High interest rates are talked about as if they’re “the end of the world” – but pale in comparison to the 1980s, according to Julian Metcalfe.
The entrepreneur launched Pret A Manger during a decade when double-digit interest rates were common.
He was speaking to Bloomberg after the Bank of England another 0.25 point rise of the base rate to 5.25%.
Metcalfe also described how riding labour costs had made dining out more expensive, but that Itsu had managed to keep price rises under control by being efficient.
“Everyone’s complaining about 5% and it’s the end of the world,” Metcalfe said. “Back then I remember we paid 14%.”
On costs, he said: “Since Covid, when you go out to a restaurant, it’s frighteningly expensive now. That is all because it’s very, very labour-intensive and the ingredients’ costs have gone up.”
Inflation in the UK has eased to 7.9% in June, down from 8.7% in May, but still well above the Bank of England’s 2% target.
Despite rising costs, Itsu has tried to steer clear from increasing prices drastically, according to Metcalfe.
“A great many customers are feeling it because the prices are going up. Often, if your business is inefficient, really inefficient, the only way to handle it is to put your prices up. Our prices have gone up a tiny bit, but not much. We’ve moved our menu a lot over to more hot food and it’s taken years of work to be able to create these products.”
Meanwhile, Metcalfe said office workers returning to city centres had been happening “slower than we thought”, but said the brand was still backing such areas, with plans to open “one of the biggest Itsus in history” in the City of London.
Itsu is also continuing to look at opportunities outside London, with Aberdeen, Edinburgh, Manchester and Leeds all doing well.
“As long as you can keep the prices low, there’s no reason why Itsu can’t thrive right across the country.
“We’re opening in Exeter very soon,” he added. “We’re opening in Glasgow. We’re opening in Liverpool. We’re opening in Newcastle. And many of our out-of-town northern Itsus are immensely successful. I think one of the most successful Itsus in the world is in Bristol.”
The brand plans to return to the US at some point, after closing its New York, but will try somewhere like Washington, Boston or Atlanta.
