Itsu boss Julian Metcalfe speaks out

After 500 SMEs challenged the 50p tax rate, sandwich and sushi magnate Julian Metcalfe tells MT that he doesn't like it, either...

by Elizabeth Anderson
Last Updated: 06 Nov 2012
'Taxing people who work very hard more and more is a hideous mistake. It's incredibly naïve and it's weak. The people who need to build businesses and somehow find the confidence to create jobs are not the same people you need to penalise', he told MT.

The 50p tax rate was introduced in April 2010, and was directed at those earning more than £150,000. But it was always meant to be a short-term measure and, as the budget is announced later this month, pressure is growing against George Osborne to drop the tax which has upset entrepreneurs the most. 'This is not like taxing cigarettes. Cigarettes are bad for you. Employing people is not bad', Metcalfe says.

Julian Metcalfe founded sandwich chain Pret a Manger in 1986 with Sinclair Beecham after taking out a £17,500 loan. The pair sold most of the company to a private equity firm and Goldman Sachs in 2008 for an undisclosed sum. Profits at the posh sandwich chain were £46.1m last year - a 37% increase on the year before.

In recent years, Metcalfe has focused more on his other business - sushi chain Itsu, which he started in 1997. Itsu's latest results show a turnover of £26m and profits of £640,000. Whilst still a fraction of what Pret is making, Metcalfe has big plans for Itsu. His next step is to branch out into serving evening meals. Within the next two months, five Itsu outlets will stay open later in to take advantage of people looking for a cheap dinner in the capital.

'There's almost nowhere you can eat in London for less than £10, unless it's fast food,' he says.  Itsu, which has around 40 shops in London and sells sushi, soup and rice dishes, is currently a favourite for city workers looking for a quick lunch. Currently the stores close at around 7pm but Metcalfe wants to extend the closing time to 10pm.

He's hoping the chain will appeal to those who want an affordable but healthy meal out. 'Many of the dishes will be under £5. The cheapest is £3.29. We've got a whole new menu', he says.

Of course, the challenge will be turning it into a profitable business. With rents averaging £4,000 a week for a shop in London and overheads high, that probably explains why restaurants have found it difficult to dish up cheap dinners. But Metcalfe's focusing on the long term: 'Of course it's achievable, it just hasn't been done before. And yes it will be profitable - just. It took years for Pret to make a decent profit. Now its making millions.'    

- Julian Metcalfe will be interviewed in April's edition of Management Today

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