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UPDATE 2-Frankie and Benny's owner warns of more pain for UK restaurants

* Sees extremely challenging Q1

* Co to only have about 145 sites open for dining-in

* Shares down around 5% (Updates shares, adds analyst comment, background)

Dec 18 (Reuters) - Britain’s The Restaurant Group, owner of the Frankie and Benny’s and Wagamama chains, warned of an extremely difficult few months ahead as restrictions to curb the spread of the COVID-19 pandemic hammer the hospitality sector.

The company has already permanently shut 250 restaurants and cut around 3,000 jobs, but said on Friday ongoing restrictions would take a heavy toll on its business.

Large areas of England will be added to the highest Tier 3 level of restrictions this weekend, which includes closing hospitality venues apart from takeaway services.

The Restaurant Group, which operates more than 350 restaurants and pubs across the United Kingdom, said that under the latest guidelines it would only have about 145 sites open for dining in.

“This will have a severe adverse impact on the group if this remains in place for the first quarter of 2021 with monthly losses, we estimate, of about 5-6 million pounds per month,” Liberum analyst Anna Barnfather said.

Shares of the FTSE small-cap firm, which have lost over 60% of their market value this year, were down 4.6% at 1248 GMT.

The Restaurant Group, which has received 50 million pounds in government assistance and carried out a share placing to help cope with the crisis, said its cash-burn during November’s lockdown in England was about 5.5 million pounds ($7.4 million) - 2 million pounds higher than during a lockdown in the spring.

“We expect trading conditions to remain tough while social restrictions are in place,” analysts at Stifel said.

“But second half (2021) promises something like a return to normal assuming COVID vaccines are rolled out as planned.”

$1 = 0.7395 pounds Reporting by Indranil Sarkar in Bengaluru, Editing by Aditya Soni and Mark Potter

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