(Adds details, context, share price fall)
Jan 25 (Reuters) - Restaurant Group's sales felllast year and the owner of the Frankie & Benny's chain warned onWednesday that a hike in Britain's minimum wage will drive costshigher in 2017.
Shares in Restaurant Group, which operates more than 500restaurants and pubs in the UK, were down 9.8 percent at 314.1pence at 0827 GMT, making the stock the worst performer on theFTSE Midcap Index.
Britain's finance minister in November raised the minimumwage to 7.50 pounds from 7.20 pounds, taking the edge off abenefits squeeze for low earners.
Restaurant Group, said it sees costs rising due toinitiatives such as an apprenticeship levy, proposed increasesin business rates and higher energy taxes.
The company also pointed to a rise in buying costs due to aweak pound and commodity inflation.
Restaurant Group, which ousted its chief executive lastyear, warned that trading in the first half of 2017 would remaindifficult.
Greene King Plc, a pub operator, in Novemberforecast a challenging consumer environment, partly due toincreasing levels of consumer uncertainty and further costpressures from a hike in British minimum wages.
Market research company Coffer Peach Business, said whileBritain's exit from the European Union remains the biggest worryfor restaurant, pub, bar and cafe group executives, confidencehas also been hit by concerns about business rates increases,particularly among restaurant chains that are more dependent onleased sites in urban areas.
Recent trading continues to be "challenging", RestaurantGroup said, adding that like-for-like sales fell 5.9 percent inthe final quarter, with a subdued performance across its leisurebrands.
Restaurant Group's market value more than halved last yearas it battled increased competition from food-led pubs andbranded restaurant chains and a drop in visitors to retailshopping parks, where many of its outlets are located. It warnedon 2016 profit in April.
The company also said in August that it had identified 33underperforming sites for sale or closure. (Reporting by Noor Zainab Hussain in Bengaluru; Editing byLouise Heavens and Alexander Smith)