Little Chef roadside restaurants are saved after last-minute deal

In a development which will no doubt warm the heart of the former Conservative prime minister John Major, the Little Chef brand and most of its roadside restaurants were saved yesterday after a last-minute buyout.

But the future of 40 of the company's restaurants still hangs in the balance, after the People's Restaurant Group - which owned 235 Little Chef sites - went into administration.

Most of the restaurants, once famously endorsed by Mr Major, have been bought by the turnaround specialists R Capital, in a move which will save the jobs of Little Chef's 4,000 staff.

The first Little Chef opened in 1958 as an 11-seat restaurant in Reading based on the model of an American roadside diner and grew rapidly as the A-roads spread through the country. However, the chain has been hit by competition from motorway service stations, and garage forecourt shops.

People's Restaurant Group's chief executive, Simon Heath, who will continue to run the business and retains a minority stake, said there was still enormous potential for the business to succeed, but "I have no doubt we now have a huge task ahead."