<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]       Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934
          For the Quarterly Period Ended September 26, 1999.

                                       or

[ ]       Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934
          For the Transition Period from ____________ to ____________.

Commission file number 0-25721.

                                   BUCA, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its Charter)

             Minnesota                                       41-180236
--------------------------------------------------------------------------------
  (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                          Identification No.)

         1300 Nicollet Mall
       Minneapolis, Minnesota                                  55403
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)

                                 (612) 288-2382
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
                     (Former name, former address and former
                   fiscal year, if changed since last report)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  [X]   No


Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: Common Stock, $.01 par value
10,788,550 shares as of October 28, 1999.

                                       1
<PAGE>

                                      INDEX

                           BUCA, INC. AND SUBSIDIARIES

                                                                          Page
                                                                          ----

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets - December 27, 1998 and
        September 26, 1999                                                  3

        Consolidated Statements of Operations - Thirteen and
        Thirty-Nine Weeks Ended September 27, 1998 and September 26,
        1999                                                                4

        Consolidated Statements of Cash Flows - Thirteen and
        Thirty-Nine Weeks Ended September 27, 1998 and September 26,
        1999                                                                5

        Notes to Consolidated Financial Statements                          6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                           7

Item 3. Quantitative and Qualitative Disclosures about Market Risk         14

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                  15

Item 2. Changes in Securities and Use of Proceeds                          15

Item 3. Defaults upon Senior Securities                                    15

Item 4. Submission of Matters to a Vote of Security Holders                15

Item 5. Other Information                                                  16

Item 6. Exhibits and Reports on Form 8-K                                   16

SIGNATURES                                                                 17

                                       2
<PAGE>

PART 1. - FINANCIAL INFORMATION

Item 1. Financial Statements

                           BUCA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)

<TABLE>
<CAPTION>

                                                                                                             (Unaudited)
                                                                                            December 27,    September 26,
                                                                                                1998            1999
                                                                                           ---------------  --------------
<S>                                                                                         <C>              <C>
                                    ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                                    $ 6,576         $ 1,120
     Marketable securities                                                                                         10,308
     Accounts receivable                                                                            1,160           1,720
     Inventories                                                                                      935           1,860
     Prepaid expenses and other                                                                       585           1,767
                                                                                           ---------------  --------------
        Total current assets                                                                        9,256          16,775

PROPERTY AND EQUIPMENT, net                                                                        27,697          51,912
OTHER ASSETS                                                                                          607             890
                                                                                           ---------------  --------------
                                                                                                 $ 37,560        $ 69,577
                                                                                           ===============  ==============

                  LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES
     Accounts payable                                                                             $ 2,638         $ 5,044
     Accrued expenses                                                                               3,257           4,024
     Current maturities of long-term debt                                                             205              84
                                                                                           ---------------  --------------
           Total current liabilities                                                                6,100           9,152

LONG-TERM DEBT, less current maturities                                                             7,661           1,989
DEFERRED RENT                                                                                         239             359
OTHER LIABILITIES                                                                                     127             122
REDEEMABLE STOCK:
     Undesignated stock, 617,147 shares authorized, none issued or outstanding
     Preferred stock, $.01 par value, cumulative, Series A convertible -
        2,396,800 shares authorized; 2,240,000 and 0 shares issued and outstanding                  9,665
     Preferred stock, $.01 par value, cumulative, Series B convertible -
        2,100,000 shares authorized; 1,922,222 and 0 shares issued and outstanding                  9,441
     Preferred stock, $.01 par value, cumulative, Series C convertible -
        3,679,053 shares authorized; 2,614,634 and 0 shares issued and outstanding                 13,154
     Common stock, $.01 par value; 601,929 shares issued and outstanding                            4,713
                                                                                           ---------------
                                                                                                   36,973
SHAREHOLDERS' (DEFICIT) EQUITY:
     Common stock, $.01 par value - 1,918,056 and 10,788,550 shares issued and
        outstanding, respectively                                                                      19             108
     Additional paid-in capital                                                                                    68,239
     Unrealized loss on marketable securities                                                                         (29)
     Accumulated deficit                                                                          (13,266)         (9,803)
                                                                                           ---------------  --------------
                                                                                                  (13,247)         58,515
     Notes receivable from shareholders                                                              (293)           (560)
                                                                                           ---------------  --------------
        Total shareholders' (deficit) equity                                                      (13,540)         57,955
                                                                                           ---------------  --------------
                                                                                                 $ 37,560        $ 69,577
                                                                                           ===============  ==============

</TABLE>

                     See notes to consolidated financial statements.

                                       3
<PAGE>

                           BUCA, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                 (in thousands, except share and per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                Thirteen Weeks Ended               Thirty-Nine Weeks Ended
                                                         -----------------------------------  ----------------------------------
                                                          September 27,      September 26,      September 27,     September 26,
                                                                1998              1999              1998              1999
                                                         ----------------  -----------------  ----------------  ----------------
<S>                                                      <C>               <C>                 <C>               <C>
RESTAURANT SALES                                                $ 10,675           $ 18,641          $ 26,350          $ 48,648
RESTAURANT COSTS
    Product                                                        2,964              5,162             7,440            13,468
    Labor                                                          3,485              6,065             8,477            15,677
    Direct and occupancy                                           2,155              3,811             5,511             9,989
    Depreciation and amortization                                    444                841             1,123             2,174
                                                         ----------------  -----------------  ----------------  ----------------
       Total restaurant costs                                      9,048             15,879            22,551            41,308
GENERAL AND ADMINISTRATIVE EXPENSES                                1,291              1,543             3,823             4,404
PREOPENING COSTS                                                     256              1,114               991             2,735
                                                         ----------------  -----------------  ----------------  ----------------
OPERATING INCOME (LOSS)                                               80                105            (1,015)              201
INTEREST INCOME                                                       (6)              (178)             (111)             (458)
INTEREST EXPENSE                                                     306                 50               816               422
SUBORDINATED DEBT CONVERSION COSTS                                     -                  -                 -               954
                                                         ----------------  -----------------  ----------------  ----------------
(LOSS) INCOME BEFORE INCOME TAXES AND EXTRAORDINARY                 (220)               233            (1,720)             (717)
(PROVISION) BENEFIT FOR INCOME TAXES                                  (4)                 1               (12)               10
                                                         ----------------  -----------------  ----------------  ----------------
(LOSS) INCOME BEFORE EXTRAORDINARY                                  (224)               234            (1,732)             (707)
EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT                           -                  -                 -            (1,545)
                                                         ----------------  -----------------  ----------------  ----------------
NET (LOSS) INCOME                                                 $ (224)             $ 234          $ (1,732)         $ (2,252)
                                                         ================  =================  ================  ================
CUMULATIVE PREFERRED STOCK DIVIDENDS, ACCRETION
    OF PREFERRED STOCK TO REDEMPTION VALUE, AND CHANGE
    IN REDEEMABLE COMMON STOCK                                      (488)                 -            (1,514)             (708)
                                                         ----------------  -----------------  ----------------  ----------------
NET (LOSS) INCOME APPLICABLE TO COMMON STOCK                      $ (712)             $ 234          $ (3,246)         $ (2,960)
                                                         ================  =================  ================  ================

NET (LOSS) INCOME PER COMMON SHARE - BASIC                       $ (0.28)            $ 0.02           $ (1.29)          $ (0.41)
                                                         ================  =================  ================  ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC             2,517,357         10,694,138         2,509,726         7,212,339
                                                         ================  =================  ================  ================

NET (LOSS) INCOME PER COMMON SHARE - DILUTED                     $ (0.28)            $ 0.02           $ (1.29)          $ (0.41)
                                                         ================  =================  ================  ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED           2,517,357         11,376,219         2,509,726         7,212,339
                                                         ================  =================  ================  ================

</TABLE>

                  See notes to consolidated financial statements.

                                       4
<PAGE>

                           BUCA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                        Thirteen Weeks Ended          Thirty-Nine Weeks Ended
                                                                   -----------------------------  -----------------------------
                                                                   September 27,   September 26,  September 27,   September 26,
                                                                       1998            1999           1998            1999
                                                                   -------------   -------------  -------------   -------------
<S>                                                                <C>              <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net (loss) income                                                $ (224)         $ 234          $ (1,732)     $ (2,252)
     Adjustments to reconcile net (loss) income to net cash
         (used in) provided by operating activities:
         Depreciation and amortization                                   451            841             1,118         2,174
         Deferred income taxes                                                           26                              59
         Gain on sale of property and equipment                          (59)                             (52)
         Loss on early extinguishment of debt                                                                         2,498
         Amortization of debt discount                                    54                              162
         Change in assets and liabilities:
             Accounts receivable                                        (124)          (587)             (444)         (560)
             Inventories                                                 (92)          (426)             (229)         (925)
             Prepaid expenses and other                                   68            (66)             (332)       (1,182)
             Accounts payable                                           (427)        (1,716)             (125)        2,406
             Accrued expenses                                            286          3,597               (57)          767
             Other                                                       (13)            54               202           136
                                                                      ------        -------           -------       -------
                 Net cash (used in) provided by operating
                     activities                                          (80)         1,957            (1,489)        3,121

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of available for sale marketable securities                                                           (33,223)
     Sale and maturity of available for sale marketable
         securites                                                                    7,450                          22,886
     Purchase of property and equipment                               (3,719)       (10,668)           (9,684)      (26,347)
     Proceeds from sale of property and equipment                      1,037                            2,263
     Increase in other assets                                            (58)          (324)             (204)         (605)
                                                                      ------        -------           -------       -------
                 Net cash used in investing activities                (2,740)        (3,542)           (7,625)      (37,289)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from line of credit borrowings                                                                          2,000
     Payment on line of credit                                                                                       (2,000)
     Proceeds from issuance of long-term debt                                           774             3,500         8,104
     Principal payments on long-term debt                               (208)           (33)             (386)      (13,651)
     Loan and lease acquisition costs                                                                    (183)         (224)
     Collection on notes receivable from shareholders                     11             22                40            56
     Repurchase of common stock                                                                                         (31)
     Net proceeds from issuance of common stock                                                            20        34,458
                                                                      ------        -------           -------       -------
                 Net cash (used in) provided by financing
                     activities                                         (197)           763             2,991        28,712

NET CHANGE IN CASH AND CASH EQUIVALENTS                               (3,017)          (822)           (6,123)       (5,456)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                       2,993          1,942             6,099         6,576
                                                                      ------        -------           -------       -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $  (24)       $ 1,120           $   (24)      $ 1,120
                                                                      ======        =======           =======       =======

</TABLE>

             See notes to consolidated financial statements.

                                       5
<PAGE>

                           BUCA, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

BUCA, Inc. and subsidiaries ("we", "us", or "our") develops and operates
family-style, immigrant Southern Italian restaurants located in Arizona,
California, Colorado, District of Columbia, Florida, Illinois, Indiana, Iowa,
Kansas, Kentucky, Michigan, Minnesota, New York, Ohio, Pennsylvania, Washington,
and Wisconsin under the name of BUCA di BEPPO.

The accompanying financial statements have been prepared by us without audit and
reflect all adjustments, consisting of normal recurring adjustments, which are,
in the opinion of management, necessary for a fair statement of financial
position and the results of operations for the interim periods. The statements
have been prepared in accordance with generally accepted accounting principles
and with the regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been condensed or omitted pursuant to such SEC rules and regulations.
Operating results for the thirteen and thirty-nine weeks ended September 26,
1999 are not necessarily indicative of the results that may be expected for the
year ended December 26, 1999.

The balance sheet at December 27, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

Certain prior year amounts have been reclassified to conform to the current
year's presentation.

For further information, refer to the financial statements and notes for the
fiscal year ended December 27, 1998 included in our Registration Statement on
Form S-1, registration no. 333-72593.


2. NET INCOME (LOSS) PER SHARE

Basic income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding. Diluted income (loss) per
share assumes conversion of the convertible subordinated debentures and
convertible preferred stock as of the beginning of the year and exercise of
stock options and warrants using the treasury stock method, if dilutive.
Dilutive net loss per share for all of 1998 and year to date for 1999 are the
same as basic net loss per share due to the antidilutive effect of the assumed
exercise of stock options, warrants, convertible subordinated debentures, and
convertible preferred stock securities.

Diluted loss per share excludes the following due to their antidilutive effect:

<TABLE>
<CAPTION>
                                             September 27, 1998                 September 26, 1999
                                       --------------------------------   --------------------------------
                                                            Weighted                           Weighted
                                                          Average Price                      Average Price
                                       Number of Shares     Per Share     Number of Shares     Per Share
                                       ----------------   -------------   ----------------   -------------
<S>                                    <C>                <C>             <C>                <C>
Stock warrants                              331,196           $ 2.46            14,757           $  .01
Stock options                               616,840             5.47         1,132,024             7.52
Convertible preferred stock               2,774,808             6.14
Convertible subordinated debentures         439,506             4.05           140,921             4.61
                                          ---------           ------         ---------           ------
                                          4,162,350           $ 5.53         1,287,702           $ 7.11
                                          =========           ======         =========           ======

</TABLE>

                                       6
<PAGE>

3. SUPPLEMENTAL CASH FLOW INFORMATION

The following is supplemental cash flow information for the period ended:

<TABLE>
<CAPTION>
                                                             Thirteen Weeks Ended          Thirty-Nine Weeks Ended
                                                        -----------------------------   ------------------------------
                                                        September 27,   September 26,   September 27,    September 26,
                                                             1998            1999            1998              1999
                                                        -------------   -------------   -------------    -------------
<S>                                                     <C>             <C>             <C>              <C>
Cash paid during year for:
    Interest expense                                         $ 254           $ 59          $ 576            $ 402
    Income taxes                                                --             25             --               50
Non-cash investing and financing activities:
    Shareholder receivable from issuance of common
    stock                                                       --            180             60              360
    Accretion of redeemable preferred stock to
    redemption value                                            27             --            127              150
    Dividends accrued on redeemable preferred stock            298             --            895              594
    Change in value of redeemable common stock                  --             --             --             (37)

</TABLE>

Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

General

At September 26, 1999 we owned and operated 30 full service, dinner-only
restaurants that offer high quality, immigrant Southern Italian cuisine served
family-style in large portions in a fun and energetic atmosphere that parodies
the decor and ambiance of post-War Italian/American restaurants. We intend to
open 15 new restaurants in fiscal 1999, of which 13 have opened through October
1999 and the remaining two are under construction. During fiscal 2000, we intend
to open 15 restaurants, of which we expect five to open in the first quarter of
2000.

We believe that the sales growth pattern of our new restaurants in the two years
after they open differs from the typical sales growth pattern for new
restaurants in other casual dining concepts. Our restaurants typically
experience lower restaurant sales during the first few periods after opening,
with gradually increasing restaurant sales during the remainder of the
restaurant's first year of operation. In the second year of operation, our
restaurants experience significant comparable restaurant sales growth. In
calculating comparable restaurant sales, we include a restaurant in the
comparable base once it has been open for 12 full calendar months. We believe we
have this "discovery" growth pattern over the first two years of operations
because we rely primarily on word-of-mouth advertising and repeat business to
generate increased restaurant sales. This new restaurant-opening trend has
contributed to our high levels of comparable restaurant sales increases of 8.9%
in fiscal 1997, 13.3% in fiscal 1998, and 10.3% over the first thirty-nine weeks
of fiscal 1999. After two years of operation, our restaurants typically
experience lower comparable restaurant sales increases than experienced in prior
periods. We expect this sales growth trend for new restaurants to generally
continue in the future; however, we also anticipate that in some markets,
particularly as we continue to develop additional restaurants in existing
markets, this discovery growth pattern could compress. In addition, as we
continue to grow, we expect that the impact of new restaurant openings on total
comparable restaurant sales will decrease as our mature restaurant base
continues to increase.

We intend to implement a price increase on December 27, 1999, the first day of
our fiscal 2000. The price increase will impact selected menu items and certain
specials. We anticipate that the net effect of this price change will be less
than 2%. This price increase is expected to cause product cost, labor, and
direct and occupancy costs to decrease as a percentage of sales in fiscal 2000.
In addition, the number of our restaurants operating in states with tip credit
is expected to continue to increase during fiscal 2000. In states with tip
credit, we are able to reduce tipped employees' wages up to a maximum of 50% of
minimum wage based upon reported tips. By the end of fiscal 2000, we expect that
60% of our restaurants will be operating in states with tip credit.

                                       7
<PAGE>

Our restaurant sales are comprised almost entirely of the sales of food and
beverages. Product costs include the costs of food and beverages. Labor costs
include direct hourly and management wages, bonuses, taxes and benefits for
restaurant employees. Direct and occupancy costs include restaurant supplies,
marketing costs, rent, utilities, real estate taxes, repairs and maintenance and
other related costs. Depreciation and amortization principally includes
depreciation on capital expenditures for restaurants. General and administrative
expenses are composed of expenses associated with all corporate and
administrative functions that support existing operations, management and staff
salaries, employee benefits, travel, information systems and training and market
research. Preopening costs consist of direct costs related to hiring and
training the initial restaurant workforce and certain other direct costs
associated with opening new restaurants. Interest expense includes the net cost
of interest expense on debt and interest income on invested assets.

Results of Operations

Thirteen Weeks Ended September 26, 1999 Compared to Thirteen Weeks Ended
September 27, 1998

Restaurant Sales. Restaurant sales increased by $7.9 million, or 74.6%, to $18.6
million in the third quarter of fiscal 1999 from $10.7 million in the third
quarter of fiscal 1998. The total increase consisted of restaurant sales of
approximately $7.3 million at fifteen new restaurants opened within the last 12
months and approximately $600,000 in comparable restaurant sales increases.
Comparable restaurant sales increased by 5.6% in the third quarter of fiscal
1999, entirely due to an increase in guest visits. We expect our comparable
restaurant sales percentage increases to remain in the mid-single digits in the
fourth quarter of fiscal 1999.

Product. Product costs increased by $2.2 million to $5.2 million in the third
quarter of fiscal 1999 from $3.0 million in the third quarter of fiscal 1998.
Product costs as a percentage of restaurant sales decreased to 27.7% in the
third quarter of fiscal 1999 from 27.8% in the third quarter of fiscal 1998.
This reduction was a result of management's efforts to reduce product costs and
improve margins, particularly at new restaurants. We expect product costs to
increase slightly in the fourth quarter due to the impact of the new restaurant
openings in 1999. During the fourth quarter of 1999, over 50% of our operating
weeks will be generated by restaurants open less than one year.

Labor. Labor costs increased by $2.6 million to $6.1 million in the third
quarter of fiscal 1999 from $3.5 million in the third quarter of fiscal 1998.
Labor costs decreased as a percentage of restaurant sales to 32.5% in the third
quarter of fiscal 1999 from 32.6% in the third quarter of fiscal 1998. This
decrease resulted from management's efforts to reduce labor costs, particularly
at new restaurants. We expect labor costs to decrease as a percentage of sales
during the fourth quarter of 1999. Although the impact of the 15 new restaurants
opened during 1999 will cause labor costs to increase as a percentage of sales,
we expect this increase to be offset by the impact of the tip credit. Eleven of
the 15 restaurants opened during 1999 will be in states with tip credit. At the
end of 1998, 42% of our restaurants were in states with tip credit. At the end
of 1999, 56% of our restaurants will be in states with tip credit.

Direct and Occupancy. Direct and occupancy costs increased by $1.6 million to
$3.8 million in the third quarter of fiscal 1999 from $2.2 million in the third
quarter of fiscal 1998. Direct and occupancy costs increased as a percentage of
restaurant sales to 20.4% in the third quarter of fiscal 1999 from 20.2% in the
third quarter of fiscal 1998. This increase was a result of the impact of the
ten new restaurants opened during the last six months. Direct and occupancy
costs are expected to decrease in the fourth quarter as a percentage of sales.
The expected increase in direct and occupancy costs resulting from the 15 new
restaurants opened during fiscal 1999 are anticipated to be more than offset by
the increased sales during the fourth quarter. Seasonally, the fourth quarter is
our highest volume sales quarter, with typical average unit volumes in mature
restaurants up 4% over third quarter volumes. The impact of these higher sales
volumes lowers direct and occupancy costs as a percentage of sales as the
majority of direct and occupancy costs are fixed in nature.

Depreciation and Amortization. Depreciation and amortization expenses increased
by $397,000 to $841,000 in the third quarter of fiscal 1999 from $444,000 in the
third quarter of fiscal 1998. This increase was the result of depreciation
recognized on capital expenditures for new restaurants.

General and Administrative Expenses. General and administrative expenses
increased by $252,000 to $1,543,000 in the third quarter of fiscal 1999 from
$1,291,000 in the third quarter of fiscal 1998. General and administrative

                                       8
<PAGE>

expenses decreased as a percentage of restaurant sales to 8.3% in the third
quarter of fiscal 1999 from 12.1% in the third quarter of fiscal 1998. We expect
that general and administrative expenses will continue to increase in dollar
amount in the future, but continue to decrease as a percentage of restaurant
sales because our expansion plans will require proportionately smaller
incremental increases in general and administrative expenses.

Preopening Costs. Preopening costs increased by $858,000 to $1,114,000 in the
third quarter of fiscal 1999 from $256,000 in the third quarter of fiscal 1998.
Preopening costs increased as a percentage of restaurant sales to 6.0% in the
third quarter of fiscal 1999 from 2.4% in the third quarter of fiscal 1998. The
increase was primarily a result of opening five restaurants with an additional
nine in development during the third quarter of fiscal 1999 compared to one
restaurant opened with five in development during the third quarter of fiscal
1998.

Interest (Income) Expense. We generated $128,000 in net interest income during
the third quarter of fiscal 1999 compared to $300,000 in net interest expense in
the third quarter of fiscal 1998. The interest income generated was due to the
investment of our initial public offering proceeds in April 1999 and the
repayment of $9.0 million in term loans and lines of credit we had borrowed from
our lender.

Provision / Benefit for Income Taxes. The provision for income taxes for the
third quarter of fiscal 1998 represents certain minimum state taxes based on
taxable factors other than earnings and a minor charge for federal taxes
primarily related to deferred income taxes. We did not record a tax benefit in
the third quarter of fiscal 1998 for the losses generated in previous years as
utilization of these losses in future periods was deemed uncertain. During the
third quarter of 1999, we recognized a small tax benefit due to the expectation
that we will begin to utilize our net operating loss carry-forward. At December
27, 1998, we had a net operating loss carry-forward of $3.5 million. The net
operating loss carry-forward begins to expire in fiscal 2003. The majority of
the expected income tax benefit derived by applying the statutory income tax
rate has been eliminated as a result of an increase in the deferred income tax
asset valuation allowance. We expect to continue to use the net operating loss
carry-forward in future periods to offset taxable income.

Thirty-Nine Weeks Ended September 26, 1999 Compared to Thirty-Nine Weeks Ended
September 27, 1998

Restaurant Sales. Restaurant sales increased by $22.2 million, or 84.6%, to
$48.6 million in the first three quarters of fiscal 1999 from $26.4 million in
the first three quarters of fiscal 1998. The increase was attributable to
restaurant sales increases of $19.5 million at new restaurants opened within the
last 15 months and $2.7 million in comparable restaurant sales increases over
the first three quarters of fiscal 1998. Comparable restaurant sales increased
by 10.3% in the first three quarters of fiscal 1999, primarily as a result of an
increase in guest visits.

Product. Product costs increased by $6.1 million to $13.5 million in the first
three quarters of fiscal 1999 from $7.4 million in the first three quarters of
fiscal 1998. Product costs as a percentage of restaurant sales decreased to
27.7% in the first three quarters of fiscal 1999 from 28.2% in the first three
quarters of fiscal 1998. This reduction was a result of management's efforts to
reduce the cost of food products and improve margins, particularly at our new
restaurants. We also renegotiated our agreement with a national food distributor
during the first quarter of 1999, which contributed to our reduced product costs
in the first three quarters of fiscal 1999.

Labor. Labor costs increased by $7.2 million to $15.7 million in the first three
quarters of fiscal 1999 from $8.5 million in the first three quarters of fiscal
1998. Despite the pressure on labor costs resulting from the 15 new restaurants
opened in the past 12 months, labor costs remained constant at 32.2% of sales
for the first three quarters of 1999 and 1998. At September 26, 1999, 50% of our
restaurants had been open for less than one year. At September 27, 1998, only
40% of our restaurants had been open for less than one year.

Direct and Occupancy. Direct and occupancy costs increased by $4.5 million to
$10.0 million in the first three quarters of fiscal 1999 from $5.5 million in
the first three quarters of fiscal 1998. Direct and occupancy costs decreased as
a percentage of restaurant sales to 20.5% in the first three quarters of fiscal
1999 from 20.9% in the first three quarters of fiscal 1998. This decrease was
primarily the result of the 10.3% increase in comparable restaurant sales. The
increase in comparable restaurant sales leveraged the fixed components of our
direct and occupancy costs.

                                       9
<PAGE>

Depreciation and Amortization. Depreciation and amortization expenses increased
by $1.1 million to $2.2 million in the first three quarters of fiscal 1999 from
$1.1 million in the first three quarters of fiscal 1998. This increase was the
result of depreciation recognized on capital expenditures for new restaurants.

General and Administrative Expenses. General and administrative expenses
increased by $581,000 to $4,404,000 in the first three quarters of fiscal 1999
from $3,823,000 in the first three quarters of fiscal 1998. General and
administrative expenses decreased as a percentage of sales to 9.1% in the first
three quarters of fiscal 1999 from 14.5% in the first three quarters of fiscal
1998.

Preopening Costs. Preopening costs increased by $1.7 million to $2.7 million in
the first three quarters of fiscal 1999 from $1 million in the first three
quarters of fiscal 1998. Preopening costs increased as a percentage of
restaurant sales to 5.6% in the first three quarters of fiscal 1999 from 3.8% in
the first three quarters of fiscal 1998. The increase was a result of opening
eleven restaurants with an additional nine in development during fiscal 1999
compared to four restaurants opened with five in development during fiscal 1998.

Interest (Income) Expense. Net interest income was $36,000 for fiscal 1999
compared to $705,000 in net interest expense for fiscal 1998. The decrease in
interest expense is due to the repayment of $9.0 million in long-term debt and
line of credit borrowings with the proceeds from the initial public offering
that was completed in April 1999. Interest expense is net of investment income
on the investment of the remaining initial public offering proceeds.

Provision / Benefit for Income Taxes. The provision for income taxes for the
first three quarters of fiscal 1998 represents certain minimum state taxes based
on taxable factors other than earnings and a minor charge for federal taxes
primarily related to deferred income taxes. We did not record a tax benefit in
fiscal 1998 for the losses generated in previous years as utilization of these
losses in future periods was deemed uncertain. During the first three quarters
of fiscal 1999, we recognized a small tax benefit due to the expectation that we
will begin to utilize our net operating loss carry-forward. At December 27,
1998, we had a net operating loss carry-forward of $3.5 million. The net
operating loss carry-forward begins to expire in fiscal 2003. The majority of
the expected income tax benefit derived by applying the statutory income tax
rate has been eliminated as a result of an increase in the deferred income tax
asset valuation allowance.

Liquidity and Capital Resources

Since we were formed, we have incurred significant net losses, primarily due to
restaurant development and the costs of hiring senior management to develop and
implement our expansion strategy. We have generated income from our restaurant
operations, but have incurred aggregate net losses of $9.8 million from
inception through September 26, 1999. We have funded our capital requirements
through sales of equity securities, debt financing, and sale-leaseback
arrangements. Net cash provided by operating activities was $3,121,000 for the
first three quarters of fiscal 1999 versus net cash used by operating activities
of $1,489,000 for the first three quarters of fiscal 1998. We expect to continue
to provide cash from operating activities in future periods.

We use cash primarily to fund the development and construction of new
restaurants. Capital expenditures were $26.4 million for first three quarters of
fiscal 1999 versus $9.7 million for the first three quarters of fiscal 1998. We
intend to open 15 restaurants in fiscal 1999, of which 13 have opened through
October 1999. Total capital expenditures are expected to be approximately $30
million in fiscal 1999. Each new restaurant is expected to require, on average,
a total cash investment of between $1.0 million and $1.5 million, excluding
preopening costs expected to range from $175,000 to $210,000. To date, the
majority of our restaurants are renovations of existing facilities ranging in
size from 4,500 to 10,200 square feet. We anticipate that future restaurants
will typically range in size from 7,000 to 9,000 square feet. In 1999, we will
build at least six restaurants based on our prototype designs, four of which
have opened through October 1999. These designs are expected to require between
$1.5 million and $2.0 million in total cash investment per restaurant. This
investment represents an incremental $500,000 increase over the historical cash
investment for remodeled restaurants. In the future we may refinance any
purchases of land or buildings through sale-leaseback transactions. We cannot
predict whether this financing will be available when needed or on terms
acceptable to us.

Net cash provided by financing activities was $28.7 million for first three
quarters of 1999 versus $3.0 million for the first three quarters of 1998.
Financing activities in the first three quarters of fiscal 1998 consisted of
long-term

                                       10
<PAGE>

debt borrowings. Upon completion of our initial public offering in April 1999,
we obtained approximately $35.5 million in net proceeds. A portion of the
proceeds was used to repay our $7.0 million term loan and $2.0 million in line
of credit borrowings. The remaining proceeds are expected to be used to fund
operations, additional restaurants, and other corporate purposes.

We have obtained a $15 million line of credit with US Bank, Bank of America, and
BankBoston. Currently we may borrow $10 million on the line of credit, with an
additional $5 million available in July 2000. The line of credit expires in
September 2001. The borrowing rate on the line of credit is the lower of US
Bank's reference rate or LIBOR plus 1.875% to 2.375% (8.0% to 8.5%), dependent
upon our meeting certain financial covenants. We are required to pay 0.25% to
0.5% on all unused line of credit funds. The credit agreement contains covenants
that place restrictions on sales of properties, transactions with affiliates,
creation of additional debt, and other customary covenants. Borrowings under the
credit agreement are collateralized by substantially all of our assets. We do
not anticipate that the above covenants and restrictions will have a significant
impact upon us.

Our capital requirements, including development costs related to the opening of
additional restaurants, have been and will continue to be significant. We will
need substantial capital to finance our expansion plans, which require funds for
capital expenditures, preopening costs and initial operating losses related to
new restaurant openings. The adequacy of available funds and our future capital
requirements will depend on many factors, including the pace of expansion, the
costs and capital expenditures for new restaurant development and the nature of
contributions, loans and other arrangements negotiated with landlords. Although
we can make no assurance, we believe that cash flow from operations together
with the net proceeds from our initial public offering and available borrowings
will be sufficient to fund our capital requirements through at least the year
2000. To fund future operations, we will need to raise additional capital
through public or private equity or debt financing to continue our growth. In
addition, we may from time to time consider acquiring the operations of other
restaurants. We may obtain additional equity or debt financing to fund such
acquisitions. The sale of additional equity or debt securities could result in
additional dilution to our shareholders. We cannot predict whether additional
capital will be available on favorable terms, if at all.

Inflation

The primary inflationary factors affecting our operations are food and labor
costs. A large number of our restaurant personnel are paid at rates based on the
applicable minimum wage, and increases in the minimum wage directly affect our
labor costs. To date, inflation has not had a material impact on our operating
results.

Year 2000 Issue

The "year 2000 issue" is a term used to describe the inability of some computer
hardware and software to operate properly as the date January 1, 2000
approaches, and beyond. Year 2000 issues can arise in unexpected areas.
Traditional computer hardware and software and information technology ("IT") is
not the only technology at risk. For example, things such as employee time
clocks, cash registers, and food ordering systems, as well as many other
technologies sometimes referred to as non-IT systems ("non-IT"), could be
impacted. Unless stated to the contrary, for purposes of this year 2000 update,
the term "system(s)" shall be interpreted as broadly as possible to include
every IT and non-IT system, including computer, hardware, software, process,
system, application or technology that has the potential of being adversely
affected by the year 2000 issue.

The year 2000 issue is centered on whether systems will properly recognize
date-sensitive information. Many systems are coded to accept only two digit date
data. As the year 2000 nears, systems processing date information will need to
accept four digit entries to distinguish years beginning with "19" from those
beginning with "20." The inability to recognize or properly treat dates may
cause systems to be unable to process financial, operational, and other
information, or may generate inaccurate results. Because of the peculiarities of
individual systems, the year 2000 issue may have an effect both before and after
January 1, 2000. A system may be impacted on other dates including, for example,
leap year day and others.

Significant negative changes in consumer buying patterns due to the year 2000
issue could materially adversely affect our business and financial results,
whether related to the year 2000 issue or otherwise. Conversely, if consumers
choose to dine away from home more frequently as a consequence of the year 2000
issue or otherwise,

                                       11
<PAGE>

our business could be enhanced. It is presently impossible to assess how, and
when, the public will respond to the year 2000 issue or the extent, if any, that
consumer reactions will impact our business.

We have taken, and will continue to take, actions intended to minimize the
impact of the year 2000 issue, although it is impossible to eliminate these
risks entirely. Unfortunately, there is no single test that can be used to
conclusively determine whether systems are immune to the year 2000 issue. Also
complicating testing are new year 2000 risks that are still being identified.
Another factor impeding year 2000 testing is the high degree of integration
between various systems and the impracticality or impossibility of conducting
full-scale live testing. Consequently, interrelated systems believed secure in a
test environment could conceivably fail when operating together under realistic
workloads.

Preexisting System Upgrades

Our corporate information systems have been largely upgraded or replaced in the
ordinary course of business over the past two years. We upgraded the majority of
our corporate office hardware following a fire in December 1998.

Over the past two years, an upgrade program has been undertaken to improve the
processing speed and information available at both the corporate and restaurant
location levels. This program entailed the replacement of the point-of-sale
system, restaurant level computer system, central computer system and accounting
software package. These upgrades have been conducted in the ordinary course of
business and have not been included in the costs discussed below. However, the
improvements had the incidental benefit of assisting with year 2000 readiness.

Year 2000 Review

Our review of the year 2000 issue involves inventory checks, readiness
assessments, remediation testing, and contingency planning. We have completed
the majority of our review and believe that we will be year 2000 compliant
barring any year 2000 risks not within our direct control as discussed below.

During the course of remediation testing, we have manipulated and entered new
data for both the restaurant level and corporate office systems. The remediation
testing program tested many non-IT systems including restaurant point-of-sale
systems, time clocks, credit card equipment, environmental controls, security
systems, shipping, and telephone systems. Due to the number of identical
systems, three restaurants were utilized in the user test in a simulated
setting. Although we believe that the simulation yielded sufficient information
to gauge year 2000 readiness, full load testing in a real environment (which is
presently deemed impractical without materially disrupting or degrading current
operations) could reveal unexpected problems.

Since unanticipated expenses may arise during our review, we are unable to
project with accuracy the total expected costs to achieve year 2000 readiness.
However, we do not allocate the value of time expended by corporate office
personnel when considering year 2000 project costs, and no special account has
been established to track year 2000 project costs. The costs of our year 2000
project are being funded with cash flows from our existing cash balances. We
have incurred approximately $175,000 in year 2000 project costs and expect to
incur an additional $25,000 in year 2000 project costs through the remainder of
1999 and 2000.

Internal Year 2000 Risks

Risks of systems failure at the restaurant level include, but are not limited
to, the following examples. The failure of automated environmental controls at
one of our restaurants could result in inhospitable conditions requiring
temporary closure. The failure of cash register systems or credit card
processing terminals would force reversion to manual sales tracking methods that
could slow both the throughput of guests, and in the instance of credit cards,
the recognition of income. The failure of personal computers in a restaurant
could prevent the daily polling of restaurant financial information by the
corporate office to account for restaurant results, cash deposits, accounts
payable, and payroll information. Since these computers are also used to order
food from suppliers and analyze food and labor costs, restaurant management
could be forced to revert to manual methods that are less effective or efficient
and which could increase the cost of food and labor. Telecommunication failures
could result in loss of sales due to customer inability to reach the
restaurants, as well as make the communication of restaurant results impossible.

                                       12
<PAGE>

Risks of systems failure at the corporate level include, but are not limited to,
the following examples. There may be temporary inability to conduct normal
accounting and financial functions due to incomplete or inaccurate data. The
absence of data normally utilized by management in the supervision of our
restaurants could make such oversight difficult and less effective, increasing
costs until the data is restored. Telecommunications risks would parallel those
at the restaurant level. A coordinated computer, software and telecommunication
system is used to sweep cash from local depositories into central accounts. The
failure of any element of this system could cause interruptions in the
availability of cash to meet our liabilities. Similar risks exist with respect
to an integrated payroll system consolidating restaurant and corporate data and
passing it on to a third party payroll administrator.

External Year 2000 Risks

We rely on vendors to supply the key items necessary to run our restaurants.
Unfortunately, we have little control over many of these external parties and it
is unlikely that we will be able to obtain adequate levels of assurance that
they have prepared sufficiently to be ready for the year 2000 issue.

For a restaurant to be able to generate revenue, it must be open for business
during its normal operating hours, staffed, lit, heated, and supplied with
product and other supplies necessary to serve its guests. Examples of external
factors that could prevent these things from occurring include the inability to
open due to lack of power or utilities, lack of food and other supplies due to
service interruptions involving suppliers or distributors, and the inability to
access the restaurants due to malfunctioning security systems controlled by
others or other facilities related impediments.

At a corporate level, third parties are relied upon for certain services,
particularly in the payroll and information services departments. For example, a
failure of the payroll vendor to supply payroll checks would interrupt the flow
of compensation to employees that could jeopardize staffing throughout the
organization. Our payroll processor has asserted that they are compliant.

Common external risks to both our corporate and restaurant operations include
interruptions in utilities to our facilities, whether related to electrical,
natural gas, water, sewer, waste removal, or telephone or data transmission
services.

We have sent 558 surveys to vendors of IT services, food and material vendors,
and utilities, among others, in an attempt to obtain certifications of their
readiness with respect to the year 2000 issue. To date, 233 of the surveys, or
41.8%, have been returned. All of the vendors who responded to our inquiry
stated that they are or plan to be compliant by the end of 1999, dependent upon
the reliability of their third parties' year 2000 compliance statements. The
utility and telecommunication firms have been conditional in their expressions
of year 2000 readiness, typically linking their readiness to the preparedness of
unrelated parties (for example, other contributors to the national power grid).
Our primary food distributor, SYSCO, has asserted that it will be year 2000
compliant by the end of 1999.

While we will continue to seek vendor readiness certifications relative to the
year 2000 issue, we expect that many companies will fail to provide such
documentation, whether due to liability concerns or otherwise. Consequently, we
are taking this factor into account, wherever possible, when formulating our
contingency plans.

Magnitude of the Year 2000 Problem

Any individual risk listed above, if experienced on a broad enough scale and of
lengthy duration, could have a material adverse effect on our results of
operations, liquidity, and financial condition. We anticipate that the worst
case year 2000 issue scenario would involve the closure for a material period of
time of most or all our restaurants due to national utility interruptions,
coupled with adverse changes in customer spending patterns. The most likely risk
scenario may instead be more localized closures of individual restaurants, or
groups of restaurants in a particular city, due to utility interruption or
failure to receive necessary food and other supplies. We believe that as long as
the restaurants can be kept open to the public in the manner they are
accustomed, the failure of administrative and corporate office functions should
have modest effects on revenue producing activities.

                                       13
<PAGE>

Contingency Plans

We have developed contingency plans for the year 2000 issue. These plans were
being developed for each of our departments and address both internal and
external year 2000 risks. For example, the plan has procedures for manually
recording and reporting sales transactions, it addresses supply shortages from
key distributors, and delineates various other contingency items.

Our risk assessment of the year 2000 issue is based on our current knowledge,
and could in hindsight prove incomplete and possibly overstate or understate the
actual risks. The ability to address the year 2000 issue in the manner and
within the cost estimates described above could be adversely affected by
negative findings arising during the course of testing systems and implementing
solutions or contingency plans.

Disclosure Regarding Forward-Looking Statements

This Form 10-Q for the third quarter ended September 26, 1999 contains
forward-looking statements within the meaning of the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are based on the beliefs of our management as well as on assumptions
made by and information currently available to us at the time the statements
were made. When used in this Form 10-Q, the words "anticipate", "believe",
"estimate", "expect", "intend" and similar expressions, as they relate to us,
are intended to identify the forward-looking statements. Although we believe
that these statements are reasonable, you should be aware that actual results
could differ materially from those projected by the forward-looking statements.
Because actual results may differ, readers are cautioned not to place
undue reliance on forward-looking statements. The actual number of restaurants
opened during any period could be higher or lower than the projected amount
based upon the timing and success of locating suitable sites, negotiating
acceptable leases, managing construction and recruiting qualified operating
personnel. Our comparable store sales percentage increases could moderate as a
result of competition, general economic conditions, or changes in consumer
preferences or discretionary consumer spending. The effect of a price increase
on product, labor, and direct and occupancy costs may be adversely affected by
increased products costs, changes in the labor market, or our ability to
negotiate favorable lease terms, as well as general economic conditions. Product
costs could be adversely affected by increased distribution prices by SYSCO
Corporation or a failure to perform by SYSCO, as well as adverse weather
conditions, governmental regulation and general economic conditions. Labor costs
could increase due to increases in the minimum wage as well as competition for
qualified employees and the need to pay higher wages to attract sufficient
employees. Direct and occupancy costs could be adversely affected by an
inability to negotiate favorable lease terms as well as general economic
conditions. General and administrative expenses could increase due to
competition for qualified employees and the need to pay higher wages to attract
sufficient employees as well as general economic conditions. Additional factors
that could cause actual results to differ include: risks associated with future
growth; inability to achieve and manage planned expansion; fluctuations in
operating results; the need for additional capital; risks associated with
discretionary consumer spending; inability to compete with larger, more
established competitors; potential labor shortages; our dependence on
governmental licenses; complaints or litigation from guests; and risks
associated with year 2000 issues. Certain of these risk factors are more fully
discussed in our Quarterly Report on Form 10-Q for the period ended March 28,
1999. We caution you, however, that the list of factors above may not be
exhaustive and that those or other factors, many of which are outside of our
control, could have a material adverse effect on us and our results of
operations. All forward-looking statements attributable to persons acting on our
behalf or us are expressly qualified in their entirety by the cautionary
statements set forth here. We assume no obligation to publicly release the
results of any revision or updates to these forward-looking statements to
reflect future events or unanticipated occurrences.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates on borrowings under
our revolving line of credit that bears interest from time to time at the lower
of the lending bank's reference rate or LIBOR plus 1.875% to 2.375%. Because we
do not believe that changes in interest rates from the maximum available
borrowings under the revolving line of credit are material, we do not believe
this risk will be material. We currently do not have any borrowings on our
revolving line of credit.

We have no derivative financial instruments or derivative commodity instruments
in our cash and cash equivalents and marketable securities. We invest our cash
and cash equivalents and marketable securities in investment grade, highly
liquid investments, consisting of money market instruments, bank certificates of
deposit, overnight investments in commercial paper, and short term government
and corporate bonds. We have invested the net proceeds from our public offering
in similar investment grade and highly liquid investments.

                                       14
<PAGE>

Many of the food products purchased by us are affected by commodity pricing and
are, therefore, subject to price volatility caused by weather, production
problems, delivery difficulties and other factors which are outside our control.
To control this risk in part, we have fixed price purchase commitments with
terms of one year or less for food and supplies from vendors who supply our
national food distributor. In addition, we believe that substantially all of our
food and supplies are available from several sources, which helps to control
food commodity risks. We believe we have the ability to increase menu prices, or
vary the menu items offered, if needed in response to a food product price
increases. To compensate for a hypothetical price increase of 10% for food and
supplies, we would need to increase menu prices by an average of 3%, which is
consistent with our average price increase of 3% in fiscal 1998 and 2% in fiscal
1997. Accordingly, we believe that a hypothetical 10% increase in food product
costs would not have a material effect on our operating results.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently subject to various legal actions arising in the normal course
of business, none of which are expected to have a material effect on our results
of operations, financial condition or cash flows.

Item 2. Changes in Securities and Use of Proceeds

Since June 27, 1999, we have sold the following securities pursuant to exemption
from registration under the Securities Act. All of the sales were made in
reliance upon the exemptions from registration provided under Section 4(2) and
Regulation D of the Securities Act for transactions not involving a public
offering. All shares were issued directly by us, no underwriters were involved
and no discount, commission or other transaction-related remuneration was paid.

1.   On July 20, 1999, we issued 6,944 shares of common stock for $50,000, or
     $7.20 per share, to outside investors upon conversion of certain
     subordinated debentures in aggregate principal amount of $50,000 held by
     the investors.

2.   On July 28, 1999, we issued 12,330 shares of common stock for $184.97, or
     $.01 per share, to outside investors upon exercise of warrants previously
     issued to the investors.

3.   On August 4, 1999, we issued 7,706 shares of common stock for $77.06, or
     $.01 per share, to an outside investor upon exercise of warrants previously
     issued to the investor.

4.   On August 9, 1999, we issued 385 shares of common stock for $3.85, or $.01
     per share, to an outside investor upon exercise of warrants previously
     issued to the investor and 90,454 shares of common stock to outside
     investors upon conversion and surrender of 90,509 warrants previously
     issued to the investors.

5.   On August 18, 1999, we issued 19,267 shares of common stock for $192.67, or
     $.01 per share, to an outside investor upon exercise of warrants previously
     issued to the investor and 23,160 shares of common stock to an outside
     investor upon conversion and surrender of 23,174 warrants previously issued
     to the investor.

6.   On August 23, 1999, we issued 15,414 shares of common stock for $154.14, or
     $.01 per share, to an outside investor upon exercise of warrants previously
     issued to the investor.


Item 3. Defaults upon Senior Securities

     None

Item 4. Submission of Matters to a Vote of Security Holders

     None

                                       15
<PAGE>

Item 5. Other Information

     None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit No.                                  Description                                Method of Filing
--------------------------------------------------------------------------------------------------------------
<S>               <C>                                                                   <C>
         3.1      Amended and Restated Articles of Incorporation of the Company (1)     Incorporated By
                                                                                        Reference
         3.2      Amended and Restated Bylaws of the Company (2)                        Incorporated By
                                                                                        Reference
         4.1      Specimen Common Stock Certificate (3)                                 Incorporated By
                                                                                        Reference
         4.2      Securities Purchase Agreement dated as of October 13, 1998            Incorporated By
                  between the Company and the Purchasers (4)                            Reference
         4.3      Non-Statutory Stock Option Agreement between the Company and          Incorporated By
                  1204 Harmon Partnership dated as of June 1, 1998 (5)                  Reference
         4.4      Form of stock purchase warrant dated as of October 31, 1997 (6)       Incorporated By
                                                                                        Reference
        10.1      Credit Agreement dated as of September 27, 1999                       Electronic Transmission
        10.2      First Amendment to Credit Agreement dated as of October 21, 1999      Electronic Transmission
        27.1      Financial Data Schedule for the quarter ended September 26, 1999      Electronic Transmission

</TABLE>

(1)  Incorporated by reference to Exhibit 3.4 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(2)  Incorporated by reference to Exhibit 3.5 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(3)  Incorporated by reference to the same numbered Exhibit to the Company's
     Registration Statement on Form S-1 (Registration No. 333-72593).
(4)  Incorporated by reference to Exhibit 10.17 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(5)  Incorporated by reference to Exhibit 10.15 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(6)  Incorporated by reference to Exhibit 10.12 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).

(b) Valuation and Qualifying Accounts:

          None

(c) Reports on Form 8-K

          No reports on Form 8-K were filed during the fiscal quarter ended
          September 26, 1999.

                                       16

<PAGE>

                                   SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                        BUCA, Inc.
                                        (Registrant)

Date: November 10, 1999                 By:  /s/  Joseph P. Micatrotto
                                             ---------------------------------
                                             Joseph P. Micatrotto,
                                             Chairman, President and Chief
                                             Executive Officer
                                             (Principal Executive Officer)


Date: November 10, 1999                 By:  /s/  Greg A. Gadel
                                             ---------------------------------
                                             Greg A. Gadel
                                             Chief Financial Officer

                                       17
<PAGE>

                                  Exhibit Index


<TABLE>
<CAPTION>

Exhibit No.                         Description                                                  Method of Filing
-----------------------------------------------------------------------------------------------------------------
<S>               <C>                                                                            <C>
         3.2      Restated Certificate of Incorporation of the Company (1)                       Incorporated By
                                                                                                 Reference
         3.4      Restated Bylaws of the Company (2)                                             Incorporated By
                                                                                                 Reference
         4.1      Specimen Common Stock Certificate (3)                                          Incorporated By
                                                                                                 Reference
         4.2      Securities Purchase Agreement dated as of October 13, 1998 between             Incorporated By
                  the Company and the Purchasers (4)                                             Reference
         4.3      Non-Statutory Stock Option Agreement between the Company and 1204              Incorporated By
                  Harmon Partnership dated as of June 1, 1998 (5)                                Reference
         4.4      Form of stock purchase warrant dated as of October 31, 1997 (6)                Incorporated By
                                                                                                 Reference
        10.1      Credit Agreement dated as of September 27, 1999                                Electronic
                                                                                                 Transmission
        10.2      First Amendment to Credit Agreement dated as of October 21, 1999               Electronic
                                                                                                 Transmission
        27.1      Financial Data Schedule for the quarter ended June 27, 1999                    Electronic
                                                                                                 Transmission
</TABLE>

(1)  Incorporated by reference to Exhibit 3.4 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(2)  Incorporated by reference to Exhibit 3.5 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(3)  Incorporated by reference to the same numbered Exhibit to the Company's
     Registration Statement on Form S-1 (Registration No. 333-72593).
(4)  Incorporated by reference to Exhibit 10.17 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(5)  Incorporated by reference to Exhibit 10.15 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(6)  Incorporated by reference to Exhibit 10.12 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).

                                       18
[{"type": "10-Q", "sequence": "1", "description": "FORM 10-Q", "secsgml_size_bytes": 77122}]
{"company-data": {"conformed-name": "BUCA INC /MN", "cik": "0001046501", "assigned-sic": "5812", "irs-number": "411802364", "state-of-incorporation": "MN", "fiscal-year-end": "1227"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-25721", "film-number": "99745884"}, "business-address": {"street1": "1300 NICOLLET MALL", "street2": "SUITE 3043", "city": "MINNEAPOLIS", "state": "MN", "zip": "55403", "phone": "6122882382"}, "mail-address": {"street1": "1300 NICOLLET MALL", "street2": "SUITE 3043", "city": "MINNEAPOLIS", "state": "MN", "zip": "55403"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)

[X]       Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934
          For the Quarterly Period Ended September 26, 1999.

                                       or

[ ]       Transition Report Pursuant to Section 13 or 15(d) of the Securities
          Exchange Act of 1934
          For the Transition Period from ____________ to ____________.

Commission file number 0-25721.

                                   BUCA, Inc.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its Charter)

             Minnesota                                       41-180236
--------------------------------------------------------------------------------
  (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                          Identification No.)

         1300 Nicollet Mall
       Minneapolis, Minnesota                                  55403
--------------------------------------------------------------------------------
(Address of principal executive offices)                     (Zip Code)

                                 (612) 288-2382
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
                     (Former name, former address and former
                   fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.  Yes  [X]   No

Indicate the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: Common Stock, $.01 par value
10,788,550 shares as of October 28, 1999.

                                       1
INDEX

                           BUCA, INC. AND SUBSIDIARIES

                                                                          Page
                                                                          ----

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Consolidated Balance Sheets - December 27, 1998 and
        September 26, 1999                                                  3

        Consolidated Statements of Operations - Thirteen and
        Thirty-Nine Weeks Ended September 27, 1998 and September 26,
        1999                                                                4

        Consolidated Statements of Cash Flows - Thirteen and
        Thirty-Nine Weeks Ended September 27, 1998 and September 26,
        1999                                                                5

        Notes to Consolidated Financial Statements                          6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations                                           7

Item 3. Quantitative and Qualitative Disclosures about Market Risk         14

PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                  15

Item 2. Changes in Securities and Use of Proceeds                          15

Item 3. Defaults upon Senior Securities                                    15

Item 4. Submission of Matters to a Vote of Security Holders                15

Item 5. Other Information                                                  16

Item 6. Exhibits and Reports on Form 8-K                                   16

SIGNATURES                                                                 17

                                       2
PART 1. - FINANCIAL INFORMATION

Item 1. Financial Statements

                           BUCA, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)
(Unaudited)
                                                                                            December 27,    September 26,
                                                                                                1998            1999
                                                                                           ---------------  --------------
ASSETS
CURRENT ASSETS:
     Cash and cash equivalents                                                                    $ 6,576         $ 1,120
     Marketable securities                                                                                         10,308
     Accounts receivable                                                                            1,160           1,720
     Inventories                                                                                      935           1,860
     Prepaid expenses and other                                                                       585           1,767
                                                                                           ---------------  --------------
        Total current assets                                                                        9,256          16,775

PROPERTY AND EQUIPMENT, net                                                                        27,697          51,912
OTHER ASSETS                                                                                          607             890
                                                                                           ---------------  --------------
                                                                                                 $ 37,560        $ 69,577
                                                                                           ===============  ==============

                  LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES
     Accounts payable                                                                             $ 2,638         $ 5,044
     Accrued expenses                                                                               3,257           4,024
     Current maturities of long-term debt                                                             205              84
                                                                                           ---------------  --------------
           Total current liabilities                                                                6,100           9,152

LONG-TERM DEBT, less current maturities                                                             7,661           1,989
DEFERRED RENT                                                                                         239             359
OTHER LIABILITIES                                                                                     127             122
REDEEMABLE STOCK:
     Undesignated stock, 617,147 shares authorized, none issued or outstanding
     Preferred stock, $.01 par value, cumulative, Series A convertible -
        2,396,800 shares authorized; 2,240,000 and 0 shares issued and outstanding                  9,665
     Preferred stock, $.01 par value, cumulative, Series B convertible -
        2,100,000 shares authorized; 1,922,222 and 0 shares issued and outstanding                  9,441
     Preferred stock, $.01 par value, cumulative, Series C convertible -
        3,679,053 shares authorized; 2,614,634 and 0 shares issued and outstanding                 13,154
     Common stock, $.01 par value; 601,929 shares issued and outstanding                            4,713
                                                                                           ---------------
                                                                                                   36,973
SHAREHOLDERS' (DEFICIT) EQUITY:
     Common stock, $.01 par value - 1,918,056 and 10,788,550 shares issued and
        outstanding, respectively                                                                      19             108
     Additional paid-in capital                                                                                    68,239
     Unrealized loss on marketable securities                                                                         (29)
     Accumulated deficit                                                                          (13,266)         (9,803)
                                                                                           ---------------  --------------
                                                                                                  (13,247)         58,515
     Notes receivable from shareholders                                                              (293)           (560)
                                                                                           ---------------  --------------
        Total shareholders' (deficit) equity                                                      (13,540)         57,955
                                                                                           ---------------  --------------
                                                                                                 $ 37,560        $ 69,577
                                                                                           ===============  ==============
See notes to consolidated financial statements.

                                       3
BUCA, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                 (in thousands, except share and per share data)
                                   (Unaudited)
Thirteen Weeks Ended               Thirty-Nine Weeks Ended
                                                         -----------------------------------  ----------------------------------
                                                          September 27,      September 26,      September 27,     September 26,
                                                                1998              1999              1998              1999
                                                         ----------------  -----------------  ----------------  ----------------
RESTAURANT SALES                                                $ 10,675           $ 18,641          $ 26,350          $ 48,648
RESTAURANT COSTS
    Product                                                        2,964              5,162             7,440            13,468
    Labor                                                          3,485              6,065             8,477            15,677
    Direct and occupancy                                           2,155              3,811             5,511             9,989
    Depreciation and amortization                                    444                841             1,123             2,174
                                                         ----------------  -----------------  ----------------  ----------------
       Total restaurant costs                                      9,048             15,879            22,551            41,308
GENERAL AND ADMINISTRATIVE EXPENSES                                1,291              1,543             3,823             4,404
PREOPENING COSTS                                                     256              1,114               991             2,735
                                                         ----------------  -----------------  ----------------  ----------------
OPERATING INCOME (LOSS)                                               80                105            (1,015)              201
INTEREST INCOME                                                       (6)              (178)             (111)             (458)
INTEREST EXPENSE                                                     306                 50               816               422
SUBORDINATED DEBT CONVERSION COSTS                                     -                  -                 -               954
                                                         ----------------  -----------------  ----------------  ----------------
(LOSS) INCOME BEFORE INCOME TAXES AND EXTRAORDINARY                 (220)               233            (1,720)             (717)
(PROVISION) BENEFIT FOR INCOME TAXES                                  (4)                 1               (12)               10
                                                         ----------------  -----------------  ----------------  ----------------
(LOSS) INCOME BEFORE EXTRAORDINARY                                  (224)               234            (1,732)             (707)
EXTRAORDINARY LOSS ON EXTINGUISHMENT OF DEBT                           -                  -                 -            (1,545)
                                                         ----------------  -----------------  ----------------  ----------------
NET (LOSS) INCOME                                                 $ (224)             $ 234          $ (1,732)         $ (2,252)
                                                         ================  =================  ================  ================
CUMULATIVE PREFERRED STOCK DIVIDENDS, ACCRETION
    OF PREFERRED STOCK TO REDEMPTION VALUE, AND CHANGE
    IN REDEEMABLE COMMON STOCK                                      (488)                 -            (1,514)             (708)
                                                         ----------------  -----------------  ----------------  ----------------
NET (LOSS) INCOME APPLICABLE TO COMMON STOCK                      $ (712)             $ 234          $ (3,246)         $ (2,960)
                                                         ================  =================  ================  ================

NET (LOSS) INCOME PER COMMON SHARE - BASIC                       $ (0.28)            $ 0.02           $ (1.29)          $ (0.41)
                                                         ================  =================  ================  ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - BASIC             2,517,357         10,694,138         2,509,726         7,212,339
                                                         ================  =================  ================  ================

NET (LOSS) INCOME PER COMMON SHARE - DILUTED                     $ (0.28)            $ 0.02           $ (1.29)          $ (0.41)
                                                         ================  =================  ================  ================
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING - DILUTED           2,517,357         11,376,219         2,509,726         7,212,339
                                                         ================  =================  ================  ================
See notes to consolidated financial statements.

                                       4
BUCA, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
Thirteen Weeks Ended          Thirty-Nine Weeks Ended
                                                                   -----------------------------  -----------------------------
                                                                   September 27,   September 26,  September 27,   September 26,
                                                                       1998            1999           1998            1999
                                                                   -------------   -------------  -------------   -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net (loss) income                                                $ (224)         $ 234          $ (1,732)     $ (2,252)
     Adjustments to reconcile net (loss) income to net cash
         (used in) provided by operating activities:
         Depreciation and amortization                                   451            841             1,118         2,174
         Deferred income taxes                                                           26                              59
         Gain on sale of property and equipment                          (59)                             (52)
         Loss on early extinguishment of debt                                                                         2,498
         Amortization of debt discount                                    54                              162
         Change in assets and liabilities:
             Accounts receivable                                        (124)          (587)             (444)         (560)
             Inventories                                                 (92)          (426)             (229)         (925)
             Prepaid expenses and other                                   68            (66)             (332)       (1,182)
             Accounts payable                                           (427)        (1,716)             (125)        2,406
             Accrued expenses                                            286          3,597               (57)          767
             Other                                                       (13)            54               202           136
                                                                      ------        -------           -------       -------
                 Net cash (used in) provided by operating
                     activities                                          (80)         1,957            (1,489)        3,121

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchase of available for sale marketable securities                                                           (33,223)
     Sale and maturity of available for sale marketable
         securites                                                                    7,450                          22,886
     Purchase of property and equipment                               (3,719)       (10,668)           (9,684)      (26,347)
     Proceeds from sale of property and equipment                      1,037                            2,263
     Increase in other assets                                            (58)          (324)             (204)         (605)
                                                                      ------        -------           -------       -------
                 Net cash used in investing activities                (2,740)        (3,542)           (7,625)      (37,289)

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from line of credit borrowings                                                                          2,000
     Payment on line of credit                                                                                       (2,000)
     Proceeds from issuance of long-term debt                                           774             3,500         8,104
     Principal payments on long-term debt                               (208)           (33)             (386)      (13,651)
     Loan and lease acquisition costs                                                                    (183)         (224)
     Collection on notes receivable from shareholders                     11             22                40            56
     Repurchase of common stock                                                                                         (31)
     Net proceeds from issuance of common stock                                                            20        34,458
                                                                      ------        -------           -------       -------
                 Net cash (used in) provided by financing
                     activities                                         (197)           763             2,991        28,712

NET CHANGE IN CASH AND CASH EQUIVALENTS                               (3,017)          (822)           (6,123)       (5,456)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                       2,993          1,942             6,099         6,576
                                                                      ------        -------           -------       -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $  (24)       $ 1,120           $   (24)      $ 1,120
                                                                      ======        =======           =======       =======
See notes to consolidated financial statements.

                                       5
BUCA, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

BUCA, Inc. and subsidiaries ("we", "us", or "our") develops and operates
family-style, immigrant Southern Italian restaurants located in Arizona,
California, Colorado, District of Columbia, Florida, Illinois, Indiana, Iowa,
Kansas, Kentucky, Michigan, Minnesota, New York, Ohio, Pennsylvania, Washington,
and Wisconsin under the name of BUCA di BEPPO.

The accompanying financial statements have been prepared by us without audit and
reflect all adjustments, consisting of normal recurring adjustments, which are,
in the opinion of management, necessary for a fair statement of financial
position and the results of operations for the interim periods. The statements
have been prepared in accordance with generally accepted accounting principles
and with the regulations of the Securities and Exchange Commission ("SEC").
Certain information and footnote disclosures, normally included in financial
statements prepared in accordance with generally accepted accounting principles,
have been condensed or omitted pursuant to such SEC rules and regulations.
Operating results for the thirteen and thirty-nine weeks ended September 26,
1999 are not necessarily indicative of the results that may be expected for the
year ended December 26, 1999.

The balance sheet at December 27, 1998 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.

Certain prior year amounts have been reclassified to conform to the current
year's presentation.

For further information, refer to the financial statements and notes for the
fiscal year ended December 27, 1998 included in our Registration Statement on
Form S-1, registration no. 333-72593.

2. NET INCOME (LOSS) PER SHARE

Basic income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common shares outstanding. Diluted income (loss) per
share assumes conversion of the convertible subordinated debentures and
convertible preferred stock as of the beginning of the year and exercise of
stock options and warrants using the treasury stock method, if dilutive.
Dilutive net loss per share for all of 1998 and year to date for 1999 are the
same as basic net loss per share due to the antidilutive effect of the assumed
exercise of stock options, warrants, convertible subordinated debentures, and
convertible preferred stock securities.

Diluted loss per share excludes the following due to their antidilutive effect:
September 27, 1998                 September 26, 1999
                                       --------------------------------   --------------------------------
                                                            Weighted                           Weighted
                                                          Average Price                      Average Price
                                       Number of Shares     Per Share     Number of Shares     Per Share
                                       ----------------   -------------   ----------------   -------------
Stock warrants                              331,196           $ 2.46            14,757           $  .01
Stock options                               616,840             5.47         1,132,024             7.52
Convertible preferred stock               2,774,808             6.14
Convertible subordinated debentures         439,506             4.05           140,921             4.61
                                          ---------           ------         ---------           ------
                                          4,162,350           $ 5.53         1,287,702           $ 7.11
                                          =========           ======         =========           ======
6
3. SUPPLEMENTAL CASH FLOW INFORMATION

The following is supplemental cash flow information for the period ended:
Thirteen Weeks Ended          Thirty-Nine Weeks Ended
                                                        -----------------------------   ------------------------------
                                                        September 27,   September 26,   September 27,    September 26,
                                                             1998            1999            1998              1999
                                                        -------------   -------------   -------------    -------------
Cash paid during year for:
    Interest expense                                         $ 254           $ 59          $ 576            $ 402
    Income taxes                                                --             25             --               50
Non-cash investing and financing activities:
    Shareholder receivable from issuance of common
    stock                                                       --            180             60              360
    Accretion of redeemable preferred stock to
    redemption value                                            27             --            127              150
    Dividends accrued on redeemable preferred stock            298             --            895              594
    Change in value of redeemable common stock                  --             --             --             (37)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

General

At September 26, 1999 we owned and operated 30 full service, dinner-only
restaurants that offer high quality, immigrant Southern Italian cuisine served
family-style in large portions in a fun and energetic atmosphere that parodies
the decor and ambiance of post-War Italian/American restaurants. We intend to
open 15 new restaurants in fiscal 1999, of which 13 have opened through October
1999 and the remaining two are under construction. During fiscal 2000, we intend
to open 15 restaurants, of which we expect five to open in the first quarter of
2000.

We believe that the sales growth pattern of our new restaurants in the two years
after they open differs from the typical sales growth pattern for new
restaurants in other casual dining concepts. Our restaurants typically
experience lower restaurant sales during the first few periods after opening,
with gradually increasing restaurant sales during the remainder of the
restaurant's first year of operation. In the second year of operation, our
restaurants experience significant comparable restaurant sales growth. In
calculating comparable restaurant sales, we include a restaurant in the
comparable base once it has been open for 12 full calendar months. We believe we
have this "discovery" growth pattern over the first two years of operations
because we rely primarily on word-of-mouth advertising and repeat business to
generate increased restaurant sales. This new restaurant-opening trend has
contributed to our high levels of comparable restaurant sales increases of 8.9%
in fiscal 1997, 13.3% in fiscal 1998, and 10.3% over the first thirty-nine weeks
of fiscal 1999. After two years of operation, our restaurants typically
experience lower comparable restaurant sales increases than experienced in prior
periods. We expect this sales growth trend for new restaurants to generally
continue in the future; however, we also anticipate that in some markets,
particularly as we continue to develop additional restaurants in existing
markets, this discovery growth pattern could compress. In addition, as we
continue to grow, we expect that the impact of new restaurant openings on total
comparable restaurant sales will decrease as our mature restaurant base
continues to increase.

We intend to implement a price increase on December 27, 1999, the first day of
our fiscal 2000. The price increase will impact selected menu items and certain
specials. We anticipate that the net effect of this price change will be less
than 2%. This price increase is expected to cause product cost, labor, and
direct and occupancy costs to decrease as a percentage of sales in fiscal 2000.
In addition, the number of our restaurants operating in states with tip credit
is expected to continue to increase during fiscal 2000. In states with tip
credit, we are able to reduce tipped employees' wages up to a maximum of 50% of
minimum wage based upon reported tips. By the end of fiscal 2000, we expect that
60% of our restaurants will be operating in states with tip credit.

                                       7
Our restaurant sales are comprised almost entirely of the sales of food and
beverages. Product costs include the costs of food and beverages. Labor costs
include direct hourly and management wages, bonuses, taxes and benefits for
restaurant employees. Direct and occupancy costs include restaurant supplies,
marketing costs, rent, utilities, real estate taxes, repairs and maintenance and
other related costs. Depreciation and amortization principally includes
depreciation on capital expenditures for restaurants. General and administrative
expenses are composed of expenses associated with all corporate and
administrative functions that support existing operations, management and staff
salaries, employee benefits, travel, information systems and training and market
research. Preopening costs consist of direct costs related to hiring and
training the initial restaurant workforce and certain other direct costs
associated with opening new restaurants. Interest expense includes the net cost
of interest expense on debt and interest income on invested assets.

Results of Operations

Thirteen Weeks Ended September 26, 1999 Compared to Thirteen Weeks Ended
September 27, 1998

Restaurant Sales. Restaurant sales increased by $7.9 million, or 74.6%, to $18.6
million in the third quarter of fiscal 1999 from $10.7 million in the third
quarter of fiscal 1998. The total increase consisted of restaurant sales of
approximately $7.3 million at fifteen new restaurants opened within the last 12
months and approximately $600,000 in comparable restaurant sales increases.
Comparable restaurant sales increased by 5.6% in the third quarter of fiscal
1999, entirely due to an increase in guest visits. We expect our comparable
restaurant sales percentage increases to remain in the mid-single digits in the
fourth quarter of fiscal 1999.

Product. Product costs increased by $2.2 million to $5.2 million in the third
quarter of fiscal 1999 from $3.0 million in the third quarter of fiscal 1998.
Product costs as a percentage of restaurant sales decreased to 27.7% in the
third quarter of fiscal 1999 from 27.8% in the third quarter of fiscal 1998.
This reduction was a result of management's efforts to reduce product costs and
improve margins, particularly at new restaurants. We expect product costs to
increase slightly in the fourth quarter due to the impact of the new restaurant
openings in 1999. During the fourth quarter of 1999, over 50% of our operating
weeks will be generated by restaurants open less than one year.

Labor. Labor costs increased by $2.6 million to $6.1 million in the third
quarter of fiscal 1999 from $3.5 million in the third quarter of fiscal 1998.
Labor costs decreased as a percentage of restaurant sales to 32.5% in the third
quarter of fiscal 1999 from 32.6% in the third quarter of fiscal 1998. This
decrease resulted from management's efforts to reduce labor costs, particularly
at new restaurants. We expect labor costs to decrease as a percentage of sales
during the fourth quarter of 1999. Although the impact of the 15 new restaurants
opened during 1999 will cause labor costs to increase as a percentage of sales,
we expect this increase to be offset by the impact of the tip credit. Eleven of
the 15 restaurants opened during 1999 will be in states with tip credit. At the
end of 1998, 42% of our restaurants were in states with tip credit. At the end
of 1999, 56% of our restaurants will be in states with tip credit.

Direct and Occupancy. Direct and occupancy costs increased by $1.6 million to
$3.8 million in the third quarter of fiscal 1999 from $2.2 million in the third
quarter of fiscal 1998. Direct and occupancy costs increased as a percentage of
restaurant sales to 20.4% in the third quarter of fiscal 1999 from 20.2% in the
third quarter of fiscal 1998. This increase was a result of the impact of the
ten new restaurants opened during the last six months. Direct and occupancy
costs are expected to decrease in the fourth quarter as a percentage of sales.
The expected increase in direct and occupancy costs resulting from the 15 new
restaurants opened during fiscal 1999 are anticipated to be more than offset by
the increased sales during the fourth quarter. Seasonally, the fourth quarter is
our highest volume sales quarter, with typical average unit volumes in mature
restaurants up 4% over third quarter volumes. The impact of these higher sales
volumes lowers direct and occupancy costs as a percentage of sales as the
majority of direct and occupancy costs are fixed in nature.

Depreciation and Amortization. Depreciation and amortization expenses increased
by $397,000 to $841,000 in the third quarter of fiscal 1999 from $444,000 in the
third quarter of fiscal 1998. This increase was the result of depreciation
recognized on capital expenditures for new restaurants.

General and Administrative Expenses. General and administrative expenses
increased by $252,000 to $1,543,000 in the third quarter of fiscal 1999 from
$1,291,000 in the third quarter of fiscal 1998. General and administrative

                                       8
expenses decreased as a percentage of restaurant sales to 8.3% in the third
quarter of fiscal 1999 from 12.1% in the third quarter of fiscal 1998. We expect
that general and administrative expenses will continue to increase in dollar
amount in the future, but continue to decrease as a percentage of restaurant
sales because our expansion plans will require proportionately smaller
incremental increases in general and administrative expenses.

Preopening Costs. Preopening costs increased by $858,000 to $1,114,000 in the
third quarter of fiscal 1999 from $256,000 in the third quarter of fiscal 1998.
Preopening costs increased as a percentage of restaurant sales to 6.0% in the
third quarter of fiscal 1999 from 2.4% in the third quarter of fiscal 1998. The
increase was primarily a result of opening five restaurants with an additional
nine in development during the third quarter of fiscal 1999 compared to one
restaurant opened with five in development during the third quarter of fiscal
1998.

Interest (Income) Expense. We generated $128,000 in net interest income during
the third quarter of fiscal 1999 compared to $300,000 in net interest expense in
the third quarter of fiscal 1998. The interest income generated was due to the
investment of our initial public offering proceeds in April 1999 and the
repayment of $9.0 million in term loans and lines of credit we had borrowed from
our lender.

Provision / Benefit for Income Taxes. The provision for income taxes for the
third quarter of fiscal 1998 represents certain minimum state taxes based on
taxable factors other than earnings and a minor charge for federal taxes
primarily related to deferred income taxes. We did not record a tax benefit in
the third quarter of fiscal 1998 for the losses generated in previous years as
utilization of these losses in future periods was deemed uncertain. During the
third quarter of 1999, we recognized a small tax benefit due to the expectation
that we will begin to utilize our net operating loss carry-forward. At December
27, 1998, we had a net operating loss carry-forward of $3.5 million. The net
operating loss carry-forward begins to expire in fiscal 2003. The majority of
the expected income tax benefit derived by applying the statutory income tax
rate has been eliminated as a result of an increase in the deferred income tax
asset valuation allowance. We expect to continue to use the net operating loss
carry-forward in future periods to offset taxable income.

Thirty-Nine Weeks Ended September 26, 1999 Compared to Thirty-Nine Weeks Ended
September 27, 1998

Restaurant Sales. Restaurant sales increased by $22.2 million, or 84.6%, to
$48.6 million in the first three quarters of fiscal 1999 from $26.4 million in
the first three quarters of fiscal 1998. The increase was attributable to
restaurant sales increases of $19.5 million at new restaurants opened within the
last 15 months and $2.7 million in comparable restaurant sales increases over
the first three quarters of fiscal 1998. Comparable restaurant sales increased
by 10.3% in the first three quarters of fiscal 1999, primarily as a result of an
increase in guest visits.

Product. Product costs increased by $6.1 million to $13.5 million in the first
three quarters of fiscal 1999 from $7.4 million in the first three quarters of
fiscal 1998. Product costs as a percentage of restaurant sales decreased to
27.7% in the first three quarters of fiscal 1999 from 28.2% in the first three
quarters of fiscal 1998. This reduction was a result of management's efforts to
reduce the cost of food products and improve margins, particularly at our new
restaurants. We also renegotiated our agreement with a national food distributor
during the first quarter of 1999, which contributed to our reduced product costs
in the first three quarters of fiscal 1999.

Labor. Labor costs increased by $7.2 million to $15.7 million in the first three
quarters of fiscal 1999 from $8.5 million in the first three quarters of fiscal
1998. Despite the pressure on labor costs resulting from the 15 new restaurants
opened in the past 12 months, labor costs remained constant at 32.2% of sales
for the first three quarters of 1999 and 1998. At September 26, 1999, 50% of our
restaurants had been open for less than one year. At September 27, 1998, only
40% of our restaurants had been open for less than one year.

Direct and Occupancy. Direct and occupancy costs increased by $4.5 million to
$10.0 million in the first three quarters of fiscal 1999 from $5.5 million in
the first three quarters of fiscal 1998. Direct and occupancy costs decreased as
a percentage of restaurant sales to 20.5% in the first three quarters of fiscal
1999 from 20.9% in the first three quarters of fiscal 1998. This decrease was
primarily the result of the 10.3% increase in comparable restaurant sales. The
increase in comparable restaurant sales leveraged the fixed components of our
direct and occupancy costs.

                                       9
Depreciation and Amortization. Depreciation and amortization expenses increased
by $1.1 million to $2.2 million in the first three quarters of fiscal 1999 from
$1.1 million in the first three quarters of fiscal 1998. This increase was the
result of depreciation recognized on capital expenditures for new restaurants.

General and Administrative Expenses. General and administrative expenses
increased by $581,000 to $4,404,000 in the first three quarters of fiscal 1999
from $3,823,000 in the first three quarters of fiscal 1998. General and
administrative expenses decreased as a percentage of sales to 9.1% in the first
three quarters of fiscal 1999 from 14.5% in the first three quarters of fiscal
1998.

Preopening Costs. Preopening costs increased by $1.7 million to $2.7 million in
the first three quarters of fiscal 1999 from $1 million in the first three
quarters of fiscal 1998. Preopening costs increased as a percentage of
restaurant sales to 5.6% in the first three quarters of fiscal 1999 from 3.8% in
the first three quarters of fiscal 1998. The increase was a result of opening
eleven restaurants with an additional nine in development during fiscal 1999
compared to four restaurants opened with five in development during fiscal 1998.

Interest (Income) Expense. Net interest income was $36,000 for fiscal 1999
compared to $705,000 in net interest expense for fiscal 1998. The decrease in
interest expense is due to the repayment of $9.0 million in long-term debt and
line of credit borrowings with the proceeds from the initial public offering
that was completed in April 1999. Interest expense is net of investment income
on the investment of the remaining initial public offering proceeds.

Provision / Benefit for Income Taxes. The provision for income taxes for the
first three quarters of fiscal 1998 represents certain minimum state taxes based
on taxable factors other than earnings and a minor charge for federal taxes
primarily related to deferred income taxes. We did not record a tax benefit in
fiscal 1998 for the losses generated in previous years as utilization of these
losses in future periods was deemed uncertain. During the first three quarters
of fiscal 1999, we recognized a small tax benefit due to the expectation that we
will begin to utilize our net operating loss carry-forward. At December 27,
1998, we had a net operating loss carry-forward of $3.5 million. The net
operating loss carry-forward begins to expire in fiscal 2003. The majority of
the expected income tax benefit derived by applying the statutory income tax
rate has been eliminated as a result of an increase in the deferred income tax
asset valuation allowance.

Liquidity and Capital Resources

Since we were formed, we have incurred significant net losses, primarily due to
restaurant development and the costs of hiring senior management to develop and
implement our expansion strategy. We have generated income from our restaurant
operations, but have incurred aggregate net losses of $9.8 million from
inception through September 26, 1999. We have funded our capital requirements
through sales of equity securities, debt financing, and sale-leaseback
arrangements. Net cash provided by operating activities was $3,121,000 for the
first three quarters of fiscal 1999 versus net cash used by operating activities
of $1,489,000 for the first three quarters of fiscal 1998. We expect to continue
to provide cash from operating activities in future periods.

We use cash primarily to fund the development and construction of new
restaurants. Capital expenditures were $26.4 million for first three quarters of
fiscal 1999 versus $9.7 million for the first three quarters of fiscal 1998. We
intend to open 15 restaurants in fiscal 1999, of which 13 have opened through
October 1999. Total capital expenditures are expected to be approximately $30
million in fiscal 1999. Each new restaurant is expected to require, on average,
a total cash investment of between $1.0 million and $1.5 million, excluding
preopening costs expected to range from $175,000 to $210,000. To date, the
majority of our restaurants are renovations of existing facilities ranging in
size from 4,500 to 10,200 square feet. We anticipate that future restaurants
will typically range in size from 7,000 to 9,000 square feet. In 1999, we will
build at least six restaurants based on our prototype designs, four of which
have opened through October 1999. These designs are expected to require between
$1.5 million and $2.0 million in total cash investment per restaurant. This
investment represents an incremental $500,000 increase over the historical cash
investment for remodeled restaurants. In the future we may refinance any
purchases of land or buildings through sale-leaseback transactions. We cannot
predict whether this financing will be available when needed or on terms
acceptable to us.

Net cash provided by financing activities was $28.7 million for first three
quarters of 1999 versus $3.0 million for the first three quarters of 1998.
Financing activities in the first three quarters of fiscal 1998 consisted of
long-term

                                       10
debt borrowings. Upon completion of our initial public offering in April 1999,
we obtained approximately $35.5 million in net proceeds. A portion of the
proceeds was used to repay our $7.0 million term loan and $2.0 million in line
of credit borrowings. The remaining proceeds are expected to be used to fund
operations, additional restaurants, and other corporate purposes.

We have obtained a $15 million line of credit with US Bank, Bank of America, and
BankBoston. Currently we may borrow $10 million on the line of credit, with an
additional $5 million available in July 2000. The line of credit expires in
September 2001. The borrowing rate on the line of credit is the lower of US
Bank's reference rate or LIBOR plus 1.875% to 2.375% (8.0% to 8.5%), dependent
upon our meeting certain financial covenants. We are required to pay 0.25% to
0.5% on all unused line of credit funds. The credit agreement contains covenants
that place restrictions on sales of properties, transactions with affiliates,
creation of additional debt, and other customary covenants. Borrowings under the
credit agreement are collateralized by substantially all of our assets. We do
not anticipate that the above covenants and restrictions will have a significant
impact upon us.

Our capital requirements, including development costs related to the opening of
additional restaurants, have been and will continue to be significant. We will
need substantial capital to finance our expansion plans, which require funds for
capital expenditures, preopening costs and initial operating losses related to
new restaurant openings. The adequacy of available funds and our future capital
requirements will depend on many factors, including the pace of expansion, the
costs and capital expenditures for new restaurant development and the nature of
contributions, loans and other arrangements negotiated with landlords. Although
we can make no assurance, we believe that cash flow from operations together
with the net proceeds from our initial public offering and available borrowings
will be sufficient to fund our capital requirements through at least the year
2000. To fund future operations, we will need to raise additional capital
through public or private equity or debt financing to continue our growth. In
addition, we may from time to time consider acquiring the operations of other
restaurants. We may obtain additional equity or debt financing to fund such
acquisitions. The sale of additional equity or debt securities could result in
additional dilution to our shareholders. We cannot predict whether additional
capital will be available on favorable terms, if at all.

Inflation

The primary inflationary factors affecting our operations are food and labor
costs. A large number of our restaurant personnel are paid at rates based on the
applicable minimum wage, and increases in the minimum wage directly affect our
labor costs. To date, inflation has not had a material impact on our operating
results.

Year 2000 Issue

The "year 2000 issue" is a term used to describe the inability of some computer
hardware and software to operate properly as the date January 1, 2000
approaches, and beyond. Year 2000 issues can arise in unexpected areas.
Traditional computer hardware and software and information technology ("IT") is
not the only technology at risk. For example, things such as employee time
clocks, cash registers, and food ordering systems, as well as many other
technologies sometimes referred to as non-IT systems ("non-IT"), could be
impacted. Unless stated to the contrary, for purposes of this year 2000 update,
the term "system(s)" shall be interpreted as broadly as possible to include
every IT and non-IT system, including computer, hardware, software, process,
system, application or technology that has the potential of being adversely
affected by the year 2000 issue.

The year 2000 issue is centered on whether systems will properly recognize
date-sensitive information. Many systems are coded to accept only two digit date
data. As the year 2000 nears, systems processing date information will need to
accept four digit entries to distinguish years beginning with "19" from those
beginning with "20." The inability to recognize or properly treat dates may
cause systems to be unable to process financial, operational, and other
information, or may generate inaccurate results. Because of the peculiarities of
individual systems, the year 2000 issue may have an effect both before and after
January 1, 2000. A system may be impacted on other dates including, for example,
leap year day and others.

Significant negative changes in consumer buying patterns due to the year 2000
issue could materially adversely affect our business and financial results,
whether related to the year 2000 issue or otherwise. Conversely, if consumers
choose to dine away from home more frequently as a consequence of the year 2000
issue or otherwise,

                                       11
our business could be enhanced. It is presently impossible to assess how, and
when, the public will respond to the year 2000 issue or the extent, if any, that
consumer reactions will impact our business.

We have taken, and will continue to take, actions intended to minimize the
impact of the year 2000 issue, although it is impossible to eliminate these
risks entirely. Unfortunately, there is no single test that can be used to
conclusively determine whether systems are immune to the year 2000 issue. Also
complicating testing are new year 2000 risks that are still being identified.
Another factor impeding year 2000 testing is the high degree of integration
between various systems and the impracticality or impossibility of conducting
full-scale live testing. Consequently, interrelated systems believed secure in a
test environment could conceivably fail when operating together under realistic
workloads.

Preexisting System Upgrades

Our corporate information systems have been largely upgraded or replaced in the
ordinary course of business over the past two years. We upgraded the majority of
our corporate office hardware following a fire in December 1998.

Over the past two years, an upgrade program has been undertaken to improve the
processing speed and information available at both the corporate and restaurant
location levels. This program entailed the replacement of the point-of-sale
system, restaurant level computer system, central computer system and accounting
software package. These upgrades have been conducted in the ordinary course of
business and have not been included in the costs discussed below. However, the
improvements had the incidental benefit of assisting with year 2000 readiness.

Year 2000 Review

Our review of the year 2000 issue involves inventory checks, readiness
assessments, remediation testing, and contingency planning. We have completed
the majority of our review and believe that we will be year 2000 compliant
barring any year 2000 risks not within our direct control as discussed below.

During the course of remediation testing, we have manipulated and entered new
data for both the restaurant level and corporate office systems. The remediation
testing program tested many non-IT systems including restaurant point-of-sale
systems, time clocks, credit card equipment, environmental controls, security
systems, shipping, and telephone systems. Due to the number of identical
systems, three restaurants were utilized in the user test in a simulated
setting. Although we believe that the simulation yielded sufficient information
to gauge year 2000 readiness, full load testing in a real environment (which is
presently deemed impractical without materially disrupting or degrading current
operations) could reveal unexpected problems.

Since unanticipated expenses may arise during our review, we are unable to
project with accuracy the total expected costs to achieve year 2000 readiness.
However, we do not allocate the value of time expended by corporate office
personnel when considering year 2000 project costs, and no special account has
been established to track year 2000 project costs. The costs of our year 2000
project are being funded with cash flows from our existing cash balances. We
have incurred approximately $175,000 in year 2000 project costs and expect to
incur an additional $25,000 in year 2000 project costs through the remainder of
1999 and 2000.

Internal Year 2000 Risks

Risks of systems failure at the restaurant level include, but are not limited
to, the following examples. The failure of automated environmental controls at
one of our restaurants could result in inhospitable conditions requiring
temporary closure. The failure of cash register systems or credit card
processing terminals would force reversion to manual sales tracking methods that
could slow both the throughput of guests, and in the instance of credit cards,
the recognition of income. The failure of personal computers in a restaurant
could prevent the daily polling of restaurant financial information by the
corporate office to account for restaurant results, cash deposits, accounts
payable, and payroll information. Since these computers are also used to order
food from suppliers and analyze food and labor costs, restaurant management
could be forced to revert to manual methods that are less effective or efficient
and which could increase the cost of food and labor. Telecommunication failures
could result in loss of sales due to customer inability to reach the
restaurants, as well as make the communication of restaurant results impossible.

                                       12
Risks of systems failure at the corporate level include, but are not limited to,
the following examples. There may be temporary inability to conduct normal
accounting and financial functions due to incomplete or inaccurate data. The
absence of data normally utilized by management in the supervision of our
restaurants could make such oversight difficult and less effective, increasing
costs until the data is restored. Telecommunications risks would parallel those
at the restaurant level. A coordinated computer, software and telecommunication
system is used to sweep cash from local depositories into central accounts. The
failure of any element of this system could cause interruptions in the
availability of cash to meet our liabilities. Similar risks exist with respect
to an integrated payroll system consolidating restaurant and corporate data and
passing it on to a third party payroll administrator.

External Year 2000 Risks

We rely on vendors to supply the key items necessary to run our restaurants.
Unfortunately, we have little control over many of these external parties and it
is unlikely that we will be able to obtain adequate levels of assurance that
they have prepared sufficiently to be ready for the year 2000 issue.

For a restaurant to be able to generate revenue, it must be open for business
during its normal operating hours, staffed, lit, heated, and supplied with
product and other supplies necessary to serve its guests. Examples of external
factors that could prevent these things from occurring include the inability to
open due to lack of power or utilities, lack of food and other supplies due to
service interruptions involving suppliers or distributors, and the inability to
access the restaurants due to malfunctioning security systems controlled by
others or other facilities related impediments.

At a corporate level, third parties are relied upon for certain services,
particularly in the payroll and information services departments. For example, a
failure of the payroll vendor to supply payroll checks would interrupt the flow
of compensation to employees that could jeopardize staffing throughout the
organization. Our payroll processor has asserted that they are compliant.

Common external risks to both our corporate and restaurant operations include
interruptions in utilities to our facilities, whether related to electrical,
natural gas, water, sewer, waste removal, or telephone or data transmission
services.

We have sent 558 surveys to vendors of IT services, food and material vendors,
and utilities, among others, in an attempt to obtain certifications of their
readiness with respect to the year 2000 issue. To date, 233 of the surveys, or
41.8%, have been returned. All of the vendors who responded to our inquiry
stated that they are or plan to be compliant by the end of 1999, dependent upon
the reliability of their third parties' year 2000 compliance statements. The
utility and telecommunication firms have been conditional in their expressions
of year 2000 readiness, typically linking their readiness to the preparedness of
unrelated parties (for example, other contributors to the national power grid).
Our primary food distributor, SYSCO, has asserted that it will be year 2000
compliant by the end of 1999.

While we will continue to seek vendor readiness certifications relative to the
year 2000 issue, we expect that many companies will fail to provide such
documentation, whether due to liability concerns or otherwise. Consequently, we
are taking this factor into account, wherever possible, when formulating our
contingency plans.

Magnitude of the Year 2000 Problem

Any individual risk listed above, if experienced on a broad enough scale and of
lengthy duration, could have a material adverse effect on our results of
operations, liquidity, and financial condition. We anticipate that the worst
case year 2000 issue scenario would involve the closure for a material period of
time of most or all our restaurants due to national utility interruptions,
coupled with adverse changes in customer spending patterns. The most likely risk
scenario may instead be more localized closures of individual restaurants, or
groups of restaurants in a particular city, due to utility interruption or
failure to receive necessary food and other supplies. We believe that as long as
the restaurants can be kept open to the public in the manner they are
accustomed, the failure of administrative and corporate office functions should
have modest effects on revenue producing activities.

                                       13
Contingency Plans

We have developed contingency plans for the year 2000 issue. These plans were
being developed for each of our departments and address both internal and
external year 2000 risks. For example, the plan has procedures for manually
recording and reporting sales transactions, it addresses supply shortages from
key distributors, and delineates various other contingency items.

Our risk assessment of the year 2000 issue is based on our current knowledge,
and could in hindsight prove incomplete and possibly overstate or understate the
actual risks. The ability to address the year 2000 issue in the manner and
within the cost estimates described above could be adversely affected by
negative findings arising during the course of testing systems and implementing
solutions or contingency plans.

Disclosure Regarding Forward-Looking Statements

This Form 10-Q for the third quarter ended September 26, 1999 contains
forward-looking statements within the meaning of the safe harbor provisions of
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are based on the beliefs of our management as well as on assumptions
made by and information currently available to us at the time the statements
were made. When used in this Form 10-Q, the words "anticipate", "believe",
"estimate", "expect", "intend" and similar expressions, as they relate to us,
are intended to identify the forward-looking statements. Although we believe
that these statements are reasonable, you should be aware that actual results
could differ materially from those projected by the forward-looking statements.
Because actual results may differ, readers are cautioned not to place
undue reliance on forward-looking statements. The actual number of restaurants
opened during any period could be higher or lower than the projected amount
based upon the timing and success of locating suitable sites, negotiating
acceptable leases, managing construction and recruiting qualified operating
personnel. Our comparable store sales percentage increases could moderate as a
result of competition, general economic conditions, or changes in consumer
preferences or discretionary consumer spending. The effect of a price increase
on product, labor, and direct and occupancy costs may be adversely affected by
increased products costs, changes in the labor market, or our ability to
negotiate favorable lease terms, as well as general economic conditions. Product
costs could be adversely affected by increased distribution prices by SYSCO
Corporation or a failure to perform by SYSCO, as well as adverse weather
conditions, governmental regulation and general economic conditions. Labor costs
could increase due to increases in the minimum wage as well as competition for
qualified employees and the need to pay higher wages to attract sufficient
employees. Direct and occupancy costs could be adversely affected by an
inability to negotiate favorable lease terms as well as general economic
conditions. General and administrative expenses could increase due to
competition for qualified employees and the need to pay higher wages to attract
sufficient employees as well as general economic conditions. Additional factors
that could cause actual results to differ include: risks associated with future
growth; inability to achieve and manage planned expansion; fluctuations in
operating results; the need for additional capital; risks associated with
discretionary consumer spending; inability to compete with larger, more
established competitors; potential labor shortages; our dependence on
governmental licenses; complaints or litigation from guests; and risks
associated with year 2000 issues. Certain of these risk factors are more fully
discussed in our Quarterly Report on Form 10-Q for the period ended March 28,
1999. We caution you, however, that the list of factors above may not be
exhaustive and that those or other factors, many of which are outside of our
control, could have a material adverse effect on us and our results of
operations. All forward-looking statements attributable to persons acting on our
behalf or us are expressly qualified in their entirety by the cautionary
statements set forth here. We assume no obligation to publicly release the
results of any revision or updates to these forward-looking statements to
reflect future events or unanticipated occurrences.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are exposed to market risk from changes in interest rates on borrowings under
our revolving line of credit that bears interest from time to time at the lower
of the lending bank's reference rate or LIBOR plus 1.875% to 2.375%. Because we
do not believe that changes in interest rates from the maximum available
borrowings under the revolving line of credit are material, we do not believe
this risk will be material. We currently do not have any borrowings on our
revolving line of credit.

We have no derivative financial instruments or derivative commodity instruments
in our cash and cash equivalents and marketable securities. We invest our cash
and cash equivalents and marketable securities in investment grade, highly
liquid investments, consisting of money market instruments, bank certificates of
deposit, overnight investments in commercial paper, and short term government
and corporate bonds. We have invested the net proceeds from our public offering
in similar investment grade and highly liquid investments.

                                       14
Many of the food products purchased by us are affected by commodity pricing and
are, therefore, subject to price volatility caused by weather, production
problems, delivery difficulties and other factors which are outside our control.
To control this risk in part, we have fixed price purchase commitments with
terms of one year or less for food and supplies from vendors who supply our
national food distributor. In addition, we believe that substantially all of our
food and supplies are available from several sources, which helps to control
food commodity risks. We believe we have the ability to increase menu prices, or
vary the menu items offered, if needed in response to a food product price
increases. To compensate for a hypothetical price increase of 10% for food and
supplies, we would need to increase menu prices by an average of 3%, which is
consistent with our average price increase of 3% in fiscal 1998 and 2% in fiscal
1997. Accordingly, we believe that a hypothetical 10% increase in food product
costs would not have a material effect on our operating results.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are currently subject to various legal actions arising in the normal course
of business, none of which are expected to have a material effect on our results
of operations, financial condition or cash flows.

Item 2. Changes in Securities and Use of Proceeds

Since June 27, 1999, we have sold the following securities pursuant to exemption
from registration under the Securities Act. All of the sales were made in
reliance upon the exemptions from registration provided under Section 4(2) and
Regulation D of the Securities Act for transactions not involving a public
offering. All shares were issued directly by us, no underwriters were involved
and no discount, commission or other transaction-related remuneration was paid.

1.   On July 20, 1999, we issued 6,944 shares of common stock for $50,000, or
     $7.20 per share, to outside investors upon conversion of certain
     subordinated debentures in aggregate principal amount of $50,000 held by
     the investors.

2.   On July 28, 1999, we issued 12,330 shares of common stock for $184.97, or
     $.01 per share, to outside investors upon exercise of warrants previously
     issued to the investors.

3.   On August 4, 1999, we issued 7,706 shares of common stock for $77.06, or
     $.01 per share, to an outside investor upon exercise of warrants previously
     issued to the investor.

4.   On August 9, 1999, we issued 385 shares of common stock for $3.85, or $.01
     per share, to an outside investor upon exercise of warrants previously
     issued to the investor and 90,454 shares of common stock to outside
     investors upon conversion and surrender of 90,509 warrants previously
     issued to the investors.

5.   On August 18, 1999, we issued 19,267 shares of common stock for $192.67, or
     $.01 per share, to an outside investor upon exercise of warrants previously
     issued to the investor and 23,160 shares of common stock to an outside
     investor upon conversion and surrender of 23,174 warrants previously issued
     to the investor.

6.   On August 23, 1999, we issued 15,414 shares of common stock for $154.14, or
     $.01 per share, to an outside investor upon exercise of warrants previously
     issued to the investor.

Item 3. Defaults upon Senior Securities

     None

Item 4. Submission of Matters to a Vote of Security Holders

     None

                                       15
Item 5. Other Information

     None

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits
Exhibit No.                                  Description                                Method of Filing
--------------------------------------------------------------------------------------------------------------
3.1      Amended and Restated Articles of Incorporation of the Company (1)     Incorporated By
                                                                                        Reference
         3.2      Amended and Restated Bylaws of the Company (2)                        Incorporated By
                                                                                        Reference
         4.1      Specimen Common Stock Certificate (3)                                 Incorporated By
                                                                                        Reference
         4.2      Securities Purchase Agreement dated as of October 13, 1998            Incorporated By
                  between the Company and the Purchasers (4)                            Reference
         4.3      Non-Statutory Stock Option Agreement between the Company and          Incorporated By
                  1204 Harmon Partnership dated as of June 1, 1998 (5)                  Reference
         4.4      Form of stock purchase warrant dated as of October 31, 1997 (6)       Incorporated By
                                                                                        Reference
        10.1      Credit Agreement dated as of September 27, 1999                       Electronic Transmission
        10.2      First Amendment to Credit Agreement dated as of October 21, 1999      Electronic Transmission
        27.1      Financial Data Schedule for the quarter ended September 26, 1999      Electronic Transmission
(1)  Incorporated by reference to Exhibit 3.4 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(2)  Incorporated by reference to Exhibit 3.5 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(3)  Incorporated by reference to the same numbered Exhibit to the Company's
     Registration Statement on Form S-1 (Registration No. 333-72593).
(4)  Incorporated by reference to Exhibit 10.17 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(5)  Incorporated by reference to Exhibit 10.15 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(6)  Incorporated by reference to Exhibit 10.12 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).

(b) Valuation and Qualifying Accounts:

          None

(c) Reports on Form 8-K

          No reports on Form 8-K were filed during the fiscal quarter ended
          September 26, 1999.

                                       16
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        BUCA, Inc.
                                        (Registrant)

Date: November 10, 1999                 By:  /s/  Joseph P. Micatrotto
                                             ---------------------------------
                                             Joseph P. Micatrotto,
                                             Chairman, President and Chief
                                             Executive Officer
                                             (Principal Executive Officer)

Date: November 10, 1999                 By:  /s/  Greg A. Gadel
                                             ---------------------------------
                                             Greg A. Gadel
                                             Chief Financial Officer

                                       17
Exhibit Index
Exhibit No.                         Description                                                  Method of Filing
-----------------------------------------------------------------------------------------------------------------
3.2      Restated Certificate of Incorporation of the Company (1)                       Incorporated By
                                                                                                 Reference
         3.4      Restated Bylaws of the Company (2)                                             Incorporated By
                                                                                                 Reference
         4.1      Specimen Common Stock Certificate (3)                                          Incorporated By
                                                                                                 Reference
         4.2      Securities Purchase Agreement dated as of October 13, 1998 between             Incorporated By
                  the Company and the Purchasers (4)                                             Reference
         4.3      Non-Statutory Stock Option Agreement between the Company and 1204              Incorporated By
                  Harmon Partnership dated as of June 1, 1998 (5)                                Reference
         4.4      Form of stock purchase warrant dated as of October 31, 1997 (6)                Incorporated By
                                                                                                 Reference
        10.1      Credit Agreement dated as of September 27, 1999                                Electronic
                                                                                                 Transmission
        10.2      First Amendment to Credit Agreement dated as of October 21, 1999               Electronic
                                                                                                 Transmission
        27.1      Financial Data Schedule for the quarter ended June 27, 1999                    Electronic
                                                                                                 Transmission
(1)  Incorporated by reference to Exhibit 3.4 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(2)  Incorporated by reference to Exhibit 3.5 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(3)  Incorporated by reference to the same numbered Exhibit to the Company's
     Registration Statement on Form S-1 (Registration No. 333-72593).
(4)  Incorporated by reference to Exhibit 10.17 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(5)  Incorporated by reference to Exhibit 10.15 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).
(6)  Incorporated by reference to Exhibit 10.12 to the Company's Registration
     Statement on Form S-1 (Registration No. 333-72593).

                                       18