Tesco ups casual dining focus as profits slide

By Gemma McKenna

Published: 16 April, 2014

Tesco is boosting its store refurbishment programme by opening 100 new Giraffe, Decks and Harris + Hoole outlets in the next year

Tesco is boosting its store refurbishment programme by opening 100 new Giraffe, Decks and Harris + Hoole outlets in the next year.

In the wake of net profits falling 6% in the 52 weeks to February 22, 2014, in the group's preliminary results, the retailer has further distanced itself from opening big new stores, and is instead committed to "refreshing" existing outlets. Several of its large extra stores are being "repurposed" to include more casual dining, children's soft play areas and other retailers.

Harris + Hoole Harris + HooleTesco is ramping up its casual dining focus in the coming year, in a bid to make its stores more appealing venues.

Tesco bought family restaurant chain Giraffe in March 2013 for £48.6 million. Decks is its carvery family dining concept, while Harris + Hoole is a coffee chain 49% owned by Tesco. Harris + Hoole, which is planning to expand to 60 stores this year, is also ramping up its evening offer by adding alcohol to its menu. Three of the coffee shops now have alcohol licences.

Tesco is ramping up its casual dining focus in the coming year, in a bid to make its stores more appealing venues.

In 2013 Tesco refurbished 300 stores, which resulted in a sales uplift of between 3 and 5% for individual stores. It said this work is "critical" especially for larger stores suffering in the weak market and as customers move more to convenience or online shopping. Back in February, it announced it plans to refurbish 650 stores in 2014/15, and this will focus firstly on the Extra shops, with 110 lined up for this year.

As for convenience, in 2013/14 it opened 128 Express stores and refurbished almost 200. It is looking to open a further 150 Express stores next year and refresh another 450.

Overall the company saw group sales, including VAT, increase by 0.3% to £70.9 billion. Group trading profit was £3.3 billion, down 6% on last year. The group said it was "impacted by a weakening UK grocery market in the second half of the year and challenging trading conditions overseas, in part driven by regulatory and political issues".

Total UK sales declined by 0.1% to just over £48 billion. UK trading profit declined by 3.6% to £2.2 billion with a lower trading margin of 5.03%.

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