Pret A Manger reinvented the office lunch. The upmarket sandwich chain was launched in 1986 and, according to founders Julian Metcalfe and Sinclair Beecham, was a response to the UK's "limp and horrible" sandwiches.
But last month the business reported a £20m loss and critics have laid the blame at the feet of an aggressive expansion drive into the Far East and US. As a result of the loss, the company has closed seven of its 22 New York outlets and several in the UK.
Pret's overseas expansion began in 2001 when McDonald's bought one third of the business. The deal was met with some hostility: how could a brand that prides itself on quality ingredients and treating its staff well get into bed with one that has been accused of exploiting staff, serving up second-rate meat and throwing around its litigious weight?
While the British business is still making money, profits halved from £3.6m to £1.8m last year. And Metcalfe, who returned to the helm of the business in March, is nothing if not obsessive about detail.
He admits that the overseas expansion has been "far too bullish" and voices frustration at the fact that Pret was planning to open in China when it still does not have a presence in Wimbledon, Bromley or Kingston.
Metcalfe also announced that the company will be moving into Starbucks and Costa territory. Last month he said their massive popularity had "paved the way for us to open 200 or 300 of what we will call Pret Cafes".
Pret must also guard its core market, which has opened up further to competition. Its closet rival is Subway, which now has 150 outlets, overtaking Pret's 132. That is growth of 112% since 1999 for Subway, compared with 52% for Pret.
Marketing asked Samantha Smith, former McDonald's and Burger King marketing director and senior vice-president of marketing at agency Digitas, and Mark Lund, co-founder of Delaney Lund Knox Warren and head of the Burger King account, for their views on the brand.
Number of specialist sandwich shops in the UK
2003 2001 1999 % chng
Subway 150 53 38 112
Pret A Manger 132 111 80 52
O'Briens 104 62 30 74
Benjys 53 42 30 23
Eat 25 18 - -
Pret A Manger's response to "limp" sandwiches in 1986 was a revelation.
Given the market at the time, it was a brave positioning and needed the passion and commitment of the founders to make it happen. Pret made Marks & Spencer's sandwich quality look second-rate.
And now it has taken that vision overseas.
Is its global aspiration flawed? I don't think so. Short-term losses are inevit-able when you invest, as are mistakes with locations - even McDonald's closes restaurants that are not performing. And what about product? BSE taught the fast-food market it could no longer rely on burgers, fries and soft drink. Product development rose to the top of the agenda.
Equally, while consistency of a product globally helps to reinforce the brand, there have to be local variants. Pret has always been innovative with its sandwich fillings, so it will be interesting to see how it evolves this strategy in new markets.
But how one translates the fresh-sandwich story into Pret Cafes will be a challenge, given the single-product coffee focus of Starbucks and its increasing penetration of the UK market.
When Pret A Manger entered the market, its brand proposition looked fantastically different and crisp. But now it has gone a bit limp, as if the founders have taken their eyes off it, which they had, until Julian Metcalfe returned to front the business in March.
The situation has been exacerbated by the fact that Pret is a brand that the world looks up to. The problem is that if the leader ceases to lead, consumers get disappointed more quickly.
Pret has created a rod for its own back. If it had set itself lower standards, people would have been happier with it for longer.
The other issue is that the business needs to make its shops more welcoming and the change in that direction is a good thing.
The brand now feels very cold by comparison with cafe culture. Its steel, wood and plastic decor means that almost everything at Pret is hard, except the sandwiches. The other exception to that is its staff, who are warm and friendly. But when the average transaction is so short and simple, they don't have much chance to demonstrate their excellence.
- 'Fresh and different' sandwiches are still an attractive proposition and the concept should be evolved to reflect new markets.
- What will differentiate Pret Cafes and act as the hook for Starbucks and Costa customers?
- Is it time for closer 'touchpoints' with customers? The internet could enrich the in-store experience and build relationships in areas such as the corporate sector.
- Pret must increase the propensity for customers to dwell.
- It should stress that food is prepared on the premises by having display kitchens. At Carluccio's Cafes,the sight of food being prepared acts as a spur to eat there.
- It must be less coy about the calorific and fat content of products. This information is important to its target market, many of whom will be on diets such as Atkins.