9 February 2018 Courier Weekly

The cash issue behind Soho House’s £1.4bn float

PLUS: London food — Rosemary water — Doctor apps — Deodorant in China

Soho House’s £1.4bn float.

News of the listing of the members’ club group is interesting on a few fronts.

  • Several new projects are in the pipeline. Among the prospective projects are considerable US expansion, new clubs in Asia and South America, Farmhouse-style resorts in upstate New York and Mexico and a new motels business. They all need cash.
  • When the Californian supermarket magnate, Ron Burkle acquired Soho House in 2012 for £250m, it’s believed part of his plan was to use Soho House as a gentrification vehicle for properties in undervalued neighbourhoods. It’s not clear whether that still figures in his thinking.
  • One assumes he was behind the choice of the proposed £1.4bn listing in New York over London. It will be frustrating for London’s financial sector to see a company with a strong UK identity go public overseas.
  • Cash continues to be Soho House’s achilles heel. The company burns through it and has had to find external investors (Richard Caring first in 2008, then Burkle). Last year it agreed a £375m refinancing deal. Founder and CEO Nick Jones currently owns 10%.
  • The cash demands of opening clubs has led Soho House to adopt a new business model. It wants property partners for new projects to shoulder the capital expenditure, making Soho House effectively a hospitality operator. All prospective new projects are understood to be underpinned by this new structure.
  • Can Soho House maintain cachet and exclusivity while expanding and opening the tap to the waiting list of potential new members? It’s an issue Jones is very conscious of. ‘I fight that every day [corporatisation]. It’s crucial we keep the spirit of a dysfunctional family,’ he told Courier. Much harder perhaps as a public company.

Costs and London fatigue bites.

There are too many food businesses in London. Many in London’s street food and restaurant scene are saying it right now. Competition is fierce, European workers are getting more scarce and ingredients are more expensive post-Brexit referendum, rents are going up and a Deliveroo-and-Netflix culture is leading more people to stay indoors.

It’s led many food operators to look outside the capital’s expensive central spots.

Street Feast has secured a site in Woolwich, food hubs are opening in Vauxhall and Hammersmith, and Boxpark is planning a food market in Wembley.

Many London chefs are pondering quitting the capital altogether.

Among those who have already done so include Dan Smith, who left the Clove Club in Shoreditch to set up The Fordwich Arms in ‘Britain’s smallest town’, in north Kent.

Dan Cox was a chef at Claridge’s. He quit last year to open a farm, pottery, brewery and restaurant in Cornwall.

And April Bloomfield and Tom Adams left Pitt Cue a couple of years ago, also to set up a ‘farm project’ in Cornwall, which also includes a restaurant and hotel.

Questionable claims of £3 rosemary water.

It’s water, it tastes of rosemary and it costs £3 for 330ml.

Rather than focus on taste, No 1 Rosemary Water is pushing health benefits, with a thickly laid on story of an Italian village where people have long lives (a direct result, apparently, from ingesting rosemary). Its advertising was banned by the Advertising Standards Authority last week as a result of the claims. Amazingly, this article, published last summer before the ban, reveals the company took advice from the ASA’s chairman about how to word the copy and ‘stay compliant’.

The Chelsea-based company launched in March last year by David Spencer-Percival, a man with a background in setting up two recruitment companies.

He invested £2m of his own money and raised a further £1m, spending heavily on advertising in places like Metro and Time Out and getting stocked in Leon, Harvey Nichols, Selfridges, Harrods, Carluccio’s, Whole Foods and Ocado. It recently agreed a deal to be stocked in Waitrose from April.

GPs push back on doctor apps​.

Visiting a doctor could well move from surgery to smartphone. But last week the UK’s powerful medical group, the British Medical Association, flagged a risk of the ‘digital divide’ forming. This would mean younger, educated and more affluent people having superior treatment, while older and poorer people are excluded.

Companies like Babylon, PushDoctor and Ada are trying to work deals with the NHS and other government healthcare services. This week, Babylon announced it had struck a deal with the Saudi Arabian government to provide AI health services. Around 65% of the population has a smartphone (similar to the UK’s 68%) and considerable government subsidy to healthcare.

Meanwhile, the potential for a tech revolution in US healthcare got mass attention last week as Warren Buffet, JPMorgan Chase and Amazon announced they were together creating a healthcare company ‘free from profit-making incentives and constraints’.

This piece by the excellent Ben Thompson on Amazon’s potential in the area are fascinating.

Lost in translation. 

Beware international differences. This story of trying to sell deodorant to Chinese people is worth a read.

There are two main reasons why armpit protection has failed in China:

  1. Culture. The benefits of detoxing are lauded in China, so sweating is considered a good thing.
  2. Biology. Scientists have proven Chinese people are less sweaty.