Tesco acquires Giraffe restaurant chain

LONDON (Reuters) - Tesco <TSCO.L> said on Wednesday it had acquired family restaurant group Giraffe for 48.6 million pounds, extending the reach of Britain's largest retailer into cafes and dining.

The acquisition follows Tesco's move to free up space in some of its larger stores, as its general merchandise moves online, Tesco said in a blog. That means Giraffe restaurants could be opened near Tesco stores, in a bid to increase the amount of time consumers spend at the shop.

Giraffe was founded by Juliette and Russel Joffe and Andrew Jacobs, and backed by private equity group 3i <III.L> and entrepreneur Luke Johnson's Risk Capital Partners.

3III invested 10 million pounds in Giraffe in 2006, and said it had made a return of 1.6 times that on the sale.

Tesco already owns a 49 percent stake in artisan cafe Harris + Hoole, an investment which drew criticism from some British shoppers in January who said they had felt duped after visiting what they thought was an independent business.

The group has also been on the back foot since January when the horsemeat scandal erupted, hitting numerous well-known brands and denting consumers' trust, when testing in Ireland revealed that some beef products also contained equine DNA.

The supermarket chain had to withdraw its line of frozen meatloaf on Tuesday after it tested positive for between 2 to 5 percent horsemeat.

(Reporting by Alice Baghdjian and Paul Sandle; editing by Kate Holton)