Harris + Hoole, the coffee chain that is 49% owned by Tesco, is set to close six unprofitable London stores just months after it announced plans to double the size of its workforce.
The high costs related to the premium brand were blamed for the closures by a source close to the situation who went on to question Tesco's aim to expand the brand.
But Harris + Hoole co-founder Nick Tolley dismissed the suggestion: "Our working relationship with Tesco remains strong as ever," he told the Evening Standard.
"Like any business which has grown rapidly, some locations have performed better than others, so it makes sense for us to review those locations which have done less well, or where the lease is coming to an end."
Earlier this year, the chain announced plans to hire 500 more people by the end of the year amid plans for a major expansion in the South East.
Stores in Walton-on-Thames and Hounslow as well as a pop-up concession in Tesco's Highbury store are among those set to close, which will reduce the size of the chain 41 sites.
However it aims to have 16 high street shops and 32 stores in or alongside Tesco premises by the end chain of the year.
Harris + Hoole was founded by Australian siblings Nick, Andrew and Laura Tolley, who still own the majority stake the business.
Tesco described Harris + Hoole and the company's other concession brands Giraffe and Euphorium as the future of its ailing larger stores at the opening of its Watford site last year.
Giraffe was bought by the supermarket giant for £50m in 2013. Its co-founders Juliette and Russel Joffe originally went with the business, but they announced their resignation last month.
A Tesco spokeswoman said: "We continue to work successfully with Harris + Hoole. Feedback from customers in stores with Harris + Hoole coffee shops has been really positive and we look forward to more shops opening in the future."