ASDA acquires Leon Restaurants for £100m

Leon Restaurant

The billionaire brothers Mohsin and Zuber Issa, who recently took over supermarket giant ASDA, have announced the £100m acquisition of fast food restaurant chain, Leon Restaurant.

The brothers’ EG Group acquisition of Leon as a proprietary brand would add to its non-fuel operations and increase its foodservice brand portfolio, which already includes third-party brands such as KFC, Burger King and Subway.

“The EG Group continues to identify innovative partnerships and acquisitions that complement our existing consumer offer and enable us to stay at the forefront of consumer trends, particularly in foodservice,” the Issa brothers said.

“Our equity investment in Leon is to strengthen our own participation in the fast-growing contemporary foodservice segment. This acquisition aligns with our commitment to being a committed foodservice operator globally, delivers financial benefit to our underlying business, and supports broader commercial strategies to be able to better realise further growth opportunities.”

Founded in 2004 by John Vincent, Leon has increased in popularity in recent years.

He said: “In some ways this is a sad day for me, to part company with the business I founded 17 years ago in Carnaby Street. But I have had the pleasure of getting to know Mohsin and Zuber across the last few years. They have been enthusiastic customers of Leon, going out of their way to eat here whenever they visit London.

“They are decent, hard-working business people who are committed to sustaining and further strengthening the values and culture that we have built at Leon, a business that has my dad’s name above the door. Mohsin and Zuber will not just be superb custodians of the Leon brand, through EG Group they have the vision, investment appetite, foodservice expertise and network scale to take Leon to many more people and places. This is what Leon has always been built for and I am confident under the new ownership, the brand will flourish and have even greater appeal to a broader customer base, especially outside of London.”

Creating a new shopping experience is behind the acquisition of Leon by Asda

Asda will become more of a destination shopping experience with its acquisition of fast-food chain Leon, say tax and advisory company Blick Rothenberg. Daniel Burke, a partner at the firm spoke to Business Leader about the acquisition.

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.

I would expect Asda to follow this up with more acquisitions or partnerships in order to make Asda a ‘Go To’ place for all of your shopping needs.

EG appears to be closing in on Caffe Nero after buying up the chain’s debt pile, and have 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. Its founder John Vincent owned 15%, whilst its other two founders held the other 15%. “Given the tough year the hospitality sector has endured the offer was probably too good to turn down by the owners.