Little Chef suitors should do their research

It’s been a busy month so far for James Caan. Last week, the ex-Dragon was at the centre of a media furore after suggesting in his first interview as the government’s new social mobility tsar that parents should avoid helping their children into jobs. When it later transpired that Caan’s two daughters have worked at companies he either ran or had a stake in, outrage and claims of hypocrisy naturally followed.

jonny bacon

This PR fumble came at almost exactly the same time as less noticed reports identified Caan as one of the parties interested in buying Little Chef, the 55-year-old chain of roadside eateries. According to several newspapers, Caan’s private equity firm Hamilton Bradshaw is performing due diligence ahead of making a bid for the company, which was put up for sale by turnaround firm Rcapital in April.

Caan’s involvement in the Little Chef sale is an interesting development, particularly as major high street brands like KFC, McDonald’s and Costa Coffee are also thought to be looking at the group. Given such heavyweight interest, Rcapital admitted late last month that the Little Chef brand could disappear completely as a result of the sale. “It is not a surprise that the majority of the offers for Little Chef are from companies that may want to rebrand the estate,” it said.

Caan, however, is understood to want to save Little Chef, as well as potentially take the brand into the Middle East. Regardless of the ridicule aimed at Caan over the last week, this wouldn’t necessarily be such a silly move.

Since Rcapital bought Little Chef out of administration in 2007, the firm has succeeded in downsizing and stabilising what was once an unsustainable business. Following the somewhat underwhelming experiment with celebrity chef Heston Blumenthal, the chain has also sensibly gone back to basics over the last year in its food and presentation while introducing several popular additions like a takeaway service and brand tie-ups with the likes of Lavazza and Cadbury.

Research also suggests that wider market trends are moving in Little Chef’s favour. Work pressures and increasingly busy lifestyles have resulted in a boom in the number of people eating breakfast in out of home locations, according to a recent study by NPD Crest.

While fast food chains are benefiting from this trend, restaurants like Little Chef are also claiming their share from car-driving commuters who are able to stop and work thanks to their smartphones and restaurants’ Wi-Fi connectivity. A recent study by recruitment firm Randstad identified a 50 per cent rise in the number of ‘extreme commuters’ over the last five years – meaning people who travel for more than 90 minutes each way. Service stations and their facilities are feeling the benefits of this growth.

None of this matters of course, if a huge multinational swoops in and decides to do away with the Little Chef business. But if someone like Caan succeeds in outbidding the competition and attempts to save the Little Chef brand, there are signs they may just have a fighting chance.

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