Le Pain Quotidien has become the second major bakery chain to say that the cost of rents is a major downside of running a business in central London.
Belgian food entrepreneur Alain Coumont, who founded the chain, is quoted in the Daily Telegraph as saying: “The rent is really crazy. I don’t know how it can continue to rise. The way the real estate market is structured in the UK - there are very few landlords. Sometimes the same one owns a whole street. The rent structure here is unlike anywhere else in the world.”
“When we first came to London, less than 10% of our sales went on rent. Now it’s typically around 17%. The problem is, you sign a lease for five years, then there is a rent review and landlords will point to other commercial tenants in the street paying more than you, and put the rents up.”
LPQ, founded 25 years ago, has 250 outlets across 19 countries, with a presence in cities including New York, Mexico City and Paris.
The private company has just opened its first store in Dublin, and is about to sign another lease in the Irish capital.
In London, there are now 25 sites, after Le Pain Quotidien opened its first store in Marylebone high street a decade ago.
The firm’s newest opening, in Fulham, offers new dinner options alongside evening entertainment such as jazz gigs.
In Le Pain’s St Pancras store, the rent bill is a fifth of annual sales – although Coumont says that with annual sales of around £5m, it is the most profitable post in London.
LPQ’s UK arm saw sales increasing 10% last year on turnover of £34m, according to the latest accounts filed to Companies House.
Gross profit margin rose two percentage points to 19.3% in the year to December, although operating profit almost halved to £537,000 due to costs associated with store expansions.
Meanwhile, Greggs’ chief executive said in August that the retailer was avoiding opening sites in central London because of high rent prices.
Roger Whiteside, chief executive of Greggs, said: “London’s going strong but we’ve still got a problem in zones one and two because we simply cannot afford those rents and keep our prices low. I can’t see that changing any time soon.”
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