Introduction
Effectiveness of Pret A Manger’s Business Strategies will be evaluated in this report by applying appropriate theories and models. Strategic management is the process in which companies adopt different strategies to manage their resources and accomplish the targeted goals of the company (Hill, Jones, and Schilling, 2014). In this report, the adopted strategies of Pret A Manger have been evaluated to know the effectiveness of the strategies.
Pret A Manger is a sandwich shop chain in the UK and provides services internationally. The mission of Pret A Manger is to deliver freshly prepared handmade foods and good services to customers. The restaurant has created global demand for its delicious and healthy foods. Products of the restaurant are Sandwiches, salads, sushi soups, coffees and snacks. The restaurant sells 1.4 million coffees in a day (Pret A Manger: 1, 2019). Pret A Manger serves fresh foods to their customers, and the milk and coffee of the restaurant are 100% organic (Pret A Manger: 2, 2019). They never sell unsold foods from the previous day. They offer unsold foods to charity at the end of the day. Pret has 450 restaurants across the world including the UK, USA Hong Kong and Europe (Pret A Manger: 2, 2019). They serve around 300,000 customers every day globally (Pret A Manger: 2, 2019). The revenue of Pret A Manger is £796 million (Verdict Media Limited, 2020). It has 10,000 employees globally (Crunchbase Inc, 2020).
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Applying Porter’s Generic Strategies in Pret A Manger:
Porter’s generic strategies show the ways of enhancing the competitive advantage of a company in its targeted market (Manteghi, and Zohrabi, 2011). Companies follow the segments of the theory and make their competitive position stronger. It also helps Pret to build up a competitive advantage.
The theory has four strategies within it; they are cost leadership, differentiation, cost focus and differentiation focus. The strategy in which companies gain competitive advantage through becoming the lower-cost service provider of the industry (Tanwar, 2013). Differentiation is the strategy where companies produce different products and services than their competitors and differentiate themselves from the rest companies in order to sell with higher costs and increase their profit level highly (Kinyuira, 2014). Cost focus meets the customers’ demand which competitors cannot meet without setting a higher price for the services or products (Moon et al., 2014). Whilst, differentiation focus meet the unfulfilled demand of customers with higher price (Moon et al., 2014). Lacking the model companies may not be successful by selecting only one strategy; therefore have to select two strategies together to become stronger in competition.
Pret A Manger uses a differentiation strategy from porter’s generic strategies. Where other restaurants sell preserved foods, the restaurant provides freshly handmade food and 100% organic milk and coffee to their customers differentiating themselves from other restaurants (Pret A Manger: 2, 2019). They do not sell unsold foods of the previous day the next day and give the unsold foods to charity which increases their reputation. Very few restaurants in the UK serve these types of organic drinks and fresh handmade foods like Pret.
Value Chain Analysis of Pret A Manger:
The set of movements conducted for creating a value chain by an organization in order to attain competitive advantage is called value chain analysis (de Souzaand Márcio de Almeida, 2013). Inbound logistics, outbound logistics, operations, service and sales and marketing are the stages of value chain analysis (Bolwig et al., 2013). Companies can deliver value for the money of customers by applying the segments of value chain analysis. By creating value for customers’ money, the model helps companies to accomplish their competitive advantage. Lacking the theory is it breaks operations into many segments that organizations lost their whole strategy and vision (Gereffi, and Fernandez-Stark, 2011).
Customers get fresh handmade foods including 100% organic coffee and milk from Pret A Manger that create value for customers’ money because these foods are healthy and have less impact on health (Pret A Manger: 2, 2019). Customers get fresh foods and organic drinks which is one of the key reasons for getting so many customers. Creating value for customers by providing healthy and delicious foods reveals the concept of a value chain. Pret maintain its supply chain management effectively and ensures receiving good raw material and consuming all the raw materials by the end of the day reveals to the inbound logistics segment. Chefs, sales employees and other members of Pret do their daily jobs and provide the best foods and drinks to customers which reveals the operations segment. The restaurant serves food from 450 restaurants across the world which is the outbound logistics of Pret A manger (Pret A Manger: 2, 2019). The restaurant provides free Wi-Fi services for the customers to attract them which refers to the marketing and sales segment of value chain analysis. The restaurant ensures good customer service and treats their customers well, such as they providing free drinks to customers. Pret Manger maintains positive relations with their employees and within the departments such as finance, sales and marketing, etcetera. Pret A Manger ensures online delivery through deliveroo, JUST EAT and Uber Eats in the UK that reveals to the use of the technology development segment of value chain analysis (Pret A Manger: 3, 2019). The procurement activity of the restaurant is purchasing coffee beans, fruits and many food ingredients.
Porter’s five forces model of Pret A Manger
Porter’s five forces model analyses the position of an organization within its competitors and shows an organization the way to be prepared for the competition and compete strongly (Indiatsy et al., 2014). The segments of porter’s five forces model:
The first segment of the model, the threat of new entrants, reveals the level of the influence of new entrants to an organization (Pringle, and Huisman, 2011). The influence of substitute products and services of a company has been identified in the segment of the threat of substitutes (Wu, Tseng, and Chiu, 2012). The bargaining power of buyers reveals to the power of buyers to bargain for the price of an organization’s services and products, and companies take initiatives to minimize the bargaining power of buyers (Hove, and Masocha, 2014). The bargaining power of suppliers reveals the level of suppliers’ power to influence a business and its operations (Lee, Kim, and Park, 2012). Competitive rivalry indicates the level of competition that a company face in the targeted market. Lacking porter’s five forces model is it does not provide summarizing picture of the competition (Indiatsy et al., 2014).
The threat of new entry is lower for Pret A Manger because of the brand image they have built. The quality of their fresh handmade foods and organic drinks is the result of their food innovation which will be tough for new entrants to produce. The threat of substitutes is higher for Pret A manger because there are many substitutes for their foods, and they have to take develop their foods to beat the substitutes. Fewer suppliers provide quality raw materials which increase the power of suppliers for Pret A Manger; therefore, they have to maintain good relations with them to get quality raw materials always. The bargaining power of buyers is lower than Pret A Manger because very few restaurants provide fresh handmade foods and organic drinks that the restaurant provide. Starbucks, White Castle, Krispy Kreme and Greats are the key competitors of Pret A Manger and the restaurant face higher competition (Comparably, 2020).
Ansoff’s growth matrix of Pret A Manger:
Companies ensure their growth by conducting the strategies of Ansoff’s growth matrix according to their organizational objectives (Hussain et al., 2013). It has four strategies: market penetration, market development, product development and diversification.
The first strategy of Ansoff’s growth matrix is market penetration which reveals the way where companies take significant initiatives to increase their sales of current products and services in the current market (Taylor, 2012). Market development reveals the process of entering a new market with current products and services to capture the new market (Kipley, Lewis, and Jeng, 2012). Product penetration is the way of developing current products and services or inventing new products or services for the current market to generate high revenue (Prasad, 2014). Differentiation reveals the way of entering a new market with new products or developed products (Hussain et al., 2014). Lacking the model is Ansoff’s growth matrix is an old model therefore, it is not compatible with the modern business world (Hussain et al., 2013).
Pret A Manger follows market penetration from Ansoff’s growth matrix. It takes a different types of initiatives to increase sales in the 10 countries they have a business, such as UK, USA, Singapore, Germany, Denmark, Switzerland and others (Pret A manger: 4, 2019). It has started providing online delivery through deliveroo, UberEats and JUST EAT to capture the online freak customers who like to enjoy food at the home or wherever they want (Pret A Manger: 3, 2019). It also provides free Wi-Fi connection to customers in order to attract them to their restaurants. Pret A Manger also conducts product development to generate higher revenue. Their food innovation has made it possible to make organic coffee and milk for customers. The restaurant has developed unique vegetable dishes also, and that makes them capable of opening their first veggie shop in 2016 in the UK (Pret A Manger: 1, 2019).
Use of Experience Curve in Pret A Manger:
It is the model through which companies ensure the utilization of employees’ experience and attain their organizational goals (de La Tour, Glachant, and Ménière, 2013). Companies become successful in reducing costs and provide lower costs services which enhance their competitive advantage.
Adapted from: Policonomics, 2017; Experience Curve
Pret A Manger applies experience curve to ensure proper utilization of employees’ experience. They arrange training and development programs to enhance their capabilities and increase their experience. They maintain positive employee relations to retain employees and conduct employees’ benefits programs to retain them. For instance, Pret A Manger gifted £1,000 each to their employees for their contribution and hard work (The Guardian, 2018). It refers to the adaptation of the experience curve in the restaurant.
The usefulness of the strategies that Pret A Manger uses:
Pret A Manger has made the outstanding image in customers’ minds through differentiation: Differentiation is the most effective strategy for gaining a competitive advantage because customers are ready to pay higher prices for the products and services which are provided by fewer companies. Pret A Manger provides freshly handmade foods and 100% organic drinks such as milk and coffee for their customers which are tough to find in the UK (Pret A Manger: 2, 2019). Competitors of the restaurant often provide preserved foods and refrigerated foods to the customers. Therefore, health-conscious customers who do not like preserved or refrigerated foods are the customers of Pret A Manger. The delicious, healthy and fresh foods and drinks of the restaurant attract customers them which makes their position stronger among their competitors. Customers visit to the restaurant and ensure the repurchase of their foods, that have increased the sales of Pret, and the restaurant generates revenue of £796 million (Verdict Media Limited, 2020).
Pret A Manger becomes able to deliver great value to the customers through value chain analysis: Through inbound logistics, the restaurant ensures that they get good raw materials such as coffee beans, fruits, vegetables and other food ingredients daily from their supply chain management. By using quality raw materials, the restaurant makes healthy and delicious foods that bring 300,000 customers to their restaurants across the world (Pret A Manger: 2, 2019). Chefs, sales employees and other members of Pret A Manger ensure quality services by doing all the operations successfully that increase customers’ satisfaction and increase the revenue of the restaurant. The restaurant distributes its food through the 450 restaurants in the countries they have services; therefore people of the countries get the food from the restaurant and purchase which increases global revenue (Pret A Manger: 2, 2019). Pret A Manger provides the best customer services and provides free food and drinks to the customers who are regular that increases customers’ loyalty. They maintain food relations within the departments and manage human resources properly which boosts up their growth. Online delivery through deliveroo, JUST EAT and Uber Eats in the UK increases profit levels by targeting tech-savvy customers (Pret A Manger: 3, 2019).
The restaurant took significant steps to compete in the market strongly by identifying its competitive position with porter’s five forces model: Porter’s five forces analysis has shown that Pret A Manger has the lower threat of new entrants because they have invented 100% organic coffee and milk through their food innovation which is tough for new companies to provide because of limited budget and less experience (Pret A Manger: 2, 2019). The restaurant also provides handmade fresh foods, which new entrants will not be able to produce like the restaurant; therefore, customers purchase their foods regularly. The restaurant identified the higher power of suppliers, and they maintain positive relations with their suppliers to get quality raw materials through which they make fresh foods and organic drinks. Buyers have a lower price because of the fresh foods and organic drinks and Pret A Manger work to maintain the quality of their foods to keep buyers’ power lower. Customers get the best food and drinks which is why they keep visiting the restaurant. The restaurant has adopted new marketing strategies such as: starting online delivery and providing free Wi-Fi in restaurants and other steps to attract more customers than competitors. (Pret A Manger: 3, 2019).
They have increased their sales in current markets through a market penetration strategy: Pret A Manger has taken become able to increase their sales in the countries where they have business, including the UK, through adopting a market penetration strategy from Ansoff’s growth matrix. The restaurant conducts market penetration for the 10 countries such as the UK, German, Switzerland, Belgium and others to boost their sales (Pret A Manger: 4, 2019). They utilize social media campaigns as their key marketing channel and respond to all the queries of customers in social media (Reed Exhibitions, 2020). It helps them to attract a huge amounts of customers through social media because most mature people from all countries use social media. Pret A Manger can advertise their foods and inform the customers about their offers through social media, which brings a huge amount of customers toward them. They have started providing online service through deliveroo and another online delivery channel in the UK (Pret A Manger: 3, 2019). It had increased their sales more than before because the customers avoided Pret A Manger because they prefer to have food in the place where they like. By providing free Wi-Fi services in restaurants, they attract young customers who also boosts revenue.
Pret A Manger has created their demand globally through applying product development: The food developer of Pret A Manger work hard to invent new foods and bring new tastes with health benefits for the customers of all host countries. The effort of the food developers of the restaurant has made it possible to deliver 100% organic coffee to the customers in all outlets (Pret A Manger: 2, 2019). Therefore, the restaurant is capable of selling 1.4 million coffees every day globally, which refers to the great demand for organic coffee (Pret A Manger: 1, 2019). Sales of organic coffees have increased the revenue of the restaurant because the coffee has less health impact and customers have the coffee without any worry. The food developed ensure developed healthy and delicious foods for the customers that bring higher revenue to them. As a result, Pret A Manger had a revenue of £796 million in 2019 (Verdict Media Limited, 2020).
Pret A Manger increase employees’ experience through experience curve: Pret A Manger increase employee retention by ensuring better employee management, providing them with all facilities and giving them the scope to increase their capabilities. The facilities they provide make employees highly satisfied, that increases employee engagement. Pret A Manger gifted 1,000 for their outstanding contribution and that type of initiative encourage them to give their hundred per cent to the restaurant (The Guardian, 2018). It helps Pret A Manger to reduce different types of additional costs, and customers get outstanding services that ensure higher revenue.
Conclusion & Recommendations:
Pret A Manger applies different types of theories and models to ensure their business growth. Ansoff’s growth matrix shows them the effective way of targeting growth, and the restaurant applies market penetration and product development from the model. Market development and product development is playing a great roles in boosting their sales in the host countries including the UK but the restaurant can target market development. Market development means entering a new markets with current products, and Pret A Manger should choose a potential market to enter and increase profitability. It is found that the restaurant applies a differentiation strategy from Porter’s generic strategies. They have differentiated themselves from the competition by providing fresh handmade foods and organic coffee and milk. A few restaurants provide these type of healthy foods therefore health-conscious customers purchase the foods of the restaurant, and the sales of the company increase. Pret A Manger should adopt a cost leadership strategy with differentiation to capture more customers toward them. There are many customers who do not purchase the foods of Pret A Manger for the price; therefore, cost leadership will make sure that the customers also purchase the foods of the restaurant. It will increase their sales drastically across the countries they have outlets. From the value chain analysis of Pret A Manger has revealed that the restaurant does all kinds of operations properly to deliver value to the customers that ensure higher growth but they have to promote their foods more and inform customers about the foods. It will bring the customers who do not know about Pret A Manger or the customers of the competitors of the restaurant. With the help of Porter’s five forces analysis, Pret A Manger has become aware of the higher competition they face in the market and higher threats of suppliers and substitute products. As a result, the restaurant has taken many effective steps to compete strongly, such as: focusing on social media campaigns, online delivery, innovating new foods and starting only veggie restaurants and other steps. It will help them to beat competitors and make a higher profits than the competitors. Pret A Manger should develop their current foods and ad a new menu to get more customers and attract the competitors’ customers in order to foster their business growth. They have to maintain constructive employee relationships to ensure outstanding performance and give them all facilities to increase retention rate that will help them to increase profit through reducing additional costs.
References:
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