Little Chef brand could go as company up for sale

TWO of the biggest players in the fast food business have emerged as potential buyers of Little Chef, in a move that could see the venerable brand disappear from Britain’s roadsides.

Restauranteur Heston Blumenthal attempted to revive a Little Chef cafe for a TV documentary. Picture: Channel 4

Bidders for the chain are thought to include McDonald’s and KFC, as well as fast-growing coffee shop operator Costa, after turnaround specialist Rcapital put it up for sale. Potential trade buyers are unlikely to want to retain the brand.

Little Chef has gone through a sweeping overhaul – including a menu revamp by celebrity chef Heston Blumenthal – since it plunged into administration in 2007 and was bought by the London-based private equity group.

But Rcapital said that while the chain, famous for its chubby chef logo and “Olympic” breakfasts, has returned to profit, diners have “voted with their feet” and increasingly choose to eat at rival fast food chains.

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.”

Rcapital confirmed that ­national and international groups were circling the chain, but it declined to say what the business could be worth.

The Little Chef chain started life as an 11-seat restaurant in Reading, Berkshire, in 1958 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 some 1,100 staff at 83 sites from Devon to Scotland, serving about six million customers a year, with the menu’s meals including steak and ale pies, fried breakfasts and baked potatoes.

Rcapital added: “Over the last six years, Rcapital has successfully completed an operational turnaround and financial restructuring, which has repositioned the business and brought the group of companies back into profitability.

“With the turnaround successfully completed, it’s time to explore the next phase for the food service operator.”

Little Chef’s turnaround ­included recruiting Michelin-starred chef Blumenthal to ­overhaul its menu. The revamp was featured in a Channel 4 documentary, Big Chef Takes On Little Chef.

It is thought a sale will not be complete until the end of the summer. Rcapital has appointed KPMG to sell it.

• WALL Street vulture funds are said to be eyeing a potential takeover of the struggling owner of Yellow Pages.

The move could see them seize control of the loss-making publishing group, now called Hibu, in a deal that would wipe out shareholders and more than halve its £2.3 billion of debts, ­according to a Sunday newspaper report.

The debt-for-equity deal may be unveiled within weeks.