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Pret a Borrow Very Heavily

Posted on Apr 24, 2021. by NTI

The NTI newsroom are split on Pret a Manger. On the one hand we like their Chef's Italian Chicken Salad and Bacon, Avocado and Tomato Toastie, but on the other we have always been critical of their business model. Who wants to invest in a business that pops out branches like a Gremlin exposed to water, but not work out any Plan B for when the high street sandwich goes stale? Who? That was exactly the question pondered by its owners JAB-holdings, and it appears that they have been convincing enough to attract an additional cash injection of £185 million, whilst extending its £150 million revolving credit facility until December 2021.

Someone likes the Pret Classic Super Club more than us. Someone who believes in the future of the sandwich and coffee emporium who took fifteen years to work out they can deliver to homes and weren't tipped the wink when senior management were pondering the chain's future and ordered in a pizza to sustain their thinking.

Pret has around 500 stores in the UK, 98 per cent of them in and around Liverpool Street station in London, as well as a presence around the world in the States, Europe the Middle East and Asia. During a business numbing 2020 its owners closed 39 Pret and 33 Eat-branded shops in the UK, and 22 shops in the United States, reducing the number of employees through 3,771 British redundancies and 1,292 American redundancies at a cost of £15.3 million.

The chief executive officer, Pano Christou, told us that the chain had enough cash to see it through the crisis, but needed additional funding to support the reopening of stores and invest in growth after their demographic rethought their love affair for wooden cutlery and rice-coconut mochas. Is this the sign of things to come for the high street? Will Pret follow Greggs back into the nation's commuter hearts? Many investors and private equity backers are paying a lot of money to consultants for the answer to that one; but the answer may lie closer to home. Will the newly released city and town centre-goer expect more from their lunch and breaktime coffee? Is a new age about more than the same old high street offerings with new backers?

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