British pubs group Marston's said cash-strapped customers were choosing to treat themselves to meals at their local pub instead of dining out at restaurants, helping its full-year profit come in at the upper end of expectations.

Britain's pub sector is a rare bright spot amid the economic gloom, with Mitchells & Butlers , Young's and Fuller's all issuing positive updates in recent weeks. Marston's said it would recruit 1,000 more staff next year.

Chief Executive Ralph Findlay said customers were looking for affordable treats.

The focus we've had on value has been one which we think is utterly crucial in this market, Findlay told Reuters in an interview. If you break out what consumers are spending on eating out, pubs are doing better than restaurants.

Marston's, whose managed pubs include the Pitcher & Piano chain, has introduced offers such as two main meals for 10 pounds and a curry with a drink for 4.95 pounds as it looks to pull in diners.

Findlay said he didn't anticipate economic conditions improving any time soon and said the company had tailored its strategy to suit the current market.

You can see how to some extent the pub sector can actually do well in what looks like a continuing difficult environment.

Britain said on Tuesday its economy will stagnate until mid-2012 and could easily fall back into recession. Consumer confidence edged up slightly in November but was still close to a two-year low.


Marston's has embarked on a strategy it calls 'F-Plan', focusing on food, families, females and forty/fifty somethings, in recognition of eating-out trends. It has opened 19 new pubs this year and has 25 openings planned for 2025 with the new outlets focused on a food-led offering.

Many are being built on retail parks competing against the likes of Restaurant Group , which owns casual dining chains Garfunkel's and Frankie & Benny's.

Marston's said its underlying pretax profit rose by 9.4 percent to 80.4 million pounds ($125.5 million).

Market expectations had ranged between 76 million and 81 million pounds, with the average forecast standing at 79.8 million, according to Thomson Reuters I/B/E/S data.

Food sales at outlets open more than a year were up 5 percent in the 12 months to October 1. The company sold more than 26 million meals over the course of the year at an average price of 6.10 pounds and food now accounts for 42 percent of total sales.

Marston's, which brews Pedigree and Hobgoblin beer, said it had made an encouraging start to its new fiscal year with sales at its managed pubs open more than a year up 3 percent in the eight weeks to November 26.

Rival Mitchells & Butlers, which owns Harvester and All Bar One, said earlier in November it was confident it could overcome the tough consumer environment in 2012 after mild weather boosted trade. Greene King reports first-half results Thursday.

The good trading across the pub sector continues to positively surprise given the wider economic environment, Citi analyst James Ainley said.

Shares in Marston's, which have gained 14 percent over the last 8 weeks, were up 4.7 percent to 97.85 pence at 1057 GMT.

The company is paying a final dividend of 3.7 pence, unchanged on the previous year.

(Reporting by Matt Scuffham; Editing by Rhys Jones and Jodie Ginsberg)