the 'rich', but that's a topic for a different thread.

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    Quote Originally Posted by doc-catfish
    ...Along these same lines, has anybody hit a movie theatre this past summer? Granted, that industry has other problems going for it, but everytime I have gone, I'd estimate anywhere from 70-95% of the seats are empty, even during prime time showings. You can't sell popcorn to empty seats.
    A decade ago, I went to a movie almost once a week, and since my days off were usually Monday & Tuesday at the time, I was able to buy a ticket for something on the order of $4.50 at an AMC "Twilight Show"(usually between 4-6 pm). I still usually go to the AMC as the closest one to me allows outside food, and sometimes I want diet root beer or lemon-lime instead of diet cola or bottled water. I don't know if that's a national policy with them or not, but on the rare times I'll go to a movie, it's enough to tip the scales in their favor.

    This year, I've gone to four movies (with "Walk the Line" and "Syriana" having been released last year - and I had free admission passes when I saw each of these). The other two I've seen are the third "X-Men" sequel and the "Superman Returns" movie (only because my cousin wanted to see that one).

    The only movies I want to see now are "Invincible" and the "America: Freedom to Fascism" movie from Deogol's thread in "Members." Not much else to interest me now, with the theaters continually attempting to raise their prices annulaly, whether by 50 cents or a dollar. The AMC is trying something new, charging $6.00 for all shows starting before 12 noon on Friday, Saturday and Sunday, so that's probably when I'll choose to see "Invincible."

    But the days of me going to a movie almost once a week are pretty much over. I spend much more time on the 'Net for my entertainment than I ever do at the movies anymore. And I usually just borrow one of my cousin's DVDs of a movie I have not seen and buy a 50-cent bottle of diet soda and nuke a 33-cent bag of popcorn in the microwave, so my total entertainment cost for a movie is now 83-cents.

    If the theaters want me back as a weekly customer, they'd have to go back to the $4.50 ticket, plus some drastically reduced concession stand prices. Which would be difficult to do now, since from what I understand, the studios are now charging quite a bit more for the print rentals. Not much of a loss, imho, considering how much garbage is getting "greenlighted" in this town the last few years.
    Last edited by PhaedrusZ; 08-31-2006 at 12:51 PM. Reason: typos

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    Default Re: what does real estate, restaurants, and 'strip clubs' have in common ?

    ^^^ no personal comment intended, Phaedrus, but I wonder if there are as many empty seats at Graumans, at Radio City, at the El Portal etc. in other words the super-upscale movie theatres who are specifically catering to a 'rich' customer base. In fact, there's an entire new theatre chain called UltraStar that's now trying to cash in on an upscale migration (although not at a level that is anywhere near the 'big name' super-upscale theatres)...



    Granted, they're getting the same Hollywood Garbage as the mall theaters ...

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