Pret a Manger

“What’s in a name?” asks Juliet in one of Shakespeare’s most famous tragedies. During the scene our “Star Cross’d” lovers realise that a name is indeed merely a meaningless and artificial convention and that it is the underlying entity which holds true value.

Try telling that to Julian Metcalfe and Sinclair Beecham. Back in 1986, the two university friends purchased the name of a small restaurant on Hampstead High Street that had gone into liquidation, from its administrators. In fair Belgravia they then set their scene. In contrast to many US fast food chains engulfing the UK at the time, they populated their menu with fresh, handmade ingredients. 

Today you can barely walk down the street without passing a Pret a Manger, reaching almost a Starbucks level of ubiquity with 237 stores in London alone. However, its stellar growth has not been constricted to just the UK. As of 2016 there were 74 Prets to be found in the US, along with offerings in France and the Netherlands, with the chain even expanding into Asia with outlets in China, Singapore and Hong Kong.

It is not just the group’s asset base that is growing but also its revenues. Since being partly bought out by private equity group Bridgepoint in 2008, Pret has overseen a 10 year bull run under what has proven to be very prudent stewardship from the investment firm. Bridgepoint can look to a job well done as it looks to sell the jewel in its crown to Luxembourg based Private Equity firm, JAB Holdings for £1.9bn, having paid just £350m for a controlling stake back in 2008. Pret’s annual revenues have also increased from £247m in the previous decade to £881m last year. Over the past decade Bridgepoint has also been cleaning up the boardroom, easing out the original founders as well as troublesome investor Mcdonald’s, who had ultimately failed to scale the business and threatened to tarnish Pret’s more wholesome brand.

As Juliet professes to her lover during Act 2 Scene 1 of Romeo and & Juliet, “Parting is such a sweet sorrow” and indeed it will be for the 12,000 staff employed by the sandwich chain as each will receive a £1,000 bonus once the deal is completed and the firm is sold. Wholesome indeed.

Pret a Manger first appeared in the Cumberland Place Newsletter for June 2018. Click here to view a PDF version.

 

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This article is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services. The mention of any specific shares or bonds should not be taken as a recommendation to deal. Any opinions expressed in the Investment newsletter are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed.

 

Tags: Analysis, Economy, Investment, Market, Newsletter

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