Investment in a sandwich chain operator by Tesco would add to its “retail theatre”, according to a City analyst.

Commenting on a story by British Baker’s sister title M&C Report that the supermarket is considering further investment in the eating-out sector, Planet Retail’s David Gray said the move fits with Tesco’s current redevelopment strategy.

“The move would be part of a programme to invest in foodservice,” said Gray. “Developing larger stores adds to Tesco’s retail theatre, making them destinations with everything consumers need in one area. I’m not surprised by the potential investment: it really fits.”

Gray added that the expansion would also fit into Tesco’s current strategy to fill space, as well as generating revenue in its own right.

When questioned about the unknown sandwich chain operator, a spokesperson for Tesco said: "We never comment on rumour or speculation.”

The investment is rumoured to be similar to Tesco’s current union with artisan coffee group Harris+Hoole, where the supermarket is thought to hold a 49% stake in the business.

“Over the last 12 to 18 months there has been a backlash against large corporations, so investment in independent, small businesses, like Harris+Hoole, makes Tesco appear more local,” said Gray.

Earlier this month Tesco reported a 1.5% decrease in like-for-like sales, according to its third-quarter interim management statement. The supermarket blamed a “weaker grocery market” for the decline.

Group sales for the 13 weeks ending 23 November 2013 increased by 0.6% at actual exchange rates and by 0.2% at constant rates, excluding petrol. Including petrol, group sales decreased by 0.8% at actual exchange rates and by 1.2% at constant rates.