Money

Pret shifts to dinner deliveries and out-of-town shops


Pret A Manger is to deliver dinners to city dwellers and open more suburban branches as it fights to revive its business after the sudden loss of its traditional office worker clientele.

The sandwich chain’s core business of providing quick lunches largely to London-based commuters has been decimated by the pandemic, as homeworking has left the capital deserted.

Pano Christou, Pret’s chief executive, acknowledged the brand had been too reliant on London, where it made the highest profits before Covid-19.

“We haven’t done a great job in marketing Pret outside of London,” he said in an interview with the Financial Times. “We have been too rigid in taking the concept outside of London as a London concept.”

Despite admitting that “meal deal was a dirty word at Pret until a year ago”, Mr Christou said the group now planned to offer cheaper combinations. It has opened its first “dark kitchen” for delivery only and is developing a hot dinner menu to serve greater numbers of customers at home.

Pret has expanded rapidly in recent years — it opened 60 stores between 2016 and 2018 and now has 300 in London — but has fallen behind other takeaway food outlets in creating online loyalty schemes and delivery services.

It has struggled more than rivals throughout the pandemic, largely because of its reliance on London.

Mr Christou said trading across Pret’s UK stores had crept up by about 7 per cent per week since reopening, to roughly 50 per cent of last year’s levels. But at its sites in London, where footfall remains lower than ever recorded despite government pleas for workers to return to offices, sales were still 60 per cent lower than a year ago and even worse in the City.

READ  Arbroath firm keeps London transport moving

Last week Pret announced it would lay-off 2,890 staff — nearly a third of its UK workforce and more than its original plan for 1,000 redundancies — and said it expected to close 28 London stores. It will look to cut costs at other sites by reducing ranges and opening hours.

To make up for the loss of business, Pret, which is backed by the Luxembourg-based consumer goods group JAB Holdings, is attempting a rapid push into new areas, including the highly competitive grocery market, where rival brands Itsu and Leon have launched products.

It plans to launch a range of pre-packaged food in supermarkets in the new year and will start selling bags of coffee with Waitrose and Ocado in October.

Pret will also introduce a new subscription coffee service. From Tuesday, customers will be able to have up to five cups of coffee per day for £20 a month, using a model inspired by Panera Bread, a JAB-owned bakery business in the US. Panera in February launched a $8.99 a month subscription that includes unlimited coffee and tea, in what it said was a first for a nationwide US restaurant chain.

The sandwich chain plans to open between five and 10 sites that will produce food for delivery by groups such as Deliveroo, Uber Eats and Just Eat. It said sales of its delivery menu — which includes wraps and some hot dishes — were already eight times pre-Covid levels.

Sales at its dark kitchen in Colindale, north London, were about a third of the average Pret store but capital costs were much lower, Mr Christou added.

READ  Refrigeration specialist secures a cool £3.2m for expansion

The overhaul of the business has been led by the advisory firm, Alvarez & Marsal, which Pret hired in May after it secured €100m emergency funding from its banks.

Pret is also focusing on its international growth. In France, where there has been a more confident return to offices, it has managed to retain all of its staff and opened a new site in Lyon this month.

Its US business, however, has been hit by the spread of the virus and lack of urban trade, forcing it to close its 17 sites in Boston and Chicago.

The difficulties at Pret have added to challenges facing its owner, JAB, which manages the wealth of Germany’s Reimann family as well as funds from external investors.

JAB faces falling sales at its US cosmetics group, Coty, while the pandemic has also hurt Panera. However, other holdings, such as Keurig Dr Pepper and the JDE Peet’s packaged coffee business, have proved more robust.



READ SOURCE

Leave a Reply