Who's the bread winner?

It's 1pm in Pret A Manger on Oxford Street and stress levels are rising. There are terse murmurs of 'Excuse me' and 'Sorry' as ravenous customers elbow their way to prime position, desperate to get their hands on the few remaining rocket and crayfish sandwiches perched, tantalisingly, at the back of the shelf. Not for this lot the M&S chicken tikka or Subway's chicken teriyaki with sweet onion sauce. Today they've chosen Pret but tomorrow it could be a different story, such is the capricious palate of London's lunchtime eater.

The choice out there is dizzying, meaning that the humble sandwich has become the most fiercely contested prize in London's food economy. 'For the sandwich makers, it's war,' says Jim Winship of the British Sandwich Association. And in this war, the tricks are getting dirtier - which is why you'll find characters like James frequenting all the chains. You could call James a sandwich saboteur, although he prefers the term 'researcher'. 'I go round and find out what sandwiches are on special offer that day, which ones are popular and what they cost.' He passes on the information to rival chains, who adjust their displays to undercut their rivals.

James's tactics can also be more hands-on. 'I'm told which is a particular chain's bestseller and I have to make sure that it runs out.' How? 'I buy a load of sandwiches just before the lunchtime rush or push them to the back of the shelves. It's pretty crude but it works.' No doubt. There is nothing more irritating than discovering your favourite sandwich has run out. As a consumer, you'll think twice about returning, a triumph for the rival chain.

The British sandwich industry is currently worth £3.3 billion. Not bad for a snack that was invented by accident in 1762 by John Montagu, the 4th Earl of Sandwich, who called for cold meat slapped between sliced bread so that he wouldn't have to leave the gambling table to eat. Three centuries later, we consume more than £100 million-worth of them each day in London alone.

Now, however, the London market is saturated with competitors, all battling for our lunch money. In one corner we have the long-established British players Marks & Spencer and Pret A Manger and, more recently, the rapidly expanding Benjys. But now big US companies are muscling in for a slice of the profit, particularly Subway, which now eclipses McDonald's in the US and hopes, through aggressive expansion tactics, to do the same here.

And the rivalry from American coffee bars is fierce: Costa Coffee sells one million sandwiches a week in London. Rising demand for sandwiches has prompted Coffee Republic to convert its coffee bars into Republic Delis. Then there are the supermarket chains with their new smaller stores - Tesco Metro and Sainsbury's Local. Even the fast-food giants are competing: at McDonald's on Oxford Street the menu describes all its burgers and, curiously, Filet-OFish and Chicken McNuggets as 'sandwiches'. 'When the mighty all-American burger wants to be a sandwich, you know our national snack is hot,' says Peter Bartlett, a sandwich consultant who runs firms which have made more than two million sandwiches for Marks & Spencer. (He loves the business so much that the personalised number plate of his Mercedes is BLT - as in bacon, lettuce and tomato.)

Competition is fierce and at the moment, the market shows no sign of slowing down. In the past year alone the market has expanded by seven per cent and sales have increased from £422.6 million to £456.9 million. Earlier this year, Greggs, the UK's biggest baker, voiced doubts that the market could continue to expand. 'It can't keep growing at those kind of levels,' says MD Sir Mike Darrington. 'Otherwise everyone would be eating sandwiches for each meal every day.' Which is why the battle between giant US corporations and established British businesses is getting more desperate; with little room for expansion they're all competing for a market share. So war it is. But who's winning?

Its clothing sales may be slumping but Marks & Spencer still leads the field, selling over a million sandwiches a day in London. Benjys is marching ahead with its low-priced snacks and Atkins-friendly ranges: the number of Benjys stores in London will have increased by 30 per cent by the end of the year, generating a turnover of £40 million. Owned by venture capitalist EC1, Benjys has invested £1 million in creating its franchised mobile sandwich vans, selling sandwiches to thousands of office workers.

In contrast, Pret A Manger went a little curly at the edges after over-expansion in the US and Asia, losing £20 million in 2002. But now it is catching up with the Starbucks generation, shedding the bright steel interiors and spending £50 million on sleek dark wood, leather banquettes and suede cushions, with artwork by Diesel fashion designer Joakim Jonason. It is relaunching its sandwiches by reminding customers that they are handmade on site, and hopes to be perceived as unique and slightly quirky: one product (a 'pork scratching-based snack') about to be launched has a personal message from founder Julian Metcalfe saying, 'This is absolutely disgusting. You either love it or you hate it.'

Takings in the three refurbished Pret Cafés are already up 40 per cent. Another ten will be revamped in this manner and a further 70 Pret takeaways will also be given the new softer, mellow look. Along with five brand-new stores, there will be 110 Pret outlets in London by 2005.