The company, which runs the Old English Inns and the Hungry Horse chains, said like-for-like sales at its managed outlets rose 5.2 per cent in the eight weeks to June 28.

Food now accounts for more than a third of retail sales, but the warm weather also boosted sales at pubs that are more focused on drinks than food.

Greene King, which has around 90 pubs in Yorkshire, said pre-tax profits for the year to May 3 fell 15 per cent to £118.5m, which was better than forecasts. Revenues rose 1.3 per cent to £954.6m.

Greene King's chief executive Rooney Anand said: "Mortgage costs have come down and the cost of living has come down a bit too, which has helped. Whether these are the green shoots of recovery I don't know because we're still cautious on the unemployment outlook."

Despite uncertainty over the outlook, the group, which makes market-leading cask ale Greene King IPA, said brewing volumes had risen more than 12 per cent.

Shares in the group, which have risen by a third so far this year, rose three per cent to close the day up 12.25p at 422.25p.

The company, which bought 11 pubs from Punch Taverns last month, raised £207.5m in April through a rights issue in order to buy up pubs from struggling rivals and pay down debt. It has slashed its debts by £46m so far.

Greene King said it was in no rush to spend more.

"We'll be opportunistic in how we allocate funds, but we won't spend at such a great pace that we undermine our value," said Mr Anand. "We are seeing assets being offered to us that would not, under normal circumstances, be offered."

Rivals Punch Taverns and Marston's have both launched rights issues in the last month.

KBC analyst Paul Hickman, who upgraded the company to 'buy' from 'hold', said: "Greene King has the firepower to take advantage of developing opportunities."

Like-for-like sales at Greene King's managed pub estate rose 5.2 per cent in the first eight weeks of the new business year, while its Belhaven pub business recorded like-for-like sales up 10.2 per cent.

Profits at Belhaven reached the £30m mark for the first time since Greene King bought the business in 2005.

Numis Securities lifted its target price on the company to 460p from 440p, while repeating its 'add' rating on the stock while KBC Peel Hunt upgraded its recommendation on the stock to 'buy'.

Hargreaves Lansdown equities analyst Keith Bowman said: "While the outlook remains challenging, as with any consumer-facing business, Greene King is viewed as a survivor and one which is likely to prosper from the over-exuberance of rivals."

Mr Anand said he looked ahead with "cautious optimism" due to the group's improved estate, stronger balance sheet and further growth opportunities. But with an election due in less than a year, he also warned of political as well as economic uncertainty.

"As a result, quite a lot of the decisions that affect the way we run the economy will be delayed," he said.

The group held its final dividend at 15.1p per share and said it would pursue a dividend policy of around two times underlying earnings in the future.

ros.snowdon@ypn.co.uk