JAB Holding Co. continues its string of top-ticket restaurant acquisitions. The parent company of Krispy Kreme, which bought Panera Bread for $7.5 billion in July, announced May 29 that it plans to purchase British sandwich chain Pret A Manger. Terms of the deal were not officially disclosed, but The Wall Street Journal pegs it for around $2 billion, including debt, according to a source familiar with the deal. Privately held JAB, also the owner of Caribou Coffee, Keurig Green Mountain, Einstein Noah Restaurant Group, Inc., and Peet’s Coffee & Tea, struck the agreement with private-equity company Bridgepoint Advisers Ltd. The transaction is expected to close during the summer.
McDonald’s Corp. took a 33 percent stake in Pret back in 2001, an effort that turned sour for both parties. Pret expanded with 14 stores in Japan and was soon on the verge of bankruptcy, forcing the chain to trim costs. McDonald’s then sold its stake to Bridgepoint in 2008 at a price of about $265 million in a deal that also included additional shares.
Pret was founded by Julian Metcalfe and Sinclair Beecham in 1986 as a single London location serving Italian-style sandwiches. It grew across Britain and opened a New York outlet in 2000. There are 530 stores worldwide, including 92 in the U.S., 26 in Hong Kong, 24 in France, two in China, two in Dubai, two in Denmark, one in Singapore, and one in the Netherlands. The brand offers ready-to-eat items, made in an on-site kitchen, with a heavy focus on healthy and responsibly sourced ingredients, like protein pots and salads. There are some vegetarian-only locations as well. Pret serves more than 300,000 customers per day, the company said, with group revenues of $1.17 billion. The food doesn’t have a "sell-by" date. Pret offers unsold food to charity at the end of the day, including 3.4 million food items in 2017.
“This is a day of celebration at Pret. This agreement recognizes the hard work of all our amazing teams around the world. Bridgepoint has been wonderful owners of the business for more than a decade,” Pret a Manger CEO Clive Schlee said in a statement. “All of us at Pret believe JAB will be excellent long-term strategic owners. JAB believes in Pret’s values and supports our growth plans. I am really looking forward to this next chapter of Pret’s story.”
Also, in an article published by the BBC, Schlee said a £1,000 bonus ($1,327.68 U.S.), will be paid to all employees on payroll during the week the deal completes. “It's serendipity for those who have just joined,” he said.
According to The Wall Street Journal, Pret is expected to accelerate U.S. expansion under the deal. JAB could leverage its coffee expertise to drive growth. Pret has posted 10 straight years of sales and earnings growth since being acquired by Bridgepoint. While not a publicly reporting company, The Wall Street Journal said a source familiar with its financial performance credits $1.2 billion and more than $130 million in profit from sales in 2017.
“I am also pleased to say that 2017 was another year of solid results for Pret, and we achieved our ninth consecutive year of like-for-like sales growth. The brand continues to thrive around the world thanks to our simple recipe of freshly prepared food, served by genuinely engaged teams,” Schlee added.
In addition to Panera, JAB has had a busy year. The chain unveiled in January that it would pay $26 billion to purchase Dr Pepper Snapple Group Inc., adding to its growing beverage empire. JAB brought Keurig Green Mountain into its portfolio in late 2015 for $13.9 billion.
Luxembourg-based JAB has controlling stakes in Coty and Jimmy Choo as well, among other companies.
“Pret has a unique culture and is a great British success story. We’re proud of what we’ve achieved over the last 10 years with Pret and its management team,” William Jackson, Chairman of Pret and managing partner of Bridgepoint, said in a statement. “This has been a successful investment for Bridgepoint and illustrates how private equity, investing for the long term and working with talented management can deliver strong growth for the benefit of all stakeholders: customers, employees and suppliers and create real value for the wider economy. I wish Pret and its team continued success for the future.”