Giraffe in Tesco stores after restaurant deal
GROCERY giant Tesco has unveiled plans to turn its supermarkets into “retail destinations” after snapping up a family-friendly restaurant brand that will feature in some of its largest stores.
Britain’s biggest supermarket group will pay £48.6 million for Giraffe, the 48-strong chain founded 15 years ago in London by husband-and-wife team Russel and Juliette Joffe.
The deal comes just weeks after Tesco bought a 49 per cent stake in Harris + Hoole’s coffee shops and an undisclosed stake in bakery chain Euphorium.
Tesco’s decision to stick its neck out on Giraffe is part of a wider strategy by chief executive Philip Clarke to remake supermarkets into “retail destinations” akin to a shopping centres, with dining and relaxation at its core.
Commercial director Kevin Grace said Tesco approached Giraffe at the beginning of the year. “Since then, we’ve been doing a lot of thinking about retail destinations and how our stores might become somewhere that people spend more time, as well as shop,” Grace said. “With more general merchandise moving online, we have an opportunity to rethink how we use the space in some of our larger stores.”
The drive to become a retail destination follows a difficult year for Tesco, which reported its first drop in profits for two decades in 2012 and was voted Britain’s worst supermarket.
UK sales have since improved, but the group has warned that the horse meat scandal will dent profit margins.
Giraffe’s founders and other long-standing investors have sold the whole of their combined stake of about 54 per cent, but the Joffes will remain to run the business.
Other backers include serial restaurant entrepreneur Luke Johnson – the chairman of Risk Capital Partners who made his first fortune with PizzaExpress – and venture capital group 3i.
Giraffe has just one restaurant in Scotland, which opened in the Union Square shopping centre in Aberdeen in September 2010. Its first site in conjunction with Tesco is due to open near London later this year.