|Industry||Roadside Restaurant Chain|
|Number of locations||78 (2013)|
|Area served||United Kingdom|
|Key people||Graham Sims (Chairman)|
|Revenue||£65.772m (2010) |
|Operating income||£0.240m (2010) |
|Profit||-£0.273m (2010) |
|Total assets||£21.270m (2010) |
|Owner(s)||Kout Food Group|
|Employees||2,412 (group, 2010) |
Little Chef is a chain of roadside restaurants in the United Kingdom, founded in 1958 by entrepreneur Sam Alper, and modelled on American diners. It specialises in the "Olympic Breakfast", its version of a full english, and "Jubilee Pancakes". The restaurants are mostly located on sites on A roads and motorways, often paired with a Travelodge motel and a petrol station.
The chain expanded rapidly throughout the 1970s and 1980s, largely organically, although in 1986 it acquired Happy Eater, its only major roadside competitor. It peaked in numbers in 1999 - 2000 with 439 restaurants, but restructuring has seen this reduced to 78. The Little Chef brand has been in decline for many years, largely due to a lack of investment, a tired menu, and increased competition on motorways.
Little Chef has been owned by six different companies since its mid-1980s heyday. It was owned by Trusthouse Forte from the 1970s, who were taken over by Granada, who were then taken over by Compass, who sold the chain to the private equity firm Permira, who divested the chain to The People's Restaurant Group, who in turn sold the chain to the business turnaround specialists RCapital.
Conception and early years
Caravan manufacturer Sam Alper built and designed the first Little Chef, modelled on diners he had seen in the United States. Opened in 1958 on Oxford Road, Reading, it had just 11 seats. The earliest Little Chefs were basic, prefabricated constructions, with room for up to 20 customers, a staff of three to four and provision for car parking. Catering industry veteran Peter Merchant developed the concept through his Merchant Group, which later merged with John Gardner Catering to form Gardner Merchant. From 1965, they began to be built in brick, with room for about 40 customers, by which time there were 12 outlets. Standard décor and uniforms were brought in, together with staff training. Later on, they were built with room for some 60 customers, car parking space was improved, and sign boards and other identifying marks emphasised. In 1968, Gardner Merchant became a subsidiary of Trust Houses, by which time there were 25 Little Chef restaurants.
In 1970 Trust Houses merged with Charles Forte's hotel and catering empire to become Trust House Forte; Europe's largest hotel, catering and leisure group. By that time, Trust House Forte had 44 Little Chef restaurants. The takeover by Forte was a huge boon for the company, as it gave them the capital and resources to expand rapidly. Frustrated by planning laws, Forte sent teams out to well-located transport cafes and offered the owners huge cash incentives to sell and move out within the week so that Forte could turn their restaurants into Little Chefs. Thus, by 1972 the chain had expanded to 100 outlets. Sites were a mixture of self-service and waitress service, though predominantly the former. By 1976 there were 174 outlets, and the first "Little Chef Lodge" motel was opened. In 1977 "Jubilee Pancakes" were added to the menu.
Little Chefs were opened at larger Trust House Forte service areas on motorways and trunk roads. In 1987 these service areas became known as Welcome Break after the acquisition of the smaller Welcome Break group of motorway service areas and the Happy Eater roadside restaurants, Little Chef's main rival at the time, in 1986 as part of the break-up of Imperial Group. In 1990 the Little Chef Lodges were rebranded as Travelodge. In 1995 Forte announced the end of the Happy Eater brand, with all existing sites converted into Little Chef.
Little Chef had a spin off brand called "Little Chef Express" which Forte developed in 1995 as a rival to fast food outlets. The first Express outlet was at the Markham Moor service station (A1 North), though only as an addition to the existing Little Chef menu there. However, only five restaurants were ever built on the roadside, and the idea was re-developed when Little Chef was taken over by Compass, with the Express take outs being set up in food courts, including one in the Eurostar terminal.
In 1996 the catering and broadcasting conglomerate Granada successfully mounted a hostile takeover for the Forte group. The Welcome Break chain was sold by Granada, the Little Chefs at those motorway service areas becoming a similar table service restaurant, Red Hen.
In 1998, Granada bought AJ's Family Restaurants, another Little Chef rival, from the "Celebrated Group" and converted all of its fifteen sites to Little Chefs. AJ's had originally been set up in 1986 by two Happy Eater directors, following Happy Eater's sale to Forte.
In 2000 Granada merged with the Compass Group to form Granada Compass, but the two demerged in 2001 leaving Little Chef as part of Compass. At about this time some Little Chefs began serving Harry Ramsden's meals, a cross-branding exercise by Compass who also owned Harry Ramsden's, though this ended in June 2004.
The private equity business Permira bought Travelodge and Little Chef from Compass Group in December 2002 for £712 million, forming a special purpose vehicle called TLLC Group Holdings. Those Little Chefs at Moto motorway service areas – formerly the Granada motorway service areas, and owned by Compass until 2006 – were owned by Moto and operated as franchised outlets.
In August 2004, Little Chef announced it planned to change its logo, to a slimmer version of 'Fat Charlie', the chain's current mascot. Little Chef's chief executive Tim Scoble said that this was " the start of a re-image programme for Little Chef" and that the chain "has become a little bit dated", but now wishes to "take it forward into the 21st century". He also noted later on that "We get accusations that he's overweight and a lot of people have also written in to say it was a small child carrying hot food, which they said was dangerous". However, the idea was dropped after 15,000 customers complained.
In 2005 the company was sold to catering entrepreneurs Lawrence Wosskow and Simon Heath for £58 million. TLLC kept hold of Travelodge, and The People's Restaurant Group Ltd was founded by the new owners of Little Chef, however they continued trading under the same name. In March 2006, the People's Restaurant Group sold 65 of its sites under a leaseback deal for £59 million to Israeli property group Arazim.
Administration and rescue deal
In December 2006, it emerged that Little Chef was undergoing serious financial problems; the business was said to be losing around £3m a year, struggling to keep up with rent payments and had lost nearly half of its branches in five years. Furthermore, Laurence Wosskow suffered a heart attack and subsequent ill health earlier in the year, and was unable to help turn the company around. On 21 December, Little Chef announced it were in urgent rescue talks with a group of American investors, in the attempt to secure rescue funding. It had been suggested at the time that PricewaterhouseCoopers was on standby to act as administrators for the company; however a source close to the company was quoted as saying “We are still very hopeful that this situation can be resolved.” At the time, the People's Restaurant Group was being advised by KPMG's corporate recovery arm.
In December 2006 Little Chef was taken into administration, and the company was then rescued on 3 January 2007 by RCapital, a UK private equity group, which paid less than £10 million. 38 of the 235 branches were not included in the sale and were closed immediately; the remaining restaurants continued to operate normally.
By December 2007 a number of sites not leased from Travelodge or Arazim (Little Chef's two main landlords) closed, as Little Chef had not been able to reach agreements with the individual landlords. As all the franchised outlets at Moto sites closed during 2008/2009, the chain was further reduced.
Competition and decline
|This section does not cite any references or sources. (December 2008)|
Several factors contributed to the decline of Little Chef, including increased competition from other chains and years of under-investment and neglect by numerous owners.
From its inception until the mid-1990s Little Chef had relatively little competition from other chains. However, by the early 2000s, the business was seen to be in decline, sometimes attributed to owners from Granada onwards having extracted too much money from the business without investing in updating the format. Britain's roadsides had become saturated by fast food restaurants such as McDonald's, KFC, and Burger King. Granada opened several Burger Kings within or adjacent to their Little Chef sites as a response, making Little Chef the largest Burger King franchise in the UK.
A further challenge to Little Chef was the rise of pub restaurants which catered both for the business and family markets. Recently refurbished service stations began to offer additional choices such as Marks & Spencer Simply Food and coffee chains such as Costa in place of Little Chef outlets, which appealed to people not wanting to spend a long time over a meal. Furthermore, the construction of the motorway network meant that A-roads (along which Little Chef outlets were usually situated) were no longer used for long-distance travel.
In 2005 it was announced that 130 underperforming restaurants were to be closed, reducing the chain to 234 restaurants. Prior to that however, Granada had been gradually reducing the number of restaurants, from well over 300 at one time. During 2005 Travelodge Hotels Ltd (the new name for TLLC) made various announcements about the sale of some or all of the restaurants, until in October the chain was sold to The People's Restaurant Group Ltd, who planned to modernise the restaurants and introduce self-service.
Changes introduced during 2006 included the opening of coffee shops under the name Coffee Tempo! within several larger branches. These 'grab and go' units were developed by Nick Smith, who joined Little Chef as development director after leading the design and implementation of the Wild Bean Café format at BP petrol stations. Little Chef also introduced a takeaway menu. Both initiatives were aimed to increase the appeal of the brand to customers unwilling to spend a long period waiting for table service.
The People's Restaurant group slashed menu prices in an attempt to attract customers. Unfortunately, the only outcome of this was less money going through the tills. It would appear[according to whom?] that Little Chef completely ignored the competition it was faced with, not to mention the fact that restaurants had become run down and staffed minimally.
2008 – present
In 2009 celebrity chef Heston Blumenthal appeared in a Channel 4 documentary programme to revamp the Little Chef chain; the programme was broadcast from 19 to 21 January, and involved Blumenthal introducing a new menu and organising a refit at the Little Chef in the village of Popham, near Basingstoke. The trial was successful, with a promise from the owner that none of the dishes would change without Blumenthal's consent. Heston Blumenthal returned to Popham in February 2009 to review progress, and the owner promised that if there was a profit within three months the redesigned format would be spread to all branches. Furthermore two more former Little Chef branches would reopen, in Ings and Malton. It was later announced that a further two Little Chefs, at York and Kettering, would be refurbished in the style of the trial in Popham.
In 2011, a further ten new concept restaurants opened at Doncaster, Markham Moor North, Shrewsbury, Black Cat, Fontwell, Weston on the Green North, Wisley South, Ilminster, Podimore and Amesbury with a view to investing £20 million in updating the brand across the estate. New menus have been introduced and restaurants have been refurbished based on the style which celebrity chef Heston Blumenthal designed in 2009. A full rebranding exercise was undertaken by Venture Three, which was hailed as a great success by the graphic design community. As part of its modernisation the company used its new branding to create a presence in the digital arena on Facebook. and Twitter
A 'Good to Go' deli offering was introduced in the new concept restaurants, making bespoke sandwiches as well as takeaway meals appealing to customers on the move. 'Good to Go' sits alongside the traditional sit-down Little Chef format.
In May 2011 the company reported a 47% increase in food sales.
On 11 January 2012, Little Chef announced that it planned to close 67 of its failing restaurants, with the loss of up to 600 jobs. On 7 February RCapital announced that it was putting the Little Chef chain through "a pre-pack administration to offload a number of toxic leases". Graham Sims, the chairman of Little Chef, said that suppliers and other unsecured creditors would suffer from the decision to put the chain through this administration process, which had been taken reluctantly. He expected job losses to be at the lower end of the previously announced range of 500 to 600. The business will refocus now on a core of 95 profitable sites.
By January 2012, 11 Little Chefs had been converted to the Blumenthal format.
In April 2012, the chairman Graham Sims said, "Everyone remembers Little Chef from the 1970s, with curtains at the windows and wooden tables. It worked well for 20 or 30 years but frankly it hasn't kept pace with the evolution of the retail market. It lost its way. We've gone through 3 or 4 owners in 10 years and none of them have really taken the tough decisions to sort out the assets, the cost base and bring up the offer for the 21st century." In his view, some of the owners had treated it as "a cash cow, looking for the traditional quick in and out".
In September the company announced plans to franchise.
In April 2013, R Capital announced that it was to seek a buyer for the Little Chef business which comprised 78 outlets, from Scotland to Cornwall, all of which are said to be profitable. The move indicated that R Capital had succeeded through tough restructuring in turning round the company’s fortunes. The sale was expected to have a price tag of 'tens of millions of pounds'.
In June 2013, Little Chef announced that it droped Heston Blumenthal's creations from all it's menus. Little Chef spokesman Richard Hillgrove is quoted as saying that 'Heston originally approached us to do his Channel 4 show about how he was going to save Little Chef. It seemed like a good idea at the time. But he took everything away from its core.' 
|This section does not cite any references or sources. (June 2012)|
Traditionally, a staple of Little Chef's menu has been all day breakfasts, although some can only be bought before 11 am. Nearly all the menu consists of traditional British fare. Main meals options include burgers, grills, steaks, haddock or cod, all with chips. Pasta and salads were introduced in the early 1990s. For dessert, pancakes have always been the most notable items, with a choice of toppings. There is also a children's menu and a new takeaway menu. Little Chefs offer each diner a free lollipop on leaving.
In November 2008 during the revamp, Heston Blumenthal wrote the new menu featuring some of the features famous in his restaurant, The Fat Duck, modernising old British classics. His original menu featuring Lancashire Hotpot with an oyster and buttered roast potato soup was scrapped after taking too long to make and the board of Little Chef disliking it. When shown that menu and given the option in a branch of Little Chef people thought it was "too posh" with 5:1 preferring the old menu. His altered menu featured such dishes as spit-roast chicken, a new Olympic Breakfast, ox cheeks, and new healthier options. The Telegraph newspaper reported in May 2009 that after a seven-month trial, the Heston Blumenthal menu was to be rolled out across the entire Little Chef estate, initially at further test sites, and that only minimal changes would be made for logistical purposes.
The new 2011 menu is based upon the one designed by Blumenthal albeit with many of the traditional Little Chef dishes still available. The new concept 'Good to Go' delis serve sandwiches and takeaway meals in several refurbished restaurants.
- From 7 February 2012, "Little Chef" became the trading name used by six companies (Hybrid Dining Limited, Linacre Miller Ltd, Wikkles Ltd, Wolfson Tango Ltd, Wycliffe Moor Ltd & Goldeneye Ltd), in succession to PT Specialist Retailing Ltd (now in administration) "Company Information".
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