Pret A Manger founder and Itsu CEO urges people to stop overreacting to high-interest rates.
Pret A Manger founder and Itsu CEO urges people to stop overreacting to high-interest rates.
Rising Costs and Consumer Impact on the Restaurant Business

When it comes to running a restaurant business, the challenges are ever-present. From managing operations to satisfying customers’ appetites, restaurant owners face a myriad of hurdles. However, in recent years, the rising costs in the industry have added even more weight to their shoulders.
Julian Metcalfe, the founder of popular restaurant chains Pret and Itsu, has witnessed the ups and downs of the business firsthand. Metcalfe reminisces about the early days of Pret, when interest rates were through the roof. “Everyone’s complaining about 5% and it’s the end of the world,” he chuckles, “back then, I remember we paid 14%.”
Metcalfe’s restaurants have flourished over the years, with Pret boasting over 600 stores worldwide and Itsu gaining popularity with nearly 80 locations in Europe. However, the increasing costs in the industry have made operating in the restaurant business more challenging than ever.
The impact of rising costs extends beyond the borders of the United Kingdom. Inflation has soared, with prices rising by 7.9% in June compared to the previous year. Although this figure shows a slight improvement from May’s 8.7%, it remains well above the Bank of England’s 2% target. Grocery bills have reached record highs, exacerbating Britain’s cost of living crisis and impacting the cost of restaurant ingredients.
To cope with these challenges, many food and beverage companies have resorted to passing on the increased costs to consumers. Domino’s U.K. successfully raised prices on its pizzas, while Heineken faced difficulties when attempting to do the same with its beers. This trend continues as Pret, now under the leadership of Pano Christou, increased the prices of its coffee subscriptions by 20% earlier this year.
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Interestingly, Itsu has taken a different approach. Julian Metcalfe explains that the company has managed to avoid drastic price increases. “If your business is inefficient, really inefficient, the only way to handle it is to put your prices up,” he remarks. “At Itsu, we’ve managed not to do that. Our prices have gone up by a tiny bit, but not much.”
Fortunately, there are signs that prices may be stabilizing. In June, food prices rose by 17.3%, down from 18.3% in May. Additionally, restaurant inflation decreased from 10.3% to 9.5% during the same period. Although this may not result in immediate price reductions, it does offer hope that further increases can be avoided.
For the restaurant industry, this potential stabilization of prices could bring much-needed relief. Lower ingredient prices would alleviate some of the financial burden, allowing businesses to focus on delivering exceptional dining experiences rather than constantly adjusting their pricing strategies.
Despite the challenges and rising costs, Julian Metcalfe maintains a positive outlook for the future of the restaurant business. He acknowledges the changes and difficulties but remains committed to providing customers with quality dining experiences at reasonable prices.
As the industry adapts and evolves, it is essential for businesses to find innovative ways to navigate rising costs while keeping their offerings accessible and appealing. The ability to strike a balance between cost management and customer satisfaction will be the key to success in an ever-changing economic landscape.