Catering giant Compass Group revealed plans earlier today [Friday] to sell off its roadside restaurant chain Little Chef in order to focus on its contract-catering operations.
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According to market watchers, Compass, which has only recently posted signs of recovery in its H1 after being hard hit by the global economic downturn, can expect to raise between £600m (US$917m) and £1bn from the sale of Little Chef and its Travelodge budget hotels.
The sales will be made through separate auctions led by Schroder Salomon Smith Barney (SSSB).
Analysts admitted to being unsure however about the strategy to sell Little Chef. Arnaud Frerault, an analyst at SG Securities, told Reuters: “Strategically, it makes sense to sell Travelodge because it has little to do with the rest of the business. But why they are selling Little Chef, which is a good foodservice business, is less obvious,”
Compass said that a strategic review had concluded that the 397-outlet strong chain was not core to its strategy.
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