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Business Feature

Taxi company experiences resurgence

3/6/2024

Patrick Stall began driving for Des Moines’ Yellow Cab company 10 years ago.

Patrick Stall began driving for Des Moines’ Yellow Cab Company 10 years ago. He joined as an independent contractor to earn some extra cash while finishing his degree. Little did he know his side gig would turn him into a career cab driver working 40 to 50 hours a week behind the wheel.

At 6:30 a.m., Stall arrives at Yellow Cab’s station at 1550 E. Army Post Road. After checking out one of the company’s vehicles, he runs through a pre-trip inspection. He examines the car’s oil, transmission, tires, lights and more to ensure he and his passengers will experience a safe ride. By 6:45 a.m., Stall usually has someone on the southside needing a ride uptown. From there, he lets the map decide where to go. Morning commuters keep him busy until about 8 a.m. There’s a lull from 8-11 a.m., then business picks up again. From then on, he’s busy taking people to and from appointments, home from work, from the airport and completing other miscellaneous rides. By the end of a decent day, Stall completes between 20 and 25 trips and drives more than 250 miles.

After a 12-hour shift, Yellow Cab charges Stall and the rest of their drivers $100 for leasing the vehicle. The drivers are also responsible for their own gas and a car wash. But after the $130 investment, they earn each penny made off the rides themselves. It costs passengers $10.70 after sales tax to hire a driver. Then, the company charges $2.40 a mile. On a good day, Stall makes about $300 per shift. 

“The money here is pretty good, and it’s honest work,” Stall said. “I knew this gig. I still had a bunch of personal customers, so I came back to it.”

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Independent drivers “are absolutely loving it here because everything I’ve done is basically for them,” said Scott Johnson, president and CEO of Yellow Cab. “They can make a decent wage and own their own business.”

The company today

Patrick Stall is a licensed taxi driver, and, as such, has undergone a background check, drug testing and training.

Johnson took over as president and CEO of Yellow Cab after the untimely death of his boss, Randy Sackett, in February 2023. He oversees the operation including 50 to 60 independent drivers, a full-service tire and auto shop, a 24/7 dispatch center based in the Philippines, a four-person accounting team, a shop manager and an operations manager. 

The success of the company is evident. Yellow Cab completes anywhere from 10,000-14,000 trips per month, depending on a variety of factors. Johnson’s proudest practice is donating $1 for every ride during Breast Cancer Awareness Month last October. In the end, the company was able to present $12,000 to the John Stoddard Cancer Center. 

So, what is the key to success? How has Yellow Cab survived as Des Moines’ last major cab company? How do they continue to grow despite challenges from techy rideshare apps?  

“It’s just going back to the basics of building relationships with all of our existing customers,” Johnson said. “We’re not reinventing the wheel or anything.”

Johnson works closely with Operations Manager Josh Jackson to meet the needs of two customer bases. Their internal customers — the drivers — want to operate nice, clean equipment and use a dispatch service that works well for them. Their external customers — the passengers — want timely, convenient customer service that gets them from point A to point B. 

When Johnson joined the company three years ago, Yellow Cab had a fleet of 16 cars. Now, the fleet is closer to 60 with much nicer and newer vehicles. Most of the growth occurred in the last year after Johnson took over as CEO. 

Yellow Cab President/CEO Scott Johnson and Operations Manager Josh Jackson

“I’m here every morning. The drivers know exactly who I am,” Johnson said. “Being an operations guy with my hands on everything makes a huge difference.”

To best meet the needs of both drivers and passengers, the company outfitted all their vehicles with tablets to run a taxi dispatch system called iCabbi. The software splits the Des Moines metro into 70 zones. When a cab is ordered through the phone or mobile app, the dispatch system first asks any available driver in that zone. If nobody is there, the system scans the surrounding zones — all of which are in a five-minute radius. If not, it opens to what they call bidding, and any driver can claim the trip.

While direct rides make up a good portion of the business, Johnson estimated that 75% of Yellow Cab’s trips come from their accounts.

“Anybody who has got a bigger business than probably 50 people, they’ve either ran through us or still do run through us,” he said. 

The list of account holders includes Medicare, Medicaid, DART, Polk County Senior Services, and Des Moines Public Schools. These organizations often provide transportation for waiver recipients and those who otherwise could not transport themselves to appointments, school or work. Or, in the case of DART, they will call Yellow Cab in case a bus breaks down and riders have places to be. After Yellow Cab completes the trips, they bill the account holders. For the drivers, these trips typically operate the same way as any other.

In the best interest of the company’s reputation and passenger safety, Yellow Cab continues to perform background checks, screen, drug test and train their drivers. That is one of the things they believe sets their company apart from rideshare apps like Uber and Lyft.

Competing against rideshare apps

Yellow Cab company has grown its fleet in recent years and is looking to expand even more in the near future.

“When Uber and Lyft came in 2015…they brought in a very expensive lobbyist, a lawyer from California to come in and argue to the city council that they don’t actually need regulations on cab driving at all,” explained Stall. “And it worked… not only Uber and Lyft could come in but just any dude can slap some vinyl on the side of his car and call himself a taxi operation. You don’t know how many DUIs he’s had, whether he has insurance, anything.”

In March 2015, the Des Moines City Council voted to reduce much of Chapter 126 in the Code of Ordinances. Before the repeal, the city of Des Moines issued individual taxi licenses and conducted background checks on all potential drivers. Now it is in the hands of the companies to do it themselves. Not to mention, the city removed its cap on how much taxis could charge. 

But nothing changed for Yellow Cab. They continued to hold their drivers to the same standards once held by the city. They also charge a flat rate for fares whereas Uber and Lyft use surge pricing when demand is high.

Yellow Cab continues to face the consequences of Uber and Lyft entering the Des Moines market. According to Stall, a big chunk of 20-to-30-somethings made the switch over to the apps. They also began to take over most of the business on Court Avenue. But the biggest impact might be the effect on the local economy. 

Companies like Uber and Lyft take a certain percentage off their fares for themselves. Stall said this takes money out of the hands of drivers and instead places it in the hands of the technology companies.

“What do we know about low-wage workers? They spend something like 80% of what they get within the next month and spend it around here,” said Stall. “Rather than extracting capital out to Silicon Valley, (riding with Yellow Cab) does keep money local.”

The company’s future

“I don’t have big marketing dollars. I don’t have a very big bank account. I make this work by being very methodical and choosing my battles,” Johnson said.

When Johnson took over many of Sackett’s responsibilities, he had to make hard decisions to keep the company afloat.

“If you knew what I had to go through this last year, it’d be even more of a story,” he said. “I had to do things quickly because I saw financially what it would do to us… We’re in a good spot because of my quick decision-making, and it surprises even me.”

Johnson has plans to grow the operation. Within the next couple of years, he hopes to have a fleet of 80 cars. He wants to expand to Ames and work closely with the airport there. He also thinks he could begin working with communities like Grimes, which no longer have DART service.

For now, the focus remains on taking care of Yellow Cab’s existing customers. But it does not hurt to spread the word to potential riders. 

“How more visual can you get than a big yellow car driving by?” said Jackson. ♦

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