Tesco's Giraffe restaurant chain is close to being sold to a family office investment vehicle that already owns restaurant assets, according to reports this week.
A sale of Giraffe by Tesco has been expected for some months as part of a wider strategy to turn the ailing supermarket business around in the face of rising competition from cut price rivals Aldi and Lidl, which saw the retailer post losses of £6.4bn in 2014.
Giraffe, which has 58 restaurants across the UK, was bought by Tesco in 2013 as part of a diversification strategy aimed at slowing Tesco's profits plunge. The deal included the opening of a number of Giraffe restaurants in Tesco Extra stores in a bid to draw in families.
Tesco declined to comment on reports that a deal with the investment vehicle could be sealed this week. A spokesman told The Caterer: "There has been speculation which we won't comment on."
The claims come just one month after Tesco closed seven Giraffe restaurants located in its Tesco Extra stores in May, in York, Sutton, Martlesham, Cirencester, Bournemouth, Twickenham and Abingdon. All seven restaurants were converted into Tesco Cafes.
Another three Giraffe restaurants located in Tesco Extra stores at Watford, Cheshunt and Inverness remain open, the spokesman told The Caterer.
Coffee shop chain Harris and Hoole, which Tesco also owns, is understood to be up for sale as part of the same company strategy, which aims to focus on the retailer's core supermarket business.
The business model for Harris and Hoole followed a similar pattern to that of Giraffe, with Tesco opening a number of the coffee shops in its supermarket stores. The spokesman declined to comment on reports that Harris and Hoole is also up for sale.
Other potential buyers for the Giraffe chain include The Restaurant Group, which already runs a number of Giraffe concessions; Chinese investment vehicle The Hony Group, which is targeting Western restaurant investments following its acquisition of PizzaExpress; and BC, Casual Dining Group, Bridgepoint, Fulham Shore, Sun Capital Partners, Equistone, Living Ventures and TPG.
Tesco to close Giraffe restaurants in seven Tesco Extra stores >>