Pret A Manger has written off a third of the value it was handed after its 2018 acquisition by European investment group JAB as an uncertain UK economy puts pressure on the sandwich chain.
The group made a £553m non-cash impairment to the £912m goodwill on its balance sheet created as part of the 2018 JAB deal which valued Pret at £1.5bn, according to the Financial Times.
Pret attributed the write down to higher costs due to an increase in national insurance contributions, as well as still-high interest rates and an uncertain global macroeconomic environment.
The group reported a pre-tax loss of £525m last year, compared with a £61.7m loss in 2023.
Despite high demand for its products, Pret has struggled with a number of shocks since 2018.
It had a bruising few years during the pandemic – its operating loss slumped to £343m in 2020 – and is now struggling with financial pressure from higher wage costs.
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Pret A Manger battling lower UK confidence
Consumer confidence in the future UK economy has plummeted over the last year, with geopolitical uncertainty exacerbating financial difficulties leftover from the cost-of-living crisis.
Household and food bills are on the rise, with inflation set to push annual grocery bills up by £275 by the end of this year.
Pret has relied on a revamped coffee subscription service to pull customers in from cheaper offerings like Greggs, but has been hit with backlash around attempts to raise prices.
The group’s sales rose by 2.8 per cent to £1.2bn in 2024, in part due to a heavy push into international markets.
While it still mostly operates in the UK – and a third of all its stores are in London – Pret is now open for business in 18 markets.
It plans to open 10 new shops on the east coast of the US by 2026, with New York its “overseas capital”.
The company’s chief executive Pano Christou said that £1 in every £4 spent at Pret was spent outside the UK last year.
City AM has contacted Pret A Manger for comment