Readers of this blog may recall our note about Pret’s response to the Covid outbreak back in March (here), as it became one of the first brands to start offering free food to NHS workers on the front line. However, it wasn’t long before the lockdown caused Pret (and almost everyone else) to shut up shop completely.
So six months on, it is interesting to see how Pret has adapted to the new post-lockdown world, which has seen city centres remain largely empty and the vast majority of office workers - Pret’s lifeblood - continue to work from home.
Like most businesses, Pret has had to make some tough decisions about how it can continue to operate in this tough climate and the company has announced that it is currently going through a significant cost-cutting exercise. But where Pret has perhaps taken a leading role is in recognising quickly that the business model also needs to adapt - and soon. So in response to the drop in footfall, it has introduced a new digital subscription model called “YourPret Barista”, whereby subscribers pay £20 per month to receive up to five coffees per day.
Now, the Government has already tried repeatedly (and perhaps desperately) to cajole people back to the office, but there seems to be little appetite amongst businesses or their workers. Pret is trying a different tack, but will the aroma of coffee - and quite a lot of it! - tempt people back out into the fresh air? And even if so, will this new model be a hit with the bean counters (quite literally)?
As with many new innovations, there is a balancing act. Clearly, Pret views the guaranteed income of the subscription model as a worthwhile trade off against the likely cost of offering more coffee for less - potentially up to 150 cups a month! It will also be hoping that as subscribers seek to get their money’s worth, they will make more frequent visits, perhaps picking up a sandwich or a snack at the same time, thus increasing overall spend.
It’s a well-worn strategy that supermarkets and other retailers have always relied on to increase footfall - but it’s a new one for coffee chains, which have traditionally relied on loyalty cards to encourage repeat visits. Interestingly, I can’t remember Pret ever operating a loyalty card and so this seems to be their own unique take on the loyalty model.
It’s a bold move, but it’s also important to note that this isn’t the only trick up Pret’s sleeve - it is also benefiting from a healthy uptick in its online delivery business, which has seen increased sales during the Covid crisis. So this is part of a wider package of digital measures that Pret hopes will make a difference.
Whilst competitors and other businesses may not have the scale or the means to replicate this model themselves, many will be watching closely to see how it plays out, not only in central London, but also in the London suburbs and other city centres. The ubiquitous chain is something of a bellwether for the health of the high street, and so if the subscription model is a success, it may for some offer, if not the answer, then part of the answer to how to survive in this new world.
"Pret needs to adapt itself to the changes of customer patterns and that’s where we’ve been very focused" Pano Christou, Pret CEO