Italian restaurant chain Prezzo today posted a 23% hike in profits after it added 32 new sites and weathered testing consumer conditions.

The business now trades from 130 restaurants, mainly in small and medium sized regional towns and high footfall locations in city centres.

Revenues rose 29% to £70.1 million following the expansion, while profits for 2007 were £10.6 million against £8.7 million a year earlier.

Market expectations were scaled back from £11 million earlier this year after Prezzo said a lacklustre November offset a strong Christmas trading period.

Overall, Prezzo said today it was pleased with the result and that it had made a satisfactory start to trading in the current year.

Chief executive Jonathan Kaye said: 'We continue to be encouraged by the versatility and resilience of the Prezzo brand.

'Our opening programme is underway and with an encouraging site pipeline in place, we remain confident of another positive year for the company.'

Five new restaurants have opened so far this year with a further five units currently being built. It said its opening plans would take into account the challenging outlook for the UK consumer and the wider economy.

The pizza and pasta chain is majority owned by ASK Central pizza chain founders the Kaye family. They built up its core chain of restaurants in London and southern England, before the business spread its reach nationwide.

Numis Securities said consumer conditions and the potential impact on the company's roll-out of new restaurants meant it would be cutting its profits forecast for this year, probably to £11.9 million from £13.6 million.

Panmure Gordon stockbrokers said it was concerned that expansion in the restaurant sector expansion had been too rapid, with supply up 5% in 2007, including 10% in London and 2.5% in provincial areas.

Analyst Douglas Jack said: 'In this context, Prezzo is relatively attractive in being a national operator with scale advantages and an orientation to less competitive secondary towns.'

Panmure also noted the defensive qualities of Prezzo in the current climate.

Jack added: 'The consumer is yet to feel the full impact of the current economic downturn. However, we believe the restaurant sector offers better value for money than it did in 1991-2.

'As is evident in the US, operators that offer a broader product/pricing range and trading window should outperform. Prezzo has the capability and opportunity to improve its offer in this regard.'