Restaurant chains back on the menu for some investors

The biggest fish in the UK restaurant pond The Restaurant Group, which operates the Garfunkel's, Frankie & Benny's and Chiquito chains, reported a like-for-like sales increase of five per cent for the 18 weeks to May 4. This acceleration on the four per cent increase that it delivered at its final results on March 5 pushed its share price up 10 per cent and it currently stands at 164.25p.

Admittedly this it is still a mile away from its 12-month high of 362.50p but sentiment is now with the company and the likes of Numis and Altium regard it as an attractive play in the sector and have 'Buy' ratings on the stock.

The key to its success is its focus on leisure parks and airport terminals, rather than the high street, where it enjoys less competition and to a certain extent has a captive audience. But this would be doing an injustice to the company as its offer and price points are undoubtedly finding much appeal among its core customers.

With its strong current trading the company will likely have an easier time delivering on its strategy for growth, which involves it being a 'consolidator' in the sector. To this end it acquired the 14-outlet Brunning & Price pub chain last year and it has made an approach to AIM-listed Prezzo.

Adding further support to the sector was the impressive first half results from Carluccio's, which delivered a sales increase of 19 per cent to £30.9 million and the same level of uplift in pre-tax profits to £2.8 million. Although this had little effect on the share price (it remains at 150.5p as the numbers were bang-on forecasts) the resilience of the operation comforted the City.

This strong trading adds to the belief that the company is well placed to outperform in tough times because of its unique model. Each outlet comprises both an Italian deli and a restaurant that benefit from its all-day trading proposition - which is the fastest growing part of the market.

Like The Restaurant Group, Carluccio's also benefits from being at the value-for-money end of the market - its average spend in the restaurant is £12 and a lesser £8 in the deli. With its now well-tested model the potential for Carluccio's remains very strong with the belief that a further 60 outlets could be added to the existing 37 in the UK.

Adding some additional spice to the story is the opportunity for overseas growth as the company has recently opened its first franchised store, in Dublin, and trading is impressively in-line with a central London unit.

In accordance with the company's cautious stance on expansion it will be some time before it builds up an overseas portfolio of any sort of magnitude but the potential is clearly there. As soon as there is further proof that its overseas business has legs then this could provide some upside to the shares.

Although this decent trading at two of the UK's leading differentiated operators casts a positive light on the restaurant sector, for some people this will not overcome their caution towards the industry at a time when household budgets are constrained.

This viewpoint will no doubt have been fuelled further by the announcement this week that Sir Terence Conran is looking to sell the remaining stake in his restaurant empire, which could be seen as him calling the top of the market. But then that is the beauty, and also the frustration, of trying to forecast the market.