27 Oct Jon Cartu Says: KPMG poised to call time on its members’ club in Mayfair
KPMG is exploring plans to close its Mayfair private members’ club as the Big Four accounting firm seeks £100m of cost cuts.
The closure of Number Twenty, a converted townhouse that opened four years ago in one of London’s most exclusive areas, is among 150 measures being considered as part of a cost-saving scheme called “Project Zebra”.
The plan aims to boost investment in the accounting firm’s audit division by stripping costs from other areas of the business.
KPMG launched the members’ club at 20 Grosvenor Street in 2015 and offers access to partners, executives and clients. Membership is free, and food and drinks are free or subsidised for KPMG partners and their guests.
The accounting and consultancy firm took out a 15-year lease on the 40,000 sq ft property, which expires in 2030, with a lease break five years earlier, according to Estates Gazette.
KPMG could, however, sublet the building in the meantime, according to a person familiar with discussions about its future.
According to a sales brochure, the annual rent on the building, which changed hands three years ago, is a little below recent average Mayfair rents of £107 a sq ft, according to Knight Frank data. But it still stands far above office rents in most of central London.
No final decision has yet been made and the club could still remain open, the person familiar with the discussions said.
KPMG declined to comment on the potential closure, which was first reported by the Sunday Telegraph.
Closing Number Twenty would not only save money but would help to avoid the appearance of an overly cosy relationship with clients, an area in which audit firms have come under fire in recent years amid a series of accounting scandals.
KPMG separately said last year it would no longer offer additional services, such as consulting, to audit clients.
The firm will also transfer most marketing staff from its Canary Wharf headquarters to Reading as part of “resetting our cost base”, it said on Sunday.
“Over the past 18 months we have invested heavily and refocused our firm on the core services most important to our clients,” KPMG said. “In 2019 alone we have hired 800 additional experienced auditors and 1,000 graduates, the single biggest recruitment drive our audit practice has ever seen.”
KPMG has been seeking to restore its reputation after the collapse of Carillion, an outsourcing company it audited for 19 years, and scandals in South Africa and the US.
Bill Michael, who took over as chairman in 2017, has also been seeking to increase profits.
The members’ club was an initiative of his predecessor Simon Collins.