Pret A Manger will try anything to survive
The pandemic made the lunch chain’s biggest strength — hundreds of stores in central London — its biggest weakness overnight.
If you stand outside the Bank underground station, in the heart of the financial centre of Britain, and want to pick up a quick lunch, within about 10 minutes you can reach 25 Pret A Manger stores.
Pret, a 37-year-old British sandwich and coffee chain, became ubiquitous in central London with the mantra “Follow the skyscrapers,” serving up London’s harried office workers Posh Cheddar & Pickle baguettes and Classic Super Club sandwiches to eat at their keyboards.
“This is the basis of how we built Pret,” said Pano Christou, chief executive of the chain, which was acquired by food conglomerate JAB Holding Company two years ago.
It stretches to New York and Hong Kong, but its roots still run deep in London, home to more than 300 of its 533 stores worldwide.
Over the years Pret (no one uses its full name, French for “ready to eat”) has seeped into Britain’s cultural life with traditions like its Christmas sandwich, part of an annual informal competition among the country’s lunch counters and supermarkets.
But in March, when the coronavirus emptied office buildings, Pret’s customers vanished. Seven months later, they have barely returned. And what was Pret’s greatest advantage — its central London stronghold — has suddenly become its biggest weakness.
The pandemic has turned back the clock on Pret’s accounts by a decade. In August, weekly sales in Britain were about £5.5 million ($7.1 million), barely more than in August 2010, when it had about 150 fewer stores.
It has laid off 2,890 people, one-third of its staff. Thousands of those who remain have gone from 35-hour contracts to 28 hours a week.
Pret has become a symbol of the needy city centre struggling without commuters, and its troubles spawned a flurry of newspaper articles about whether people should or shouldn’t “Save Pret.”
Photos of high-ranking government officials popping in and out of a Pret near parliament in July sent a clear message about which side of the argument the government was on before it instructed workers to return to their offices, albeit temporarily.
For some companies, the only response to the pandemic has been to hunker down and try to avoid running out of cash before their customers can return (consider the airline industry), but others cannot wait for a return to normalcy because it may never come.
Pret is among the companies forced to reconsider their business as everyone reconsiders personal day-to-day routines. The predicament has forced a successful company to go into survival mode, to figure out what the office lunch is without the office.
And it is now clearly willing to try anything.
It wants to sell Pret food in supermarkets and has already begun selling coffee beans on Amazon; it has signed up to all the major food delivery platforms to take its sandwiches, soups and salads to its work-from-home customers and opened a so-called dark kitchen in North London to prepare its food strictly for delivery, modeled on the success of Sweetgreen and Shake Shack, and hopes to open another dark kitchen in either New York or New Jersey soon; and it is devising a special menu of hot evening meals for delivery, such as a Chipotle Chicken Burrito Bowl.
Then there is the coffee subscription, an effort to drive people back to the stores: Five drinks a day made by a barista (coffees, teas and smoothies) for 20 pounds a month. On the face of it, it could be an extraordinarily good deal. With two lattes a week, a subscriber will break even. And the first month is free. (Small print: You can’t order five drinks at once; there must be 30 minutes between each drink order.)
“Pret’s whole business model hasn’t collapsed, just one crucial part of it,’’ said Jessica Spungin, who teaches strategy and entrepreneurship at London Business School.
“Many people are still working, and they still need to eat a quick lunch. How they can sell it to them is different because these people are no longer where they used to be,” she said.
“The only way through this, if there is a way through this, is for Pret to experiment with lots of ‘small, low-risk’ ideas at once,’’ Spungin said.
Christou, 42, sees this as an opportunity for Pret to become a different type of company. Rather than worry about whether workers will return to their offices and what the government’s advice will be, Pret needs to transform.
“I don’t think customers should help Pret. I think it’s down to Pret to figure out what it does and how it evolves,” Christou said at the company’s headquarters last month, on his first anniversary of becoming chief executive.
He joined Pret 20 years ago as an assistant manager, after a stint at McDonald’s. Since then, he has risen up the ranks through operational roles overseeing stores in London, Edinburgh and Leeds.
When Christou took over the helm, he was supposed to be overseeing an expansion. His predecessor had just bought a rival chain to accelerate the growth of the company’s vegetarian and vegan spin-off, Veggie Pret.
Now the goal is survival, and the new mantra, he said, is “Bring Pret to the people.”
Christou said he had gotten the idea for the coffee subscription from Panera Bread, the US chain that is also owned by JAB.
The other benefit of the subscription plan is the chance to gather more data about its customers, who will scan a QR code each time they use it.
“Pret has been very, very late adapters to this,” Christou said.
Panera, he said, has a database of more than 40 million customers across the United States. “Pret’s been run over the last 30 years with gut feel and intuition, and we haven’t done that badly, but I think the richness of data today gives you an opportunity to learn much more about your customers.”
Spungin said that data could prove “invaluable” to Pret in identifying its loyal fans, those who “care enough and miss Pret enough that they’ll sign up.”
With that information, she said, the company should consider a food delivery subscription, where people can pick their lunches for the week and have them delivered each morning.
“Regardless of what Pret does to diversify its business, doing nothing was definitely not going to work,” Spungin said. “This has a higher chance of success.”
Christou’s optimism about Pret’s future comes with a dose of realism. “It’s still very much a turbulent time. We are not out of the woods.”
The British government’s furlough programme, which is set to end Oct 31, is still helping to pay some of Pret’s store staff, along with about three million other people in Britain.
And paying rent remains an issue for Pret, as it is for many hospitality businesses in Britain, especially those in the center of London.
The government put in place a moratorium on evictions, effectively allowing businesses to delay their rent payments, which has twice been extended, now to the end of the year.
“The extension of the moratorium is huge for us,” Christou said.
The problem with rent goes beyond the stores, of which 26 have been permanently closed in Britain.
Pret has also put the lease for its headquarters — in the Victoria area of London, near the location of the first Pret — on the market. It’s a large industrial expanse of glass and concrete with plenty of spots for staff to congregate, which are now needless.
Pret, a victim of office downsizing and companies allowing employees to work from home indefinitely, finds it must make the same calculations for its own staff.
Christou said the head office would probably stay in London but would be less central, and accommodate about 60% of its newly depleted office staff (90 people were laid off in August).
He also hopes a smaller, less grand office will give the company more of a start-up culture and recall the earlier, “quirky” days when the company’s founders, Sinclair Beecham and Julian Metcalfe, were constantly experimenting with new sandwich formulas, including a crayfish and arugula sandwich that became a menu staple for years.
“When you’re in survival mode, you’ve got to try things,” Christou said.
I don’t think customers should help Pret. I think it’s down to Pret to figure out what it does and how it evolves. PANO CHRISTOU CEO of Pret A Manger