Sandwich maker Pret eyes US listing as Brexit hedge

Pret A Manger

After opening shops across New York, UK sandwich and coffee chain Pret A Manger may be heading for Wall Street.

Private equity firm Bridgepoint Advisers is considering a US initial public offering of the provider of tuna, mayo and cucumber baguettes and organic coffee, according to sources.

By looking at listing in New York rather than London, where Pret is based, the company is signalling its intention of making a bigger push into the rapidly expanding US market for healthier alternatives to burger chains and other fast-food outlets. Activity in the sector has been fueled by deals such as JAB’s plan to buy soup and sandwich chain Panera Bread.

By expanding in the US, Pret could accelerate its geographical diversification at a time when its UK operations face a possible squeeze from Brexit. The sandwich chain has said only about one in 50 job applicants in the UK are British and it’s taking steps to try to address a possible staff crunch if leaving the EU results in immigration curbs, as the government of Prime Minister Theresa May has vowed.

An exodus of jobs from London’s financial district could also affect the chain’s core clientele of office workers. Whitbread, owner of the UK’s Costa chain, forecasts 91% growth in the number of coffee outlets in the country, to 27,412, from 2010 to 2020.

Pret is “one of the standout brands in the lighter and healthier grab-and-go market and it certainly has phenomenal potential to go global,” Jeffrey Young, managing director at industry consultant Allegra Group, said.

The US market for coffee-shop chains, including brands such as Tim Hortons and Dunkin Donuts, is set to reach $85 billion (€78.2bn) by 2025 as customers increasingly eat out for breakfast, according to Allegra. At the end of 2016, Pret had 444 shops globally: 329 in the UK, 74 in the US, 19 in Hong Kong, 19 in France, two in China and one in Dubai. Pret said last month it planned to reach 500 outlets globally within a year. It said US sales exceeded £200m (€238m), out of a total of £776.2m (€923.4m) for the chain last year.

Bridgepoint is working with advisers at JPMorgan Chase, Jefferies Group, Credit Suisse, Barclays and Piper Jaffray on the potential listing, the sources said.

Bridgepoint bought Pret in 2008, eight years after the chain entered the US, acquiring it from founders Sinclair Beecham and Julian Metcalfe as well as McDonald’s, which held a 33% stake at the time. JAB, an investment vehicle of the billionaire Reimann family, has fueled deal activity in the sector with a series of acquisitions, including coffee chain Keurig Green Mountain, doughnut baker Krispy Kreme Doughnuts and Panera.

Bloomberg


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