UPDATE 2-O'Charley's hit as fewer people eat out

* Q3 loss/shr from cont ops $0.18

* Q3 revenue of $186.6 mln vs $188.6 mln

* Sees Q4 rev of $177-$182 mln vs est $185.1 mln (Adds rivals, restaurant level margins)

Nov 3 (Reuters) - O’Charley’s Inc posted a wider-than-expected loss for a second straight quarter and forecast weak revenue for the holiday period as it struggles to arrest a decline in guest counts at its flagship casual dining chain.

The company had begun its fiscal year with its first quarterly profit in nearly two years but has since slipped back to posting losses as it struggles to contain rising costs and grow traffic at its main O’Charley’s chain.

O’Charley’s stock has shed about 15 percent of its value since reporting first-quarter results.

Same-restaurant sales at the O’Charley’s chain fell 0.9 percent on a 4.5 percent decline in guest counts, ending a rebound in comparable sales that lasted for just two quarters. The company had posted its first rise in five years in comparable sales at O’Charley’s in the first quarter.

The O’Charley’s chain has struggled to grow sales in a highly competitive market, feeling the pinch of recession-wary consumer’s reluctance to dine out amid rising prices of fuel and other everyday items.

The O’Charley’s chain has 227 restaurants spread across 18 states in southeast and midwest United States, serving mostly traditional American fare.

The company has taken a number of steps to lure customers to its O’Charleys chain like ramping up promotions and bringing in Kona Grill Inc’s ex-CEO Marc Buehler to lead the division. In a rare bright spot for the chain in the quarter, the average amount of money a customer spent rose 3.8 percent.

O’Charley’s -- which also runs over a 100 Ninety Nine restaurants, a pub-style chain in New England and Massachusetts -- expects a fourth-quarter loss from operations of $3-$6 million on revenue of $177-$182 million.

Analysts on average had forecast fourth-quarter revenue of $185.1 million, according to Thomson Reuters I/B/E/S.

Last month, rival Ruby Tuesday Inc also forecast a second-quarter loss on lower same-restaurant sales, higher advertising costs and increased interest expenses. {ID:nL3E7L53GG}

Like many other restaurant chains, O’Charley’s, which also runs about 10 upscale steakhouses in six states in the Southeast and Midwest under the Stoney River Legendary Steaks name, is facing pressure on its margins from rising food costs.

O’Charley’s results, however, are in contrast to those of Texas Roadhouse Inc , which posted a better-than-expected quarterly profit as it was able to offset higher commodity costs helped by a hike in prices.

For the third quarter, the company reported a loss from continuing operations $4.0 million, or 18 cents a share, while revenue fell slightly to $186.6 million.

Analysts on average were expecting a loss of 17 cents a share on revenue of $187.4 million.

Nashville, Tennessee-based O’Charley’s shares had closed at $6.53 on Nasdaq on Wednesday. (Reporting by Chris Jonathan Peters in Bangalore; Editing by Viraj Nair)