LONDON McDonald’s Corp. is completing its retreat from the diversification strategy of a prior management regime by divesting its 33-percent stake in Pret A Manger, the British grab-and-go chain that never pushed beyond its U.S. beachhead of a few stores in New York City.
The concept’s intended buyers have promised to increase that presence by 50 percent during 2008.
Acontrolling interest in Pret, which features organic and “all-natural” selections, is being sold by founders Sinclair Beecham and Julian Metcalfe to Bridgepoint Capital, a European private-equity firm. Goldman Sachs is reportedly buying a minority stake.
The announcement from Bridgestone said McDonald’s “will no longer be part of the business” after the deal closes, without specifying if the burger giant was selling its stake to Bridgepoint, Goldman or some other minority investor.
Pret, after talking for years about blitzing the U.S. market, currently has only 14 stores on this side of the Atlantic. All are believed to be in New York.
The 22-year-old chain has 175 shops in the United Kingdom and 11 in Hong Kong.
Bridgepoint said it intends to increase the chain’s presence in the United States by opening seven more stores in New York this year. It pledged to open at least 23 elsewhere in the world. Its statement on the deal described the New York stores as “already profitable.”
It pegged Pret’s worldwide sales during 2007 at about $439 million.
McDonald’s bought its interest in Pret in 2001 for an estimated $50 million. The deal was part of an acquisition effort undertaken by then-chief executive Jack Greenberg, who was looking for a younger brand to offset the slumping performance of McDonald’s namesake U.S. operations. In a diversification tear, the company acquired Donatos Pizza, Boston Market and Chipotle Mexican Grill, and bought stakes in the Fazoli’s quick-pasta chain. The franchisor and its franchisees also experimented with new concepts of their own creation, like McDonald’s with the Diner Inside, McCafe and McStop, a convenience center.
Virtually all have been sold or shut down, leaving the 33-percent stake in Pret as the burger giant’s lone remaining restaurant diversification.