Pret a Manger shareholders, including its co-founder, Sinclair Beecham, are pumping £100m into the company to fund expansion despite losses ballooning to £256m during the pandemic.
The coffee shop group is planning to open more than 200 UK and Irish stores over the next two years, expanding into the London suburbs, regional cities, retail parks and, through franchise deals, into travel locations such as railway stations and motorway services.
Pret, which has 550 outlets across the UK, US, France, Dubai and Hong Kong, is also planning to expand into new international markets in Europe and Asia, mainly through franchise partnerships.
The plans come after sales dived almost 60% to £299m last year, multiplying operating losses by more than 10 times to £256m from £25m a year before. The company permanently closed 74 outlets in the UK in 2020 and 22 in the US, resulting in more than 1,000 job losses.
The latest cash injection from shareholders comes on top of £185m pumped in last year when the company warned of “material uncertainties” about its future as its outlets were forced to close during the pandemic.
Pano Christou, the chief executive of Pret, said the company was now aiming to hire at least 3,000 more workers by the end of 2023, on top of 2,000 recruited this year, as it bounced back from the pandemic. Pret currently employs 6,400 people in the UK.
“We are definitely much more confident and optimistic about our future. What our shareholders are showing is that they have confidence in the brand. What we have done through Covid is build the foundations for a strong launchpad to grow,” he said.
Christou said Pret’s sales in city centres remained 30% down on pre-Covid levels but were 20% to 30% up in regional and suburban areas. He said home deliveries, which Pret began when it was forced to close all its UK outlets last year, now made up more than 7% of sales.
In the past year, Christou said the group had “delivered more change than in 30 years of Pret’s history”.
The company plans to take its subscription model, in which customers pay £20 a month for up to five coffees a day, from the UK to the US and launch a new loyalty scheme in the UK. It also now sells bake-at-home croissants and other foods through retailers including Tesco, Sainsbury’s and Amazon.
“Clearly the last couple of years has been challenging for Pret, the industry and the whole world,” he said. “We’ve come through Covid and things are starting to look a bit better and more optimistic. We’ve had a very positive trajectory since ‘freedom day’ in July and into September.”
He said city centres were not likely to fully recover to pre-pandemic sales levels but Pret saw “many opportunities” in the suburbs and regional centres outside London, while home deliveries continued to increase despite many workers returning to offices.
With the business recovering, Pret plans to introduce more staff benefits after raising pay by 5% last week and putting its regular service-related bonus back up to £1 an hour. From January staff will be able to get a 50% bonus in stores, up from 25% at present.