MARKETING MANAGEMENT - 1

CASE ANALYSIS: PRET-A-MANGER

PESTEL ANALYSIS:

The United Kingdom has a stable government with industry-friendly policies that help
business segments. Good infrastructure is also a bonus. As Pret focusses on fresh food, it has
a unique niche in the market. At the end of the day, if the shop has leftovers, they are donated
to a food bank. This practice enhances the brand value of Pret in the customer’s mind and has
positive financial effects for Pret. With a good purchasing power of Pound, the cost of food
will be reasonable and appealing to the customer.

The majority of Pret's customers are associates from office, and the lunch session is the
busiest session. As there are no preservatives in the food, almost no chemicals are used
which helps avoid environmental pollution. Pret uses an advanced technology that has
yielded good results in terms of quality of products and customer waiting time. With
excellent employee policies, there is no requirement for strong employment laws in the
country.

COMPETITOR ANALYSIS:

Though Pret-a-Manger didn’t have any direct competition, the big retailers and coffee shop
chains like Tesco and Starbucks were challenging Pret’s ‘in shop cooked food’ ideology.

A pre-cooked sandwich shop called EAT was one of the direct competitors as they were
catering to the same market of sandwiches. But, Pret already had stores opened at multiple
prime locations and their freshly cooked sandwiches didn’t leave much space for the
competitors to grow.

EAT did grow at a steady pace initially but the margin of profit wasn’t much due to the high
operational cost. The below exhibit depicts the same.
For EAT, percentage growth in revenue has drastically reduced from 38.1% to 8.5% during the
period 2008-10. Whereas, Percentage growth of PRET has increased steadily from 9.8% to
15.2% during the same period.
(Indicates downward trend for EAT and upward trend for PRET)
Percentage margin (EBIT/Revenue) over the period of 2006-10 for PRET = 9.70%

Percentage margin (EBIT/Revenue) over the period of 2006-10 for EAT = 4.27%

COGS and operating charges high for EAT which constitutes 95.73% of revenue.

In case of PRET its 90.31%.

Hence, Competition for PRET is PRET itself.
GOOD PRACTICES:

Pret people always follow company policies and values such as being customer-centric. The
following are the good practices:

 Employees are the most important part of Pret.

 Employees are empowered to make their own decisions regarding the day-to-day
activities of the shop.

 Employees are hired based on the feedback from the current employees after they
worked for a 6-hour shift alongside current employees.

 After hiring, each employee has to go through a training course based on their roles.

 Maintained a high level of morale in employees through various incentive schemes

like Mystery Shopper Program, Shop Manager Bonuses, Pret Parties.

 Through the Buddy Days program, employees from headquarters remained in touch
with the experience of working in the kitchen of a Pret Shop.

 All the employees are Customer Friendly. Employees addressed customers with
sincerity, passion and developed healthy relations with customers.

 Food is delivered within 60 seconds of entering a queue. In peak hours, this is achieved
by cross-functional employees.
  The quality of the food is the top priority. Without using any preservatives, fresh food
is made in the shop kitchen itself as per demand.

 The shop is well maintained all the time.

 All the kitchens and shops keep the unaccounted waste to a minimum. Pret maintains
productive kitchen by monitoring the average number of products made per hour.

 Pret gives prime importance to its customers. Continuous feedback is obtained from
the customers and active response is provided.

ISSUES FACED BY THE ORGANIZATION:

 Going Global: Pret tried to expand its business in the U.S. but was not able to adapt
to customer choices. After incurring losses for 2 straight years they shut down the
operations.

 Expansion issues: Pret wanted to expand locally. This expansion was not possible
because of the shortage of locations that met Pret's requirements.

 Twin-Shops: To expand locally, Pret started opened stores that can work like a ‘hub
and spoke' concept. This concept was against the ideology of Pret-a-Manger (that is,
cooking in stores). Pret suffered a lot of backlash from their customers. The customers
felt cheated when they came to know about this.
SOLUTION FOR THE IDENTIFIED ISSUES:

Pret will go ahead with the twin shop business model with certain modifications. The first
modification is that the twin shops will be renamed as “Pret-a-Manger Xpress”, with the
tagline “Scrumptious and Speed!”

Pret-A-Manger Xpress.
Scrumptious and Speed!

The second modification is, Pret will set up a compact kitchen in each twin shop and serve a
shorter range of products compared to a regular Pret shop. Hence, the space constraint is
overcome by excluding the dine-in facility. So, all twin shops are a point of sale as each one
of them will have a compact kitchen.

Pret Mystery shopper criteria will be relaxed for Xpress shops. Pret has to only consider the
quality of the food and the waiting time of customers to evaluate Xpress shops and to reward
employees.

To increase revenue, Pret can rent a place in corporate parks to setup Xpress shops and target
more customers.

Also, Pret can provide loyalty points for customers who visit Xpress shops. After 5 visits, the
customer is provided with a free sandwich.

THANK YOU