Penthouse opens first in planned chain of upscale strip clubs

Paul Singer

Thursday, Dec. 26, 2002 | 11:24 a.m.

CLEVELAND -- Penthouse Magazine plans to license a chain of upscale strip clubs around the country, hoping to cash in on its well-known name and expand its franchise as magazine sales have ebbed.

The first Penthouse Key Club was filled with customers on its grand opening this month in Cleveland and a second club is opening in Dallas. Penthouse consultant David "Slim" Baucom said the magazine expects to sign up about two dozen strip clubs nationwide over the next two years.

Penthouse spokeswoman Dottie Meyer said Penthouse is looking to bring the club to Las Vegas in the future.

"We are looking at some future ventures there," she said. "As the hotels are looking to get away from family oriented things, strip clubs in Vegas hotels is definitely a huge market."

As to when and where, Meyer said no details have been worked out.

Tim Spencer, owner of the Cleveland club, said his club had gotten stale and partnering with Penthouse brings a new mystique.

"You have an internationally known name," Spencer said. "It's known for sex and it's known for quality and we want to carry that same theme."

Neither Penthouse nor Spencer would discuss financial terms of their partnership, though Spencer said he spent $1.5 million renovating the club, which now has a lavish mirrored entry hall with velvet upholstered stone benches and murals of Greek statues. The dining areas feature leather booths and wood paneling. Patrons can choose from some of the world's top champagnes and cognacs, though the primary drink is beer on tap and the menu is mostly burgers and fries.

The Penthouse plan is to open luxurious clubs with food and drink that cater to women and couples as well as men and that add polish to the image of a seedy strip club with plastic seats and watered-down drinks.

"These will be places where you can go and have dinner," Meyer said. " A higher caliber of girls will be dancing, and it will be a more living-room type atmosphere."

The clubs are an attempt by parent company General Media Communications Inc. to extend the Penthouse brand beyond the magazine. Circulation is down from a high of 5 million to less than 1 million, and competition in the men's magazine market is growing.

Penthouse is not the first to get into the upscale nightclub business but it is currently the biggest name.

In the 1960s and '70s, Playboy operated nightclubs featuring women clad in tiny bunny costumes, but there was no nudity.

The clubs were once chic. "But they got boring and people found there was a lot more exciting things they could do," said Dennis McAlpine, a stock market analyst who covers the adult entertainment industry.

The challenge for Penthouse will be keeping the clubs full, he said. "Once you get through the newness, what keeps attracting people? What brings them back?"

The Las Vegas Sun

contributed to this story.