Tesco is to close seven Giraffe restaurants located in its Tesco Extra stores in May, The Caterer has learnt.
The move adds fuel to reports that the supermarket giant is planning to sell its Giraffe restaurant business this year.
The closures will see seven Giraffe restaurants shut in Tesco Extra stores in York, Sutton, Martlesham, Cirencester, Bournemouth, Twickenham and Abingdon. All seven restaurants will be converted into Tesco Cafes. Another three Giraffe restaurants located in Tesco Extra stores at Watford, Cheshunt and Inverness remain open.
A Tesco spokesman confirmed the closures this week. He told The Caterer: “We are always looking to provide the best possible offer for customers at each of our stores and have concluded seven of our stores which currently host giraffe restaurants will be better suited to Tesco Cafes. We expect all colleagues to be offered positions in the new Tesco Cafes.”
Asked if Tesco plans to close the remaining three Tesco extra Giraffe restaurants at Watford, Cheshunt and Inverness the spokesman said: “There are no current plans but we will continue to evaluate our customer offerings in each of our stores.”
The spokesman declined to say whether the closure of the in store Giraffe restaurants heralds the sale of Giraffe. “We can’t comment on speculation,” he said.
However a staff member at one Tesco Extra Giraffe restaurant told the Caterer: “We have been told we will close down as Giraffe on May 7 and open up as a Tesco Café. We’ve been told it is because Tesco is going to sell its Giraffe business later this year.”
The strategy is understood to be part of Tesco’s effort to turn the ailing supermarket business around in the face of rising competition from cut price rivals Aldi and Lidl, which saw the supermarket giant post major losses last year of £6.4bn in 2014.
This week Tesco posted its annual results for 2015 which showed a significant improvement with pre-tax profits standing at £162m. However chief executive Dave Lewis warned that profit improvement was likely to slow in the first half of the year.
Giraffe, which has 58 restaurants across the UK, was bought by Tesco in 2013 as part of a strategy of diversification aimed at halting Tesco’s plummeting profits. The purchase included the opening of a number of Giraffe restaurants in Tesco Extra stores in a bid to draw in families.
Tesco’s plans for coffee shop chain Harris and Hoole, which it also owns, are also under question. The business model has followed a similar pattern to that of Giraffe, with Tesco opening a number of Harris and Hoole coffee shops in its supermarket stores.