Coronavirus: Pret a Manger braces for crunch landlord talks

Pret a Manger, one of Britain’s biggest fast-food chains, is to hold crunch talks with landlords as it prepares for a permanent shift in footfall in the city centre locations where its brand has become a ubiquitous presence over the last 25 years.

Sky News has learnt that Pret’s management, led by chief executive Pano Christou, has appointed the professional services firm Alvarez & Marsal and CWM, a property agent, to propose new rent arrangements across its UK operations.

The development comes as the coronavirus pandemic paves the way for what most leisure and hospitality operators believe will be long-term changes to the economic model of their industry.

Pret, which employs roughly 8,000 people, trades from approximately 430 sites in the UK, and has become of the food-to-go industry’s biggest players.

The chain was sold to JAB, a global consumer goods investor, for a reported £1.5bn two years ago, with its new owner charting a rapid course to domestic and international expansion.

People close to the company say that Pret now wants to switch to a ‘turnover rent’ model, which links a tenant’s payments to landlords to the turnover of an individual site.

The likely long-term implementation of social distancing measures is likely to have a grave impact on sales figures at many of Pret’s outlets, which thrive because of the dense footfall they attract from office-workers in busy urban locations.

With many employers contemplating shifts to permanent home-based working for parts of their workforces, commuter volumes could be sharply reduced for a potentially lengthy period.

Sources said that A&M and CWM would jointly work on a “comprehensive transformation plan” for the business, which could include a limited number of permanent closures.

On Monday, Pret will reopen another 200 of its UK stores, bringing the total which have resumed trading since the partial relaxation of lockdown measures to 300.

That will leave about 130 more which remain temporarily closed, and subject to the progress of discussions with landlords.

An insider said that while some closures were possible, it would not be a substantial number in the context of the overall estate.

In a statement this weekend, a spokesman told Sky News: “A&M and CWM will advise Pret on aspects our plan to transform our business model to adjust to the new retail environment.

“The massive reduction in footfall and how people may behave means we have to adapt quickly.

“We have already started to reach people in different ways be carefully re-opening shops, increasing our digital offering and through delivery.

“These advisers will help us explore all our options to ensure we find a way for Pret to thrive in the future.”

It was unclear this weekend what Pret’s stance would be on the June rent quarter payment date, with many retailers and restaurant chains expected to withhold payments, as they did in March.

Last month, Pret began talks aimed at securing an additional €100m loan from its banking syndicate to help it weather the impact of COVID-19.

As well as its UK presence, Pret trades in the US, France and Hong Kong, among other overseas markets.

It has about 550 stores around the world.

The coronavirus crisis has prompted the company to pursue a series of new partnerships, including a retail coffee offering sold by Amazon and extending its delivery footprint with Deliveroo, Just Eat and Uber Eats.

It has also launched branded food products designed to be heated by consumers at home.

Like many of its rivals, Pret has also been forced to spend substantial sums on making its outlets compliant with the requirements of a food industry that may have to contend with the consequences of COVID-19 for some time.

Mr Christou said this week: “The changes we’ve been making include new ways to serve customers and bring Pret’s products to our customers’ homes safely.

“It’s going to continue to be tough for Pret in the months ahead, and I’d like to thank our team members who are returning to work and making reopening possible.”

Other chains which have started reopening their doors include Burger King, KFC and McDonald’s.