UK favourite sandwich shop Pret A Manger has told landlords it is in “the eye of the storm” as it faces losses of “tens of millions of pounds” due to the coronavirus pandemic and prepares to pay only 30% of its quarterly rent.
In a letter sent to landlords this week, Pret chief executive Pano Christou revealed that sales had fallen below 20% of normal levels for this time of year. The company declared that it has insufficient funds to pay its rent bill, even after resorting to executive pay cuts in an effort to reduce costs.
Bought by German-owned investment group JAB Holdings for £1.5 billion in 2018, Pret has surged in popularity over recent years after “following the skyscraper” with its office-based target audience and convenient take-away lunch and coffee products.
The company has taken a hard hit from the coronavirus pandemic, however. With the majority of office workers being told to work from home or being put on the UK government’s furlough scheme, Pret turned to banks in a plea for €100 million in emergency funding and appointed advisory firm Alvarez & Marsal to help direct its business model through the recovery process.
Pret intends to pay 30% of its quarterly rent bill over the next 3 months in 10% instalments, as the company quietly announces that it may be reviewing jobs in July.
Phil Reynolds, a partner at the restructuring advisory firm FRP, said that central London-based chains that rely on office workers and weekday trade are now starting to face a “big issue”.
“We are looking at how businesses will shape up after lockdown and [what happens] if lockdown might come in again if we have a second wave”.
Pret has already reopened 320 of its 434 UK stores, but the path ahead is all but clear.
In the letter to landlords, Christou candidly revealed: “We feel strongly that the Pret brand has every reason to believe it will thrive again, but we are currently in the eye of the storm. The mid to long term remains very unknown for us at Pret”.