Asda will become more of a destination shopping experience after its owner this week acquired restaurant business Leon, it was predicted today.
The healthy fast food chain’s 70 restaurants were snapped up by Mohsin and Zuber Issa, who own the supermarket giant and control petrol station chain EuroGarages as part of their EG Group empire.
They have indicated their intentions to open 20 new Leon sites a year from 2022 and develop additional concession formats, but leading tax and advisory company Blick Rothenberg suggests the takeover will also have benefits for Asda.
Daniel Burke, a partner at the firm, said: “EG Group, the new owners of Asda, have acquired the fast food chain Leon Restaurants for £100m, in order to provide a better all-round shopping experience for its customers.
“EG is no stranger to food outlets. They own more than 6,000 petrol stations across 10 countries, and have been installing Starbucks, KFC, Burger King, Greggs, Cinnabon and Subway branches at their forecourts.
“Asda and Leon are not two businesses you would expect to come together. Asda is traditionally ‘low cost’, whilst Leon provides good quality fast-food with premium prices, but it is clear that Asda are looking at providing a new customer experience.”
Mr Burke said he would expect Asda to follow up the deal with more acquisitions or partnerships in order to make it more of a destination outlet. If correct, it would mirror what Tesco attempted to do some years ago when it acquired Giraffe and Harris + Hoole before new management abandoned that strategy.
“EG appears to be closing in on Caffe Nero after buying up the chain’s debt pile, and has even considered buying Topshop. Asda may well become the bricks and mortar equivalent of Amazon – a place where you can go to buy anything you need.
“This is part of a wider trend in the retail sector where larger players are acting as ‘virtual department stores’ for a number of brands. The attraction for the established retailer is younger/innovative brands while the new brands get access to an established distribution network.”
Leon was majority-owned by two private equity firms, Active Partners and Spice Private Equity, with stakes of 30% and 40% respectively. I
Founder John Vincent owned 15%, whilst its other two founders held the other 15%.