Pret A Manger is being punished for focusing on the UK and this is a “disaster for domestic growth”, according to the chief executive of drinking chocolate chain Knoops.
Writing on LinkedIn, William Gordon-Harris said “the sad fact is for UK domestic growth is that so many UK founded businesses focus their growth after launch into foreign markets because that is where the interest and the capital is”.
He cited the recent significant write down in Pret A Manger’s value as an example of “failing to focus abroad” being punished – stating that 75 per cent of the chain’s income is “still derived from the UK 25 years after opening its first international store”.
Gordon-Harris also questioned why a “fast growing brand potentially employing hundreds of new staff each year would focus on the UK” in the aftermath of the USA initial public offering (IPO) of Black Rock Coffee Bar recently.
The CEO said that “completely different valuation metrics” were applied to “a business a fraction of the size of Pret”.
On 11 September, Black Rock Coffee Bar raised $294.1m (£216.9m) in an IPO which valued it at $956.3m.
A few days before, it was revealed that Pret A Manger had written off a third of the value it was handed after its 2018 acquisition by European investment group JAB.
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.
Pret A Manger 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 chain also reported a pre-tax loss of £525m last year, compared with a £61.7m loss in 2023.
Over the same period, Pret A Manger’s sales increased by 10 per cent to £1.2bn.
Knoops boss hits out at ‘rich family offices becoming richer’
Gordon-Harris said: “Here at Knoops it’s disappointing to see the UK July growth numbers.
“Especially when we are seeing enormous growth in our own business. UK growth is what we need as a country more than anything else.
“Availability of capital to help good businesses grow here in the UK is key.
“Especially ones potentially emptying thousands of workplace starters and offering unparalleled career advancement.
“But making sure that any growth capital is democratised is also important – rich family offices becoming richer is not the optimised capital model for society.
“The sad fact is for UK domestic growth is that so many UK founded businesses focus their growth after launch into foreign markets because that is where the interest and the capital is.
“Failing to focus abroad is punished. Look at the recent write down in value of Pret A Manger and consider that 75 per cent of its income is still derived from the UK 25 years after opening its first international store.
“This punishment for having a UK focus is a disaster for domestic UK growth.
“Compare now with the USA IPO this week of Black Rock Coffee Bar and the completely different valuation metrics applied to a business a fraction of the size of Pret and consider why a fast growing brand potentially employing hundreds of new staff each year would focus on the UK.”
Growth on the menu for Knoops
In January, City AM reported that Knoops expected to almost double its revenue by the end of its current financial year as it posted record Christmas trading results.
The London-headquartered company, which counts Julian Metcalfe, the co-founder of Pret a Manger and founder of Itsu, as a board member, stated it expected to post a UK revenue of around £16m for the year ending March 2025.
The figure would compare to the £9.3m revenue it achieved in the prior 12 months.
In November 2024, Gordon-Harris outlined plans to the grow drinking chocolate chain into a $5bn (£3.9bn) giant with at least 3,000 stores across the world.