The supermarket chain purchased a non-controlling stake in an agreement struck three years ago. That deal included an option which Tesco has now exercised.

When Dave Lewis became Tesco chief executive in 2014 analysts had speculated the firm's stake in the coffee shop chain and its Giraffe restaurant chain could be sold.

"We can confirm we have acquired full ownership of Harris+Hoole," Tesco said.

"We have worked successfully with Harris+Hoole since investing in the business...and will continue to partner with the management board in the future."

Harris+Hoole trades from 43 outlets, employing around 500.

Last month Tesco reported better than expected Christmas trading, while industry data published on Tuesday showed an improving trend.

Shares in the firm have increased 16.3 percent so far this year. They were up 4.2 percent at 181.1 pence at 1351 GMT.

(Reporting by James Davey; Editing by Keith Weir)