Paramount restaurant group has emerged as the frontrunner in the race to buy Little Chef it was revealed this week.
A source close to the deal said the Chez Gérard operator now seemed the most likely contender to sign a deal for the portfolio of 118 stand-alone properties, and 115 franchise deals at restaurants co-located on Travelodge sites.
Initial bids for the roadside chain were submitted on 8 April, but the number of serious contenders was thought to have dropped to five in recent weeks. Paramount group chief executive Nick Basing said he could not comment on speculation around disposals or acquisitions.
But City analysts thought Paramount was likely to be a strong candidate for the deal. One commented: "As a restaurant group, Paramount would be able to create synergies, unlike a standard venture capital company. It would also give them a national spread and more brands. They've got a good track record and have done a great job recovering the Chez Gérard group."
Question marks still hover over Little Chef's £45m asking price, however. One source said they expected Paramount to pay up to £50m for the chain, but another City insider said: "I think the final figure could be surprisingly low. A lot of people looked at the deal and walked away. There might be hidden gold in the brand but there might not. The sale has taken longer than they hoped."
Travelodge and-Little Chef's co-located restaurant sites are understood to be the most eye-catching part of the deal. "They would be more profitable due to the captive audience from the hotel," said one commentator. "There could be a franchise agreement on those, with a brand change possible."
A spokesmen for Davis Coffer Lyons, which is handling the sale, declined to comment, as did Travelodge and Little Chef.