Greene King dines out on restaurants' success

Greene King's push into pub dining continues to reap rewards.

The Suffolk-based brewer and pubs operator, which owns the Hungry Horse, Old English Inns and Loch Fyne Restaurants chains, said like-for-like sales in its retail division rose 4.3% in the 10 weeks to Sunday, driven by a 4.7% rise in food.

Greene King also wants to expand in London and recently bought the Capital Pub Company in a £70million deal. It believes this acquisition will be a boon to sales in the upcoming Olympics.

The firm said the outlook remained uncertain but added that the expansion of its retail division after the recent acquisitions of the Cloverleaf and Realpubs chains should help deliver growth.

Investec Securities said today's update was in line with expectations, although the broker is forecasting a slight drop in full-year profits to £136.1million.

Analyst Paul Leyland also has a sell rating on the shares amid fears over the company's exposure to trends in consumer spending. But he added: "We see Greene King as a well-run operator capable of continued market share growth."