What's happened
Several major UK food and beverage brands report financial losses amid rising costs and industry pressures. Pret a Manger plans to test meal deals to boost sales, while Tesco and others increase prices. Meanwhile, the parent companies of Pret and Costa face impairments and potential sales, reflecting broader economic challenges.
What's behind the headline?
The financial struggles of Pret and Costa highlight the broader challenges facing the UK food and beverage sector. Pret's impairment and losses reflect a significant reassessment of its brand value amid economic uncertainty and rising costs. The company's move to test meal deals signals a strategic shift to compete with supermarkets on value, aiming to revive sales and profitability. However, the scale of impairments suggests that Pret's recovery will be slow and dependent on successful international expansion and cost management.
Meanwhile, Coca-Cola's consideration of selling Costa underscores the difficulty high street chains face in maintaining profitability. The potential sale at a valuation nearly half of the purchase price indicates industry-wide pressures, including rising coffee bean prices, wage increases, and competition. The UK sector's reliance on price hikes and value offers like meal deals will likely intensify, with supermarkets and chains vying for consumer loyalty amid inflation.
Overall, these developments suggest a consolidating industry where brands must innovate and adapt quickly to survive. The focus on international growth and value offerings will be crucial for Pret, while Costa's future remains uncertain, potentially reshaping the competitive landscape of UK coffee and food-to-go markets.
What the papers say
Bloomberg reports Pret's impairment of £553 million and its ongoing restructuring efforts, emphasizing the company's financial challenges and strategic shifts. The Guardian highlights Pret's plan to test meal deals as a response to industry pressures and declining valuations, with CEO Pano Christou emphasizing value-driven growth. Bloomberg also notes Coca-Cola's consideration of selling Costa Coffee, which has struggled with rising costs and industry competition, with potential sale valuations significantly lower than the original purchase price. The Independent provides context on the broader cost inflation impacting UK food companies, including increased wages and commodity prices, which are squeezing profit margins across the sector. These contrasting perspectives underscore the industry's complex financial landscape, with some brands seeking growth through innovation and others facing potential sale or exit.
How we got here
Pret a Manger, acquired by JAB in 2018, has faced declining valuations and losses, including a £553 million impairment in 2024. The company has been restructuring, reducing staff, and expanding internationally. Meanwhile, Costa Coffee, owned by Coca-Cola since 2018, is reportedly being considered for sale due to industry pressures and declining valuation. The UK food sector is grappling with rising costs, including higher wages and commodity prices, impacting profitability across multiple brands.
Go deeper
Common question
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What is Pret a Manger testing with their new meal deals?
Pret a Manger is launching a new trial of meal deals in late 2025 as part of its strategy to boost sales and compete more effectively with supermarkets and other high street chains. This move comes amid financial challenges and a need to attract more customers with value offers. Below, you'll find answers to common questions about this new initiative and what it could mean for the industry and consumers.
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