Skyrocketing costs lead to a decrease in valuation for Pret A Manger's sandwich business

In a bid to expand its reach, Pret A Manger Ltd. has opened more outlets, bringing the total to 717 across 21 markets. This growth comes amidst intense strain for the sandwich chain, as CEO Pano Christou revealed.

The company's 2024 report showed an operating loss of £452 million ($612 million), a significant setback for the brand. To address this, Chairman Jose Cil of JAB Holding, Pret's owner, is exploring a potential initial public offering (IPO) for the brand.

Despite the losses, Pret's sales grew by 10% last year to £1.2 billion. The company is focusing on city centers and transport hubs for growth, aiming to grow from 500 locations to around 1,000 to 1,500.

Accelerating food inflation is weighing on British consumers, leading many to buy more branded grocery items in supermarkets rather than eating out. However, Pret's launch of Super Plates in July has driven more customer visits, particularly in London. The company managed to absorb around £25 million in labor, food, and operational costs.

In the US, Pret aims to reach more than $1 billion in sales. To achieve this, the company plans to test meal deal formats later in the year and is pursuing a new store format that is better suited to town centers. The new store format will have a more spacious, sit-down environment and food made to order.

The move to write down the value of Pret A Manger Ltd. reflects uncertainty in the global economy and additional operating costs from the UK government's revenue-raising budget. In its 2024 report, Pret included a non-cash goodwill impairment of £553 million.

Pret competes with rival British bakery chain Greggs Plc. However, the company is optimistic about its future, with various tools available for growth, according to Chairman Cil. The potential IPO could provide a significant boost to Pret's expansion plans.

Skyrocketing costs lead to a decrease in valuation for Pret A Manger's sandwich business