O'Charley's Inc said it sees increased food and beverage costs -- mainly from higher beef prices -- continuing to weigh on its margins, and the casual dining chain posted a wider-than-expected quarterly loss, sending its shares down to their lowest in more than two years.

Rivals such as Ruby Tuesday Inc and Texas Roadhouse Inc have also warned of higher commodity costs after posting profits that missed market expectations.

"We expect percentage increase in food and beverage costs for the third quarter of 2011 in the mid- to high single-digits," said Chief Executive Jeffrey Williams on a conference call.

Commodity costs hurt second-quarter margins and the restaurant-level margins for the chain fell to 12.5 percent from 14.5 percent.

"Looks like the market did not like the fact that commodity (costs) are so high for them (O'Charley's)," said Capstone analyst Stas Kiselev.

Analyst Kiselev said 26 percent of the restaurant chain's food costs comes from beef, followed by poultry and sea food at 10 percent each.

However, he added that beef prices should reduce in 2012 and, "they might get a bit of better pricing going into the back of 2011."

O'Charley's, which operates or franchises about 343 restaurants including its Ninety Nine and Stoney River concepts, said net loss from continuing operations was $1.7 million, or 8 cents a share, compared with a loss of $2.3 million, or 11 cents a share, a year ago.

Excluding items, the company posted a loss of 10 cents a share, while analysts had expected a loss of 5 cents a share, according to Thomson Reuters I/B/E/S.

Comparable sales and guest counts increased for all three restaurant concepts, while that for O'Charley's rose 2.9 percent.

Shares of Nashville, Tennessee-based O'Charley's were trading at $5.11 on Thursday on the New York Stock Exchange after falling as low as $4.51 earlier.