In results last week, Pret A Manger wrote off a third of its value from the 2018 acquisition by JAB.  Pret reported a 3% increase in like-for-like sales.  But it also signalled a strong focus on value for money going forward.  I wonder how volumes are faring in their London heartland, compared to their heyday a few years back?

So why are things challenging for Pret, and what lessons might we learn for Grocery?

In society and industry, we are driven by a hunger for growth.  Growth brings returns for investors and opportunity for staff.  Little companies can grow fast, adding outlets, driving efficiencies of scale, learning by doing, and creating a flywheel effect.  And so Pret rose to prominence in London.  They showed us what fresh, exciting, quality food at fair prices could look like.  Well-designed stores, with smart, quick and friendly staff.  The odd free item chucked in at random (remember that?)  The outlet of choice for many.

But growth creates pressures.  Society changed.  Lockdown arrived and many Pret customers found they could work effectively at home.  The economy tightened and over £5 for a sandwich seemed too much (especially if shelf prices were inflated, to allow Club Pret members 20% off every food item.)

Competitors responded.  Gails surged, upping the ante on store look and freshness.  Greggs and the supermarkets doubled down on value.

Earlier decisions took on a new light.  Pret had opened a lot of locations in London, often very close to each other.  That works when you’re flying but could become a millstone when you aren’t.

Not all these dynamics were in Pret’s control.  But to investors, they sound like excuses.  The golden years of success are in the bank.  Investors want growth now and tomorrow.

Worse still, in this situation, the angst felt by leaders in the centre, can osmose to the front line.  That can mean stressed staff, which customers notice.  Often, the company looks for ways to cut costs.  Credit to Pret, I haven’t seen their quality or freshness diminish.  But the temptation must be there.  The finance guys are likely asking questions.  “Do we really need to freshly prepare in store?”  “Why do we leave napkins out, can’t we make customers ask?” “Could we get away with one less staff member over lunchtime?” All fair questions, but too many can accelerate a vicious circle.

I deeply admire what Pret have achieved.  But what can we learn?  If your company is winning, be modest about your growth ambitions and beware of overreach.  If your company is struggling, insulate your front line and the customer from the angst you feel.  If you’re an investor, be careful to exit on time.  Growth can’t go on forever.

​Jeremy Garlick is a Partner of Insight Traction, consulting with FMCG and Retail companies. He was formerly Head of Insight at Sainsbury’s, Waitrose and Premier Foods.

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