At the moment he is pretty much talking to his new animal compatriot, taking a peak inside the tavern and what not. Observing it, to see if he could bring his friend in. He's in the general area of Kenneth, Lily etc. 

Edit: IF they aren't like really near the tavern, he is the area with Billy and Morthos, as they stated that they were in the tavern earlier. Depending on the closeness of Kenneth and Lily to the tavern, will determine if he is near them and if he just walked past them while talking to his animal compatriot.