Shares rise on the back of an upbeat update from the Restaurant Group signalling that consumer spending has proved largely resilient despite cost of living challenges.

The owner of the Wagamama dining chain has raised its annual profit expectations despite suffering a continued drag on the business from brands including Frankie and Benny’s.

The Restaurant Group, which has 400 UK sites, reported a 10% rise in revenue over the half-year to 2 July of £467.4m.

It drove a 15% rise in adjusted core profit to £36.3m, the company said – adding that trading since the end of the period had continued to improve.

It credited its Wagamama outlets and Brunning & Price pubs for driving the growth, with airport-based concessions enjoying a like-for-like sales leap of 29% over the year to date.

Its leisure business, comprising Frankie & Benny’s and Chiquito restaurants, endured a 2% decline by the same measure.

The arm, the company explained, was still suffering from the effects of weakened demand due to cost of living challenges among its core customer base.

However, the Restaurant Group pointed to signs of more resilient trading over the past few weeks – aided by “a strong recent cinema slate”.

It has reduced the size of its leisure trading estate and expected to have 76 sites at the end of its financial year, compared with the 116 operated at the end of last winter.

While saying that it now expected annual adjusted core profits to be higher, it did not provide a range.

A company-compiled consensus said analysts, on average, expected a figure of about £77.5m.

The Restaurant Group added that the outlook for costs over the medium term continued to improve.

Hospitality has been hammered by a tide of rising costs since the economy reopened from COVID restrictions, with Russia’s war in Ukraine adding to the bills and pressure on businesses to pass on those energy-driven increases.

The struggle has been exacerbated by the same factors affecting wider consumer bills, with the cost of living crisis evolving this year to include additional hits from higher mortgage and rental costs as interest rates have gone up to tackle the pace of price increases.

There is evidence to suggest that consumer spending is holding up despite the gloomy outlook for the wider economy.

Recent data has shown a recovery for retail sales after a weather hit in July.

Restaurant Group shares were up 3% at the open.

Its chief executive, Andy Hornby, told investors: “We are encouraged by the significant progress made in the first eight months of the year, delivering strong LFL sales growth despite the consumer backdrop.”