Icons of the urban streetscape, taxi cabs and their caretakers have been experiencing a bumpy ride lately. Waleed Sonbol co-owns Blue and White Taxi, which recently expanded to 340 cabs with its purchase of Rainbow Taxi. He’s seen a whirlwind of change in the cab scene. Minneapolis lifted its cap on the number of taxi licenses in 2006, doubling the number of vehicles from nearly 400 to more than 800. More recently, light rail, car-sharing services such as Car2Go, Zipcar and Hourcar, and transportation network companies such as Uber and Lyft have all taken business from traditional taxis. With younger consumers preferring to find transportation by using an app on a smartphone, Sonbol is actively responding to the changes by using technology that allows consumers to follow their cab’s route to their location, adding an app with functionality similar to Uber and implementing new security features. As pressure grows on taxi services, Sonbol said he is in it for the long haul.
Q: The Twin Cities area has more than 850 licensed taxis. Is that too many?
A: There used to be a ratio to estimate the number of medallion licenses needed. For every 1,000 people you needed one cab. Before 2006, a cap on the number of cabs was in effect. Now we probably have too many. Transferable licenses that were worth $25,000 in 2004 are now worth about $2,500. Incomes are down for drivers. Employees used to put their kids through college. Now a cabdriver needs to be a salesman. He has business cards and some have their own regular clients. Most of our drivers don’t sit or stand around at taxi stands. They work the board, always moving around.
Q: Is it true that the average cabdriver in Minneapolis makes about $7 or $8 per hour?
A: It varies based on the driver. The cabdriver has to be a salesman. In 2007, after the lifting of the license caps, wages were at or below the poverty line. Those that provide regular transportation contracts at Medica, UCare and HealthPartners make more than $7 or $8 per hour. The majority make between $10 and $15 per hour.
Q: Do most drivers own their taxis?
A: Most do. About 65 percent own and drive. Some lease them out to others.
Q: How significant has the loss of business to UberX and Lyft been?
A: It’s very significant for our cash business. Customers are becoming more savvy. Uber and Lyft took about 10 to 15 percent of our cash business. It’s never more than 15 percent. We’re not California or New York, which have lost as much as 40 percent.
Q: How can you compete with Uber and Lyft on price?
A: We can’t compete with them when their costs are about $1.30 per mile until they switch to surge pricing. Ours can go as low as $2.20 per mile using the site, but cabdrivers have certain costs associated with the business — $495 a year for licensing, $270 a year for inspections, up to $170 a week to the dispatch company and $600 to $620 a month for commercial insurance. We compete more on customer service.
Q: What about your new app?
A: On Sept. 21, we’re launching a new app called Cruz. It will have more functionality than Uber. You can store up to five credit card numbers, and it records a history of rides, flat fees and promo codes. We can reward frequent customers with a promo code. We’re looking into introductory discounts for those who download our new app.
Q: What are you doing to attract younger customers?
A: It comes down to marketing and advertising. We don’t identify as a cab but as a brand or message. We’ll be advertising in bars and sponsored events and doing a video podcast with Tim Mahoney called Cabcast. We sponsored Cocktailian and Iron Fork. We’re trying to brand ourselves as a local company. It’s important that we not be seen as just a cab with a paint job.
Q: What about complaints that some cabdrivers are refusing customers who want to go short distances or use credit cards?
A: We don’t allow it. We put credit card readers in the back seat and the front seat, so drivers can’t say the credit card machine isn’t working. If we got a complaint about the credit card readers being out of service, we would take the cab out of service until it’s fixed. I suppose some drivers are trying to make up income with a longer run, but there is no reason for it. Our typical fare is $8 to $13.
Q: Are you using software that shows the cab en route to the customer on their smartphone or computer?
A: We started the software on Aug. 24 with Rainbow, with the SevenThrees app. We turn on ABC and Blue and White on Sept. 20.
Q: What percent of your employees are racial minorities?
A: Ninety-five percent of drivers are minorities. The taxi industry is an immigrant one. People came to the U.S. and that’s what they do. First it was Italian or Polish people. Now it’s Nigerian, Egyptian, Ethiopian or Somali.
Q: What other technology are you implementing?
A: By Nov. 30, we’ll install cameras in every car for customer and driver safety.