Tesco buys Giraffe restaurants

Giraffe has 47 sites across the UK plus one in Dubai

Supermarket group Tesco has bought the restaurant chain Giraffe for £48.6m.

The move will see the supermarket open Giraffe branches near to Tesco stores as it seeks to create "retail destinations" for customers.

Tesco will hope that the acquisition will help revitalise its UK business.

Over the past year, the group has been revamping its UK stores. In January, it reported its strongest growth in UK Christmas sales for three years, but said there was "a lot more to do".

Tesco pointed to Giraffe's popularity with a wide range of ages, particularly families, as part of its appeal.

"We think our customers will love it," said group commercial director Kevin Grace.

The supermarket recently bought a 49% stake in Harris and Hoole coffee shops, a move which drew criticism from some shoppers who felt they had been duped into believing it was an independent business. It has also invested in the Euphorium Bakery chain.

'Lucrative growth'

"I think it's a very significant move," Neil Saunders, managing director of Conlumino told BBC News.

"Traditional retailing is seeing much more sluggish growth and one of the things that all retailers have got to do is look to wider areas of spending including leisure and dining out.

"[This] exposes Tesco to much more lucrative growth."

Analysts also suggested that the move could help Tesco solve a crucial problem: what to do with the retail space that was once devoted to things like CDs and movies.

Tesco can "implant Giraffe restaurants into its larger stores where it has an excess of retail space," said UBS food retail analyst Mike Tattersall.

Giraffe founders Russel and Juliette Joffe and Andrew Jacobs will remain in place on the management team, with Russel Joffe continuing as managing director.

"This move will allow us to introduce Giraffe to a wider audience, presents great opportunities for growth and for the team to be involved in an exciting stage in our brand's development," said Mr Joffe.

Private equity firms 3i and Risk Capital Partners have sold their stakes in the business.