"Caviar Lairs," Ritzy Lodgings, and Pricey Furniture: Is RH Trying to Become the Next Soho House?
RH seems to be on track to deliver the members’ club experience without annual dues, thanks to a series of expansions into restaurants, hotels, and even an editorial platform helmed by a print magazine veteran.
At one time RH, then known as Restoration Hardware, was just another mall-caliber furniture store selling greige furniture and decor to suburbanites. Since then, the California-based brand has truncated the name and shifted its consumer base up a few tax brackets by embarking on a sweeping foray into opulent restaurants (hilariously dubbed “caviar lairs” by Eater), ritzy lodgings in New York and Aspen, shrewd expansions of its furniture business, and now a media arm helmed by former AD editor Margaret Russell.
Sound familiar? The furniture juggernaut’s recent trajectory seems to be mimicking that of Soho House, whose parent company, Membership Collective Group (MCG), rapidly expanded its U.S. holdings leading up to its 2021 IPO. Soho House has been in expansion mode ever since, with a spate of buzzy clubs and hotels opening in Nashville, Copenhagen, and Tel Aviv, and future ones slated for Mexico City and Bangkok.
As MCG approached its IPO, the company opened the doors to Soho Works, a dedicated coworking space in New York where members’ screentime and phone calls wouldn’t be policed by eagle-eyed social club managers. The launch of Soho Home, its upmarket line of club-inspired furniture and decor, soon made landfall in Manhattan and then Los Angeles. The company then raised eyebrows when it appointed Wired UK and British GQ alumnus Andrew Diprose with the bold directive of creating a print magazine in 2022.
Most recently came America’s first outpost of the Ned, another joint social club and hotel venture under the MCG banner that brought with it public and members-only restaurants and a fine art collection fit for the Whitney. The company also has holdings in international spas, dubbed Soho Health clubs; skincare products branded Soho Skin; and the UK movie theater chain Electric Cinemas.
For all the parallels between RH and MCG’s respective hype trains, their revenue figures tell a different story. In 2021, RH posted 35 percent year-over-year revenue growth to the sum of $3.66 billion, and is on track to post $3.85 billion for 2022. By comparison, MCG posted 2021 revenue totaling $400 million, and is on track to grow that figure by 58 percent to $650 million this year. There are caveats to such a direct comparison: RH has been a publicly traded company since 2001, and Membership Collective Group made its IPO just last year. During a recent earnings call, RH CEO Gary Friedman shared a staggering contraction of the company’s gross profit margin, and uncertainty seeded by the “complete collapse” of the luxury housing market, according to Business of Home.
With menu offerings like a $65 wagyu sandwich and an $84 rotisserie chicken, the stark realities of the current economic climate don’t seem to have reached the clientele of the Dining Room at RH Guesthouse in Manhattan. With its oak floors, travertine slabs, and leather upholstery, a specific shade of Billionaire Beige prevails there, where Friedman told the New York Times: “Nobody cares if the room’s beautiful if the food sucks.”
Another key difference between the two companies include their expansion strategies. MCG has a reputation for creating offshoot companies like Soho Home from within. Following suit, RH recently made calculated business acquisitions to power its category expansions in the case of California-based upholstery brand Dmitry and Michigan-based furniture manufacturer Jeup, whose leadership and infrastructure will be positioned to launch RH Couture Upholstery and RH Bespoke Furniture, respectively. With the appointment of Russell, a legendary doyenne of shelter media, the company seems to hope to flex its—or perhaps by proxy, her—proximity to people influencing the direction of design at the highest level.
It’s too early to tell who will come out ahead in the arms race to become the ultimate lifestyle omni-brand, but it feels symbolic that the neighboring Soho House and RH Guesthouse along New York’s Ninth Avenue share the same view.