Garfunkel’s beats crunch

Customers are still flocking to fill up on a cheap meal, the group behind Garfunkel's and Frankie and Benny's said today as it posted a 3% rise in pre-tax profits to £21.7 million for the six months to the end of June.

The Restaurant Group, which also owns Chiquito, said it was on target to open between 15 and 20 new restaurants this year, adding to its current estate of 358 outlets, which are mostly located near multiplex cinemas and in out-of-town retail parks.

Revenue rose 3% to £210 million, even though sales on delicacies such as Frankie and Benny's crispy chicken strips were 3.5% down because of strong comparables in the same period last year.

The group paid back £10 million to lenders over the first six months of the year, leaving £69 million of net debt remaining.

Chief executive Andrew Page said the company's low-price restaurants had made "profitable progress" in spite of the recession, not because of it.

He said: "These are good results, with sales, profits and earnings per share all increasing. Although conditions remain tough, going forward we will be looking to maintain our profitable progress."

Greg Feehely of Altium Securities described the figures as "stronger than expected." He added: "The Restaurant Group is significantly outperforming a challenging market".

The interim dividend was maintained at 1.4p, as shares in The Restaurant Group soared 20p to 195p.