Analysts say Pret coffee subscription ‘commendable’ but ‘nervous’ of industry shift

Pret a Manger’s decision to launch an innovative monthly coffee subscription comes amid far-reaching shifts to the food industry that have not yet been fully realised, analysts warned on Friday.

While commending the move, analysts at Shore Capital said that changes to the UK’s food sector in the wake of the coronavirus pandemic made them “nervous” for firms that currently rely on city centre footfall.

Pret on Friday launched the country’s first ever in-shop coffee subscription, which entitles those who pay £20 a month to five coffees per day.

“The move by Pret is commendable, showing that it is adjusting to the evolving market conditions and doing so in a way that is embracing technology,” the analysts said in a note.

But “structural adjustments” in the sector still have some way to run and make them nervous for food and drink businesses with “major exposure to city centres and travel hubs,” they wrote.

READ MORE: Pret A Manger cutting 2,800 jobs as it closes 30 stores

In a statement announcing YourPret Barista, the new subscription offering, Pret said the move was part of its strategic transformation programme.

It comes after the coffee and sandwich chain said last week that it would close 30 of its outlets and axe around 2,800 roles, almost triple the number of expected job cuts.

The company, which cited the impact of the coronavirus pandemic and a huge drop-off in sales for the move, said on Friday that it was in the process of building a new digital infrastructure that would allow it to launch “tailored customer propositions.”

“This newly developed digital ecosystem will enable Pret to develop insight and data-led products and services, many of which are already in trial across London,” the company said in a statement.

The flat subscription offering for coffee and barista-prepared drinks is just Pret’s latest pandemic innovation: In May, it began selling three different types of its coffee on Amazon for the first time, hoping to capitalise on the work-from-home revolution.

The chain, which has hundreds of outlets in urban locations, has been severely dented by the thousands of firms who have instructed their employees to stay away from offices.

READ MORE: UK services sector sees sharpest increase in activity since 2015

2020 is going to be a “wipe-out year” for firms reliant on city-centre and commuter footfall, the analysts wrote.

“It is a matter of debate again as to when and if such businesses return to pre-COVID trading intensities and financial outcomes,” they said.

Weekly sales at Pret have risen by just 7% since the end of July, but the company has said it is “confident” it can continue to build on this growth.

“This is just the first step in our plan to bring Pret to more people,” said chief executive Pano Christou on Friday.

“We now have the building blocks to establish Pret as a multichannel, digitally-led business, and YourPret Barista is the first big launch we’re able to deliver through our new technology platform.”