While other high-street outlets struggle, the ubiquitous British chain is doing so well that business is booming even in the spiritual home of the deli

Just after 8am, in the bowels of Manhattans concrete rabbit warren Penn Station, there are a lot of queues. Long lines of travellers wait for the Long Island Rail Road and Amtrak trains; for the bathrooms where dozens of homeless people spend the night; and for food and drinks outside Dunkin Donuts, Starbucks and Pret a Manger.

The line for the French-sounding-but-British-owned Pret is longer than that for any of the other food chains. Thats no surprise as the outlet, above platforms 20 and 21 on the LIRR, is the busiest for its size of all the 400 or so Prets worldwide.

The chain founded with one outlet in Londons Victoria by serial food entrepreneur Julian Metcalfe and his friend Sinclair Beecham 30 years ago now operates around the world including China and France. And it is growing fast: last week Pret revealed sales climbed nearly 14% last year, to 676m. The improvement is not just the result of opening more outlets: takings at branches open more than a year were up 7.5%. Profits rose 14.5% to more than 84m.

Prets customers are trendy, health-conscious types. The company says sales of vegetarian options are up in double digits and it is trialling a veggie-only pop-up shop in the summer. Takings from lines containing avocado were up 26% last year: Prets outlets got through 5 million avocados in 12 months.

The first steps into the US back in 2001, with a store on New Yorks Broad Street were faltering. Americans thought the sandwiches had too much mayonnaise and they took time to be convinced that food sold in packages, rather than made to order in a deli, could be truly fresh.

But the US is now Prets most significant market outside the UK with 65 stores and 10 more planned this year. One of those will be a second outlet in busy Penn Station.

Clive Schlee, chief executive, says: We have become a bit of a beacon there. He says Prets strategy in the US has been the same as in the UK: constant, steady innovation to get the mix right before expansion. It took five years of tinkering in the UK before Pret opened its second store.

Clive
Clive Schlee, chief executive of Pret a Manger Photograph: Linda Nylind for the Guardian

Other businesses that have expanded abroad and have been forced into hideous retreats have made the mistake of trying to copy the same large-scale operations they have in the UK. At Pret, we can just do a small-scale kitchen within our own shop. It takes longer but its more durable, says Schlee, who joined Pret during its uncertain overseas expansion phase in the early 2000s. At that time McDonalds was a 33% shareholder, although it later sold its stake.

In the US, Pret has now adapted to sell a more seasonal menu, including iced teas and coffees suitable for hot summers and a broader range of hot foods for cold days. Customers can also choose from six salad dressing options compared with the one included in the box in the UK. Meanwhile, filter coffee which punters serve themselves makes up more than 80% of coffee sales, whereas in Europe more than 80% prefer espresso-based drinks.

Schlee says: It took time to teach [Americans] that our food was fresher than they could make themselves from the deli, where the ingredients might have been sitting around.

Now he believes New York is a wonderful Pret market and the company could easily have as many stores there as it has in London.

Pret is now majority owned by private equity firm Bridgepoint, with Metcalfe and the management holding small stakes. Bridgepoint, whose other investments include businesses like Fat Face, Hobbycraft and Leeds Bradford Airport, has been involved for eight years, but so far shows no sign of checking out and there are no current plans to float the business.

Someone once asked Julian Metcalfe what adjective he would use to describe Pret and he said dependable. At the time people thought that was not very glamorous but actually thats what you want dependable friends, dependable meals, says Schlee.

Its also about reassuring ethical policies, he says, such as donating waste food to the homeless through direct relationships with hostels and offering jobs to more than 200 homeless people.

But Schlee argues that Prets key strategy of making food fresh in kitchens behind each coffee shop even those in busy and expensive locations such as Waterloo station is the key strength of the business. Supermarkets and the vast majority of other sandwich chains make their food in factories and deliver them to stores.

Prets system offers better flexibility to adapt to new food trends such as veggie food and avocados and sudden fluctuations in demand caused by the weather or disruption at transport hubs that can mean surges or slumps in customer numbers.

Pret
Pret a Manger at Penn Station: customers can serve themselves filter coffee, and have a choice of salad dressings. Photograph: Tim Knox for the Observer

The chain introduces new food options every three or four months and is currently testing out evening meals in London. As the government prepares its sugar tax, Pret is looking at lowering the natural sugar content of its fruit juices and has 15 staff looking at the next food trends.

In the UK, Schlee is counting on the freshness and flexibility of Prets food to fend off rising competition on the high street. When you invite your mother-in-law for lunch on Saturday, you dont give her food youve made two or three days before you make something that morning. And thats what gives us a massive competitive edge, he says.

That edge will be important, as up to a fifth of stores selling clothing, books and other physical products are moving out of the high street. The gaps are being filled by an ever-increasing array of eateries ramping up competition with the likes of Pret.

Schlee says: Pret tends not to worry about the competition but about being true to itself, avoiding the temptation of centrally made food and making sure we look after our staff.

The focus on healthy fare has helped Pret open its first outlet in a British hospital a new area for expansion and there are plans to move onto university campuses as well as open more outlets in regional British cities such as Manchester.

Friendly staff with the freedom to hand out free coffees to whoever they like up to a certain percentage of sales are a big part of building loyalty in those new stores.

Pret doesnt use zero-hours contracts and has raised wages to maintain the businesss differential above the new minimum wage for over-25s the so-called national living wage introduced by the government this month.

Staff earn 7.50 an hour and can earn a 1-an-hour bonus if they meet customer service criteria checked by mystery shoppers every week. Workers who put in a full days shift also get two free meals and paid breaks.

Schlee says the package will help Pret remain the employer of choice among coffee chains, helping it stand out from rivals such as Caff Nero and Eat, both of which have recently been criticised for cutting back on staff benefits. There are also bonuses, staff discounts, Friday night parties and paid breaks, which are an important part of its culture. Thats a very meaningful part of what we pay, Schlee says.

The deal for workers, he says, means Pret has lower staff turnover than the majority of its rivals less than half its staff leave every year. Certainly he is a stayer, having spent 13 years running Pret. Why is he still here?

My wife says anyone can run Pret. The management is extremely lucky to be selling healthy food at convenience and speed, which is what people want. We have had favourable winds, hesays.

Read more: http://www.theguardian.com/business/2016/apr/23/new-yorkers-queuing-up-pret-a-manger


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