The news that Bridgepoint has agreed to sell Pret A Manger to JAB Holdings marks a new chapter for a brand that has consistently been voted the most admired among sector leaders. James Wallin looks at the values underpinning the brand and what the deal may mean for Pret and its investors – both incoming and outgoing – as well as assessing what wider impact the company’s £1k staff bonus may have on hospitality’s reputation as an employer.
“Its closeness to the consumer means it is developing offers suited to the market – it has the ability to act locally/ think globally and set trends rather than just follow.”
This was just one of the comments from MCA’s Top of Mind report at the start of the year, as Pret was voted the most trusted brand among sector leaders for the ninth year in a row.
The comments go to the heart of a brand that has appeared to do very little wrong over that period – during which its fusion of local and global thinking has been solidly backed by Bridgepoint. Yesterday that patience from its backer handsomely paid off with a sale to JAB Holdings which valued Pret at £1.5bn, compared to the £345m Bridgepoint invested in 2008.
As well as being a welcome good news story for the eating out sector, yesterday’s announcement was accompanied by a move that may do more than any lobbying campaign could ever hope in bolstering the public’s perception of hospitality as a career path. The decision to award each of Pret’s 12,000 staff members £1,000 on the back of the deal will forever be a part of the Pret story, will endear them even more to staff and customers and will reflect very favourably on the sector as a whole. It will almost certainly also prove a handy recruitment and retention boost over the next few months, given that the criteria for eligibility is to be an employee in the week the deal completes. On a wider canvas, it will hopefully be an aid in conquering the ‘Mum and Dad’ test of a suitable career path, by highlighting that this is an industry wholly reliant on its people and willing to invest in them and reward success.
That is not to say that this was the intention. Anyone who has spent time with Pret’s chief executive, Clive Schlee, will attest to the fact that he is a genuine and passionate believer in the importance of his staff. It is also to the credit of his new backers that this most uncorporate of gestures was indulged.
As much-loved as Pret is there are bound to be some dissenting voices among the congratulations and concerns about where JAB will seek to derive value from its new investment. Will we see Krispy Kreme counters and Green Mountain Coffee beans creeping across the Pret estate? Will the spirit of innovation that has allowed Pret to trial costly initiatives such as its Veggie Pret experiment and Joy of Pret giveaways remain? Time will tell but the first utterances on the subject from JAB chief executive, Olivier Goudet, would certainly give the purists hope.
“We’re very excited to partner with Pret and its talented team to continue their extraordinary growth story. Management’s proven track record and commitment to customer service, investment in innovation and approach to freshly prepared food position Pret well as it capitalises on evolving consumer taste and lifestyle preferences. We look forward to working with Clive Schlee and his management team, while promoting the Pret brand and supporting Pret’s impressive culture for the next phase in the company’s growth with JAB.”
So what is that next phase likely to be? Speaking to MCA earlier this year, Schlee said the lessons of over-expansion in the mid-2000s were constantly at the forefront of his mind. He has stuck to the mantra of growing the company by c10% a year and there doesn’t seem to be any obvious need to accelerate this. Pret has plenty of scope to grow in the UK, where its 381 stores belies a brand recognition that could easily rival the likes of Greggs and McDonald’s despite their wider spread. In fact, MCA’s most recent Eating Out panel data shows Pret cementing its place as the third most visited sandwich retailer for breakfast and lunch in Q1 2018, capitalising particularly in the former daypart as leaders Greggs and Subway lost share.
Similarly, there are clear opportunities abroad - in established markets, such as the US, where it currently operates 92 stores and in newer territories, such as Germany, where it is about to launch. In the States in particular, where JAB already has a strong presence through its other investments, there would seem to be significant scope for further inroads.
Questions will no doubt be asked about whether this is the point that Schlee, who has achieved so much with the brand, may look to take a step back after 15 years at the helm, and if so who would be his natural replacement. As he admitted back in April: “No one is indispensable in Pret, particularly not me.”
Personally, I see too much genuine enthusiasm for the business and for following the ever flexing trends of consumers for Schlee to consider moving on just yet.
And, what of Bridgepoint – criticised in some quarters for not realising its investment a few years ago, it walks away from this deal unblemished. It remains heavily invested I the sector and with its most recent investment in Burger King UK, has the chance to reinvigorate another giant of the high street.
This deal poses many intriguing questions but for now perhaps we should simply take a moment to enjoy a success story for a sector that deserves its day in the sunshine.