Exclusivity was the main selling point when Nick Jones opened his private membersโ club on Londonโs Greek Street in 1995 as a โrelaxed hideawayโ for 500 of Londonโs arts and media elite.
Three decades later, Soho House has expanded to an international group with 210,000 members worldwide.
โI still like it hereโ.โ.โ. [but] thereโs nothing about this that feels exclusive anymore,โ said one former member visiting the brasserie attached to the groupโs High Road House venue in Chiswick this week.
After decades of global expansion and a turbulent stint as a public company following a 2021 stock market listing in New York, Soho House is returning to private ownership in a $2.7bn deal announced on Monday.
Jones repeatedly told his employees he wanted Soho House to be โwarm, not hotโ as โhot things donโt lastโ in a bid to control its vibe โ and favoured creative types for memberships.
Under its current management โ Jones exited as CEO in 2022 but remained on the board โ Soho House has slowed its push to open new venues. Former executives, investors and analysts told the Financial Times that the expansion had diluted Soho Houseโs cachet and that it now faced a strategic choice.
โThey either have to admit they are now a mid-market business, or it has to retreat to its exclusivity. Both roads are going to be painful,โ one former Soho House investor said.
Soho House has grown from a trendy London venue to a global empire but some people familiar with the group feel its focus on growth came at the expense of exclusivity and coolness, making it too easy to get a membership, while service levels dipped.
At the end of last year, the average number of members per Soho House venue was 4,700, up 30 per cent since 2021.
The โovercrowding problem that has changed the Soho House experienceโ was down to admitting more members to increase revenue faster than expanding geographically, said Nadine Choe, a former real estate private equity investor and founder of The Stanza, a newsletter about the hospitality business.
One former executive said: โBefore people were screaming to get in but now itโs like my dead grandma can get approved. We wanted to open everywhere, Tokyo, the Nordics, Hong Kong.โ
The person added: โWe became too greedyโ.โ.โ.โwe started rolling out houses at 100 miles an hour. Staff came under enormous pressure.โ
A person close to the company said membership growth reflected its entry to 10 new countries, while member retention has remained about 90 per cent, adding that opening in more cities increases the value of a membership.
The person said that after Andrew Carnie took over as chief executive in 2022, the group recognised it was trying to expand too quickly and slowed down from a planned eight to 10 openings a year to just two in 2023 and three last year, as well as focusing on updating existing venues.
Advocates of the group say Soho House venues remain exclusive, with the person close to the company saying the membership waiting list has doubled since 2021 to about 111,000 people โ and that members are only admitted when there is space. A membership for all houses costs an average of $5,400 a year.
Soho Houseโs new owner is MCR Hotels, the third-largest owner-operator in the US with sites including the High Line Hotel and JFK airportโs TWA hotel. Billionaire Ron Burkle, who has been executive chair of Soho House since 2012, is rolling over his stake along with other existing investors, according to people briefed on the matter.
MCR says it plans to expand by opening sites rather than adding throngs of new members to the existing 46 houses. Another will open this year in Barcelona, along with a 15th UK property in Manchester.
Some watchers of Soho House say its fortunes were not helped by the decision to list its shares on the public markets. The stock closed 10 per cent lower on its first day of trading in November 2021 and has continued to struggle, sparking a fierce activist battle and culminating in this weekโs take-private deal.
โSoho House is a great success story in many ways but that all gets lost when you see the debt, the lossesโ.โ.โ.โit harms them from a stock market perspective but as a private company they can focus less at growth at all cost,โ said Saxon Moseley, an analyst at RSM.
Being on the public markets has brought scrutiny. Short seller GlassHouse claimed Soho House had a โbroken business modelโ when it targeted the group last year. The company rejected those claims following an independent review, which it said had found โno material issuesโ.
Third Point revealed a large stake in January and called on Soho Houseโs board to run a competitive sale process. The hedge fundโs founder, Daniel Loeb, told the FT on Monday he supported the deal โas both a shareholder and Soho House memberโ and was โpleased to see management of the club in good handsโ.
While Soho House is yet to make an annual profit, earlier this month it reported a second-quarter net profit of almost $25mn, compared with a loss of close to $30mn for the same period last year. Revenue increased 7 per cent year on year to $1.2bn in 2024.
Carnie said this week the group would build on its momentum and remain โgrounded in the spirit that makes Soho House so specialโ as a private company.
Jamie Oliver, the celebrity chef and Soho House member, told the FT the return to private ownership was the โright moveโ and would provide โfreedom to focus on details and little things thatย matter to its membersโ.
Others are also upbeat on the groupโs future. One former adviser to the company said they believed โSoho can open in every city in this worldโ, before adding: โThe hardest place in town to get into isnโt Soho House anymore.โ
Soho House declined to comment.
