Decision Case analysis : COVID 19: Pret a Manager's Figher for Survival

ANALYSIS

1.Overall decision

clear paragraph , and definitive

2. Summary of major reasons (criteria) for your decision

Here I should see a summary of your inferences below

3. Evidence supporting overall decision

Provide data from the case for each alternative you need to assess against the 3 criteria

you listed above.Best way to do this is with a table.

Example:

Criteria A:

Evidence Criteria A:

- fact 1: ....

-fact 2: ..

-fact 3: ...

Inference: (Based on these facts, what conclusion can you make about this criteria?)

Criteria B:

Evidence Criteria b:

- fact 1: ....

-fact 2: ..

-fact 3: ...

Inference: (Based on these facts, what conclusion can you make about this criteria?)

Criteria C:

Evidence Criteria C:

- fact 1: ....

-fact 2: ..

-fact 3: ...

Inference: (Based on these facts, what conclusion can you make about this criteria?)

ACTION PLAN

4. Overall Goal

should be driven by your overall decision. It's the "now what?" and should be longer term. It should be stated clearly

5. Short-term SMART objectives

at least 2 objectives in the short term to reach your overall goal.The objective should be specific, measurable, achievable, realistic, and timebound.

6. Long-term SMART objectives

at least 2 objectives in the long term to reach your overall goal.The objective should be specific, measurable, achievable, realistic, and timebound.

7. Major Risks

List 2 risks to your action plan - i.e., are there any short or long-term objectives that present a risk to the company if they are not reached.

8. Risk Mitigation

For each risk listed above, what can you do to lower or perhaps eliminate the risk

9. APPENDIX (6 points)

Include at least 1 analytic framework below.

COVlD-19: Pret a Manger's Fight for Survival \"If we sit and wait for things to change, that is a bigger risk than going out there and being b0ld"Pret a Manger CEO Pano Christou1 Pret a Manger (French for ready to eat), popularly referred to as Pret, is a multinational sandwichshop franchise chain based in the UK. Founded in 1986, it had expanded rapidly in recent yearsit opened 60 locations between 2016 and 2018 and acquired 90 EAT outlets in 2019. Only in December of 2019, Pret's recently appointed CEO had been bullish on \"turbocharging the growth of Veggie Pret\"rst launched as a pop-up experiment in 2016and digitising the customer experience. The COVlD1 9 pandemic threw a wrench into those plans. Pret and its business model were intimately tied to London, where more than half of its 500 locations across nine countries were located. Despite the economy reopening after a lockdown that had restricted restaurants to delivery and takeout service, the pandemic continued to signicantly curb footfall at Pret shops that were strategically located near ofces and transport hubs. With a second infection wave under way, there remained an estimated 40% drop in commuting in October of 2020with fewer than half of workers having returned to work in ofces full time as well as a huge drop in tourism. This was bad news for the casual dining sector, which had already seen closures up by 25% in the year prior, including chains such as Carluccio's and Jamie's Italian. COVlD-19 was causing signicant adverse effects and 12,000 to 15,000 small sandwich bars were struggling. Suppliers too were affected. Adelie Foodsa sandwich supplier to Gaffe Nero, petrol station shops such as Shell and supermarkets including Aldihad collapsed in May with a loss of over 2,000 jobs. People were still eating, of course, but doing so at homewith year-on-year grocery sales up 30% and espresso machines showing a near 80% jump in sales. Pret's locations in London served customers with higher levels of disposable wealth. This had largely shielded the business before the pandemic. Now this positioning made Pret especially vulnerable, with sales down 60% year-on-year in August (50% worldwide). It therefore came as no surprise when Pret announced at the end of August that it was laying off around one-third of its nearly 9,000 UK employees, closing 30 of its 300 UK shops (28 in London), as well as looking to cut costs at by renegotiation leases, reducing opening hours, and limiting menu ranges. Even the lease for their shiny headquarters in central London was up for sale. Pret was in a ght for survival. Company Background Pret was emblematic of three decades of uninterrupted growth in the UK sandwich sector, one worth more than 8bn2 in 2019. More than 4bn sandwiches were sold annually and a further 5bn were prepared at home. The boom began in 1980 when the UK's most powerful department store, Marks & Spencer (M&S), began selling packaged sandwiches in its stores. Within a decade, M&S had a dedicated \"food to go\" section, with separate tills and checkouts. Like almost every major retail chain, Boots pharmacy had followed This case was prepared by Jessica Spungin and Nader Tavassoli of London Business School. London Business School notes are developed solely as the basis for class discussion and are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. 2020 London Business School. All rights reserved. No part of this case study may be reproduced, stored in a retrieval system, or transmitted in any form or by any means electronic, photocopying, recording or otherwise without written permission of London Business School. suit. Boots pioneered the meal deal and was the rst to establish a national distribution system in 1985, selling identical sandwiches across its branches. By the end of the 1990s, the sandwich industry had consolidated into two parts: specialist chains with in-store kitchenslike Greggs (nearly 2,000 UK shops), Subway (1,000), and Pretand factories that worked through the night to supply supermarkets, high-street shops, schools, prisons, airlines, hospitals and others. The rst Pret was a delicatessen near one London's of biggest transport hubs, with bowls of fresh salad and sandwiches prepared on site. It was opened by two public school friends, Julian Metcalfe and Sinclair Beecham, who were fed up with London's dismal sandwich bars and fast-food options. Their \"proper sandwich" proved a hit. So much, that in order to finance expansion, they sold a 33% stake of the business to McDonalds in 2001. In 2008, Pret was bought out for 364m by private equity giant Bridgepoint, who helped Pret expand into hot drinks, including organic coffee. Hot drinks accounted for around 20% of revenues by 2018, when Pret was sold for 1.5bn to German investment fund JAB Holdings. JAB owned several coffee brands around the world (e.g., Douwe Egberts, Jacobs, Kenco, Keurig, Peets, Green Mountain, Tassimo), as well as coffee and food chains (Espresso House, Caribou Coffee, Panera Bread and Krispy Cream Doughnuts) and the beauty company Coty. Pret's mission was \"to create handmade natural food avoiding obscure chemicals and preservatives.\" This translated into a brand image of \"fresh, natural, handmade" with an added \"buzz" based on its service mentality. As such, it was well positioned for the \"good food" trend that had been gathering pace as of late. Pret did not make sandwiches to order but prepared them on site in small batches to replenish inventory on the shelf. To do so, recipes had to be easily assembled within a small kitchen space, using an ingredient list short enough to t on a recipe card. Despite this, Pret continually updated and expanded its menu, with a major addition of 20 new menu items in 2019 alonHight of which were vegan, ve vegetarian, plus items such as avocado-based salad pots and open sandwiches made on gluten-free bread developed in house. Underlining freshness, food was never discounted at the end of the day to move remaining inventory but donated to charity food banks. People. To foster its buzzyand very humancustomer service, Pret hired, paid and promoted based on qualities like cheerfulness. With \"Core Behaviours\" of \"passion, clear talking and team working,\" their careers website stated: \"you can't hire someone who can make sandwiches and teach them to be passionate. So we hire passionate people and teach them to make sandwiches." Employees were trained to create the "Pret Buzz\"to smile as drink orders were called out to baristas, to make small talk with regulars, and to occasionally give freebies to customers. Pret was not a centralised, process-driven organisation, but hired and promoted initiative-taking self-starters. Job applicants completed a six-hour "experience day\" after which the shop team voted on whether to hire them. Employees knew that a bad hire could cost them, as weekly mystery shoppers determined store-level bonuses. Their people process seemed to work: Pret's 60% annual employee turnover rate was less than one-fifth of the industry average. Marketing systems. Pret had lagged other takeaway food outlets in creating loyalty schemes that provide customer-specific data and allow for sophisticated customer-relationship management (CRM) systems. However, their store-level inventory management was extraordinarily precise. Sales were tracked by the minute and algorithms predicting demand months if not years in advance, and each shop's selection was continuously adjusted based on local tastes. Locations. Pret shops were situated based on the insight that workers were unwilling to walk further than a street or two for lunch, and selected based on hundreds of data points, such as historic sales, visibility (preferring more visible and well-lit corner locations), footfall volumes and demographics, and competitor locations. COVlD-19 had upended these models, and it was not certain that historic data could be relied upon for the future. The Pandemic, a Call to Action In March of 2020, in response to the COVlD-19 pandemic, the UK government had mandated that all restaurants, cafes and bars must close except for collection. Pret closed the doors to all of its 400 UK restaurant (300 of them in London) and only slowly started reopening them, with initially 10 London shops opening for takeaway and delivery in mid-April. Trading under limited opening hours, these offered a reduced range of customer favouritessuch as the Avo, Olives & Toms baguette and Swedish Meatball Hot Wrapand the new addition of a \"Heat Me At Home\" option. Limited to takeout and deliveries, Pret's buzzy vibe was no longer an attraction. It also became clear just how far behind they were in digital takeout and delivery senrices, including options such as ordering ahead or click-and-collect using an app, or pre-paying so that customers did not have to queue up in order to pay. It was time to play catch up and digitise on the one hand, and to disrupt their business model on the other. Follow-the-customer mum-channel business 2020 proved to be as innovative for Pret's business model as 2019 had been for its menu. In response to falling footfall at transport hubs, shopping centres and ofce districts, Pret launched a multi-channel follow- the-customer strategy. Some of Pret's changes, below, had been in motion before the crisis, such as delivery and a move into groceries. . Keen to capitalise on the growing shift to online shopping, Pret * PD\" A I1 AMER * started selling its rst ever range of organic ground coffee and espresso beans on Amazon. 0 Pret planned to sell packaged coffee in the supermarket Waitrose before the end of the year, and to sell other pre- packaged items in multiple supermarkets in 2021. 0 With continuing social distancing restrictions, Pret's shops were no longer a place to hang out. In response, "Pret Ofce Drops\"branded drop-off stations installed in ofce buildings, that provided contactless delivery and conveniencewere ENJOY PRET COFFEE AT HOME launched in London, following a New York City pilot. * . Pret started their own delivery service in select locations over the summer. Minimum order sizes of 30 were required for delivery between 8.30 and 9.00 am for their breakfast menu, and between 11:30 am and 12:30 pm for their lunch menu. . In a more radical move, Pret established a socalled \"dark kitchen" in north London to senre deliveries. Plans were to open up to 10 further such production facilities. . Food deliveries are hardly new, but Customer behaviour was changing. Six months into the pandemic, delivery orders from UK restaurants were up 40% on some weekdays, with a 50% increase in breakfast and an 80% increase in lunch orders. In July, Pret had launched \"Dinners by Pret" including hot meals from 7 shops in several cities. Pret had experimented with an evening meal in 2015, but this had been a op. Customers did not embrace a Pret shop as a place to enjoy a Korean barbecue pulled pork hot pot, along a glass of wine, soft lighting and jazz. - Pret had long resisted dealing with third-party delivery companies, as they thought it too risky to leave the brand in the hands of potentially grumpy motorcycle couriers. Pret had partnered with Deliveroo on an experimental basis in 2019, but quickly expanded their delivery options from select locations to Just Eat and Uber Eats during the UK's pandemic lockdown. Within two months, deliveries accounted for 20% of their albeit reduced sales. Customers were charged for delivery in various ways. For example, Deliveroo relied on a dynamic pricing model based on distance up to a maximum of 4.99 per order. Delivery cost as little as 49pand was free for orders over 10for customers signed up to the 1 1 .49- a-month Deliveroo Plus subscription. Restaurants themselves paid a commission plus VAT that could account for around 42% an order's food price. a Greggs and local independent cafes had beneted from the continued work-from-home trend, one that some were predicting would result in a permanent work-habit change. Pret was therefore considering expanding into suburbs. This would mean more directly competing with Greggs' 3.15 and Boots' 3.99 meal deals. In comparison, a Pret sandwich, drink and crisps cost close to 8.00. Pret had done meal- deals in other countries but was adamant it wouldn't do so in the UK, despite being keen to broaden its "posh\" appeal. New subscription model One of Pret's most signicant innovations was the \"YourPret Barista\" All- YOUR COFFEES subscription, announced in the beginning of September. This was inspired \"EA""""5'"""''\"\""" by a similar one by Panera Bread, a U.S. chain also owned by JAB. For 20 a month (with the rst month free) subscribers could receive up to ve hot or cold barista-prepared beverages a day, including all coffees, teas, hot chocolate, iced drinks, frappes, and a limited selection of hand-made smoothies. These had to be picked up in store and ordered one at a time, with a minimum of 30 minutes between orders. Subscriptions were valid for one month, and auto-renewed with no minimum term contract. OR ONLY 20 A MONTH It would only require eight lattes per month, Pret's most popular item, for subscribers to come out ahead. The deal had received much PR, and the customer response was immediate with 16,500 people signing up by 3 pm on the rst day, handily beating the 2,000 to 3,000 rst- day subscribers expected. But only a day later, Pret's me-too competitor Leon introduced a similar coffee- only subscription plan. It only cost 15 a month and covered up to 75 coffees with multiple coffees per order allowed. Looking Ahead In the nal quarter of 2020, Pret faced the problem that the majority of its traditional customers were still working mostly from home, at least part of the time, and not travelling to or through the major transport and ofce-based city centres. Tourists too were scarce, a key customer segment in London. Pret's management team felt it had to take drastic action. The raft of initiatives made some observers nervous, however. Had they tried too much? When haemorrhaging cash, why offer such a steep discount on drinks? What exactly were the long-term objectives of the prescription model? Would third-party deliveries damage customer relationships that had been built on the Pret buzz? Was Pret able to compete with the razor thin margins typical of the more industrial dark kitchens? And how would they realistically access shelf-space in the competitive world of grocery retailing? There were those who felt a watch-and-wait approach was a better option, or those who expressed concern that a business pivot at this point might damage any return to status quo once COVID-19 was under controlonce consumers had settled into a new-normal, whatever that may look like