Musgrave Foodservices has taken over Belfast-based food-services group Variety Foods as part of its expansion strategy.

Variety Foods is a family-owned firm, which was established in 1985. Its two shareholders, Mr Henry Johnston and his wife, Ms Rotha Johnston, will remain with the company as it is subsumed into Musgrave.

Ms Johnston said yesterday that the acquisition would allow Variety Foods to invest in its future development. Variety Foods, which operates on an all-Ireland basis, had the potential to succeed in markets abroad, she added.

Musgrave did not disclose how much it paid for Variety Foods but the deal is likely to have created a sizeable windfall for the Johnstons.

The firm's staff, who number more than 100, will also receive a bonus calculated according to their length of service.

Variety Foods specialises in supplying frozen foods to the independent hotel and restaurant sector from distribution centres in Belfast, Cork, Dublin and Limerick.

The firm has turnover of some €30 million and has experienced double-digit sales growth in each of the past three years.

Northern Ireland Companies Office documents show that, in the year to May 30th, 2004, Variety Foods (NI) had pre-tax profits of £562,716 (€810,824) - double the profits achieved in the previous year.

The firm did not give sales figures, but gross profit was £4.8 million.

Variety Foods was initially run by Mr Johnston, but he was joined by his wife in the business in 1995. The couple are prominent in Northern Ireland's business circles, with Ms Johnston sitting on the boards of the North's inward investment body, Invest NI, and First Trust Bank.

The purchase of Variety Foods is the second acquisition to be made by Musgrave in food services within the past three months. The firm bought Killarney frozen-food company C&R Foods late last year.

The enlarged Musgrave Foodservices operation, which is a division of the Musgrave Group, will have a turnover of close to €200 million, with one-fifth of this drawn from the frozen food sector.

Bord Bia has calculated that food purchases made by the catering industry have doubled over the past four years and are set to total €3 billion in 2005.

Musgrave is the largest player in this market, which takes almost one-third of its revenues from frozen food.