Tesco acquires Giraffe restaurants

By Luke Nicholls

- Last updated on GMT

Related tags: Giraffe, Fast casual restaurant

Giraffe restaurants are now set to spring up within or nearby some of Tesco’s larger UK stores
Giraffe restaurants are now set to spring up within or nearby some of Tesco’s larger UK stores
Supermarket giant Tesco has today announced that it has bought a 100 per cent stake in the 48-strong family restaurant chain Giraffe in a deal worth £48.6m.

The acquisition will see more of the child-friendly restaurants opening within or nearby some of Tesco’s larger UK stores as part of the company's plans to create ‘more compelling’ retail destinations.

Giraffe’s original founders - Russel and Juliett Joffe and Andrew Jacobs - will be selling their combined stake of around 54 per cent, and will be retained by Tesco along with the rest of the management team.

“We’re very much looking forward to working with Tesco,” said managing director Russel Joffe. “We’re passionate about great service, wonderful hospitality and serving good, healthy food at great value.

'Business as usual'

Giraffe's menu features a range of global dishes for breakfast, lunch and dinner

“This move will allow us to introduce Giraffe to a wider audience, it presents great opportunities for growth and for the team to be involved in an exciting stage of our brand’s development.

“It will be very much business as usual at Giraffe.”

Serial restaurant investor and Giraffe chairman Luke Johnson has also sold his 20 per cent stake in the business on behalf of his Risk Capital Partners business, while private equity firm 3i has cashed in the remaining 36 per cent share.

The investment will support Giraffe’s revamped plans for 'a more rapid rollout across the UK'.​The first Giraffe opened in Hampstead in 1998 and the group now consists of 48 sites nationwide, including franchised sites at Heathrow and other UK airports as well as one in Dubai. In 2009, the business was voted the Family-Friendly Restaurant Group of the Year by Restaurant Magazine.

Tesco value

For Tesco, the deal follows the purchase of a 49 per cent stake in the Harris & Hoole coffee chain, which will see a number of coffee shops open in adjoining premises to Tesco stores over the coming months. 

Kevin Grace, group commercial director at Tesco, said: “We invest in businesses that add value for our customers online or offline; as we’ve done with Harris & Hoole, Euphorium, blinkbox, and now Giraffe.

“We have the opportunity to develop some of the space in our larger stores to create retail destinations that offer customers even more choice. Giraffe is hugely popular with a wide range of ages and particularly families – we think our customers will love it.”   

The first Giraffe restaurant to open next to a Tesco store will be ‘near London’.

Attractive proposition

Mystery has been providing the branding for food and drink businesses for the past 15 years

Giraffe also operates a quick-service train station concept​and the adult-focused Giraffe Bar and Grill brand, as well as the Giraffe Burgers & Cocktails restaurants formerly known as Guerrilla Burgers. Read a full Business Profile of the group here.

Brand design agency Mystery worked with Giraffe restaurants from its inception. Speaking about the group's buyout, Mystery's founder Dan Einzig said: "I think that Tesco is a great partner for the Giraffe brand. By opening the restaurant to a wider demographic and new markets, it will help to fulfil Giraffe’s original mission to bring global food and world music to the mass market.

"There is no doubt why the restaurant is an attractive proposition to the supermarket and I believe that both businesses will benefit hugely from this partnership. Giraffe is widely recognised and loved. There is now huge potential for the brand to keep growing and delivering an experience that continues to make consumers happy as long as the new owners stay true to its brand values. Tesco has the property portfolio and investment available to rapidly expand the business and if Giraffe sites are placed near to existing supermarkets then the latter will surely benefit from reciprocal business.

"Giraffe has benefitted massively by staying true to its brand and keeping it at the heart of everything it offers – from the cuisine and service through to the interior and digital experience. If Tesco is to maintain the restaurant group’s current success it must ensure that Giraffe retains its spirit of independence and the brand values that so many people have a connection with and have fallen in love with.”

The experts' view...

Sam Fuller, head of leisure, Altium

Commenting on the deal, Sam Fuller - head of leisure at the investment bank Altium - told BigHospitality: "Tesco has a history of diversifying successfully, from garden centres to coffee shops, so we shouldn't be too surprised it is considering a foray into the restaurant sector. 

"Giraffe's family-friendly image fits well with Tesco's corporate identity and the supermarket is clearly keen on getting hold of a slice of the growing 'fast casual' sector that has performed well in the downturn. 

"It also looks set to be Tesco's first significant M&A activity for some time and Giraffe appears to be an easier asset to acquire than Cote or Byron, two other fast casual restaurants that have been linked with buyouts. 

"It will be interesting to see how Tesco leverages the Giraffe brand, assuming the deal goes ahead. It may look to stock Giraffe-branded products in store and possibly even put some Giraffe restaurants in their stores."

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