London
Tesco has agreed to sell its Harris + Hoole coffee shops, less than four years after investing in the launch of the business and a few months after taking full control. The sale of the artisan-style chain to Caffe Nero is chief executive Dave Lewis’s latest disposal of one of several peripheral businesses that were bought — often to the mystification of customers and analysts — by his predecessors.
Earlier this month, Lewis sold the Giraffe restaurant chain and Dobbies garden centres as he sought to concentrate management attention on the task of turning round Tesco’s neglected UK grocery stores. Tesco invested in Harris + Hoole when it launched in 2012, taking a 49 per cent stake with the rest owned by sibling founders Nick, Laura and Andrew Tolley.
Philip Clarke, then Tesco’s chief executive, was continuing the company’s record of spreading its tentacles into apparent growth opportunities as consumer tastes moved upmarket and Britons started drinking more coffee. Clarke was also looking for ways to attract shoppers back to Tesco’s underused out-of-town superstores.
Harris + Hoole seemed to offer a way to turn the weekly shop into a leisure experience. The 50 million pound deal the following year to buy Giraffe, the child-friendly restaurants that cater for middle-class families, had a similar aim.
Tesco bought Dobbies in 2007 under the leadership of Sir Terry Leahy. But neither Giraffe nor Harris + Hoole has proved a success. Both businesses are loss-making and neither fit well with Tesco’s stores or customers.
Both were sold for undisclosed sums. Dobbies, which makes money, went for 217 million pounds (Dh1.09 billion).
Harris + Hoole became a source of controversy for Tesco when customers, initially enticed by the independent feel of its outlets, found the chain was owned by a retailer with a reputation for crushing smaller local competitors.
Tesco bought out the Tolleys in February in what looked like a commitment to keep hold of Harris + Hoole amid a wholesale restructuring under Lewis. In the end, doing so made it easier to sell the coffee chain. The sales leave Tesco owning Euphorium, the upmarket bakery launched in Islington, north London, in the late 1990s.
Analysts suggest the bakery, which Tesco took full control of last year, is another candidate for sale. Phil Dorrell, a partner at consultants Retail Remedy, said Clarke incorrectly believed businesses such as Harris + Hoole would help support flagging sales at Tesco stores.
“You can’t cover that issue [falling sales] by doing something else,” he said. “They needed to divest themselves of all that and to focus on retailing.”
Guardian News & Media Ltd
