Tesco looks set to regain its presence in the casual dining market after it announced last week that it’s merging with food wholesaler, Booker.
Just six months after it sold its Giraffe restaurant chain, the UK’s largest supermarket retailer has secured a deal which will see it regain an indirect presence in the casual dining sector, as Bookers Chef Direct business sells over £100m to nationwide chains such as Byron, Wagamama and Carluccio’s.
Harsha Wickremasinghe, associate at Mergers & Acquisitions firm, Livingstone, said: “The announcement that the UK’s largest supermarket retailer is merging with food wholesaler Booker is one that has caught many by genuine surprise. We believe Tesco will be the biggest beneficiary of this merger, becoming the undisputed leader in the convenience retail sector. Securing such a deal at a time when consumer shopping habits continue to evolve away from larger, weekly shops towards more frequent top-up shops at local stores and online, is a strong move that should cement Tesco’s dominance in small format grocery retailing.
“Several potential initiatives such as lower prices, more extensive ranges and further private label development, alongside a more comprehensive delivery infrastructure, are just some of the perceived benefits customers could enjoy. Booker’s Chef Direct business also has over £100m sales to nationwide chains such as Byron, Wagamama and Carluccio’s – providing Tesco with an indirect presence in the buoyant casual dining market, just over six months since it sold its Giraffe restaurant chain.
“For all the excitement surrounding the deal, it will not be an easy ride from here on. The biggest stumbling block is the Competition & Markets Authority (CMA) which is undoubtedly salivating and plotting how they can steamroller this deal in the sake of consumers’ interests. We also expect a significant vocal outburst from independent retailers and the broader wholesale sector regarding the possible impact to their businesses as a result of this deal. The objections will be strong; the investigations searching; and the battle to get this deal over the line could be brutal for everyone involved.”
