Pret A Manger warns higher costs and tax rise are putting hospitality under 'intense strains'

Pret A Manger’s chief executive has warned that rising operating costs and a recent National Insurance increase are placing "intense strains" on the hospitality sector, saying the tax rise alone cost the business £15 million.

Pano Christou told media the company had taken "disciplined decisions to protect sales" but that vendors were struggling as costs rose. Pret reported total sales slipped 4.2% to £868.4 million for the year to Jan. 2, a performance Christou described as growth in difficult conditions.

Christou criticised the effect of Westminster tax policy on the business, saying the National Insurance rise introduced by Chancellor Rachel Reeves had directly increased Pret’s costs by about £15 million. He said the group made strategic choices during 2024 to protect sales and margins amid what he termed "intense strains on the hospitality industry."

Helen Dickinson, chief executive of the British Retail Consortium, said retailers were approaching the traditional "golden quarter" of trading with caution. Dickinson noted the later-than-expected Budget, set for Nov. 26, would fall just days before Black Friday and that speculation about tax changes could dampen consumer confidence and spending in the run-up to Christmas.

"With the later-than-expected Budget falling just days before Black Friday, many are uneasy about how consumer confidence and spending could be impacted by tax rise speculation in the run-up to Christmas," Dickinson said, calling on the government to act to shore up both consumer and business confidence.

Analysts say the hospitality sector has been navigating several cost pressures, including increased labour costs, supplier price rises and higher taxes, which can squeeze margins for chains with large retail footprints. Pret’s sales decline for the year to Jan. 2, however, came after a period in which the company expanded and implemented measures it said were designed to protect sales.

Retailers and hospitality operators now face a crucial autumn and winter trading period that historically accounts for a large share of annual revenues. Industry trade bodies have urged clarity from government on fiscal measures and support to sustain consumer spending over the holiday season, pointing to the potential knock-on effects of policy uncertainty on staffing, pricing and promotional strategies.

Pret’s comments echo broader industry warnings about tighter margins and cautious consumer spending as companies prepare for the busiest months of the year. The firm and trade groups said they will continue to monitor the impact of policy changes and seek to balance cost pressures with customer demand as the period of peak trading approaches.