Pret a Manger announced the closure of 28 stores in July, leading to the loss of 2,890 jobs. The chain is hugely reliant on commuters and office workers, but with a large percentage of people still working from home, it is now struggling to regain sales.
With a total of 400 Pret a Mangers in the UK (pre-pandemic), the closure of 28 stores might not sound very drastic. However, it certainly marks a turning point for the brand, after a decade of continued (and unrivalled) success.
Just last year, Pret acquired rival Eat in a bid to boost its already-successful Veggie Pret chain. Turnover of its UK business increased to £710m for the year ending January 2019. Meanwhile, however, the UK casual dining sector saw closures increase by 25% in the year to June 2019, taking with it the likes of Strada and Jamie’s Italian.
Now, according to the FT, Pret is seeing footfall at a fifth of pre-pandemic levels. With once-packed Pret stores either closed, under limited opening hours, or without trade – the future of Pret as we know it is under threat. In response, the company is looking to adapt its business model, with the aim of evolving into a ‘multi-channel business’ in order to drive new revenue opportunities.
Since announcing store closures, Pret has launched a new subscription model called YourPret Barista. For £20 a month, customers can get up to five drinks per day, including items like smoothies and frappes as well as barista-made coffee, hot chocolate, and tea.
The idea behind YourPret Barista is that it will give customers a reason to visit, which before the pandemic might have been convenience (i.e. a grab and go office lunch) or habit (such as picking up a coffee on the way to work). It’s also a bid to instill loyalty in customers, ensuring that people who are transitioning back to the office slowly – perhaps for just one or two days a week – also return to Pret.
YourPret Barista is the first of its kind in the UK, but the service is based on a similar example from US chain Panera Bread, which gives customers unlimited coffee for $8.99 a month. Despite launching at the onset of the Covid pandemic in late February, Panera has seen huge success from its subscription service.
According to Forbes, more than 835,000 customers have signed up to the program, of whom more than 700,000 signed up in July following a refer-a-friend initiative. Forbes suggests that the program’s success lies in the fact that customers are still seeking out coffee, albeit later on in the day rather than during their commute. Fortunately for Panera, this behaviour coincides with lunch, meaning that customers are adding on their coffee to a food order.
Pret is surely hoping the same will happen in the UK. However, with most stores located in city centres and travel hubs, the chain is also offering additional services to align with new customer behaviour (and enable greater accessibility). One of these is click-and-collect, which is set to trial in five London locations, and will allow customers to pick up their food without entering the store. QR codes on fridges are reportedly in the works, too, so that customers do not have to queue up in order to pay.
Lastly, Pret has launched its first ‘dark kitchen’ to allow companies Deliveroo, Uber Eats, and Just Eat to deliver. It is also developing a hot dinner menu, to encourage home-based customers to order outside of breakfast and lunch hours.
Pret’s coffee subscription is most likely to appeal to people living in London. Indeed, a recent YouGov poll found that 13% of Londoners would consider purchasing one, compared to just 9% in the North and South respectively.
This is not necessarily to do with Londoners buying more coffee. Rather, this statistic highlights the London-centric nature of the brand (with 300 out of the aforementioned 400 stores located in the capital). In the past few months, however, Pret has begun to consider revenue streams that sit outside of its city centre stores.
Retail is one such opportunity, with Pret a Manger particularly keen to capitalise on the growing shift to online shopping. In May, the chain announced that it would be selling its coffee beans on Amazon. While this was a move in response to the coronavirus pandemic – enabling consumers to get their Pret coffee fix while at home – it was the first real example of the chain’s investment in retail.
More recently, Pret has announced that it will also sell coffee beans in Waitrose starting in October, and plans to sell other pre-packaged items in supermarkets in the new year. This shift into retail is all part of Pret’s new strategy to ‘follow the customer’, which replaces its old mantra, ‘follow the skyscraper’.
Pret is clearly hoping it will find similar success to its rival Leon, which has been selling grocery products in supermarkets since 2019, as well as a popular cookware range since 2016.
In isolation, Pret’s new initiatives might not necessarily catch on, but one thing working in its favour is an established reputation as a customer-focused brand. From the constant evolution of its menu to suit the changing tastes of customers to social good initiatives (such as the Pret Foundation), Pret has proved itself to be an agile and innovative company.
Pret is not without its controversy (or its critics), naturally, but in a time of intense upheaval, its ability to adapt could be the factor that draws people back in.
After all, brands that adapted to Covid-19 are now seeing the most success, with examples like Gymshark, Boohoo, and Microsoft all generating positive sentiment – either through pivoting to digital services or providing regular pay to employees on furlough. Tim Knight from KPMG suggests brands must adapt to the new expectations of customers in order to stay relevant. “The new customer wants brands to put purpose before profit, as we are arguably entering an ‘integrity economy’, he says. “They also want businesses to innovate, accelerate their move to digital, and demonstrate their values.”
Pret is certainly not resting on its laurels in any of these areas. Instead of waiting for customers to return to its London stores, the chain is adapting its business model to meet customers where they are – whether that’s online, at home, in supermarkets, or with the desire for a safer store experience.
Pret might be guilty of perpetuating the London commuter cliché, but there’s a reason it has come to dominate the casual dining market so strongly.
