Tesco to expand its presence with Giraffe acquisition

Tesco has entered into a £50m deal to acquire family-friendly restaurant chain Giraffe in an effort to expand its services to customers. Tesco-Giraffe deal comes just weeks after Tesco’s 49% stake acquisition of coffee chain Harris + Hoole, bakery group Euphorium, and online film rental service blinkbox. Sales at traditional British supermarkets are under threat as consumers are shifting their spending on food to smaller convenience stores and online shopping. Tesco’s expansion plans have come into effect to make customers ‘spend more time in their stores’.

The supermarket giant will own Giraffe completely after buying the combined stake from venture capitalist Risk Capital Partners and UK buyout firm 3i which originally invested £10m in the restaurant chain in 2006. Russel and Juliette Joffe, who founded Giraffe along with Andrew Jacobs, will remain in place on the management team, with Russell Joffe continuing as managing director. Tesco will open a new restaurant later this year next to a store near London, and “where possible” it will look to open new stores adjacent to supermarkets rather than inside them.

Recently, Tesco has been rivalling for share against upscale chains including Waitrose and discounters Aldi and Lidl, pledging to invest £1 billion to add staff, refresh its products and brighten stores. Taking a leaf out of Asian and continental European markets where supermarkets are often part of larger shopping centres, Kevin Grace, Tesco’s commercial director, said, “There is no reason that supermarkets can’t offer something similar here. 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. We want the dining experience to feel separate from the weekly shop because it’s a place where customers can take a break and relax. They’ll keep their unique look and feel because it’s part of their brand and customers like it.”