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Little Chef brand under threat as fast-food rivals line up as potential buyers

Little Chef brand under threat as fast-food rivals line up as potential buyers

Fast-food giants McDonald's and KFC have emerged as potential buyers of roadside diner chain Little Chef.

Coffee shop operator Costa is also believed to be interested in buying the chain, after owner Rcapital put the company on the market last month, according to the Sunday Times. But it is unlikely that potential buyers will want to retain the 55-year-old brand.

Turnaround specialist Rcapital took control of Little Chef when it fell into administration in 2007. The chain then went through a number of attempts to overhaul the brand, including a revamped menu by Michelin-starred chef Heston Blumenthal, and the number of sites was reduced from 200 sites to 83.

But while the company returned to profit, it still struggled to compete with fast-food rivals. A spokesperson for Rcapital said: "The aim of the sale was to find a buyer that would take the business and the brand on to the next stage.

"However the market is changing and fast food and coffee houses are growing in popularity. It is not a surprise that the majority of the offers for Little Chef are from companies that may want to re-brand the estate.

"Rcapital has a deep affection for the Little Chef brand and it is hoped some Little Chefs will remain on Britain's A roads even if some sites are re-branded."

The Little Chef chain was founded in 1958. It began as an 11-seat restaurant in Reading, Berkshire, and has had a string of owners, including private equity group Permira.

When it fell into administration six years ago, it had 234 outlets with 4,000 staff. The chain now has around 1,100 staff at 83 sites across the country.

It is thought a sale, which is being handled by KPMG, will not be complete until the end of the summer.

RCapital puts Little Chef up for sale >>

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