<PAGE>
 
   As filed with the Securities and Exchange Commission on February 18, 1999
                                                    Registration No. 333-
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                               ----------------
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     Under
                          The Securities Act of 1933
                               ----------------
                                  BUCA, INC.
            (Exact name of Registrant as specified in its charter)
                               ----------------
 
        Minnesota                      5812                  41-1802364
     (State or other             (Primary Standard        (I.R.S. Employer
     jurisdiction of                Industrial           Identification No.)
    incorporation or            Classification Code
      organization)                   Number)
 
                        1300 Nicollet Mall, Suite 3043
                         Minneapolis, Minnesota 55403
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)
                                ---------------
                             Joseph P. Micatrotto
                     President and Chief Executive Officer
                                  BUCA, Inc.
                        1300 Nicollet Mall, Suite 3043
                         Minneapolis, Minnesota 55403
                                (612) 288-2382
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
 
                                  Copies to:
        Douglas P. Long, Esq.                    Jonathan B. Abram, Esq.
         Faegre & Benson LLP                      Dorsey & Whitney LLP
         2200 Norwest Center               Pillsbury Center South, 20th Floor
       90 South Seventh Street                   220 South Sixth Street
    Minneapolis, Minnesota 55402              Minneapolis, Minnesota 55402
                                ---------------
  Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box:  [_]
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:  [_]
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering:  [_]
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:  [_]
 
                        CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
                                                          Proposed
                                             Proposed      Maximum
 Title of Each Class of                      Maximum      Aggregate   Amount of
    Securities to be       Amount to be   Offering Price  Offering   Registration
       Registered         Registered(1)    Per Share(2)   Price(2)       Fee
---------------------------------------------------------------------------------
<S>                      <C>              <C>            <C>         <C>
Common Stock, $.01 par
value................... 3,047,500 Shares     $12.50     $38,093,750   $10,591
</TABLE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(1) Includes 397,500 shares of common stock which may be purchased by the
    underwriters to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(a) of the Securities Act of 1933, as amended.
 
  The Registrant hereby amends this Registration Agreement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
 
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this Prospectus is not complete and may be changed. We may +
+not sell these securities until the Securities and Exchange Commission        +
+declares our registration statement effective. This Prospectus is not an      +
+offer to sell these securities and is not soliciting an offer to buy these    +
+securities in any state where the offer or sale is not permitted.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                 Subject to completion, dated February 18, 1999
 
2,650,000 Shares
 
BUCA, INC.
 
Common Stock           [LOGO]
 
$   per share
 
            ------------------------------------------------------
 
 . BUCA, Inc. is offering    . This is our initial public offering and no
  2,500,000 shares and        public market currently exists for our shares.
  selling shareholders
  are offering
  150,000 shares.
 
 . We anticipate that the    . Proposed trading symbol: Nasdaq National
  initial public              Market--BUCA.
  offering price will be
  between $10.50 and
  $12.50 per share.
 
                                  ----------
 
This investment involves risk. You should carefully consider the "Risk Factors"
beginning on page 7.
 
            ------------------------------------------------------
            ------------------------------------------------------
 
<TABLE>
<CAPTION>
                                                             Per
                                                            Share     Total
                                                           ------- ------------
<S>                                                        <C>     <C>
Public Offering Price..................................... $       $
Underwriting Discount.....................................
Proceeds to BUCA, Inc. ...................................
Proceeds to Selling Shareholders..........................
</TABLE>
 
            ------------------------------------------------------
            ------------------------------------------------------
 
The underwriters have a 30-day option to purchase up to 397,500 additional
shares of common stock from us and a selling shareholder to cover over-
allotments, if any.
 
Neither the Securities and Exchange Commission nor any state securities
commission has approved of anyone's investment in these securities or
determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
 
Piper Jaffray Inc.                                        NationsBanc Montgomery
                                                              Securities LLC
 
                The date of this Prospectus is          , 1999.
<PAGE>
 
 
 
 
 
BUCA (R) and BUCA di BEPPO(R), as well as certain additional names and logos
appearing in this Prospectus, are registered trademarks of BUCA, Inc. This
Prospectus also includes names and trademarks of other companies.
 
 
                                       2
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
     <S>                                                                  <C>
     Summary.............................................................   4
     Risk Factors........................................................   7
     Use of Proceeds.....................................................  13
     Dividend Policy.....................................................  13
     Capitalization......................................................  14
     Dilution............................................................  15
     Selected Consolidated Financial Data................................  16
     Management's Discussion and Analysis of Financial Condition and
      Results of Operations..............................................  18
     Business............................................................  25
     Management..........................................................  34
     Certain Relationships and Related Transactions......................  40
     Principal and Selling Shareholders..................................  42
     Shares Eligible for Future Sale.....................................  43
     Description of Capital Stock........................................  44
     Underwriting........................................................  48
     Legal Matters.......................................................  50
     Experts.............................................................  50
     Where You Can Find More Information.................................  50
     Index to Consolidated Financial Statements.......................... F-1
</TABLE>
 
                                ---------------
 
You should rely only on the information contained in this Prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. This Prospectus is not an offer to sell, nor is it
seeking an offer to buy, these securities in any state where the offer or sale
is not permitted. The information in this Prospectus is complete and accurate
as of the date on the front cover, but the information may have changed since
that date.
 
                                       3
<PAGE>
 
                                    SUMMARY
 
The items in the following summary are described in more detail later in this
Prospectus. This summary provides an overview of selected information and does
not contain all the information you should consider. Therefore, you should also
read the more detailed information set out in this Prospectus, including the
financial statements.
 
                                Business of BUCA
 
BUCA, Inc. owns and operates 20 full service, dinner-only restaurants under the
name BUCA di BEPPO. Our restaurants 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. Our food is based on authentic family recipes enjoyed for
generations in the villages of Southern Italy and then adapted to American
ingredients. Our menu features dishes such as the BUCA di BEPPO 1893 salad,
chicken cacciatore, spaghetti with half-pound meat balls, eggplant parmigiana,
ravioli al pomodoro, veal marsala, garlic mashed potatoes, pizza arrabiatta and
tiramisu. These dishes, often seasoned with garlic and served with vine-ripened
tomatoes, communicate the pure, powerful flavors of the immigrant Southern
Italian kitchen. Our oversized portions, served family-style on large platters,
are designed to overwhelm guests with an abundance of high quality food. In
family-style serving, each item is shared by the entire table, which encourages
guests to interact and enjoy the meal together. A full service bar featuring
affordable, quality Italian table wines complements our menu. We believe that
the generous portions, combined with an average check per guest of
approximately $20.00, including beverages, offer our guests exceptional value.
We reinforce this value by encouraging guests to take home their extra food in
our logo-bearing BUCA bags, allowing guests to enjoy an additional BUCA meal at
home.
 
Our BUCA di BEPPO restaurants irreverently exaggerate the cliches of post-War
Italian/American restaurants found in Little Italy in New York City, the North
End of Boston and other Italian neighborhoods of large U.S. cities. We design
our restaurants to be a fun, high-energy destination. The layout of each BUCA
di BEPPO restaurant in a market is unique, which reinforces our image as a
collection of neighborhood restaurants. Restaurant interiors are divided into a
number of distinct rooms with walls covered by hundreds of vintage photos of
Italian families and celebrities, Christmas lights displayed year-round and
other icons of Italian heritage. Boxes of pasta, cans of roasted peppers and
jugs of wine fill window sills and shelves throughout our restaurants. Lively
music from classic artists such as Frank Sinatra and Dean Martin adds to the
fun and energetic atmosphere. Restaurant exteriors feature flashing bare bulb
signage, statuary and humorous neon signs promising "elegant dining" and "air
conditioning." Our food, decor and family-style servings all promote a fun,
celebratory and socially interactive dining experience that emulates a
traditional Italian/American evening meal.
 
From the moment a guest walks in the front door, the BUCA experience is
enhanced by a high level of customer service provided by our knowledgeable,
energetic staff. Servers are trained to introduce guests to the BUCA di BEPPO
concept, explain the menu and encourage guest interaction. The restaurant's
general manager, known as the Paisano Partner, also interacts with guests to
make them feel welcome and is responsible for ensuring their satisfaction with
the dining experience.
 
We believe that our restaurants provide superior unit level economics. In
fiscal 1998, our mature restaurants (those with at least two full years of
operating history) generated average restaurant sales of approximately $3.0
million and average cash flow of approximately $693,000, or 23.5% of restaurant
sales. We believe that our Paisano Partners Program, in which Paisanos purchase
stock and receive a significant portion of their annual cash compensation based
on restaurant cash flow, motivates Paisanos to achieve significantly greater
operating efficiencies and contributes to our superior unit level economics. In
fiscal 1998, our total cash investment per restaurant averaged $1.4 million,
excluding average preopening costs per restaurant of approximately $195,000.
Our current restaurants range in size from approximately 4,500 to 10,000 square
feet, and have approximately 170 to 375 seats. We anticipate that future
restaurants will typically range in size from 7,000 to 9,000 square feet and
have from 250 to 350 seats.
 
We are pursuing a rapid but disciplined expansion strategy. Our objective is to
become the dominant family-style, immigrant Southern Italian restaurant in each
of our markets. We focus primarily on metropolitan markets
 
                                       4
<PAGE>
 
with a population of at least 800,000 that can support multiple BUCA di BEPPO
restaurants. This focus allows us to build brand awareness and realize
operating and management efficiencies within each market. We intend to continue
our expansion throughout the United States with 13 openings planned in fiscal
1999, of which one has already opened, seven are under construction and the
remaining five have signed leases. By the end of fiscal 1999, we plan to have
32 restaurants open in at least 17 markets.
 
The BUCA di BEPPO concept was created by Philip A. Roberts, who opened the
first BUCA di BEPPO restaurant in July 1993. Joseph P. Micatrotto, a second
generation Italian immigrant, joined BUCA as President and Chief Executive
Officer in 1996 to lead our national expansion. Since Mr. Roberts opened the
first BUCA di BEPPO restaurant, the innovation of this concept has attracted
national attention as evidenced by national awards, including a 1998 "Hot
Concepts!" award from Nation's Restaurant News, and awards in all of our local
markets.
 
                                Office Location
 
We were incorporated on December 2, 1994 as a Minnesota corporation. Our
principal executive offices are located at 1300 Nicollet Mall, Minneapolis,
Minnesota 55403 and our telephone number is (612) 288-2382.
 
                                  Risk Factors
 
You should carefully consider the "Risk Factors" described immediately
following this summary.
 
                                  The Offering
 
Common stock offered:
 
<TABLE>
<S>                                        <C>
        By BUCA, Inc...................... 2,500,000 shares
        By selling shareholders...........   150,000 shares
            Total......................... 2,650,000 shares
Common stock outstanding after the offer-
 ing...................................... 9,559,557 shares(/1/)
Offering price............................ $      per share
Use of proceeds........................... To fund restaurant
                                           development, repay bank debt
                                           and for general corporate purposes.
Proposed Nasdaq National Market symbol.... BUCA
</TABLE>
 
                                ---------------
(/1/) Based on the number of shares outstanding as of January 31, 1999.
 Includes the issuance of 4,545,434 shares of common stock in connection with
 the conversion of all outstanding shares of preferred stock upon the closing
 of this offering. Excludes (i) 1,050,154 shares of common stock issuable upon
 exercise of options outstanding as of the date of this Prospectus (at a
 weighted average exercise price of $6.96 per share); (ii) 397,859 shares of
 common stock issuable upon exercise of warrants outstanding as of the date of
 this Prospectus (at a weighted average exercise price of $2.05 per share); and
 (iii) 257,971 shares of common stock issuable (from and after the completion
 of this offering) upon conversion of subordinated debt outstanding as of the
 date of this Prospectus, assuming a public offering price of $11.50 per share.
 
 
                                       5
<PAGE>
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
              (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
 
<TABLE>
<CAPTION>
                                            FISCAL YEAR ENDED(/1/)
                                -----------------------------------------------
                                DECEMBER 31, DECEMBER 28,
                                    1996         1997       DECEMBER 27, 1998
                                ------------ ------------ ---------------------
<S>                             <C>          <C>          <C>
CONSOLIDATED STATEMENTS OF OP-
 ERATIONS DATA:
Restaurant sales..............    $11,316      $19,030           $38,483
Income from restaurant
 operations...................      1,499        2,501             5,581
Operating loss................       (919)      (2,399)           (1,893)
Net loss......................     (1,113)      (3,319)           (2,946)
Net loss applicable to common
 stock........................     (4,800)      (5,305)           (5,135)
Net loss per common share--
 basic and diluted............    $ (1.96)     $ (2.13)          $ (2.04)
Common shares assumed
 outstanding--basic and
 diluted......................      2,445        2,490             2,512
Pro forma net loss per common
 share--basic and
 diluted(/2/).................                                   $  (.42)
Common shares assumed
 outstanding pro forma--basic
 and diluted(/2/).............                                     7,060
OPERATING DATA:
Comparable restaurant sales
 increase(/3/)................        0.2%         9.4%             13.5%
Average weekly restaurant
 sales........................    $47,343      $48,307           $52,971
Restaurants open at end of
 period.......................          6           11                19
<CAPTION>
                                               DECEMBER 27, 1998
                                -----------------------------------------------
                                                 PRO            PRO FORMA
                                   ACTUAL     FORMA(/2/)  AS ADJUSTED(/2/)(/4/)
                                ------------ ------------ ---------------------
<S>                             <C>          <C>          <C>
CONSOLIDATED BALANCE SHEET
 DATA:
Cash and cash equivalents.....    $ 6,576      $ 6,576           $25,451
Total assets..................     37,560       37,560            63,135
Total debt, including current
 portion......................      7,866        9,266               466
Redeemable stock(/5/).........     36,973          --                --
Common shareholders'
 (deficit)/equity.............    (13,540)      22,033            49,408
</TABLE>
 
                                ---------------
 
(/1/)We changed our fiscal year-end from December 31 to the last Sunday in
     December, beginning with the fiscal year ended December 28, 1997.
(/2/)Pro forma information gives effect, as of and for the period ending
     December 27, 1998, to (i) the issuance of shares of common stock in
     connection with the conversion of all outstanding shares of preferred
     stock upon the closing of this offering; (ii) the termination of our
     obligation to redeem shares of common stock held in the Parasole Employee
     Stock Ownership Trust and the BUCA Employee Stock Ownership Plan (the
     "Redeemable Common Stock") upon the closing of this offering; and (iii)
     the repayment of outstanding subordinated and bank debt in the amount of
     $6,600,000 with borrowings of $7,000,000 under our credit facility with
     U.S. Bank.
(/3/)The calculation of comparable restaurant sales increase includes
     restaurants open for 12 full calendar months, as adjusted to provide
     comparable 52-week fiscal years.
(/4/)As adjusted to give effect as of December 27, 1998 to (i) our receipt of
     the estimated net proceeds of $25,875,000 from the sale of 2,500,000
     shares of common stock offered by us at an assumed initial public offering
     price of $11.50 per share; (ii) application of a portion of the net
     proceeds of this offering to repay amounts outstanding under our credit
     facility with U.S. Bank and the resulting write-off of deferred financing
     costs; and (iii) the special non-cash charge of approximately $1,300,000
     related to the discount applicable to the right of holders of $1,780,000
     of outstanding subordinated debt of BUCA to convert such debt into common
     stock after the closing of this offering.
(/5/)Includes Series A, Series B and Series C preferred stock and the
     Redeemable Common Stock.
 
 
                                ---------------
Except as otherwise noted, all information in this Prospectus assumes (i) no
exercise of the underwriters' over-allotment option, (ii) no exercise of
options or warrants to purchase shares of common stock or the conversion of
outstanding convertible subordinated debt into shares of common stock and (iii)
the issuance of shares of common stock in connection with the conversion of all
outstanding shares of preferred stock upon the closing of this offering.
Information in this Prospectus also gives effect to a two-for-three reverse
split of the common stock effected on February 17, 1999.
 
                                       6
<PAGE>
 
                                  RISK FACTORS
 
You should carefully consider the following risk factors before you decide to
buy our common stock. You should also consider the other information in this
Prospectus. If any of the following risks actually occur, our business,
financial condition, operating results or cash flows, could be materially
adversely affected. This could cause the trading price of our common stock to
decline, and you may lose part or all of your investment.
 
This Prospectus also contains certain forward-looking statements that involve
risks and uncertainties. These statements relate to our future plans,
objectives, expectations and intentions. These statements may be identified by
the use of words such as "expects," "anticipates," "intends," "plans" and
similar expressions. Our actual results could differ materially from those
discussed in these statements. Factors that could contribute to these
differences include those discussed below and elsewhere in this Prospectus.
 
We May Continue to Incur Net Losses
 
Since we were formed, we have incurred net losses of approximately $7.6 million
through the end of fiscal 1998, primarily due to restaurant development and the
costs of hiring senior management to develop and implement our expansion
strategy. We intend to continue to expend significant financial and management
resources on the development of additional restaurants. We cannot predict
whether we will be able to achieve or sustain revenue growth, profitability or
positive cash flow in the future. See "Selected Consolidated Financial Data"
and "Management's Discussion and Analysis of Financial Conditions and Results
of Operations."
 
We Face Uncertainties as We Expand Operations
 
To continue to grow, we must open new BUCA di BEPPO restaurants on a timely and
profitable basis. We expanded from 11 restaurants at the end of fiscal 1997 to
19 restaurants at the end of fiscal 1998. We expect to open an additional 13
restaurants during fiscal 1999, one of which is already open. Our ability to
expand successfully will depend on a number of factors, some of which are
beyond our control, including the:
 
    .identification and availability of suitable restaurant sites;
 
    .competition for restaurant sites;
 
    .negotiation of favorable leases;
 
    .timely development in certain cases of commercial, residential, street
          or highway construction near our restaurants;
 
    .management of construction and development costs of new restaurants;
 
    .securing required governmental approvals and permits;
 
    .recruitment of qualified operating personnel (particularly Paisano
          Partners and kitchen managers);
 
    .competition in new markets; and
 
    .general economic conditions.
 
We have experienced delays in restaurant openings from time to time and may
experience delays in the future. Delays or failures in opening new restaurants
could materially adversely affect our business, financial condition, operating
results or cash flows.
 
In addition, we contemplate entering new markets in which we have no operating
experience. These new markets may have different demographic characteristics,
competitive conditions, consumer tastes and discretionary spending
 
                                       7
<PAGE>
 
patterns than our existing markets, which may cause our new restaurants to be
less successful in these new markets than in our existing markets.
 
We May Not Be Able to Achieve and Manage Planned Expansion
 
We face many business risks associated with rapidly growing companies,
including the risk that our existing management, information systems and
financial controls will be inadequate to support our planned expansion. We
cannot predict whether we will be able to respond on a timely basis to all of
the changing demands that our planned expansion will impose on management and
these systems and controls. If we fail to continue to improve management,
information systems and financial controls or encounter unexpected difficulties
during expansion, our business, financial condition, operating results or cash
flows could be materially adversely affected.
 
Furthermore, we may from time to time seek to acquire the operations of other
restaurants to expand the BUCA di BEPPO concept. To do so successfully, we
would need to identify suitable acquisition candidates, obtain financing on
acceptable terms, and negotiate acceptable acquisition terms. Even if we are
successful in making acquisitions, they may have a material adverse effect on
our operating results, particularly in the fiscal quarters immediately
following the completion of an acquisition, while the acquisition is being
integrated into our operations. We do not currently have any definitive
agreements, arrangements or understandings regarding any particular
acquisition.
 
We Will Experience Fluctuations in Operating Results
 
Our operating results will fluctuate significantly because of several factors,
including the timing of new restaurant openings and related expenses,
profitability of new restaurants, increases or decreases in comparable
restaurant sales, general economic conditions, consumer confidence in the
economy, changes in consumer preferences, competitive factors and weather
conditions. In the past, our preopening costs have varied significantly from
quarter to quarter primarily due to the timing of restaurant openings. We
typically incur most preopening costs for a new restaurant within the two
months immediately preceding, and the month of, its opening. In addition, our
labor and operating costs for a newly opened restaurant during the first three
to six months of operation are materially greater than what can be expected
after that time, both in aggregate dollars and as a percentage of restaurant
sales. Accordingly, the volume and timing of new restaurant openings in any
quarter has had and is expected to continue to have a significant impact on
quarterly preopening costs and labor and direct and occupancy costs. We
anticipate that preopening costs, labor and direct and occupancy costs will
significantly increase as a percent of restaurant sales in the second and third
quarters of fiscal 1999. Due to these factors, results for a quarter may not
indicate results to be expected for any other quarter or for a full fiscal
year. In the future, results of operations may fall below the expectations of
public market analysts and investors. In that event, the price of our common
stock would likely decrease. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
We Have Significant Future Capital Needs and Availability of Additional Funding
is Uncertain
 
We will need substantial capital to finance our expansion plans, which require
funds for capital expenditures, preopening costs and potential initial
operating losses related to new restaurant openings. We estimate that capital
expenditures during fiscal 1999 will be approximately $17.0 million and that
capital expenditures during future years will exceed this amount. In addition,
we have experienced negative cash flow from operations of approximately
$169,000 in fiscal 1996 and $1.5 million in fiscal 1997, while experiencing a
positive cash flow from operations of approximately $338,000 in fiscal 1998.
Although we expect that the net proceeds of this offering, combined with other
resources, will be sufficient to fund our capital requirements through at least
the next 12 months, this may not be the case. We may be required to seek
additional capital earlier than anticipated if:
 
    .future actual cash flows from operations fail to meet our expectations;
 
    .costs and capital expenditures for new restaurant development exceed
       anticipated amounts;
 
    .we are unable to obtain sale-leaseback financing of certain
       restaurants;
 
    .landlord contributions, loans and other incentives are lower than
       expected; or
 
    .we are required to reduce prices to respond to competitive pressures.
 
                                       8
<PAGE>
 
In the future, we will require additional funding for our expansion plans. We
may not be able to obtain additional financing on acceptable terms. If adequate
funds are not available, we will have to curtail projected growth, which could
materially adversely affect our business, financial condition, operating
results or cash flows. Moreover, if we issue additional equity securities, your
holdings may be diluted. See "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
 
We Face Risks Because of Our Small Restaurant Base
 
We currently operate 20 restaurants, nine of which opened in the last 12
months. Due to our small restaurant base, poor operating results at any one or
more restaurants could materially adversely affect our business, financial
condition, operating results or cash flows. Our operating results achieved to
date may not be indicative of our future operating results with a larger number
of restaurants.
 
Our Operations are Susceptible to Changes in Food Costs
 
Our profitability depends in part on our ability to anticipate and react to
changes in food costs. We rely on SYSCO Corporation, a national food
distributor, as the primary distributor of our food. Although we believe that
alternative distribution sources are available, any increase in distribution
prices or failure to perform by SYSCO could cause our food costs to increase.
Further, various factors beyond our control, including adverse weather
conditions and governmental regulation, may affect our food costs. We cannot
predict whether we will be able to anticipate and react to changing food costs
by adjusting our purchasing practices and menu prices, and a failure to do so
could materially adversely affect our business, financial condition, operating
results or cash flows.
 
We Depend Upon Our Key Personnel
 
Our future success significantly depends on the continued services and
performance of our senior management, particularly Joseph P. Micatrotto, our
President and Chief Executive Officer, and Greg A. Gadel, our Chief Financial
Officer. Our performance also depends on our ability to motivate and retain our
other executive officers and key employees. Competition for these employees is
intense. The loss of the services of members of our senior management or the
inability to attract additional personnel as needed could materially adversely
affect our business, financial condition, operating results or cash flows. See
"Management."
 
Changes in Consumer Preferences or Discretionary Consumer Spending Could
Negatively Impact Our Results
 
Our restaurants feature immigrant Southern Italian cuisine served family-style.
Our continued success depends, in part, upon the popularity of this type of
Italian cuisine and this style of informal dining. Shifts in consumer
preferences away from our cuisine or dining style could materially adversely
affect our future profitability. Also, our success depends to a significant
extent on numerous factors affecting discretionary consumer spending, including
economic conditions, disposable consumer income and consumer confidence.
Adverse changes in these factors could reduce guest traffic or impose practical
limits on pricing, either of which could materially adversely affect our
business, financial condition, operating results or cash flows.
 
We Operate in a Highly Competitive Industry
 
The restaurant industry is highly competitive. We compete on the basis of the
taste, quality, and price of food offered, guest service, ambiance and overall
dining experience. Our competitors include a large and diverse group of
restaurant chains and individual restaurants, serving both Italian and non-
Italian cuisine. The family-style Italian sector of the restaurant industry is
growing and is attracting an increasing number of competitors. These
competitors range from independent local operators that have opened restaurants
in various markets, to well-capitalized national restaurant companies. Many of
these competitors have substantially greater financial resources and operating
histories than we do. We will likely face direct competition in each of the
markets we enter. See "Business--Competition."
 
                                       9
<PAGE>
 
We Could Face Potential Labor Shortages
 
Our success depends in part upon our ability to attract, motivate and retain a
sufficient number of qualified employees, including restaurant managers,
kitchen staff and wait staff, necessary to keep pace with our expansion
schedule. Qualified individuals needed to fill these positions are in short
supply in certain areas, and the inability to recruit and retain such
individuals may delay the planned openings of new restaurants or result in high
employee turnover in existing restaurants which could have a material adverse
effect on our business, financial condition, operating results or cash flows.
Additionally, competition for qualified employees could require us to pay
higher wages to attract sufficient employees, which could result in higher
labor costs.
 
We are Subject to Extensive Government Regulation
 
The restaurant business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. While at this time we have been able to obtain and
maintain necessary governmental licenses, permits and approvals, the failure to
maintain such licenses, permits and approvals, including food and liquor
licenses, could have a material adverse effect on our operating results.
Difficulties or failure in obtaining required licenses and approvals could
result in delaying or canceling the opening of new restaurants. Local
authorities may suspend or deny renewal of our food and liquor licenses if they
determine that our conduct does not meet the standards for initial grant or
renewal. Although we have satisfied restaurant and liquor licensing for our
existing restaurants, we cannot predict whether we will be able to maintain
these approvals or obtain these approvals at future locations.
 
We also are subject to certain states' "dram shop" statutes. These statutes
generally provide a person injured by an intoxicated person the right to
recover damages from an establishment that served alcoholic beverages to the
intoxicated person. We carry liquor liability coverage as part of our existing
comprehensive general liability insurance. The imposition, however, of a
judgment substantially in excess of our insurance coverage, or our failure to
obtain and maintain insurance coverage, could materially and adversely affect
us.
 
Various federal and state labor laws govern our relationship with our employees
and affect operating costs. These laws include minimum wage requirements,
overtime, unemployment tax rates, workers' compensation rates, citizenship
requirements and sales taxes. Significant additional government-imposed
increases in minimum wages, paid leaves of absence and mandated health
benefits, or increased tax reporting and tax payment requirements for employees
who receive gratuities could materially adversely affect us. Furthermore,
changes in the laws of certain states, or a reduction in the number of states
that allow tips to be credited toward minimum wage requirements also could
materially adversely affect us. In addition, the Federal Americans with
Disabilities Act prohibits discrimination on the basis of disability in public
accomodations and employment. Although our restaurants are designed to be
accessible to the disabled, we could be required to make modifications to our
restaurants to provide service to, or make reasonable accomodation for,
disabled persons. See "Business--Government Regulation."
 
We Face Risk of Litigation
 
We are from time to time the subject of complaints or litigation from guests
alleging illness, injury or other food quality, health or operational concerns.
Adverse publicity resulting from these allegations may materially adversely
affect us and our restaurants, regardless of whether the allegations are valid
or whether BUCA is liable. In addition, employee claims against us based on,
among other things, discrimination, harrassment or wrongful termination may
divert our financial and management resources that would otherwise be used to
benefit the future performance of our operations. We have been subject to these
employee claims from time to time, and a significant increase in the number of
these claims or any increase in the number of successful claims could
materially adversely affect our business, financial condition, operating
results or cash flows.
 
We Face Uncertainty Regarding Risk of Year 2000 Compliance
 
BUCA and third parties with which we do business, rely on numerous computer
programs for day to day operations. We cannot predict whether we will be able
to effectively address our year 2000 issues in a timely and
 
                                       10
<PAGE>
 
cost-efficient manner and without interruption to our business. We have
initiated discussions with our significant suppliers regarding their plans to
solve year 2000 issues where their systems interface with our systems or
otherwise impact our operations. We cannot predict whether year 2000
difficulties encountered by our suppliers and other third parties with whom we
do business will have a material adverse impact on our business, financial
conditions, operating results or cash flows. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Impact of Year
2000."
 
We Could Face Consolidated Tax Group Liability
 
Prior to our spin-off in late fiscal 1996, we were a member of the consolidated
tax group of Parasole Restaurant Holdings, Inc. Under the Internal Revenue
Code, as a former member of the consolidated tax group, we could be held liable
for unpaid federal tax liabilities, if any, of the consolidated tax group
through the end of 1996 in the event of nonpayment by Parasole.
 
Our Existing Shareholders Will Retain Significant Control
 
Upon completion of this offering, our executive officers, directors and
principal shareholders and their affiliates will own approximately 56.9% of the
outstanding shares of common stock (or 54.5% if the underwriters' over-
allotment option is completely exercised). As a result, they may be able to
control us and direct our affairs, including the election of directors and
approval of significant corporate transactions. This concentration of ownership
also may delay, defer or prevent a change in control of BUCA, and make some
transactions more difficult or impossible without the support of these
shareholders. These transactions might include proxy contests, mergers, tender
offers, open market purchase programs or other purchases of common stock that
could give our shareholders the opportunity to realize a premium over the then
prevailing market price for shares of common stock. See "Management" and
"Principal and Selling Shareholders."
 
Our Common Stock May Not Have a Public Market
 
Prior to this offering, there has been no public market for our common stock.
The initial public offering price of our common stock will be determined by
negotiations among us, the selling shareholders and the underwriters. We cannot
predict whether an active trading market for the common stock will develop or
continue after the completion of this offering or whether the market price of
our common stock will decline below the initial public offering price. See
"Underwriting."
 
Our Common Stock Price May Be Volatile
 
The market price of our common stock could fluctuate significantly in response
to quarterly operating results and other factors, including many over which we
have no control and that may not be directly related to us. The stock market
has from time to time experienced extreme price and volume fluctuations, which
have often been unrelated or disproportionate to the operating performance of
particular companies. Fluctuations or decreases in the trading price of our
common stock may adversely affect your ability to trade your shares. In
addition, such fluctuations could adversely affect our ability to raise capital
through future equity financings. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations."
 
A Significant Number of Shares Will Be Eligible for Future Sale Either in the
Market or Through Exercise of Registration Rights
 
The 2,650,000 shares of common stock sold in this offering (and any shares sold
upon exercise of the Underwriters' over-allotment option) will be freely
tradable without restriction under the Securities Act of 1933, as amended,
except for any such shares held by our executive officers, directors and
certain principal shareholders ("affiliates"). The remaining 6,909,557 shares
of common stock are "restricted shares" within the meaning of Rule 144 under
the Securities Act and sales of these shares are subject to restrictions under
the Securities Act. Of these restricted shares,          are subject to lock-up
agreements under which the holders have agreed not to sell or otherwise dispose
of any of their shares for a period of 180 days after the date of this
Prospectus without the prior written consent of Piper Jaffray Inc. In its sole
discretion and at any time without notice, Piper Jaffray may release all or
 
                                       11
<PAGE>
 
any portion of the shares subject to the lock-up agreements. All of the
restricted shares subject to lock-up agreements will become available for sale
in the public market immediately following expiration of the 180-day lock-up
period, subject (to the extent applicable) to the volume and other limitations
of Rule 144 or Rule 701 under the Securities Act. Upon closing of this offering
       restricted shares not subject to lock-up agreements or contractual
restrictions will become available for sale in the public market, subject to
the limitations of Rule 144. In addition, beginning 90 days after the date of
this Prospectus,        restricted shares not subject to lock-up agreements or
contractual restrictions will become available for sale in the public market,
subject to the volume and other limitations of Rule 144. In addition, after
expiration of the lock-up period, some of our securityholders have the
contractual right to require us to register some of their shares of common
stock for future sale.
 
We intend to file a registration statement on Form S-8 covering all shares of
common stock issuable upon exercise of stock options in effect on the date of
this Prospectus and stock options or other stock rights to be granted under our
stock option plans. Upon this registration on Form S-8, an additional 1,034,154
shares of common stock, together with any additional shares of common stock
that will be issuable pursuant to stock options or other stock rights granted
in the future under our stock option plans, will be eligible for sale in the
public market.
 
Sales of substantial amounts of common stock in the public market, or the
perception that these sales may occur, could adversely affect the prevailing
market price of our common stock and our ability to raise capital through a
public offering of our equity securities. See "Shares Eligible for Future
Sale," "Principal and Selling Shareholders" and "Description of Capital Stock."
 
Your Holdings Will Be Diluted
 
The price that we are offering the shares to you in this offering is
substantially higher than the net tangible book value per share of common
stock. You will therefore incur immediate and substantial dilution of $6.41 per
share (assuming an initial public offering price of $11.50 per share). See
"Dilution."
 
 
                                       12
<PAGE>
 
                                USE OF PROCEEDS
 
The net proceeds to us from the sale of the 2,500,000 shares of common stock
offered by us at an assumed initial public offering price of $11.50 per share
are estimated to be approximately $25,875,000, after deducting the underwriting
discount and estimated offering expenses (approximately $29,955,000 if the
over-allotment option granted by us is exercised in full). We will not receive
any of the proceeds from the sale of shares of common stock by the selling
shareholders.
 
We intend to use approximately $17.0 million of the net proceeds of this
offering to finance the development of new BUCA di BEPPO restaurants during the
next twelve months and $7.0 million to retire existing bank debt. Our agreement
with our commercial lender requires us to (i) repay all amounts outstanding
under our $7.0 million term loan with the lender, which bears interest at 9.63%
and matures on December 31, 2000, and (ii) to repay all amounts outstanding in
excess of $3.0 million under our revolving line of credit with the lender,
which bears interest at lender's prevailing reference rate plus 0.75% to 1.25%
(based on the then-applicable cash flow coverage ratio) and expires on December
31, 2000. This debt was incurred to repay other BUCA debt and for the
development of restaurants. The balance of the net proceeds from this offering
will be used to finance the development of BUCA di BEPPO restaurants in
subsequent periods and for general corporate purposes. We may also use a
portion of the net proceeds for the acquisition of other restaurant operations
to expand the BUCA di BEPPO concept. We do not currently have any definitive
agreements, arrangements or understandings regarding any particular
acquisition. Pending application of the net proceeds, we intend to invest the
net proceeds in short-term, investment-grade, interest-bearing securities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
 
                                DIVIDEND POLICY
 
  We have never declared or paid cash dividends. We currently intend to retain
all future earnings for the operation and expansion of our business and do not
anticipate paying cash dividends on the common stock in the foreseeable future.
Any payment of cash dividends in the future will be at the discretion of our
Board and will depend upon our results of operations, earnings, capital
requirements, contractual restrictions and other factors deemed relevant by our
Board. In addition, our current credit facility restricts our ability to pay
cash dividends.
 
 
                                       13
<PAGE>
 
                                 CAPITALIZATION
 
The following table sets forth, at December 27, 1998, our consolidated cash and
cash equivalents and capitalization: (i) on an actual basis; (ii) on a pro
forma basis to reflect the issuance of common stock in connection with the
conversion of the preferred stock upon the closing of this offering and the
termination of our redemption obligations with repect to the Redeemable Common
Stock; and (iii) on a pro forma as adjusted basis to reflect the sale of the
shares of common stock offered by us by this Prospectus at an assumed initial
public offering price of $11.50 per share and the application of the estimated
net proceeds from the offering. See "Use of Proceeds." This table should be
read in conjunction with the Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
 
<TABLE>
<CAPTION>
                                               December 27, 1998
                                 ----------------------------------------------
                                                                Pro Forma
                                  Actual   Pro Forma(/1/) As Adjusted(/1/)(/2/)
                                 --------  -------------- ---------------------
                                                (in thousands)
<S>                              <C>       <C>            <C>
Cash and cash equivalents....... $  6,576     $ 6,576            $25,451
                                 ========     =======            =======
Long-term debt, less current
 portion........................ $  7,661     $ 7,661            $   261
Redeemable stock(/3/)...........   36,973         --                 --
Common stock: $.01 par value;
 13,100,000 shares authorized,
 1,914,359 shares issued and
 outstanding, actual; 7,059,557
 shares issued and outstanding,
 pro forma;
 9,559,557 shares issued and
 outstanding, pro forma as
 adjusted(/4/)..................       19          71                 96
Additional paid-in capital......      --       36,921             65,871
Accumulated deficit.............  (13,266)    (14,666)           (16,266)
                                 --------     -------            -------
                                  (13,247)     22,326             49,701
Notes receivable from
 shareholders...................     (293)       (293)              (293)
  Total common shareholders'
   (deficit) equity ............  (13,540)     22,033             49,408
                                 --------     -------            -------
  Total capitalization.......... $ 31,094     $29,694            $49,669
                                 ========     =======            =======
</TABLE>
 
                                ---------------
 
(/1/)Pro forma information gives effect as of December 27, 1998 to (i) the
     issuance of shares of common stock in connection with the conversion of
     all outstanding shares of preferred stock upon the closing of this
     offering; (ii) the termination of our redemption obligations with respect
     to the Redeemable Common Stock upon the closing of this offering; and
     (iii) the repayment of outstanding subordinated and bank debt in the
     amount of $6,660,000 with borrowings of $7,000,000 under our credit
     facility with U.S. Bank.
(/2/)Adjusted to give effect to (i) our receipt of the estimated net proceeds
     of $25,875,000 from the sale of 2,500,000 shares of common stock offered
     by us at an assumed public offering price of $11.50 per share; (ii) the
     application of a portion of the net proceeds of this offering to repay
     amounts outstanding under our credit facility with U.S. Bank and the
     resulting write-off of deferred financing costs; and (iii) the non-cash
     charge of approximately $1,300,000 related to the discount applicable to
     the right of holders of $1,780,000 of outstanding subordinated debt of
     BUCA to convert such debt into common stock after the closing of this
     offering.
(/3/)Includes Series A, Series B and Series C preferred stock and the
     Redeemable Common Stock.
(/4/)Excludes (i) 1,050,154 shares of common stock issuable upon exercise of
     options outstanding as of the date of this Prospectus; (ii) 397,859 shares
     of common stock issuable upon exercise of warrants outstanding as of the
     date of this Prospectus; and (iii) 257,971 shares of common stock issuable
     (from and after the completion of this offering) upon conversion of
     subordinated debt outstanding as of the date of this Prospectus, assuming
     a public offering price of $11.50 per share. See "Management--Stock
     Incentive Plans and Stock Options," "Certain Relationships and Related
     Transactions" and "Description of Capital Stock."
 
                                       14
<PAGE>
 
                                    DILUTION
 
Our net tangible book value as of December 27, 1998 was approximately $22.8
million, or $3.23 per share of common stock. Net tangible book value per share
is determined by dividing BUCA's net tangible worth (tangible assets less
liabilities) by the aggregate number of shares of common stock outstanding,
giving effect to the conversion of the preferred stock and the elimination of
our redemption obligations with respect to the Redeemable Common Stock. After
giving effect to the sale of the 2,500,000 shares of common stock offered
hereby at an assumed initial public offering price of $11.50 per share and the
application of the net proceeds therefrom, our pro forma net tangible book
value as of December 27, 1998 would have been approximately $48.7 million, or
$5.09 per share of common stock. This represents an immediate increase in net
tangible book value of $1.86 per share to existing shareholders and an
immediate dilution of $6.41 per share to new investors. The following table
illustrates this per share dilution:
 
<TABLE>
<S>                                                                 <C>   <C>
Assumed initial public offering price per share (mid-range)........       $11.50
  Net tangible book value per share before this offering........... $3.23
  Increase per share attributable to new investors.................  1.86
                                                                    -----
Pro forma net tangible book value per share after this offering....         5.09
                                                                          ------
Dilution per share to new investors................................       $ 6.41
                                                                          ======
</TABLE>
 
The following table sets forth as of December 27, 1998, giving effect to the
conversion of the preferred stock, the difference between the number of shares
of common stock purchased from us, the total consideration paid to us and the
average price per share paid by existing shareholders and by new investors (at
an assumed initial public offering price of $11.50 per share):
 
<TABLE>
<CAPTION>
                                                                         AVERAGE
                                   SHARES PURCHASED  TOTAL CONSIDERATION  PRICE
                                   ----------------- -------------------   PER
                                    NUMBER   PERCENT   AMOUNT    PERCENT  SHARE
                                   --------- ------- ----------- ------- -------
<S>                                <C>       <C>     <C>         <C>     <C>
Existing shareholders............. 7,059,557   73.8% $30,962,000   51.9% $ 4.39
New investors..................... 2,500,000   26.2   28,750,000   48.1   11.50
                                   ---------  -----  -----------  -----  ------
  Total........................... 9,559,557  100.0% $59,712,000  100.0% $ 6.25
                                   =========  =====  ===========  =====  ======
</TABLE>
 
Sales by the selling shareholders in this offering will reduce the number of
shares held by existing shareholders to 6,909,557, or 72.3% of the total number
of shares of common stock outstanding, and will increase the number of shares
held by new investors to 2,650,000, or 27.7% of the total number of shares of
common stock outstanding after the offering. The foregoing table excludes (i)
1,050,154 shares of common stock issuable upon exercise of options outstanding
as of the date of this Prospectus (at a weighted average exercise price of
$6.96 per share); (ii) 397,859 shares of common stock issuable upon exercise of
warrants outstanding as of the date of this Prospectus (at a weighted average
exercise price of $2.05 per share); and (iii) 257,971 shares of common stock
issuable (from and after the completion of this offering) upon conversion of
subordinated debt outstanding as of the date of this Prospectus, assuming a
public offering price of $11.50 per share. To the extent these shares are
issued, there will be further dilution to new investors. See "Management--
Employment Agreements," "Management--"Stock Incentive Plans," "Certain
Relationships and Related Transactions" and "Description of Capital Stock."
 
                                       15
<PAGE>
 
                      SELECTED CONSOLIDATED FINANCIAL DATA
           (IN THOUSANDS, EXCEPT SHARE, PER SHARE AND OPERATING DATA)
 
The following selected consolidated financial data for the five fiscal years
ended December 27, 1998 are derived from our audited consolidated financial
statements. The Consolidated Financial Statements and the Notes thereto for
each of the three fiscal years ended December 27, 1998, and the reports of
independent public accountants on those years, are included elsewhere in this
Prospectus. This Selected Consolidated Financial Data should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other financial information included elsewhere in this
Prospectus. We changed our fiscal year-end from December 31 to the last Sunday
in December, beginning with the fiscal year ended December 28, 1997.
 
<TABLE>
<CAPTION>
                                                   FISCAL YEAR ENDED
                            ----------------------------------------------------------------
                            DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 28, DECEMBER 27,
                                1994         1995         1996         1997         1998
                            ------------ ------------ ------------ ------------ ------------
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
<S>                         <C>          <C>          <C>          <C>          <C>
Restaurant sales..........   $    4,114   $    7,142   $   11,316   $   19,030   $   38,483
Restaurant costs:
  Product.................        1,345        2,303        3,471        5,520       10,876
  Labor...................        1,354        2,258        3,723        6,478       12,548
  Direct and occupancy....          829        1,270        2,242        3,750        7,861
  Depreciation and
   amortization...........           79          173          381          781        1,617
                             ----------   ----------   ----------   ----------   ----------
    Total restaurant
     costs................        3,607        6,004        9,817       16,529       32,902
                             ----------   ----------   ----------   ----------   ----------
Income from restaurant
 operations...............          507        1,138        1,499        2,501        5,581
General and administrative
 expenses.................          332          656        1,988        3,760        5,579
Preopening costs..........          151          183          430        1,140        1,895
                             ----------   ----------   ----------   ----------   ----------
Operating income (loss)...           24          299         (919)      (2,399)      (1,893)
Interest expense..........           98          219          295          497        1,036
                             ----------   ----------   ----------   ----------   ----------
Income (loss) before
 income taxes and
 cumulative effect of
 change in accounting
 principle................          (74)          80       (1,214)      (2,896)      (2,929)
Provision (benefit) for
 income taxes.............            1           43         (101)          72           17
                             ----------   ----------   ----------   ----------   ----------
Income (loss) before
 cumulative effect of
 change in accounting
 principle................          (75)          37       (1,113)      (2,968)      (2,946)
Cumulative effect of
 change in accounting
 principle related to
 preopening costs.........          --           --           --          (351)         --
                             ----------   ----------   ----------   ----------   ----------
Net income (loss).........   $      (75)  $       37   $   (1,113)  $   (3,319)  $   (2,946)
                             ==========   ==========   ==========   ==========   ==========
Cumulative preferred stock
 dividends, accretion of
 preferred stock to
 redemption value, and
 change in redeemable
 common stock.............          --           --        (3,687)      (1,986)      (2,189)
                             ----------   ----------   ----------   ----------   ----------
Net income (loss)
 applicable to common
 stock....................   $      (75)  $       37   $   (4,800)  $   (5,305)  $   (5,135)
                             ==========   ==========   ==========   ==========   ==========
Net income (loss) per
 share--basic and
 diluted..................   $     (.03)  $      .02   $    (1.96)  $    (2.13)  $    (2.04)
                             ==========   ==========   ==========   ==========   ==========
Weighted average common
 shares assumed
 outstanding--basic and
 diluted shares ..........    2,444,666    2,444,666    2,444,666    2,490,136    2,512,309
                             ==========   ==========   ==========   ==========   ==========
Pro forma net income
 (loss) per share--
 basic and diluted (/1/)..                                                            $(.42)
                                                                                 ==========
Common shares assumed
 outstanding pro forma--
 basic and diluted(/1/)...                                                        7,059,557
                                                                                 ==========
</TABLE>
 
 
                                       16
<PAGE>
 
<TABLE>
<CAPTION>
                                                  FISCAL YEAR ENDED
                                        --------------------------------------
                                        DECEMBER 31, DECEMBER 28, DECEMBER 27,
                                            1996         1997         1998
                                        ------------ ------------ ------------
<S>                                     <C>          <C>          <C>
OPERATING DATA:
Comparable restaurant sales in-
 crease(/2/)...........................       0.2%         9.4%        13.5%
Average weekly restaurant sales........   $47,343      $48,307      $52,971
Restaurants open at end of period......         6           11           19
</TABLE>
 
<TABLE>
<CAPTION>
                                                      AS OF
                         ----------------------------------------------------------------
                         DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 28, DECEMBER 27,
                             1994         1995         1996         1997         1998
                         ------------ ------------ ------------ ------------ ------------
<S>                      <C>          <C>          <C>          <C>          <C>
CONSOLIDATED BALANCE
 SHEET DATA:
Cash and cash equiva-
 lents..................    $1,222       $  805      $ 5,750      $ 6,099      $  6,576
Total assets............     2,480        4,477       12,771       21,288        37,560
Total debt, including
 current portion........     2,062        2,907        3,940        5,460         7,866
Redeemable stock(/3/)...       --           --        11,301       21,824        36,973
Shareholders' deficit...      (179)        (148)      (4,942)      (9,284)      (13,540)
</TABLE>
 
                                ---------------
 
(/1/)Pro forma information gives effect as of December 27, 1998 to (i) the
     issuance of shares of common stock in connection with the conversion of
     all outstanding shares of preferred stock upon the closing of this
     offering; (ii) the termination of our obligation to redeem the Redeemable
     Common Stock upon the closing of this offering; and (iii) the repayment of
     outstanding subordinated and bank debt in the amount of $6,600,000 with
     borrowings of $7,000,000 under our credit facility with U.S. Bank.
(/2/)The calculation of comparable restaurant sales increase includes
     restaurants open for 12 full calendar months, as adjusted to provide
     comparable 52-week fiscal years.
(/3/)Includes Series A, Series B and Series C preferred stock and the
     Redeemable Common Stock.
 
 
                                       17
<PAGE>
 
   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS
 
The following discussion of the financial condition and results of operations
should be read in conjunction with our Consolidated Financial Statements and
Notes thereto appearing elsewhere in this Prospectus.
 
Overview
 
We own and operate 20 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. In late 1996, BUCA, then a wholly
owned subsidiary of Parasole Restaurant Holding, Inc., was spun-off to the
shareholders of Parasole. At the time of the spin-off, we operated five
restaurants and had recently hired Joseph P. Micatrotto as President and Chief
Executive Officer. Since then, Mr. Micatrotto has hired an experienced
management team to embark on a strategic expansion of the BUCA di BEPPO
concept, targeted at major metropolitan areas throughout the United States.
Since late 1996, we have pursued a rapid but disciplined expansion strategy,
opening two restaurants in 1996, five in 1997 and eight in 1998. We intend to
open 13 new restaurants in fiscal 1999, of which one opened in Louisville,
Kentucky, in January, seven are under construction and the remaining five have
signed leases.
 
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 9.4%
in fiscal 1997 and 13.5% in fiscal 1998. 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 continue in the future; however, we expect that the impact of
new restaurant openings on total comparable restaurant sales will decrease as
our mature restaurant base continues to increase.
 
During fiscal 1997 and fiscal 1998, we expanded the use of daily specials and
began other measures to build sales in existing restaurants and reduce our
product costs as a percentage of restaurant sales. Each day, every restaurant
offers from two to four specials. These daily specials are selected from a list
of approximately 60 recipes. These daily specials typically are priced higher
than normal menu items and generate higher margins. We have increased sales of
specials from approximately 10% of restaurant sales in fiscal 1996 to
approximately 15% of restaurant sales in fiscal 1998. The increase in sales of
specials along with price increases of approximately 2% in fiscal 1997 and 3%
in fiscal 1998 have produced an increase in our average check from $17.50 in
fiscal 1996 to $18.80 in fiscal 1997 and to $20.00 in fiscal 1998. In addition
to achieving reduced costs through our sales of daily specials, we have
achieved cost efficiencies through the improved management of product
purchasing. Each restaurant orders items primarily from our national
distributor, SYSCO Corporation, on terms negotiated by our centralized
purchasing staff. We expect to introduce a new wine list in the second quarter
of fiscal 1999, which is intended to increase wine sales and reduce the cost of
wine as a percentage of wine sales.
 
During fiscal 1999, we expect to incur special non-cash charges in the
aggregate amount of approximately $3.0 million related to the early repayment
of debt. On February 5, 1999, we entered into a new credit facility with U.S.
Bank National Association. A portion of this facility was used to repay our
outstanding subordinated debt in the amount of $6.0 million. This early
repayment of debt resulted in a one-time extraordinary charge of approximately
$1.4 million in the first quarter of fiscal 1999. We also have outstanding $1.8
million of convertible subordinated debt that is convertible, at the option of
the holders, into common stock at a conversion price equal to 60% of the
initial public offering price. As a consequence of this right, we will
recognize a special non-cash
 
                                       18
<PAGE>
 
charge of approximately $1.3 million in the second quarter of fiscal 1999. In
addition, the $7.0 million term loan portion of our credit facility with U.S.
Bank is required to be repaid upon the completion of this offering. This will
result in a one-time extraordinary charge of approximately $300,000 in the
second quarter of fiscal 1999 for the write-off of costs related to this loan.
 
Our restaurant sales are comprised almost entirely of the sales of food and
beverages. In fiscal 1998, alcohol sales accounted for 26.6% of total
restaurant sales. 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. 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. 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. Management believes that future expansion and resulting
increases in restaurant sales will require proportionately smaller incremental
increases in general and administrative expenses, causing general and
administrative expenses as a percentage of sales to decrease further in the
future.
 
We adopted a fiscal year ending on the last Sunday in December beginning in
1997. Prior to that, our fiscal year followed the calendar year. Therefore,
fiscal 1997 included only 362 days instead of 364 days. Our fiscal quarters
include two four week periods followed by a five week period. Fiscal 2000 will
be a 53-week-year, with the final quarter of the fiscal year totaling 14 weeks.
 
 
                                       19
<PAGE>
 
RESULTS OF OPERATIONS
 
Our operating results for fiscal years 1996, 1997 and 1998 expressed as a
percentage of restaurant sales were as follows:
 
<TABLE>
<CAPTION>
                                                   FISCAL YEAR ENDED
                                         --------------------------------------
                                         DECEMBER 31, DECEMBER 28, DECEMBER 27,
                                             1996         1997         1998
                                         ------------ ------------ ------------
<S>                                      <C>          <C>          <C>
CONSOLIDATED STATEMENT OF OPERATIONS
 DATA:
Restaurant sales.......................     100.0%       100.0%       100.0%
  Restaurant costs:
   Product.............................      30.7         29.0         28.3
   Labor...............................      32.9         34.0         32.6
   Direct and occupancy................      19.8         19.7         20.4
   Depreciation and amortization ......       3.4          4.1          4.2
Income from restaurant operations......      13.2         13.1         14.5
General and administrative expenses....      17.6         19.8         14.5
Preopening costs.......................       3.7          6.0          4.9
                                            -----        -----        -----
Operating loss.........................      (8.1)       (12.6)        (4.9)
Interest expense.......................       2.6          2.6          2.7
                                            -----        -----        -----
Loss before income taxes and cumulative
 effect of change in accounting princi-
 ple...................................     (10.7)       (15.2)        (7.6)
(Benefit) provision for income taxes...      (0.9)         0.4          --
Net loss...............................      (9.8)%      (17.4)%       (7.7)%
                                            =====        =====        =====
</TABLE>
 
FISCAL YEAR ENDED DECEMBER 27, 1998 COMPARED TO FISCAL YEAR ENDED DECEMBER 28,
1997
 
RESTAURANT SALES. Restaurant sales increased by $19.5 million, or 102.2%, to
$38.5 million in fiscal 1998 from $19.0 million in fiscal 1997. The increase
was attributable to restaurant sales of $9.8 million at new restaurants opened
in fiscal 1998 and to increased sales at restaurants open prior to fiscal 1998.
Comparable restaurant sales increased by 13.5% in fiscal 1998, primarily as a
result of increased guest visits, increased sales of daily specials and a price
increase of approximately 3% in July 1998. The price increase and sales of
daily specials resulted in an increase in the average check per guest to $20.00
in fiscal 1998 from $18.80 in fiscal 1997.
 
PRODUCT. Product costs as a percentage of restaurant sales decreased to 28.3%
in fiscal 1998 from 29.0% in fiscal 1997. This reduction was a result of
management's efforts to reduce the cost of food products and improve margins.
We entered into an agreement with a national food distributor which reduced our
food product costs beginning in the second quarter of fiscal 1997. We also
sought to increase the percentage of daily specials that are sold at the
restaurants.
 
LABOR. Labor costs decreased as a percentage of restaurant sales to 32.6% in
fiscal 1998 from 34.0% in fiscal 1997. This decrease primarily resulted from
improved management of hourly staff levels and lower average wage costs because
of the opening of new stores in states that allow tips credit toward minimum
wage requirements.
 
 
                                       20
<PAGE>
 
Direct and Occupancy. Direct and occupancy costs increased as a percentage of
restaurant sales to 20.4% in fiscal 1998 from 19.7% in fiscal 1997. This
increase was a result of the higher occupancy costs in our California
restaurants opened in the last half of fiscal 1997 and during fiscal 1998, as
well as an increase in supplies usage during fiscal 1998.
 
Depreciation and Amortization. Depreciation and amortization expenses increased
approximately $836,000 to $1.6 million in fiscal 1998 from approximately
$781,000 in fiscal 1997. This increase was the result of depreciation
recognized on capital expenditures for new restaurants.
 
General and Administrative. General and administrative expenses increased $1.8
million to $5.6 million in fiscal 1998 from $3.8 million in fiscal 1997.
General and administrative expenses decreased as a percentage of restaurant
sales to 14.5% in fiscal 1998 from 19.8% in fiscal 1997. This increase in
dollars was primarily the result of the addition of management personnel in
fiscal 1997 and fiscal 1998, resulting in $600,000 of additional compensation
and benefits and $300,000 of additional travel expenses, and an increase in
legal fees of $600,000. We expect that general and administrative expenses will
continue to increase in dollar amount in the future, but decrease as a
percentage of restaurant sales because our expansion plans will require
proportionately smaller incremental increases in general and administrative
expenses.
 
Preopening. Preopening costs increased $400,000 to $1.9 million in fiscal 1998
from $1.5 million (inclusive of the cumulative effect of the change in
accounting principle related to preopening expenses) in fiscal 1997 due to the
greater number of restaurants that were opened or under development in fiscal
1998 compared to fiscal 1997.
 
Interest Expense. Interest expense increased $539,000 to $1.0 million in fiscal
1998 from $497,000 in fiscal 1997 due to an increase in our long-term debt.
 
Provision for Income Taxes. The provision for income taxes for fiscal 1998 and
fiscal 1997 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 or fiscal
1997 for the losses generated in previous years as utilization of these losses
in future periods was deemed uncertain. At December 27, 1998, we had a net
operating loss carryforward of approximately $3.5 million, and a $3.5 million
deferred tax asset related primarily to preopening costs which will reverse in
the future. The net operating loss carryforwards begin to expire in fiscal
2003. 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.
 
Fiscal Year Ended December 28, 1997 Compared to Fiscal Year Ended December 31,
1996
 
Restaurant Sales. Restaurant sales increased by $7.7 million, or 68.2%, to
$19.0 million in fiscal 1997 from $11.3 million in fiscal 1996. The increase
was attributable to restaurant sales of $7.0 million at new restaurants opened
in fiscal 1997 and to increased sales at restaurants open prior to fiscal 1997.
Increased guest visits as well as the increased sales of daily specials
contributed to the comparable restaurant sales gain of 9.4% in fiscal 1997. We
implemented a price increase of approximately 2% in June 1997. The increased
sales of daily specials and the price increase in fiscal 1997 contributed to
the increase in the average check per guest to $18.80 in fiscal 1997 from
$17.50 in fiscal 1996.
 
Product. Product costs as a percentage of restaurant sales decreased to 29.0%
in fiscal 1997 from 30.7% in fiscal 1996. This decrease was a result of the
agreement entered into with a national food distributor in the second quarter
of fiscal 1997, as well as efforts to reduce excess food preparation costs and
the increased sales of daily specials.
 
Labor. Labor costs increased as a percentage of restaurant sales to 34.0% in
fiscal 1997 from 32.9% in fiscal 1996. This increase was a result of the
increased number of new restaurants opened in fiscal 1997 compared to fiscal
1996, and the timing of these openings in each year. Labor costs at new
restaurants generally are higher both in dollars and as a percentage of
restaurant sales for the first six months after opening.
 
 
                                       21
<PAGE>
 
DIRECT AND OCCUPANCY. Direct and occupancy costs decreased as a percentage of
restaurant sales to 19.7% in fiscal 1997 from 19.8% in fiscal 1996. This
decrease was primarily due to more favorable lease terms associated with new
restaurants opened in 1997.
 
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
approximately $781,000 in fiscal 1997 from approximately $381,000 in fiscal
1996. This increase was principally the result of depreciation recognized on
capital expenditures for new restaurants opened in fiscal 1997.
 
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$1.8 million to $3.8 million in fiscal 1997, from $2.0 million in fiscal 1996.
General and administrative expenses increased as a percentage of restaurant
sales to 19.8% in fiscal 1997 from 17.6% in fiscal 1996. The increase in fiscal
1997 was primarily related to the costs associated with adding management staff
necessary to operate BUCA as a separate company. For most of fiscal 1996, we
operated as wholly owned subsidiary of Parasole Restaurant Holdings, Inc.
 
PREOPENING. Preopening costs in fiscal 1997 increased to $1.5 million
(including the cumulative effect of the change in accounting principle related
to preopening costs) from approximately $430,000 in fiscal 1996. This increase
was a result of the increased number of new stores developed in fiscal 1997 as
well as the $351,000 charge for the change in accounting principle related to
preopening costs.
 
INTEREST EXPENSE. Interest expense increased to approximately $497,000 in
fiscal 1997 from approximately $295,000 in fiscal 1996 due primarily to the
increase in our long-term debt.
 
BENEFIT/PROVISION FOR INCOME TAXES. The provision for income taxes for fiscal
1997 represents certain minimum state taxes based upon taxable factors other
than earnings and a minor charge for federal taxes primarily related to
deferred income taxes. In fiscal 1996, we recorded a benefit of $101,000
related to the net operating loss carryforwards. In fiscal 1997, 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.
 
QUARTERLY RESULTS
 
Our quarterly operating results will fluctuate significantly as a result of a
variety of factors, including the timing of new restaurant openings and related
expenses, profitability of new restaurants, increases or decreases in
comparable restaurant sales, general economic conditions, consumer confidence
in the economy, changes in consumer preferences, competitive factors and
weather conditions. In the past, we have experienced significant variability in
preopening costs from quarter to quarter. These fluctuations are primarily a
function of the timing of restaurant openings. We typically incur the most
significant portion of preopening costs associated with a given restaurant
within the two months immediately preceding, and the month of, the opening of
the restaurant. In addition, our experience to date has been that labor and
direct and occupancy costs associated with a newly opened restaurant for the
first three to six months of operation are materially greater than what can be
expected after that time, both in aggregate dollars and as a percentage of
restaurant sales. Accordingly, the volume and timing of new restaurant openings
in any quarter has had and is expected to continue to have a significant impact
on quarterly preopening costs and labor and direct and occupancy costs. We
anticipate that this effect will significantly increase preopening costs, labor
and direct and occupancy costs as a percentage of sales in the second and third
quarters of fiscal 1999.
 
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 $7.6 million. We have
funded our capital requirements through private sales of equity securities,
debt financing and sale-leaseback arrangements. Net cash used in operating
activities was $1.5 million for fiscal 1997 and net cash provided by operations
was $338,000 for fiscal 1998.
 
We use cash primarily to fund the development and construction of new
restaurants. Net cash used in investing activities was $8.1 million for fiscal
1997 and $15.6 million for fiscal 1998. Capital expenditures were $7.9 million
for fiscal 1997 and $17.9 million for fiscal 1998. During fiscal 1997 and 1998,
we purchased the land and building
 
                                       22
<PAGE>
 
for our Wheeling, Cleveland and St. Paul locations. We subsequently entered
into sale-leaseback arrangements for both the Wheeling and Cleveland locations
during 1998. These purchases of land and buildings, along with our expansions
of the Seattle and St. Paul restaurants, accounted for approximately
$2.2 million of fiscal 1998 capital expenditures. We intend to open 13
restaurants in fiscal 1999, one of which has already opened. Total capital
expenditures are expected to be approximately $17.0 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. Total capitalized investment includes the
capitalized lease value of the property, which can vary greatly depending on
the specific trade area. To date, all of our restaurants are renovations of
existing facilities. In 1999, we will build at least two restaurants based on
our prototype designs. These designs are expected to require between
$1.5 million and $2 million in total cash investment per restaurant. This
investment represents an incremental $500,000 increase over the historical cash
investment for remodeled restaurants. We plan to 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 $9.9 million in fiscal 1997 and
$15.8 million in fiscal 1998. Financing activities in fiscal 1997 and fiscal
1998 consisted primarily of sales of preferred stock as well as the incurrence
of additional long-term debt. We have an $8.0 million revolving line of credit
which matures on December 31, 2000 under which we currently have no borrowings
and which bears interest at the bank's reference rate plus .75% to 1.25%. We
also have a $7.0 million term loan which expires on December 31, 2000 and bears
a fixed rate of interest of 9.63%. Pursuant to the terms of the credit
agreement, the term loan must be repaid upon the consummation of this offering.
In addition, we must repay any borrowings under the revolving line of credit in
excess of $3.0 million, which will become the line's credit limit. The credit
agreement contains covenants which 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 on us. After this offering, we
intend to renegotiate our line of credit and we believe that the lender will be
willing to increase the amount of the line of credit on terms and conditions
which are comparable to those contained in our existing line of credit, or that
other financing will be available in an amount and on terms and conditions
which are adequate to meet our currently planned working capital and liquidity
needs. However, we cannot predict whether our existing lender will ultimately
agree to any increase or whether any alternative financing will be available.
 
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 after this offering
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 this offering and
available borrowings will be sufficient to fund our capital requirements
through at least the next twelve months. If additional capital is required, we
may need to raise additional capital through public or private equity or debt
financings. Future capital funding transactions may result in dilution to you.
We cannot predict whether additional capital will be available on favorable
terms, if at all.
 
We lease restaurant and office facilities and certain real property under
operating leases expiring between fiscal 1999 and fiscal 2018. Future minimum
lease payments under operating leases, including restaurant facilities
currently under construction or yet to be constructed as of December 27, 1998
were as follows: $3.0 million in fiscal 1999, $4.0 million in fiscal 2000, $4.0
million in fiscal 2001, $4.1 million in fiscal 2002, $4.2 million in fiscal
2003 and thereafter $29.4 million.
 
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
 
                                       23
<PAGE>
 
affect our labor costs. To date, inflation has not had a material impact on our
operating results. See "Risk Factors--We Face Risks Because of Our Small
Restaurant Base" and "--We are Subject to Extensive Government Regulation."
 
YEAR 2000 COMPLIANCE
 
We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The "year 2000 problem" is
pervasive and complex as virtually every computer operation will be affected in
some way by the rollover of the two digit year value to "00". The issue is
whether computer systems will properly recognize date-sensitive information
when the year changes to 2000. We have reviewed both our information technology
and our non-information technology systems to determine whether they are year
2000 compliant, and we have not identified any material systems which are not
year 2000 compliant. We have substantially completed year 2000 testing of our
systems and have identified those components deemed noncompliant. We have
initiated formal communications with all significant suppliers and service
providers to determine the extent to which we are vulnerable to those third
parties' failure to solve the year 2000 problem. We have received written
assurances of year 2000 compliance from a majority of the third parties with
whom we have relationships, including our national food distributor, and
payroll and credit card service providers. Unless public suppliers of water,
electricity and natural gas are disrupted for a substantial period of time (in
which case our business may be materially adversely affected), we believe that
our operations will not be significantly disrupted even if third parties with
whom we have relationships are not year 2000 compliant. We will develop a
contingency plan to deal with potential third party failure issues. Testing and
replacement of all systems is scheduled to be completed by June 30, 1999. A
decision to implement a contingency plan is expected by June 30, 1999. We
estimate that we incurred approximately $100,000 in fiscal 1998 to address year
2000 issues, principally testing our existing systems, and that we will incur
an additional $100,000 in fiscal 1999 to replace certain system components
deemed non-year 2000 compliant. These amounts do not include insurance proceeds
used to replace hardware and software systems destroyed in the recent fire at
our headquarters with new systems represented to be year 2000 compliant. See
"Business--Properties." However, uncertainty exists concerning the potential
costs and effects associated with any year 2000 compliance, and we intend to
continue to make efforts to ensure that third parties with whom we have
relationships are year 2000 compliant. Any year 2000 compliance problem of ours
or our vendors could materially adversely affect our business, financial
condition, operating results or cash flows, and could prohibit us from
operating our restaurants.
 
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
 
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
lending bank's reference rate plus 0.75% to 1.25%. Because we have no
borrowings under our revolving line of credit and we do not believe that the
maximum available borrowings under the revolving line of credit are material,
we do not believe this risk will be material.
 
We have no derivative financial instruments or derivative commodity instruments
in our cash and cash equivalents and investments. We invest our cash and cash
equivalents and investments in investment grade, highly liquid investments,
consisting of money market instruments, bank certificates of deposit and
overnight investments in commercial paper. We anticipate investing our net
proceeds from this offering in similar investment grade and highly liquid
investments pending their use as described in this Prospectus. See "Use of
Proceeds." Primarily all of our transactions are conducted, and our accounts
are denominated, in United States dollars. Accordingly, we are not exposed to
foreign currency risk.
 
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 average price increases 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.
 
                                       24
<PAGE>
 
                                    BUSINESS
 
Overview
 
BUCA, Inc. owns and operates 20 full service, dinner-only restaurants under the
name BUCA di BEPPO. Our restaurants 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. Our food is based on authentic family recipes enjoyed for
generations in the villages of Southern Italy and then adapted to American
ingredients. Our menu features dishes such as the BUCA di BEPPO 1893 salad,
chicken cacciatore, spaghetti with half-pound meat balls, eggplant parmigiana,
ravioli al pomodoro, veal marsala, garlic mashed potatoes, pizza arrabiatta and
tiramisu. These dishes, often seasoned with garlic and served with vine-ripened
tomatoes, communicate the pure, powerful flavor of the immigrant Southern
Italian kitchen. Our oversized portions, served family-style on large platters,
are designed to overwhelm guests with an abundance of high quality food. In
family-style serving, each item is shared by the entire table, which encourages
guests to interact and enjoy the meal together. A full service bar featuring
affordable, quality Italian table wines complements our menu. We believe that
the generous portions, combined with an average check per guest of
approximately $20.00, including beverages, offer our guests exceptional value.
We reinforce this value by encouraging guests to take home their extra food in
our logo-bearing BUCA bags, allowing guests to enjoy an additional BUCA meal at
home.
 
Our BUCA di BEPPO restaurants irreverently exaggerate the cliches of post-War
Italian/American restaurants found in Little Italy in New York City, the North
End of Boston and other Italian neighborhoods of large U.S. cities. We design
our restaurants to be a fun, high-energy destination. The layout of each BUCA
di BEPPO restaurant in a market is unique, which reinforces our image as a
collection of neighborhood restaurants. Restaurant interiors are divided into a
number of distinct rooms with walls covered by hundreds of vintage photos of
Italian families and celebrities, Christmas lights displayed year-round and
other icons of Italian heritage. Boxes of pasta, cans of roasted peppers and
jugs of wine fill window sills and shelves throughout our restaurants. Lively
music from classic artists such as Frank Sinatra and Dean Martin adds to the
fun and energetic atmosphere. Restaurant exteriors feature flashing bare bulb
signage, statuary and humorous neon signs promising "elegant dining" and "air
conditioning." Our food, decor and family-style servings all promote a fun,
celebratory and socially interactive dining experience that emulates a
traditional Italian/American evening meal.
 
Our Business Strategy
 
Our objective is to become the dominant family-style, immigrant Southern
Italian restaurant in each of our markets. To achieve our objective, we have
developed the following strategies:
 
Offer Vital, Vibrant and Powerfully Flavored Food.  BUCA di BEPPO restaurants
feature foods with the pure, powerful flavors of the immigrant Southern Italian
kitchen. Our BUCA di BEPPO 1893 salad, for example, combines a large bed of
greens with olives, two kinds of cheese, mortadella, pepperoni, peperoncini,
onions, cucumbers and tomatoes. Our chicken vesuvio features fresh, tender
chicken, seasoned with oregano, sauteed with spicy Italian sausage and tossed
in a sauce of olive oil, sweet white wine, garlic, chunks of tomato, broccoli,
red onion and white cannellini beans. For dessert, our cannoli's three crispy
shells are covered with powdered sugar and filled with a thick, creamy ricotta
and sweet mascarpone, sprinkled with pistachios and covered in chocolate sauce.
 
Create a Fun, Energetic, Destination Dining Experience.  BUCA di BEPPO promotes
a fun, irreverent and socially interactive atmosphere. The family-style,
participatory dining format, "kitschy" decor, unique restaurant layouts, and
festive atmosphere all combine to make our restaurants entertaining and fun for
guests. We believe that this atmosphere results in BUCA di BEPPO restaurants
being a destination for diners who will seek out our restaurant locations. We
also believe this atmosphere is attractive for a wide variety of dining
occasions, including weekend evenings, business occasions, family celebrations
as well as regular weeknight dining.
 
 
                                       25
<PAGE>
 
Provide Superior Dining Value.  Our restaurants provide high quality,
moderately priced food in oversized portions. We believe that the generous
portions, combined with an average check per guest of approximately $20.00,
including beverages, offer our guests exceptional value. We reinforce this
value by encouraging guests to take home their extra food in our logo-bearing
BUCA Bags, allowing guests to enjoy an additional BUCA meal at home.
 
Achieve Excellent Restaurant Economics.  We believe that our restaurants
provide superior unit level economics. During fiscal 1998, our mature
restaurants (those with at least two full years of operating history) generated
average restaurant sales of approximately $3.0 million and average cash flow of
approximately $693,000, or 23.5% of restaurant sales.
 
Leverage Our Paisano Partners Program.  We believe that our Paisano Partners
Program, in which restaurant general managers purchase BUCA stock, receive
stock options and share in their restaurant's profits, enables us to attract
and retain managers with greater experience and of a higher caliber than the
industry average. We believe this program motivates our Paisanos to achieve
significantly greater operating efficiencies, results in lower turnover and
contributes to our superior unit level economics.
 
Pursue Rapid but Disciplined Restaurant Expansion.  Since fiscal 1997, BUCA has
pursued a rapid but disciplined restaurant development strategy. Our current
development plan is to open 13 new restaurants in fiscal 1999, of which one is
already open, seven are under construction and the remaining five have signed
leases.
 
Create a Passionate Culture of Service.  We foster a passionate culture of
guest service among our employees by emphasizing consideration of the guest
first in all decisions. From the moment a guest walks in the front door, the
BUCA di BEPPO experience is enhanced by a high level of guest service provided
by a knowledgeable, energetic staff. Servers are trained to introduce guests to
the BUCA di BEPPO concept, explain the menu and encourage guest interaction.
The Paisano also interacts with guests to make them feel welcome and is
responsible for ensuring their satisfaction with the dining experience.
 
The BUCA di BEPPO Concept
 
The BUCA di BEPPO concept was created in Minneapolis in 1993 by our founder,
Philip A. Roberts. Mr. Roberts designed the restaurants to take advantage of
the long-standing popularity of Italian cuisine and certain dominant consumer
trends, including the growing casualness of American society and an increasing
desire among consumers for value. The BUCA di BEPPO concept irreverently
exaggerates the cliches of traditional post-War neighborhood Italian/American
restaurants but also pays tribute to and emulates their reverence for food,
vibrant atmosphere, colorful decor and high degree of social interaction. After
the initial BUCA di BEPPO restaurants proved to be successful, Joseph P.
Micatrotto, a second generation Italian immigrant, joined our company as
President and CEO to help refine the concept and lead BUCA's national
expansion. The innovation of this concept has attracted national attention as
evidenced by national awards won by BUCA, including a 1998 "Hot Concepts!"
award from Nation's Restaurant News, and awards in all of our local markets.
 
Powerfully Flavored High Quality Food.  We believe that the authenticity,
quality and consistency of our food is the most important component of our
long-term success. In contrast to the levity of our decor and ambiance, we take
menu development and food preparation very seriously. Our menu is based on
authentic family recipes enjoyed for generations in the villages of Southern
Italy and then adapted to American ingredients. We make regular trips to
Southern Italy and Sicily to find new recipes for our menu that are then
extensively tested and refined before introduction in our restaurants.
 
Some of our most popular menu items include the BUCA di BEPPO 1893 salad,
chicken cacciatore, spaghetti with half-pound meat balls, eggplant parmigiana,
ravioli al pomodoro, veal marsala, garlic mashed potatoes, pizza arrabiatta and
tiramisu. Our foods, often seasoned with garlic and served with vine-ripened
tomatoes, communicate
 
                                       26
<PAGE>
 
the pure, powerful flavors of the immigrant Southern Italian kitchen. We also
offer daily specials centered around a genre of Southern Italian cooking called
"cucina di povera," which translates as "cuisine of the poor." These daily
specials consist of year-round specials such as manicotti or cannelloni as well
as seasonal specials such as mozzarella caprese that is offered only in the
summer in order to assure the availability of high quality ingredients and to
take advantage of seasonal customer demand. We believe that our daily specials
play a vital role in keeping the menu fresh and allow us to test prospective
permanent menu items. In fiscal 1998, daily specials accounted for
approximately 16% of food sales.
 
To ensure that the food we are serving is of consistently high quality, we have
developed extensive quality control practices. For example, every member of our
kitchen staff must participate in a thorough training program. We also have
strict specifications that ensure only high quality ingredients are used in our
food. A kitchen manager at each restaurant is responsible for making a final
check of each item to assure it meets our high quality standards before it
leaves the kitchen.
 
Our menu pricing is consistent within a market, but may differ slightly from
one market to the next. Menu entrees range in price from $9.95 to $19.95 and
are designed to be shared by the entire party at the table. The average check
per guest is approximately $20.00, including beverages. In fiscal 1998,
alcoholic beverages, primarily table wine, accounted for 26.6% of total
restaurant sales.
 
Family-Style Serving and Ambiance. BUCA di BEPPO restaurants' oversized
portions, served family-style on large platters, are designed to overwhelm
guests with an abundance of high quality food. An order of our spaghetti and
meatballs, for example, features 2.5 pounds of pasta and three half-pound
meatballs, covered by a pound of marinara sauce. Our chicken cacciatore
consists of a whole chicken served on two pounds of garlic mashed potatoes,
ladled with cacciatore sauce and weighs seven pounds. Guests can enjoy their
meal with bottles of Italian table wine of up to five liters in size.
 
In family-style serving, each item is shared by the entire table, which
encourages guests to interact and enjoy the meal together. We locate menu
boards on our restaurant's walls instead of distributing individual menus,
encouraging guests to wander from their seats to read the menu. Guests take
note of what other tables have ordered and may interact with other parties. We
believe the fun and socially interactive dining experience typical of a meal at
one of our restaurants differentiates us from our competitors and promotes
guest loyalty from a wide range of guests. We maintain a policy of serving
dinner-only which reinforces our family-style concept.
 
We believe that serving guests family-style offers us a competitive advantage.
Because larger portions are more efficient to produce and serve, cost savings
are passed along to the guest. Furthermore, by exclusively serving larger
portions, we are able to consistently and emphatically make a value statement
to our guests. We reinforce this value by encouraging guests to take home their
extra food in our logo-bearing BUCA bags, allowing them to enjoy an additional
BUCA meal at home.
 
Irreverent Decor and Unique Layout. Our restaurants are designed with an
irreverence that exaggerates the cliches of traditional post-War
Italian/American neighborhood restaurants. Our restaurant exteriors are
typically clad in faux flagstone and painted Tuscan red, feature flashing bare
bulb signage, statuary, fake flowers and humorous neon window signs promising
"elegant dining," "sanitary bathrooms" and "air conditioning." Our restaurant
interiors are decorated with hundreds of vintage photos of Italian and
Italian/American families and celebrities, bright strings of Christmas lights
displayed year-round and numerous other icons of Italian heritage. Boxes of
pasta, cans of olive oil and roasted peppers and jugs of wine fill window sills
and shelves throughout our restaurants. Lively music from classic artists such
as Frank Sinatra and Dean Martin adds to the fun and energetic atmosphere. The
combined effect of these exaggerated cliches is a lighthearted, tongue-in-
cheek, "kitschy" atmosphere that makes BUCA di BEPPO restaurants fun and
entertaining destinations.
 
The individual layout of each BUCA di BEPPO restaurant in a market is unique.
The restaurant's collection of individual dining rooms provide a variety of
seating possibilities. We believe that this individuality reinforces the
 
                                       27
<PAGE>
 
image of BUCA as a collection of quirky neighborhood restaurants. In most of
our restaurants, for example, guests must pass through the kitchen before being
seated. Some elements such as the signage, menu and service are consistent
throughout all restaurants. All restaurants feature a visible pizza kitchen,
several distinct dining rooms and a bar that is used primarily as a waiting
area.
 
BUCA di BEPPO restaurants are designed to accommodate groups, with a
predominance of tables seating four to six guests and many tables seating
parties of eight or more. Additionally, most locations feature a "Pope's Table"
and a "Kitchen Table." The Pope's Table is a large table that seats 16 to 20
people and occupies a marquee location in the restaurant. The Kitchen Table
seats six to ten people in the heart of the restaurant's loud and boisterous
kitchen, providing the ultimate BUCA di BEPPO experience.
 
Exemplary Guest Service. At BUCA, we are committed to guest satisfaction. From
the moment guests walk in the door, they are treated as part of the BUCA di
BEPPO family. The server ensures that first-time guests understand the BUCA di
BEPPO family-style servings and provides an explanation of the menu, if
necessary. When guests are ordering, our server highlights the daily specials
and helps them determine an appropriate amount of food to order. We emphasize
to our employees that they should consider the guest first in all decisions
they make. The restaurant's Paisano Partner interacts with guests to make them
feel welcome and is responsible for ensuring their satisfaction with the dining
experience. We also contract with an independent company to send its personnel
to dine in each of our restaurants unannounced at least twice each month. After
each visit, these anonymous diners issue a written report with both subjective
impressions and objective grading of our restaurants in several operational
areas.
 
Unit Level Economics
 
During fiscal 1998, our mature restaurants (those with at least two full years
of operating history) generated average restaurant sales of approximately $3.0
million. During fiscal 1998, these mature restaurants generated average cash
flow of approximately $693,000, or 23.5% of restaurant sales, and average
restaurant operating income of approximately $593,000, or 20.0% of restaurant
sales. We currently lease all but one of our restaurant locations and plan to
lease most, if not all, of our future restaurant sites. We anticipate that, on
average, new restaurants will require a cash investment of $1.0 million to $1.5
million. In fiscal 1998, our total cash investment per restaurant averaged
approximately $1.4 million, excluding preopening costs of approximately
$195,000. Preopening costs for future restaurants are expected to range from
$175,000 to $210,000 per restaurant. However, individual unit investment costs
could vary due to a variety of factors, including competition for sites,
location, construction costs, unit size and the mix of conversions, build-to-
suit and leased locations.
 
Our current restaurants range in size from 4,500 to 10,000 square feet and have
approximately 170 to 375 seats. We anticipate that future restaurants will
typically range in size from 7,000 to 9,000 square feet and have approximately
250 to 350 seats. From time to time, we have expanded the size of existing
restaurants to meet demand.
 
 
                                       28
<PAGE>
 
Current Restaurant Locations
 
We currently own and operate the following 20 restaurants, located in 11
markets:
 
<TABLE>
<CAPTION>
Location                                          Date Opened  Square Feet Seats
--------                                         ------------- ----------- -----
<S>                                              <C>           <C>         <C>
Minneapolis, Minnesota.......................... July 1993        4,465     172
St. Paul, Minnesota............................. May 1994         9,991     375
Eden Prairie, Minnesota......................... June 1995        8,025     230
Milwaukee, Wisconsin............................ November 1995    9,210     293
Palo Alto, California........................... July1996         5,192     197
Seattle, Washington............................. November 1996    8,213     328
Chicago, Illinois............................... May 1997         5,340     185
Wheeling, Illinois.............................. May 1997         6,426     225
San Francisco, California....................... August 1997      6,393     202
Lynnwood, Washington............................ November 1997    6,890     262
Pasadena, California............................ December 1997    6,739     250
Indianapolis, Indiana........................... February 1998    7,678     326
Encino, California.............................. March 1998       6,080     248
Redondo Beach, California....................... June 1998        6,152     272
Lombard, Illinois............................... July 1998        8,278     328
Scottsdale, Arizona............................. October 1998     8,230     298
Burnsville, Minnesota........................... November 1998    7,340     312
Cleveland, Ohio................................. November 1998    9,430     256
Kansas City, Kansas............................. December 1998    7,494     298
Louisville, Kentucky............................ January 1999     8,315     244
</TABLE>
 
We expect that twelve additional restaurants will open during the remainder of
fiscal 1999. Construction has commenced on seven of these sites, one each in
Claremont, California; Denver, Colorado; Washington, D.C.; Des Moines, Iowa;
Detroit, Michigan; Buffalo, New York; and Columbus, Ohio. In addition, we have
10 signed leases for future sites, including five sites for restaurants we
expect to open in 1999. We also have entered into a lease for a 10,000 square
foot restaurant to be opened during fiscal 2000 at Universal Studios in Los
Angeles. We are currently negotiating additional leases for potential future
locations.
 
Expansion Strategy and Site Selection
 
Beginning in fiscal 1997, following the hiring of Joseph P. Micatrotto as our
President and CEO, we accelerated our rate of restaurant expansion. Mr.
Micatrotto previously had been instrumental in the expansion of two national
restaurant chains, Chi-Chi's Mexican Restaurants and Panda Express. Today we
are focused on growing our restaurant base in a rapid but disciplined manner.
We intend to open 13 new restaurants in fiscal 1999, of which one is already
open, seven are under construction and the remaining five have signed leases.
By the end of fiscal 1999, we plan to have 32 restaurants open in at least 17
markets. We intend to continue expanding BUCA primarily in metropolitan markets
of the United States with a population of at least 800,000 which we believe can
support multiple BUCA di BEPPO restaurants. We do, however, plan to enter one
or more smaller markets within the next 12 months. We believe that the majority
of our future growth will come from opening new restaurants. From time to time,
we will evaluate opportunities to acquire and convert other restaurant
operations to the BUCA di BEPPO concept, but we do not currently have any
definitive agreements, arrangements or understandings regarding any particular
acquisition.
 
We have designated teams of employees that are responsible for opening new
restaurant locations, including kitchen personnel and other individuals who are
trained as hosts, servers, bartenders and managers. Our training programs
enable us to promote existing employees and managers as new restaurants open.
We believe that through our training programs and the hiring of outside
personnel we will be able to support our expansion strategy.
 
 
                                       29
<PAGE>
 
We believe that our concept is extremely flexible and can be successfully
operated in a number of different settings. We have located our restaurants in
both urban and suburban areas with equal success. Our restaurants have been
successfully opened both as freestanding structures and as tenants in larger
multi-purpose buildings. To date, all of our restaurant sites involved the
remodeling of existing structures. To develop efficiencies and to increase
flexibility with respect to locations, we have developed prototype designs for
new construction. While our restaurants typically share common interior decor
elements, the layouts of our restaurants differ to accommodate different types
of buildings and different square footage of available space.
 
We believe that a restaurant's location is a critical factor in determining its
success. Accordingly, we thoroughly analyze each prospective site before
signing a lease. Restaurant sites must be approved by the Real Estate Site
Approval Committee, consisting of two outside directors, our Chairman, CEO, CFO
and the prospective Divisional Vice President. As a dinner-only concept, we are
most concerned about locating restaurants close to areas where our guests
typically spend their evening hours. The criteria we consider when selecting a
site include: the site's visibility, traffic patterns, general accessibility
and availability of suitable parking, competition within the site's trade area,
availability of restaurant-level employees and proximity of shopping,
entertainment activities, office parks, and tourist attractions. In general, we
prefer to open our restaurants within larger metropolitan areas with higher
population densities and above-average household incomes.
 
Operations
 
Restaurant Management. Our ability to effectively manage restaurants over a
diverse geographic area will continue to be critical to our overall success. We
currently have three Divisional Vice Presidents of Operations who report
directly to the Chief Operations Officer. Each Divisional Vice President
supervises a multi-state geographic area and is expected to effectively manage
up to 15 restaurants. Our Divisional Vice Presidents supervise each Paisano
within his or her territory with the goal of achieving an expected return on
investment through the successful implementation and operation of the BUCA di
BEPPO concept. We believe that our Divisional Vice Presidents can accomplish
this broad supervisory task in large part because of the high caliber of our
Paisano Partners, who we also believe have more experience than the average
restaurant general manager in the industry. In addition, because we are a
dinner-only concept, the number of meal shifts that the Paisano Partner and,
indirectly, the Divisional Vice President, must supervise are approximately
one-half of most restaurants in the industry. The typical restaurant management
team consists of the Paisano Partner, Kitchen Manager, Assistant General
Manager and Assistant Kitchen Manager. Under the Paisano Partners Program, this
management team receives a percentage of incremental restaurant cash flow after
their restaurant achieves certain minimum performance levels. Each member of
our restaurant management team is cross-trained in all operational areas. As we
grow our restaurants and expand geographically, we expect to add additional
Divisional Vice Presidents.
 
Recruiting. We actively recruit and select individuals who share our passion of
guest service. Testing and multiple interviews are used to aid in the selection
of new employees at all levels. We have developed a competitive compensation
plan for restaurant management that includes a base salary, competitive
benefits package including a 401(k) plan, and participation in a management
incentive plan that rewards the restaurant management team for achieving
performance objectives. All of our employees are entitled to discounted meals
at our restaurants; in addition, all restaurant employees are invited to the
daily pre-shift meal held at each restaurant. We also enjoy the recruiting
advantage of being a one-meal-period-only restaurant concept, which provides
employees with a more regular schedule than they might have at other restaurant
concepts. In addition, because they are working only a dinner shift, where tips
are usually greater than other meals, servers realize better per hour
compensation than most other multiple meal concepts. It is our policy to
promote from within, but we recognize the need to supplement this policy with
outside recruiting at this stage of our growth and as new markets are opened.
 
Training. We provide all new employees with intensive training to ensure they
are provided with the tools to excel in their position. This training
encompasses classroom instruction, on-the-job training programs for each
position, and testing of the new employee's progress at pre-determined stages
within the training schedule. Each new member of the restaurant management team
receives a minimum of 12 weeks of training before being assigned to a
restaurant location. All management employees receive kitchen training. In
addition to the formal training
 
                                       30
<PAGE>
 
programs, we maintain detailed operating procedure manuals, standards,
controls, food line management systems and a food culture book to complement
the training received at all levels.
 
Operational Control Systems. All of our restaurants use personal computer
systems integrated with point-of-sale and back-of-the-house management systems
to monitor restaurant sales, product costs and labor costs on a daily basis.
Financial controls are maintained through a centralized accounting system,
which includes a sophisticated theoretical food cost program and a labor
scheduling and tracking program. Physical inventories of food and beverage
items are taken on a weekly basis. Daily, weekly and monthly financial
information is provided to each restaurant and to the Divisional Vice
Presidents for analysis and comparison to our budget and to comparable
restaurants. We closely monitor restaurant sales, cost of sales, labor and
other restaurant trends on a daily, weekly and monthly basis. We believe that
our current systems are adequate for our planned expansion strategy.
 
Hours of Restaurant Operation. BUCA di BEPPO restaurants are open seven days a
week for dinner only, typically opening at 5:00 p.m. during the week and 4:00
p.m. on the weekends and closing at the Paisano's discretion, typically 10:00
p.m. on weekdays and 11:00 p.m. on weekends. Additionally, our restaurants open
at noon on selected holidays.
 
Marketing
 
Our marketing strategy is to communicate the BUCA di BEPPO brand through many
creative and non-traditional avenues. We focus our efforts on getting people in
the local community (particularly civic, business and media leaders) to talk
about the BUCA di BEPPO experience. During fiscal 1998, we spent an aggregate
of 2.5% of restaurant sales on marketing efforts. We expect to continue
investing approximately 2% to 3% of restaurant sales in marketing efforts in
the future, primarily in connection with the opening of new restaurants.
 
In connection with new restaurant openings, we contract with local public
relations firms to assist us in establishing and sustaining the BUCA di BEPPO
brand. By organizing events like pre-opening parties and concierge dinners,
these firms focus primarily on introducing BUCA di BEPPO restaurants to opinion
leaders, such as civic and media personalities, and to hospitality industry
leaders such as key hotel staff, meeting planners and convention and visitors
bureau representatives.
 
We sustain restaurant awareness primarily through unpaid media exposure and
word-of-mouth advertising, including grassroots neighborhood marketing efforts,
primarily by the Paisano Partner. BUCA di BEPPO restaurants have achieved
particular success by delivering a sample of menu items to drive-time radio
personalities and morning television hosts, earning free media exposure (and
often invitations for scheduled return engagements) while developing
relationships with high-profile media personalities.
 
To reinforce our image as a collection of unique neighborhood restaurants, the
Paisano Partner works diligently to establish a community presence. Through
ongoing neighborhood marketing efforts, supported by our marketing department,
the Paisano Partner establishes relationships with area businesses and
residents, participates in high-profile events and festivals, and takes
advantage of opportunities to introduce area residents and workers to the
restaurant. Because of their credibility as local business owners and community
members, Paisano Partners play an integral role in establishing BUCA di BEPPO
in the neighborhood.
 
We engage to a limited extent in paid advertising, including billboards, radio
spots, and newspaper and magazine ads. We also utilize a variety of printed
marketing materials, including restaurant location brochures, hotel concierge
cards, take-out menus and direct mailings. Typical themes in these materials
include: "Recorded Music in Every Room," "Cocktails in the Lounge and at Your
Table" and "Vinyl Booths Mean No Static Cling For the Ladies." All marketing
communications work to establish each of our restaurants as an irreverent,
distinct, casual and welcoming neighborhood immigrant Southern Italian
restaurant.
 
 
                                       31
<PAGE>
 
Purchasing
 
We endeavor to obtain high quality menu ingredients and other supplies and
services for our operations from reliable sources at competitive prices. To
this end, we continually research and evaluate various ingredients and products
in an effort to maintain the highest quality and to be responsive to changing
consumer tastes. Our centralized purchasing staff, under the direction of our
Vice President of Purchasing, procures the products specified by our Food and
Beverage Department, specifies the products to be used at our restaurants,
designates the vendors and provides suppliers with detailed ingredient
specifications. To maximize purchasing efficiencies and to provide for the
freshest ingredients for our menu items, each restaurant's management
determines the quantities of food and supplies required. To obtain the lowest
possible prices for the required high quality and consistency, each restaurant
orders items primarily from our national food distributor, SYSCO Corporation,
on terms negotiated by our centralized purchasing staff. We believe that all
essential food and beverage products are available from several qualified
suppliers at competitive prices should an alternative source be required.
 
Competition
 
The restaurant industry is intensely competitive with respect to price,
service, the type and quality of food offered, location and other factors. We
have many well established competitors, both nationally and locally owned
Italian and non-Italian concepts, with substantially greater financial
resources and a longer history of operations than we do. We compete with other
restaurant and retail establishments for sites. Changes in consumer tastes,
economic conditions, demographic trends and the location and number of, and
type of food served by, competing restaurants could adversely affect our
business as could the unavailability of experienced management and hourly
employees.
 
Properties
 
All of our restaurants but one are located in leased facilities. Current
restaurant leases have expiration dates ranging from 2003 to 2018, with all of
the leases providing for five-year options to renew for at least one additional
term.
 
The building formerly housing our executive offices suffered extensive fire
damage in December 1998. Our executive offices are now temporarily located in
approximately 10,000 square feet of leased space in Minneapolis, Minnesota.
 
Employees
 
At January 31, 1999, we had 1,400 employees. Forty served in administrative or
executive capacities, 85 served as restaurant management personnel, and the
remainder were hourly restaurant personnel.
 
None of our employees are covered by collective bargaining agreements, and we
have never experienced an organized work stoppage or strike. We believe that
our working conditions and compensation packages are competitive and consider
relations with our employees to be very good.
 
Intellectual Property
 
We have registered the servicemarks "BUCA" and "BUCA di BEPPO" with the United
States Patent and Trademark Office. We believe that our trademarks and other
proprietary rights have significant value and are important to the marketing of
our restaurant concept. We have in the past and expect to continue to
vigorously protect our proprietary rights. We cannot predict, however, whether
steps taken by us to protect our proprietary
 
                                       32
<PAGE>
 
rights will be adequate to prevent misappropriation of these rights or the use
by others of restaurant features based upon, or otherwise similar to, our
concept. It may be difficult for us to prevent others from copying elements of
our concept and any litigation to enforce our rights will likely be costly. In
addition, other local restaurant operations with names similar to those we use
may try to prevent us from using our marks in those locales.
 
Government Regulations
 
Our restaurants are subject to regulation by federal agencies and to licensing
and regulation by state and local health, sanitation, building, zoning, safety,
fire and other departments relating to the development and operation of
restaurants. These regulations include matters relating to environmental,
building, construction and zoning requirements and the preparation and sale of
food and alcoholic beverages. Our facilities are licensed and subject to
regulation under state and local fire, health and safety codes.
 
Each of our restaurants is required to obtain a license to sell alcoholic
beverages on the premises from a state authority and, in certain locations,
county and/or municipal authorities. Typically, licenses must be renewed
annually and may be revoked or suspended for cause at any time. Alcoholic
beverage control regulations relate to numerous aspects of the daily operations
of each of our restaurants, including minimum age of patrons and employees,
hours of operation, advertising, wholesale purchasing, inventory control and
handling, and storage and dispensing of alcoholic beverages. We have not
encountered any material problems relating to alcoholic beverage licenses to
date. The failure to receive or retain a liquor license in a particular
location could adversely affect that restaurant and our ability to obtain such
a license elsewhere.
 
We are subject to "dram-shop" statutes in the states in which restaurants are
located. These statutes generally provide a person injured by an intoxicated
person the right to recover damages from an establishment that wrongfully
served alcoholic beverages to the intoxicated individual. We carry liquor
liability coverage as part of our existing comprehensive general liability
insurance, which we believe is consistent with coverage carried by other
entities in the restaurant industry. Although we are covered by insurance, a
judgement against us under a dram-shop statute in excess of our liability
coverage could have a material adverse effect on us.
 
Our operations are also subject to federal and state laws governing such
matters as wages, working conditions, citizenship requirements and overtime.
Some states have set minimum wage requirements higher than the federal level.
Significant numbers of hourly personnel at our restaurants are paid at rates
related to the federal minimum wage and, accordingly, increases in the minimum
wage will increase labor costs. Other governmental initiatives such as mandated
health insurance, if implemented, could adversely affect us as well as the
restaurant industry in general. We are also subject to the Americans With
Disability Act of 1990, which, among other things, may require certain
renovations to its restaurants to meet federally mandated requirements. The
cost of these renovations is not expected to materially affect us.
 
Legal Proceedings
 
From time to time, we are a defendant in litigation arising in the ordinary
course of our business, including claims resulting from "slip and fall"
accidents, claims under federal and state laws governing access to public
accommodations, employment-related claims and claims from guests alleging
illness, injury or other food quality, health or operational concerns. To date,
none of such litigation, some of which is covered by insurance, has had a
material effect on us.
 
                                       33
<PAGE>
   
                                   MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
 
Set forth below is certain information concerning our executive officers,
directors and key employees:
 
<TABLE>
<CAPTION>
  NAME                     AGE              POSITION WITH COMPANY
  ----                     --- ------------------------------------------------
<S>                        <C> <C>
  Joseph P.
   Micatrotto(/1/)          47 President, Chief Executive Officer and Director
  Greg A. Gadel             39 Chief Financial Officer, Treasurer and Secretary
  Leonard A. Ghilani        38 Chief Operations Officer
  Philip A. 
   Roberts(/1/)(/2/)        60 Chairman of the Board
  Peter J. Mihajlov(/3/)    59 Director
  Don W. Hays(/2/)          57 Director
  John P. Whaley(/2/)(/3/)  46 Director
  David Yarnell(/1/)(/3/)   43 Director
  Paul Zepf(/2/)            34 Director
  Daniel E. Durenberger     31 Divisional Vice President
  Joseph J. Kohaut          35 Divisional Vice President
  Joseph J. Talarico        44 Divisional Vice President
  John J. Motschenbacher    36 Vice President of Finance and Purchasing
  Robert R. Parent          51 Vice President of Development
  Jennifer Percival         39 Vice President of Family Relations
  Vittorio Renda            44 Vice President of Food and Beverage
  Lane Schmiesing           42 Vice President of Marketing
</TABLE>
 
                                ---------------
  (/1/)Member of Executive Committee.
  (/2/)Member of the Compensation Committee.
  (/3/)Member of Audit Committee.
 
Joseph P. Micatrotto joined BUCA in 1996 as our President and Chief Executive
Officer. Mr. Micatrotto's twenty-five year career in restaurant management
includes being CEO of Panda Management Company, Inc. where he led the company's
expansion and president and CEO of Chi-Chi's Mexican Restaurant, Inc., where he
was instrumental in its national growth. Mr. Micatrotto is active on various
boards and industry groups. He has been nominated to the Board of Directors of
the National Restaurant Association.
 
Greg A. Gadel has been BUCA's Chief Financial Officer and Treasurer since 1997
and its Secretary since 1998. Prior to joining BUCA, Mr. Gadel was CFO for the
32-unit restaurant chain, Leeann Chin. In addition he previously was vice
president and controller for the largest Chi-Chi's franchisee, Consul
Corporation. He has also worked for Marriot, McDonald's and the Deloitte &
Touche LLP accounting firm, and has over 15 years experience in the restaurant
industry. Mr. Gadel is a member of the American Institute of Certified Public
Accountants.
 
Leonard A. Ghilani joined BUCA in 1998 as a Divisional Vice President and was
named Chief Operations Officer in 1999. He was previously with Einstein Noah
Bagel Corporation where he spent two and a half years as Vice President of
Operations. Prior to his employment with Einstein Noah Bagel Corporation, Mr.
Ghilani worked for Chi-Chi's Mexican Restaurant, Inc., where he held several
positions including Divisional Vice President, District Manager, General
Manager and Kitchen Manager.
 
Philip A. Roberts co-founded BUCA in 1993 and currently serves as Chairman of
our Board of Directors. Mr. Roberts is also a principal of Parasole Restaurant
Holdings, Inc., which he co-founded in 1986. Mr. Roberts has been involved in
the restaurant industry since 1977, when he co-founded with Mr. Mihajlov the
first of several privately-held restaurant companies, which later merged to
form Parasole.
 
 
                                       34
<PAGE>
 
Peter J. Mihajlov co-founded BUCA in 1993 and currently serves as a Director.
Mr. Mihajlov is also a principal of Parasole, which he co-founded in 1986. Mr.
Mihajlov has been in the restaurant industry since 1977, when he and Mr.
Roberts co-founded the first of several privately-held restaurant companies,
which later merged to form Parasole. Prior to that, Mr. Mihajlov served in a
variety of marketing and business management positions within The Pillsbury
Company over the course of seventeen years.
 
Don W. Hays co-founded BUCA in 1993 and currently serves as a Director. Mr.
Hays is also a principal of Parasole, which he co-founded in 1986. Prior to
that, Mr. Hays founded Hospitality Management Group, Inc. in 1977, which later
merged to form Parasole. Mr. Hays has been involved in the restaurant industry
since 1964, when he joined Dayton's Restaurant Division, of which he later
became Director of Operations.
 
John P. Whaley has served as a Director of BUCA since 1996. He is a partner of
Norwest Equity Partners and Norwest Venture Partners, and has been a partner or
officer of these and affiliated private equity investment funds since 1977. He
is also a director of several privately held companies.
 
David Yarnell has served as a Director of BUCA since 1996. He has been a Vice
President of Consumer Venture Partners since June 1993. He has been a General
Partner of Brand Equity Ventures since April 1997. Mr. Yarnell also serves on
the Board of Directors of Cyberian Outpost, a publicly held company.
 
Paul Zepf  has served as a Director of BUCA since 1998. He has been a Managing
Director of Centre Partners Management L.L.C., which manages Centre Capital
Investors II, L.P. and related private equity investment funds, since 1995. He
is also a Managing Director of Corporate Advisors, L.P., which he joined in
1989. He is a director of The Learning Company, LaSalle Re Holdings Limited,
and Firearms Training Systems, Inc. He is also a director of Nationwide Credit,
Inc., a privately held company with public bonds.
 
Daniel E. Durenberger joined BUCA in 1993 as Paisano of the original BUCA di
BEPPO restaurant in Minneapolis, Minnesota and was promoted to his current
position of Divisional Vice President in 1998. From 1996 to 1998, Mr.
Durenberger served as Director of Training and Team Development at BUCA. Prior
to joining BUCA, he held various management positions at the Madison Hotel in
Washington, D.C.
 
Joseph J. Kohaut joined BUCA in 1997 as a Divisional Vice President. From 1994
to 1997, Mr. Kohaut was a regional manager with Panda Management Company, Inc.,
where he was responsible for developing his region from five to 14 operating
units. Mr. Kohaut has more than 18 years of restaurant industry experience,
including general management and operations positions with Chi-Chi's and Ground
Round prior to joining Panda.
 
Joseph J. Talarico joined BUCA in 1997 as a Divisional Vice President. Prior to
joining BUCA, Mr. Talarico served as Vice President of Development and Training
for the Chevy's Mexican Restaurant division of Pepsico from 1994 to 1997. For
the 12 years prior to joining Pepsico, Mr. Talarico held several positions with
Chi-Chi's, including General Manager, Area Supervisor and Vice President of
Training and Development.
 
John J. Motschenbacher joined BUCA as Corporate Controller in 1998 and was
named Vice President of Finance and Purchasing in 1999. Prior to joining BUCA,
Mr. Motschenbacher held the position of Controller at Cafe Odyssey, Leann Chin
and Bon Appetit. He also held various accounting positions at Consul
Corporation, the largest Chi-Chi's franchisee.
 
Robert R. Parent joined BUCA in 1998 as Vice President of Development. He was
previously with Don Pablo's, the Dallas-based division of Apple South, Inc.
(renamed Avado Brands, Inc.) and operator of the 93-unit Don Pablo's Mexican
restaurant chain, where he served as Senior Vice President of Development. Mr.
Parent brings 17 years of retail and restaurant site development experience to
BUCA. He previously held various real estate development positions with the Red
Lobster and Olive Garden casual dining restaurant chains.
 
Jennifer Percival joined BUCA in 1999 as Vice President of Family Resources.
Ms. Percival was previously with Lufthansa Service USA Corp.'s Venice Market
division, a Dallas-based company operating in-flight catering and
 
                                       35
<PAGE>
 
specialty concepts, where she served as Vice President of Human Resources for
the U.S. Ms. Percival has more than 20 years of restaurant industry and human
resources experience. Prior to her work with Lufthansa, she held various
management and human resources positions with La Madeleine and TGI Friday's
restaurant companies.
 
Vittorio Renda has been with BUCA since 1993, first as its Director of Culinary
Development and since 1996 as Vice President of Food and Beverage. From 1982 to
1993, Mr. Renda served in various culinary and management roles for Parasole
and its predecessor companies, with the exception of 1989-1991 when he was
General Manager and Executive Chef with the DeBartolo Corporation. Mr. Renda
developed his culinary skills working throughout Italy in the twelve years
prior to joining Parasole. Mr. Renda was born and raised in Calabria, Italy.
 
Lane Schmiesing joined BUCA in 1997 as Vice President of Marketing. He was
formerly with Rare Hospitality, Inc., where he spent three years as Vice
President of Marketing. He brings to BUCA 20 years of restaurant marketing
experience. He has developed award winning advertising and promotional
campaigns for such brands as Dairy Queen, Bonanza Restaurants and Longhorn
Steakhouses. A member of the Board of Directors of the Marketing Executive
Group of the National Restaurant Association, he is also a frequent guest
lecturer at colleges and universities on the topics of strategic marketing and
brand identity.
 
BOARD OF DIRECTORS; COMMITTEES
 
Our Board consists of seven members. Members of the Board are elected each year
at our annual meeting of shareholders, and serve until their respective
successors have been elected and qualified. Pursuant to the terms of Mr.
Micatrotto's employment agreement, the Board is required to use its best
efforts to cause Mr. Micatrotto to continue to be elected to the Board as long
as he is our Chief Executive Officer.
 
The Executive Committee of the Board, comprised of Messrs. Micatrotto, Roberts
and Yarnell, provides advice and counsel to the Chief Executive Officer
regarding the day to day operations of BUCA. While the Executive Committee may
recommend policies and actions for the Board's consideration, it does not have
the authority to take any action on behalf of the Board.
 
The Compensation Committee of the Board, comprised of Messrs. Roberts, Hays,
Whaley and Zepf, is responsible for reviewing and establishing the compensation
structure for our officers and directors, including salaries, participation in
incentive compensation and benefit plans, stock option plans and other forms of
compensation, and is responsible for administering our 1996 Incentive Plan and
the Stock Option Plan for Non-employee Directors. See "Stock Incentive Plan and
Stock Options."
 
The Audit Committee of the Board, comprised of Messrs. Mihajlov, Whaley and
Yarnell, is responsible for recommending to the Board our independent auditors,
analyzing the reports and recommendations of the auditors and reviewing
internal audit procedures and controls.
 
LIMITATION OF LIABILITY AND INDEMNIFICATION
 
Pursuant to provisions of the Minnesota Business Corporation Act, we have
adopted provisions in our Articles of Incorporation that provide that our
directors shall not be personally liable for monetary damages to the company or
our shareholders for a breach of fiduciary duty as a director to the full
extent that the act permits the limitation or elimination of the liability of
directors.
 
DIRECTOR COMPENSATION
 
Our directors are reimbursed for certain reasonable expenses incurred in
attending Board meetings. Directors who are also employees of the company
receive no remuneration for services as members of the Board or any board
committee. Directors who are not employed by the company have received certain
grants of stock options. See "Stock Incentive Plans and Stock Options."
 
                                       36
<PAGE>
 
Executive Compensation
 
Summary Compensation Table. The following table contains information concerning
compensation for fiscal 1998 earned by our President and Chief Executive
Officer and our Chief Financial Officer, our executive officers whose total
salary and bonus for this period exceeded $100,000.
 
                     Fiscal 1998 Summary Compensation Table
 
<TABLE>
<CAPTION>
                                                                      Long-Term
                                                                     Compensation
                                            Annual Compensation         Awards
                                        ---------------------------  ------------
                                                       Other Annual   Securities
               Name and                 Salary  Bonus  Compensation   Underlying
          Principal Position              ($)    ($)       ($)       Options (#)
          ------------------            ------- ------ ------------  ------------
<S>                                     <C>     <C>    <C>           <C>
Joseph P. Micatrotto................... 300,573 39,339  65,200(/1/)     13,333
 President and Chief Executive Officer
Greg A. Gadel.......................... 135,000 54,000   6,000(/2/)     23,333
 Chief Financial Officer
</TABLE>
 
                                ---------------
 
(/1/)Includes car allowance, living expenses and college tuition for Mr.
     Micatrotto's child.
(/2/)Represents car allowance.
 
Stock Option Grants Table. The following table sets forth certain information
concerning all stock options granted during fiscal 1998 to the named executive
officers. We did not grant any stock appreciation rights or restricted stock
awards during fiscal 1998.
 
                        Fiscal 1998 Stock Option Grants
<TABLE>
<CAPTION>
                                                                                       Potential Realizable
                                                                                         Value at Assumed
                                                                                       Annual Rates of Stock
                                                                                      Price Appreciation For
                                                               Option Term               Option Term(/2/)
                                                     -------------------------------- -----------------------
                         Number of      Percent of
                           Shares      Total Options
                         Underlying     Granted to    Exercise or
                          Options      Employees in    Base Price      Expiration
          Name            Granted          1998      ($/Share)(/1/)       Date          5% ($)      10% ($)
          ----           ----------    ------------- -------------- ----------------- ----------- -----------
<S>                      <C>           <C>           <C>            <C>               <C>         <C>
Joseph P. Micatrotto....   13,333(/3/)     5.25           7.68      December 15, 2008     147,360     295,300
Greg A. Gadel...........   23,333(/4/)     9.19           7.68      December 15, 2008     257,883     516,780
</TABLE>
 
                                ---------------
 
(/1/)The exercise price may be paid in cash, in shares of common stock valued
     at fair market value on the exercise date, or in a combination of cash and
     shares.
(/2/)The hypothetical potential appreciation shown in these columns reflects
     the required calculations at annual assumed appreciation rates of 5% and
     10%, as set by the Securities and Exchange Commission, and therefore is
     not intended to represent either historical appreciation or anticipated
     future appreciation of the common stock.
(/3/)The entire grant of options vested immediately upon grant and all options
     are transferrable.
(/4/)The grant vests 20% per year beginning one year from the date of grant.
 
No stock options were exercised by the named executive officers during fiscal
1998. Mr. Micattrotto also received certain options to purchase common stock in
February 1999 in connection with the amendment of his employment agreement. See
"Employment Agreements."
 
Fiscal Year-End Option Value Table. The following table sets forth certain
information concerning unexercised stock options held by the named executive
officers as of fiscal 1998 year-end.
 
                                       37
<PAGE>
 
               AGGREGATE 1998 FISCAL YEAR-END OPTION VALUE TABLE
 
<TABLE>
<CAPTION>
                                 NUMBER OF SHARES              VALUE OF
                              UNDERLYING UNEXERCISED         IN-THE-MONEY
                                    OPTIONS AT                OPTIONS AT
                                 DECEMBER 27, 1998      DECEMBER 27, 1998(/1/)
                             ------------------------- -------------------------
NAME                         EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----                         ----------- ------------- ----------- -------------
<S>                          <C>         <C>           <C>         <C>
Joseph P. Micatrotto........   131,520      140,000    $1,016,183    $822,500
Greg A. Gadel...............    10,333       79,666        58,456     321,507
</TABLE>
 
                                ---------------
 
(/1/)There was no public trading market for the common stock as of December
     27, 1998. Accordingly, these values have been calculated, in accordance
     with the rules of the SEC, on the basis of the initial public offering
     price per share minus the applicable exercise price per share.
 
EMPLOYMENT AGREEMENTS
 
We entered into an employment agreement with Joseph P. Micatrotto on July 22,
1996, which was subsequently amended and restated in February 1999. Under the
terms of the agreement, Mr. Micatrotto is currently serving as our President
and Chief Executive Officer for a term expiring on December 31, 2003. The
agreement provides that Mr. Micatrotto's annual salary will be $325,000 for
the current year, $335,000 for the year ended December 31, 2000, $350,000 for
the year ended December 31, 2001 and for the remainder of the term it will be
an amount determined by the Board, but not less than the prior year's amount.
Mr. Micatrotto is eligible to receive a yearly bonus based upon certain
performance criteria established by the Board. In connection with the
amendment of Mr. Micatrotto's employment agreement in February 1999,
Mr. Micatrotto received options to purchase 126,666 shares of our common stock
at an exercise price of $11.25 per share, 6,666 of which vest on each of
December 31, 1999, 2000 and 2001 and 53,334 of which vest on each of December
31, 2002 and 2003. We also have agreed to reimburse Mr. Micatrotto's
reasonable and necessary business expenses. Mr. Micatrotto is entitled to the
following termination benefits:
 
    .     If Mr. Micatrotto is terminated by us for cause (as defined in the
          agreement) or if Mr. Micatrotto terminates his employment, he will
          receive no additional compensation or termination benefits.
 
    .     If Mr. Micatrotto is terminated because of death or physical or
          mental disability, he or his estate will be entitled to a
          termination payment of two years' base salary then in effect,
          payable in 24 equal monthly installments.
 
    .     If Mr. Micatrotto terminates his employment upon 30 days' prior
          written notice following a change in control of the company (as
          defined in the agreement), because his duties are substantially
          reduced or negatively altered (as defined in the agreement)
          without his prior written consent, or if Mr. Micatrotto's
          employment is terminated by us without cause following a change in
          control or within 180 days prior to a change in control and the
          termination is related to the change in control, he will be
          entitled to a termination payment of 18 months' base salary then
          in effect, payable in 18 monthly installments. If Mr. Micatrotto
          terminates employment as a result of a change in control, but his
          duties have not been substantially reduced or negatively altered,
          he will be entitled to a termination payment of 12 months' base
          salary then in effect, payable in 12 monthly installments.
 
    .     If Mr. Micatrotto is terminated by us without cause and not
          associated with a change in control, he will be entitled to a
          termination payment of 18 months' base salary then in effect,
          payable in 18 monthly installments.
 
The agreement also contains certain fringe benefits, confidentiality and non-
competition provisions. See "Executive Compensation."
 
                                      38
<PAGE>
 
On April 1, 1997, we entered into a letter agreement with Greg A. Gadel under
which Mr. Gadel will be entitled one year's base compensation in effect at the
time of termination if his employment is terminated as a result of a change in
control of BUCA or if he terminates his employment following a change in
control if his duties are substantially reduced or negatively altered.
 
Stock Incentive Plan and Stock Options
 
1996 Stock Incentive Plan. The 1996 Stock Incentive Plan of BUCA, Inc. and
Affiliated Companies provides an incentive to our key employees through the
award of stock options, stock appreciation rights, restricted stock, restricted
stock units, stock-based awards, or other performance awards that may be
granted in cash, shares of stock, or other property and are related to
performance goals. The plan is administered by the Compensation Committee of
the Board. The committee has full power and authority, subject to the terms of
the plan, to designate participants and the type and terms of any awards. Any
options granted may be incentive stock options or nonqualified stock options,
must be for no longer than 10 years and, except under limited circumstances,
are not transferable. The base price for any stock appreciation right must be
not less than 100% of the fair market value of a share of stock at the date of
grant.
 
The plan will be effective until October 1, 2006, but may be amended, altered,
suspended or discontinued at any time by the Board, subject to certain limited
exceptions. We have reserved 1,500,000 shares for issuance under the plan.
 
Stock Option Plan for Non-Employee Directors. The Stock Option Plan for Non-
Employee Directors is also administered by the Compensation Committee of the
Board. Prior to its termination in February 1999, the plan provided for option
grants of common stock to each director who was not an employee of BUCA and had
not been an employee for at least one year, in the amount of 1,333 shares on
first election or appointment to the Board and 666 shares on each of the
following anniversaries. The purchase price was 100% of the fair market value
of the common stock, as defined in the plan, at the time the option was
granted. The term of each option is ten years; however, the option is not
exercisable for the first year and will terminate if the optionee ceases to be
a director in the one-year period following the grant of the option. The
options are not transferable other than by will or the laws of descent and
distribution. We have reserved 26,666 shares for issuance under the plan. All
options outstanding under the plan when terminated shall remain outstanding. In
connection with the termination of the plan, the Board approved grants of
options to purchase 8,000 shares of common stock to each of the six non-
employee directors of BUCA under the 1996 Stock Incentive Plan. These options
have an exercise price of $11.25 per share, are immediately exercisable and
expire 10 years after grant.
 
Paisano Partners Program. We have established the Paisano Partners Programs for
our general managers, kitchen managers and assistant managers. The Paisano
Partners Program for general managers has three primary components: profit
sharing, the purchase of shares of our common stock and a stock option grant.
The profit sharing component allows the general manager to participate in the
profits of the restaurant he or she manages. In order to participate in the
Paisano Partners Program, general managers are required to purchase shares of
our common stock worth approximately $20,000, at fair market value. We will
also loan the general managers the purchase price of the stock at 8% interest,
with the entire amount payable over five years. Under the stock purchase
agreement we enter into with each general manager, we have certain repurchase
rights regarding the stock. General managers also receive a one-time option
grant to purchase 2,000 shares of our common stock at fair market value on the
date of grant. The options are exercisable only upon completion of five years
of employment as a Paisano Partner and expire 10 years after the date of grant.
Participants in the Paisano Partners Program for kitchen managers participate
in profit sharing and receive a one-time option grant to purchase 1,000 shares
of our common stock on the same terms as that provided to general managers, but
have no right to purchase shares under the program. Participants in the Paisano
Partners Program for assistant managers participate in profit sharing but
receive no options and have no right to purchase shares.
 
Compensation Committee Interlocks and Insider Participation
 
Philip A. Roberts, Don W. Hays, John P. Whaley and Paul Zepf, directors of
BUCA, are members of the Board's Compensation Committee.
 
                                       39
<PAGE>
 
                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
On September 30, 1996, we were spun off from our parent, Parasole Restaurant
Holdings, Inc. through a share dividend of our common stock pro rata among the
Parasole shareholders. The Parasole shareholders at the time of the dividend
included the Parasole Employer Stock Ownership Trust, owner of more than 5% of
a class of our capital stock, and Philip A. Roberts, Peter J. Mihajlov and Don
W. Hays, directors of the company and owners of more than 5% of a class of our
capital stock.
 
Series A Preferred Financing. In October 1996, we sold shares of Series A
Convertible Preferred Stock convertible into 1,493,331 shares of common stock
for an aggregate purchase price of $8,400,000, or $5.625 per common share. Upon
completion of this offering, all shares of our outstanding Series A Convertible
Preferred Stock will automatically convert into shares of common stock.
 
The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series A Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:
 
<TABLE>
<CAPTION>
     5% Shareholders(/1/)                                  Shares Purchased(/2/)
     --------------------                                  ---------------------
     <S>                                                   <C>
     Norwest Equity Partners V, L.P.......................        711,111
     Consumer Venture Partners II, L.P....................        266,666
     Northwood Ventures...................................        266,666
     Regent Capital Partners, L.P.........................        177,778
</TABLE>
 
                                ---------------
 
(/1/)See notes to "Principal and Selling Shareholders" for information relating
     to the beneficial ownership of shares and identification of affiliated
     shareholders.
(/2/)Represents number of shares of common stock issuable upon conversion of
     purchased shares of Series A Convertible Preferred Stock.
 
Series B Preferred Financing. In September 1997, we sold shares of Series B
Convertible Preferred Stock convertible into 640,739 shares of common stock for
an aggregate purchase price of $4,324,999.50, or $6.75 per common share. In
December 1997, we sold additional shares of Series B Convertible Preferred
Stock convertible into 640,738 shares of common stock for an aggregate purchase
price of $4,324,999.50, or $6.75 per common share. Upon completion of this
offering, all shares of our outstanding Series B Convertible Preferred Stock
will automatically convert into shares of common stock.
 
The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series B Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:
 
<TABLE>
<CAPTION>
     5% Shareholders(/1/)                                  Shares Purchased(/2/)
     --------------------                                  ---------------------
     <S>                                                   <C>
     Norwest Equity Partners V, L.P.......................        370,370
     National Dining Concepts, Inc........................        296,296
     Walden Investors.....................................        237,036
     Consumer Venture Partners II, L.P....................        148,148
     Northwood Ventures...................................        148,147
</TABLE>
 
                                ---------------
 
(/1/)See notes to "Principal and Selling Shareholders" for information relating
     to the beneficial ownership of shares and identification of affiliated
     shareholders.
(/2/)Represents number of shares of common stock issuable upon conversion of
     purchased shares of Series B Convertible Preferred Stock.
 
Series C Preferred Financing. In October 1998, we sold shares of Series C
Convertible Preferred Stock convertible into 1,092,679 shares of common stock
and related contingent value rights for an aggregate purchase price of
$8,400,007.02, or $7.6875 per common share. In December 1998, we sold
additional shares of Series C Convertible Preferred Stock convertible into
637,752 shares of common stock and related contingent value rights for an
aggregate purchase price of $5,000,000, or $7.84 per common share. The
contingent value rights entitle the holders to receive, in the aggregate, up to
610,082 shares of common stock if certain events regarding our common stock do
not occur prior to October 2001.
 
Upon completion of this offering, all shares of our outstanding Series C
Convertible Preferred Stock will automatically convert into shares of common
stock and the related contingent value rights will terminate. In
 
                                       40
<PAGE>
 
connection with such conversion and termination, an aggregate of 40,195
additional shares of common stock will be issued to the holders of the Series C
Convertible Preferred Stock immediately after the completion of this offering.
 
The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series C Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:
 
<TABLE>
<CAPTION>
     5% SHAREHOLDERS(/1/)                                  SHARES PURCHASED(/2/)
     --------------------                                  ---------------------
     <S>                                                   <C>
     Centre Capital Investors II, L.P.....................       1,288,156
     Norwest Equity Partners V, L.P.......................         282,802
     Northwood Ventures...................................          65,040
     Walden-SBIC, L.P.....................................          45,994
     Regent Capital Partners, L.P.........................          48,439
</TABLE>
 
                                ---------------
 
(/1/)See notes to "Principal and Selling Shareholders" for information relating
     to the beneficial ownership of shares and identification of affiliated
     shareholders.
(/2/)Represents number of shares of common stock issuable upon conversion of
     purchased shares of Series C Convertible Preferred Stock.
 
SUBORDINATED DEBT TRANSACTIONS. In October 1997, we entered into a subordinated
loan transaction under which we borrowed $2,500,000, including $500,000 from
Regent Capital Partners, L.P. Regent is a beneficial owner of more than 5% of a
class of our capital stock. In connection with the transaction, we also issued
warrants to purchase 16,111 shares of our common stock at $0.01 per share to
Regent. In May 1998, we borrowed an additional $3,500,000, including $1,500,000
from Regent. In connection with the May transaction, we also issued warrants to
purchase 48,332 shares of our common stock at $0.01 per share to Regent. The
indebtedness was repaid by us from amounts borrowed under our current credit
facilities.
 
In connection with these subordinated debt transactions, we issued warrants to
purchase an aggregate of 66,663 shares of our common stock at $0.01 per share
to the purchasers of our Series B Convertible Preferred Stock. The warrants
vest upon completion of our initial public offering, but only if the public
offering price per share is less than $13.50.
 
AGREEMENTS WITH PARASOLE. We have entered into an Amended and Restated
Management Agreement dated January 1, 1997, as amended, with Parasole. Philip
Roberts, Don Hays and Peter Mihajlov are officers, directors and shareholders
of Parasole as well as our directors and holders of more than 5% of a class of
our capital stock. Under the management agreement, Parasole provides
development and design support in connection with our new restaurants. In
exchange for these services, we pay Parasole a fee of $12,500 for each new
restaurant we open. Prior to the amendment of the management agreement, we
agreed to pay Parasole an accounting charge of $1,000 per month for the first
24 months after a new restaurant's opening. While we no longer incur new
charges under the amended management agreement, the 24-month period has not
expired for all of our restaurants opened prior to the amendment of the
management agreement. The amount paid by us to Parasole under the management
agreement in fiscal 1996 was $354,000, in fiscal 1997 was $270,000 and fiscal
1998 was $248,000.
 
We have a vendor relationship with Parasole Good Earth Bakery, owned by
Parasole, through which the bakery provides various baked goods to our
restaurants in the Minneapolis/St. Paul market. The relationship can be
terminated at any time at our discretion. The amount paid by us to the bakery
in fiscal 1996 was $211,000, in fiscal 1997 was $180,000, and in fiscal 1998
was $169,000. We believe the terms of the supply arrangement are at least as
favorable as we could obtain from unrelated parties.
 
We have a Redemption Agreement with Parasole under which we are obligated to
repurchase shares of our common stock held by the Parasole Employee Stock
Ownership Trust under certain conditions. The Parasole Employee Stock Ownership
Plan holds a total of 499,936 shares of our common stock. Parasole has similar
obligations regarding its stock held by our ESOP.
 
OTHER TRANSACTIONS. Steven Roberts, son of Philip Roberts, our director and a
holder of more than 5% of a class of our capital stock, from time to time
performs architectural services for us under a letter agreement. The amount
paid by us to Mr. Roberts for these services in fiscal 1998 was $99,947.
 
                                       41
<PAGE>
 
                       PRINCIPAL AND SELLING SHAREHOLDERS
 
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of the date of this Prospectus and as adjusted
to reflect the sale of the 2,500,000 shares of common stock offered by us by
this Prospectus by (i) each shareholder known by us to beneficially own more
than five percent of any class of our capital stock, (ii) each of our
directors, (iii) the named executive officers, (iv) all of our directors and
executive officers as a group and (v) the selling shareholders. Except as
otherwise noted below, each of the shareholders identified in the table has
sole voting and investment power with respect to the shares of common stock
beneficially owned by the person. The following table gives effect to the
conversion of all outstanding shares of our preferred stock, which will occur
automatically upon the closing of the offering and assumes that the price of
the common stock in this offering will be less than $13.50, causing certain
warrants we issued to vest.
 
<TABLE>
<CAPTION>
                                     SHARES
                                  BENEFICIALLY
                                 OWNED PRIOR TO            SHARES BENEFICIALLY
                                THE OFFERING(/1/) SHARES  OWNED AFTER OFFERING
                                -----------------  BEING  -----------------------
NAME OF BENEFICIAL OWNER         NUMBER   PERCENT OFFERED   NUMBER      PERCENT
------------------------        --------- ------- ------- ------------ ----------
<S>                             <C>       <C>     <C>     <C>          <C>
Norwest Equity Partners V,
 L.P.(/2/)....................  1,400,072  19.8      --      1,400,072     14.6
Centre Capital Investors II,
 L.P.(/3/)....................  1,326,153  18.8      --      1,326,153     13.9
Philip A. Roberts(/4/)........  1,138,898  16.1   50,000     1,088,898     11.4
Peter J. Mihajlov(/5/)........  1,138,862  16.1   50,000     1,088,862     11.4
Don W. Hays(/6/)..............  1,132,330  16.0   50,000     1,082,330     11.3
Parasole Employee Stock Owner-
 ship Trust(/7/)..............    499,936   7.1      --        499,936      5.2
Northwood Ventures(/8/).......    491,058   6.9      --        491,058      5.1
Consumer Venture Partners II,
 L.P.(/9/)....................    431,854   6.1      --        431,854      4.5
National Dining Concepts,
 Inc.(/10/)...................    311,710   4.4      --        311.710      3.3
Walden Investors(/11/)........    296,420   4.2      --        296,420      3.1
Regent Capital Partners,
 L.P.(/12/)...................    299,569   4.2      --        299,569      3.1
John P. Whaley(/13/)..........  1,400,072  19.8      --      1,400,072     14.6
David Yarnell(/14/)...........    431,854   6.1      --        431,854      4.5
Paul Zepf(/15/)...............  1,326,153  18.7      --      1,326,153     13.9
Joseph P. Micatrotto(/16/)....    244,747   3.4      *         244,747      2.5
Greg A. Gadel(/17/)...........     10,335   --       --         10,335      --
All directors and officers as
 a group (9 persons)..........  5,531,701  76.0              5,381,701     55.0
</TABLE>
 
                                ---------------
 
*  Mr. Micatrotto has granted to the underwriters an option to purchase up to
   an additional 16,000 shares of common stock as part of their option to cover
   over-allotments, if any. This option will be exercised on a pro rata basis
   with the option granted by BUCA.
(/1/)Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission that generally attribute beneficial
     ownership of securities to persons who possess sole or shared voting power
     and/or investment power with respect to those securities and includes
     shares of common stock issuable pursuant to the exercise of stock options
     that are immediately exercisable or exercisable within 60 days. Unless
     otherwise indicated, the persons or entities identified in this table have
     sole voting and investment power with respect to all shares shown as
     beneficially owned by them. Percentage ownership calculations prior to and
     after the offering are based on 7,059,557 shares and 9,559,557 shares,
     respectively, of common stock outstanding. As of February 17, 1999, we had
     107 shareholders of record.
(/2/)Includes (i) warrants for the purchase of 19,268 shares of common stock
     exercisable within 60 days held by Norwest; (ii) 6,522 shares of common
     stock to be issued to Norwest upon completion of the offering; and (iii)
     options for the purchase of 9,999 shares of common stock exercisable
     within 60 days granted to John P. Whaley. The address for Norwest is 222
     South Ninth Street, Minneapolis, Minnesota 55402.
(/3/)Includes (i) 602,561 shares owned by State Board of Administration of
     Florida; (ii) 129,122 shares owned by Centre Capital Tax-Exempt Investors
     II, L.P.; (iii) 86,338 shares owned by Centre Capital Offshore Investors
     II, L.P.; (iv) 67,264 shares owned by Centre Partners Coinvestment, L.P.;
     (v) 6,082 shares owned by Centre Parallel Management Partners, L.P.; (vi)
     9,240 shares of common stock to be issued upon completion of the offering
     to Centre Capital Investors II, L.P.; (vii) 14,033 shares of common stock
     to be issued upon completion of the offering to State Board of
     Administration of Florida; (viii) 3,007 shares of common stock to be
     issued upon completion of the offering to Centre Capital Tax-Exempt
     Investors II, L.P.; (ix) 2,010 shares of common stock to be issued upon
     completion of the offering to Centre Capital Offshore Investors II, L.P.;
     (x) 1,566 shares of common stock to be issued upon completion of the
     offering to Centre Partners Coinvestment, L.P.; (xi) 141 shares of common
     stock to be issued upon completion of the offering to Centre Parallel
     Management Partners, L.P.; and (xii) options for the purchase of 8,000
     shares of common stock exercisable within 60 days granted to Paul Zepf.
     The address for Centre is 30 Rockefeller Plaza, New York, New York 10020.
 
                                       42
<PAGE>
 
(/4/)Includes (i) 133,333 shares owned by the Roberts Family Limited
     Partnership II; (ii) 106,666 shares owned by Mr. Roberts' wife; (iii)
     options for the purchase of 8,000 shares of common stock exercisable
     within 60 days granted to Mr. Roberts; (iv) options for the purchase of 35
     shares of common stock exercisable within 60 days granted to Mr. Robert's
     wife; (v) 499,936 shares of common stock held by the
   Parasole ESOT, of which Mr. Roberts is a co-trustee, and (vi) 97,226 shares
   of common stock held by the BUCA Employee Stock Ownership Plan, of which Mr.
   Roberts is a co-trustee. The address for Mr. Roberts is 1300 Nicollet Mall,
   Minneapolis, Minnesota 55403.
(/5/)Includes (i) 166,666 shares owned by the Mihajlov Family Limited
     Partnership; (ii) 106,666 shares owned by Mr. Mihajlov's wife; (iii)
     13,066 shares held in the Mihajlov Irrevocable Grandchildren's Trust; (iv)
     options for the purchase of 8,000 shares of common stock exercisable
     within 60 days granted to Mr. Mihajlov; (v) 499,936 shares of common stock
     held by the Parasole ESOT, of which Mr. Mihajlov is a co-trustee; and (vi)
     97,226 shares of common stock held by the BUCA Employee Stock Ownership
     Plan, of which Mr. Mihajlov is a co-trustee. The address for Mr. Mihajlov
     is 2908 Hennepin Avenue South, Minneapolis, Minnesota 55408.
(/6/)Includes (i) 133,333 shares owned by the Hays Family Limited Partnership;
     (ii) 100,133 shares owned by Mr. Hays' wife; (iii) options for the
     purchase of 8,000 shares of common stock exercisable within 60 days
     granted to Mr. Hays; (iv) 499,936 shares of common stock held by the
     Parasole ESOT, of which Mr. Hays is a co-trustee; and (v) 97,226 shares of
     common stock held by the BUCA Employee Stock Ownership Plan, of which Mr.
     Hays is a co-trustee. The address for Mr. Hays is 2908 Hennepin Avenue
     South, Minneapolis, Minnesota 55408.
(/7/)The address for the Parasole ESOT is 2908 Hennepin Avenue South,
     Minneapolis, Minnesota 55408.
(/8/)Includes (i) 89,466 shares owned by Northwood Capital Partners LLC; (ii)
     1,350 shares of common stock to be issued upon completion of the offering
     to Northwood Ventures; (iii) 149 shares of common stock to be issued upon
     completion of the offering to Northwood Capital Partners LLC; (iv)
     warrants for the purchase of 6,166 shares of common stock exercisable
     within 60 days held by Northwood Ventures; (v) warrants for the purchase
     of 1,541 shares of common stock exercisable within 60 days held by
     Northwood Capital Partners LLC; and (vi) options for the purchase of 1,999
     shares of common stock exercisable within 60 days granted to Henry T.
     Wilson. The address for Northwood is 485 Underhill Boulevard, Syosset, New
     York 11791.
(/9/)Includes (i) warrants for the purchase of 7,707 shares of common stock
     exercisable within 60 days held by Consumer Venture Partners II, L.P.; and
     (ii) options for the purchase of 9,333 shares of common stock exercisable
     within 60 days granted to David Yarnell. The address for Consumer Venture
     is 3 Pickwick Plaza, Greenwich, Connecticut 06830.
(/10/)Includes warrants to purchase 15,414 shares of common stock exercisable
      within 60 days held by National Dining Concepts, Inc. As of the date of
      this prospectus National Dining Concepts, Inc. holds 23.1% of our Series
      B Preferred Stock and upon closing of the offering, National Dining
      Concepts, Inc. will hold less than 5% of our Common Stock.
(/11/)Includes (i) 22,222 shares owned by Walden Ventures; (ii) 7,407 shares
      owned by Walden Capital Partners; (iii) 172,780 shares owned by Walden-
      SBIC, L.P.; (iv) 28,770 shares owned by Walden Technology Ventures II,
      L.P. (v) warrants to purchase 2,697 shares of common stock exercisable
      within 60 days held by Walden Investors; (vi) warrants to purchase 1,156
      shares of common stock exercisable within 60 days held by Walden
      Ventures; (vii) warrants to purchase 385 shares of common stock
      exercisable within 60 days held by Walden Capital Partners; (viii)
      warrants to purchase 6,936 shares of common stock exercisable within 60
      days held by Walden-SBIC, L.P.; (ix) warrants to purchase 1,156 shares of
      common stock exercisable within 60 days held by Walden Technology
      Ventures II, L.P.; (x) 909 shares of common stock to be issued upon
      completion of the offering to Walden-SBIC, L.P.; and (xi) 151 shares of
      common stock to be issued upon completion of the offering to Walden
      Technology Ventures II, L.P. As of the date of this Prospectus, Walden
      holds 18.5% of our Series B Preferred Stock and upon closing of the
      offering, Walden will hold less than 5% of our common stock. The address
      for Walden is 750 Battery Street, Suite 700, San Francisco, California
      94111.
(/12/)Includes (i) warrants to purchase 385 shares of common stock exercisable
      within 60 days held by Regent Capital Partners, L.P.; (ii) warrants to
      purchase 64,443 shares of common stock stock exercisable within 60 days
      held by Regent Capital Partners, L.P.; and (iii) 1,117 shares of common
      stock to be issued upon completion of the offering to Regent Capital
      Partners, L.P. As of the date of this prospectus, Regent Capital
      Partners, L.P. holds 11.9% of our Series A Preferred Stock and upon
      closing of the offering, Regent Capital Partners, L.P. will hold less
      than 5% of our common stock. The address for Regent Capital Partners,
      L.P. is 505 Park Avenue, Suite 1700, New York, New York 10022.
(/13/)Consists of options for the purchase of 9,999 shares of common stock
      exercisable within 60 days granted to Mr. Whaley and 1,390,073 shares of
      common stock owned by Norwest Equity Partners V, L.P. Mr. Whaley
      disclaims beneficial ownership of the 1,390,073 shares of common stock
      owned by Norwest Equity Partners V, L.P.
(/14/)Consists of (i) options for the purchase of 9,333 shares of common stock
      exercisable within 60 days granted to Mr. Yarnell; (ii) 414,814 shares of
      common stock owned by Consumer Venture Partners II, L.P.; and (iii)
      warrants for the purchase of 7,707 shares of common stock exercisable
      within 60 days held by Consumer Venture Partners II, L.P.
(/15/)Consists of (i) options to purchase 8,000 shares of common stock
      exercisable within 60 days granted to Mr. Zepf; and (ii) 1,318,153 shares
      of common stock beneficially owned by Centre Capital Investors II, L.P.
(/16/)Includes (i) options for the purchase of 131,521 shares of common stock
      exercisable within 60 days granted to Mr. Micatrotto and (ii) 97,226
      shares of common stock held by the BUCA Employee Stock Ownership Plan, of
      which Mr. Micatrotto is a co-trustee.
(/17/)Consists of options for the purchase of 10,335 shares of common stock
      exercisable within 60 days granted to Mr. Gadel.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
Upon the consummation of this offering, the 2,650,000 shares sold in this
offering will be freely tradable without restriction under the Securities Act,
unless purchased by an "affiliate" of BUCA, as that term is defined in Rule 144
 
                                       43
<PAGE>
 
under the Securities Act. Holders of an aggregate of            shares of
Common Stock, have entered into lock-up agreements under which they have agreed
that they will not, without the prior written consent of Piper Jaffray, offer,
sell or otherwise dispose of, any shares of Common Stock, options or warrants
to acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock owned by them during the 180-day period following
the date of this Prospectus. Piper Jaffray may, in its sole discretion at any
time without notice, release any portion of the shares subject to the lock-up
agreements during the 180-day period. Upon closing of this offering,
shares of Common Stock will be eligible for immediate resale in the public
market subject to the limitations of Rule 144. Of such shares, approximately
          will be eligible for resale in the public market pursuant to Rule
144(k) without regard to the volume and manner of sale limitations in Rule 144.
 
In general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated), including an affiliate, who has beneficially owned
shares for at least one year, within any three-month period commencing 90 days
after the date of this Prospectus, may sell a number of shares that does not
exceed the greater of (i) one percent of the number of shares of Common Stock
then outstanding (approximately 95,596 shares immediately after this offering)
or (ii) the average weekly trading volume of the Common Stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are generally subject
to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. Under Rule
144(k), a person who is not deemed to have been an affiliate of the Company at
any time during the 90 days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell such
shares without having to comply with the manner of sale, public information,
volume limitation or notice provisions of Rule 144. Under Rule 701 under the
Securities Act, persons who purchase shares upon exercise of options granted
prior to the effective date of this offering are entitled to sell such shares
90 days after the effective date of this offering in reliance on Rule 144,
without having to comply with the holding period requirements of Rule 144 and,
in the case of non-affiliates, without having to comply with the public
information, volume limitation or notice provisions of Rule 144.
 
We intend to file a registration statement on Form S-8 covering all shares of
common stock issuable upon exercise of stock options in effect on the date of
this Prospectus and stock options or other benefits to be granted under our
1996 Stock Incentive Plan and Stock Option Plan for Non-Employee Directors. We
have outstanding stock options with respect to an aggregate of approximately
1,034,154 shares of common stock as of the date of this Prospectus. Upon this
registration on Form S-8, an additional 1,034,154 shares of common stock,
together with any additional shares of common stock which will be issuable
pursuant to stock options or other benefits to be granted under the 1996 Stock
Incentive Plan, will be eligible for sale in the public market.
 
Prior to the offering, there has been no market for the common stock, and we
cannot predict the effect, if any, that public sales of shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Sales of substantial amounts of common stock in the public market
following the offering, or the perception that sales may occur, could adversely
affect the prevailing market price of the common stock and our ability to raise
capital through a public offering our equity securities. See "Risk Factors--Our
Common Stock may not have a Public Market."
 
                          DESCRIPTION OF CAPITAL STOCK
 
We are authorized to issue 21,893,000 shares of stock, par value $.01 per
share, of which 13,100,000 are designated as common shares, 2,396,800 are
designated as shares of Series A Convertible Preferred Stock, 2,100,000 are
designated as shares of Series B Convertible Preferred Stock, and 3,679,053 are
designated as shares of Series C Convertible Preferred Stock. Automatically
upon the closing of the offering, all outstanding shares of our preferred
stock, together with all accrued and unpaid dividends on the preferred stock,
will convert automatically into shares of common stock at the applicable
conversion price. As of the date of this Prospectus, we had 7,059,557 shares of
common stock outstanding, and 617,147 undesignated shares. In March 1999, we
will hold a shareholders' meeting for the purpose of increasing the number of
authorized shares of common stock to 20,000,000 and the number of undesignated
shares to 5,000,000 The following discussion assumes receipt of the required
approval for certain modification to the terms of the outstanding series of
preferred stock, which are necessary for the automatic conversion of the
preferred stock into common stock.
 
                                       44
<PAGE>
 
Common Stock
 
Holders of common stock are entitled to one vote per share on all matters to be
voted upon by shareholders. All shares of common stock rank equally as to
voting and all other matters. The shares of common stock have no preemptive or
conversion rights, no redemption or sinking fund provisions, are not liable for
further call or assessment, and are not entitled to cumulative voting rights,
except for shares of common stock held in the Parasole Employee Stock Ownership
Trust and the Buca Employee Stock Ownership Plan, which have redemption rights
that will terminate upon the closing of this offering. See Note 6 to Notes to
Consolidated Financial Statements. The outstanding shares of common stock are
fully paid and non-assessable.
 
Subject to the prior rights of holders of preferred stock, the holders of
common stock are entitled to receive dividends when and as declared by the
Board out of funds legally available for dividends, when, as and if declared
and paid to the holders of common stock. We have never declared or paid cash
dividends. We currently intend to retain all future earnings for the operation
and expansion of our business and do not anticipate paying cash dividends on
the common stock in the foreseeable future. See "Dividend Policy."
 
Upon a liquidation of the company, after creditors had been paid in full and
after shares of any series of preferred stock had received the preferential
amounts to which the shares are entitled upon liquidation, the holders of
common stock would be entitled to receive a pro rata distribution per share of
the excess amount.
 
We have applied for listing of the common stock on the Nasdaq National Market
under the symbol "BUCA."
 
Preferred Stock
 
Upon completion of the offering, all of our issued and outstanding Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, and Series C
Convertible Preferred Stock will be converted into an aggregate of 4,505,239
shares of common stock, at the applicable conversion price of each series of
preferred stock as provided in our Articles of Incorporation. Upon conversion,
all accrued and unpaid dividends on the preferred stock will be eliminated.
 
Additional Preferred Stock
 
The Articles of Incorporation empower the Board to issue the undesignated stock
from time to time in one or more series and to fix the designation, privileges,
preferences and rights and the qualifications, limitations and restrictions of
those shares, including dividend rights, conversion rights, voting rights,
redemption rights, terms of sinking funds, liquidation preferences and the
number of shares constituting any series or the designation of the series,
which could decrease the amount of earnings and assets available for
distribution to holders of common stock or adversely affect the rights and
powers, including voting rights, of the holders of the common stock without any
further vote or action by the shareholders. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred shares that may be issued by us in the future. The
issuance of new preferred stock could have the effect of delaying or preventing
a change in control of the company or make removal of management more
difficult. Additionally, the issuance of new preferred stock may have the
effect of decreasing the market price of the common stock, and may adversely
affect the voting and other rights of the holders of common stock. While we
have no present intention to issue any shares of new preferred stock, any
issuance could have the effect of making it more difficult for a third party to
acquire a majority of our outstanding voting stock.
 
Series A Convertible Subordinated Debentures
 
We have outstanding $1.8 million in principal amount of Series A Convertible
Subordinated Debentures due July 30, 2001. Under the debentures, we have agreed
to pay interest at a rate adjusted semi-annually equal to one percent in excess
of the rate announced or published by U.S. Bank National Association as its
reference or prime rate in effect on the banking day immediately prior to
January 1 and July 1 of each year. The holders may elect to have their
debentures paid in full on July 30, 1999 and receive a premium payment from us
equal to 10% of the original principal sum of the debenture. Upon completion of
this offering, the holders of the debentures will have
 
                                       45
<PAGE>
 
the right, for a period of one year, to covert the entire principal amount of
their debentures into shares of our common stock at a price per share equal to
60% of the price of the common stock being sold in this offering. If the holder
holds the debenture until maturity, the holder is entitled to a premium payment
from us equal to 20% of the original principal sum of the debenture.
 
STOCK OPTION
 
In 1998, we granted a non-qualified stock option to purchase up to 16,000
shares of our common stock at an exercise price of $6.75 per share to
1204 Harmon Partnership. The options vest in eight equal annual amounts
beginning on May 31, 1999. The option expires upon the earlier to occur of
May 31, 2008 or, at our option, upon payment to 1204 Harmon Partnership of the
excess of the fair market value of the common stock underlying the option over
the exercise price upon the occurrence of certain circumstances. The options
provide for adjustments in the number of shares (to the nearest whole share)
subject to the option and the exercise price to give effect to any distribution
of assets (other than regular dividends) or debt securities to holders of
common stock or any change made in the number of outstanding common stock by a
recapitalization, reclassification, combination, share dividend, share
division, share combination or other similar change.
 
WARRANTS
 
We issued warrants to purchase 156,800 shares of Series A Convertible Preferred
Stock at an exercise price of $3.75 per share to our placement agents in
connection with the private placement of our Series A Convertible Preferred
Stock in October 1996. These warrants became exercisable in May 1997 and expire
on October 23, 2003. Upon the closing of this offering, these warrants will
automatically convert into warrants to purchase 104,532 shares of common stock
at an exercise price of $5.625 per common share.
 
We issued warrants to purchase 50,000 shares of Series B Convertible Preferred
Stock at an exercise price of $4.50 per share to our placement agent in the
connection with the private placement of our Series B Convertible Preferred
Stock. These warrants become exercisable on October 31, 1997 and expire on
September 2, 2004. Upon closing of this offering, these warrants will
automatically convert into warrants to purchase 33,333 shares of common stock
at an exercise price of $6.75 per common share.
 
We issued warrants to purchase an aggregate of 66,663 shares of common stock at
an exercise price of $.01 per share to the purchasers of our Series B
Convertible Preferred Stock. These warrants will become vested and exercisable
if the public offering price per share in this offering is less than $13.50.
These warrants expire on September 30, 2002.
 
As partial consideration for subordinated loan financings of $6.0 million, we
issued warrants to purchase a total of 193,331 shares of common stock at an
exercise price of $.01 per share to our lenders. These warrants expire on
September 20, 2002 with respect to 80,555 shares and on June 30, 2003 with
respect to the remaining shares. We granted the warrantholders the right to
sell their warrants to us for a period of 30 days immediately prior to their
expiration at a purchase price equal to the fair market value of the shares of
common stock issuable upon exercise of the warrant. This right will expire upon
the closing of this offering.
 
All of these warrants provide for anti-dilution adjustments in the event of
stock splits, stock dividends, sales by us of our stock at, or issuance of
options or warrants containing an exercise price of, less than fair market
value or merger, consolidation, recapitalization or similar transactions.
 
REGISTRATION AND OTHER RIGHTS
 
We have granted registration rights to the holders of shares of common stock
issued in exchange for any of our preferred shares under the terms of the
Securities Purchase Agreement dated as of October 13, 1998 by and between us
and the purchasers named in the agreement. Following the closing of this
offering, approximately 4,643,104 shares of common stock, including 204,528
shares subject to outstanding warrants, will be entitled to these rights. Under
the terms of the Securities Purchase Agreement, the holders have the right to
require us to register their shares at our expense under certain circumstances.
In addition, the holders have the right to have any or all of their shares
included, at our expense, in a registration statement relating to common stock
filed by us, subject to certain limitations, including the right of an
underwriter to limit the number of the holders' shares to be
 
                                       46
<PAGE>
 
included in the registration. In connection with any registration under these
provisions, we are required to indemnify the holders participating in an
offering against certain liabilities, including civil liabilities under the
Securities Act. Warrants to purchase an aggregate of 137,865 shares of our
common stock issued in connection with the sales of the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock contain similar
registration rights provisions.
 
We also granted piggyback registration rights under the warrants to purchase
193,331 shares of our common stock granted to the lenders in our subordinated
debt transactions. See "Certain Relationships and Related Transactions--
Subordinated Debt Transactions." The rights are subject to certain limitations,
including the right of an underwriter to limit the number of the holders'
shares to be included in the registration. The warrants grant the holders the
right to sell the warrants back to us for a period of 30 days prior to their
expiration at a purchase price equal to the fair market value of the shares of
common stock issuable upon exercise of the warrants and grant the holders
certain co-sale rights with respect to sales of shares by Philip A. Roberts,
Peter J. Mihajlov, Don W. Hays, Joseph P. Micatrotto or Barbara Marshall.
 
Under the terms of a Non-Statutory Stock Option Agreement between us and 1204
Harmon Partnership, we have granted the holder piggyback registration rights
with respect to the 16,000 shares covered by the option agreement. The rights
are subject to certain limitations, including the right of an underwriter to
limit the number of the holders' shares to be included in the registration. In
connection with any registration under these provisions, we are required to
indemnify the holder participating in an offering against certain liabilities,
including civil liabilities under the Securities Act.
 
Certain Provisions of Minnesota Law
 
Certain provisions of Minnesota law described below could have an anti-takeover
effect. These provisions are intended to provide management flexibility to
enhance the likelihood of continuity and stability in the composition of our
Board of Directors and in the policies formulated by the Board and to
discourage an unsolicited takeover of the company, if the Board determines that
such a takeover is not in the best interests of the company and our
shareholders. However, these provisions could have the effect of discouraging
certain attempts to acquire the company which could deprive our shareholders of
opportunities to sell their shares of common stock at prices higher than
prevailing market prices.
 
Section 302A.671 of the Minnesota Statutes applies, with certain exceptions, to
any acquisitions of our voting stock (from a person other than us, and other
than in connection with certain mergers and exchanges to which we are party)
resulting in the beneficial ownership of 20% or more of the voting stock then
outstanding. Section 302A.671 requires approval of the granting of voting
rights for the shares received pursuant to any such acquisitions by a majority
vote of our shareholders. In general, shares acquired without this approval are
denied voting rights and can be called for redemption at their then fair market
value by us within 30 days after the acquiring person has failed to deliver a
timely information statement to us or the date the shareholders voted not to
grant voting rights to the acquiring person's shares.
 
Section 302A.673 of the Minnesota Statutes generally prohibits any business
combination by us, or any subsidiary of us, with any shareholder that purchases
10% or more of our voting shares (an "interested shareholder") within four
years following the interested shareholder's share acquisition date, unless the
business combination is approved by a committee of all of the disinterested
members of our Board of Directors before the interested shareholder's share
acquisition date.
 
Section 302A.675 of the Minnesota Statutes generally prohibits an offeror from
acquiring shares of a publicly held Minnesota corporation within two years
following the offeror's last purchase of the corporation's shares pursuant to a
takeover offer with respect to that class, unless the corporation's
shareholders are able to sell their shares to the offeror upon substantially
equivalent terms as those provided in the earlier takeover offer. This statute
will not apply if the acquisition of shares is approved by a committee of all
of the disinterested members of our Board of Directors before the purchase of
any shares by the offeror pursuant to a takeover offer.
 
Transfer Agent and Registrar
 
Norwest Bank Minnesota, National Association has been appointed as the transfer
agent and registrar for our common stock.
 
                                       47
<PAGE>
 
                                  UNDERWRITING
 
The underwriters named below have agreed to buy, subject to the terms and
conditions of the purchase agreement, the number of shares listed opposite
their names below. The underwriters are committed to purchase and pay for all
of the shares if any are purchased (other than those shares covered by the
over-allotment option described below).
 
<TABLE>
<CAPTION>
                                                                        Number
          Underwriters                                                 of Shares
          ------------                                                 ---------
<S>                                                                    <C>
          Piper Jaffray Inc. .........................................
          NationsBanc Montgomery Securities LLC.......................
                                                                       ---------
              Total................................................... 2,650,000
                                                                       =========
</TABLE>
 
The underwriters have advised us and the selling shareholders that they propose
to offer the shares to the public at $      per share. The underwriters propose
to offer the shares to certain dealers at the same price less a concession of
not more than $     per share. The underwriters may allow and the dealers may
reallow a concession of not more than $     per share on sales to certain other
brokers and dealers. After the offering, these figures may be changed by the
underwriters.
 
We have granted to the underwriters an option to purchase up to an additional
381,500 shares of common stock from us and Joseph P. Micatrotto has granted to
the underwriters an option to purchase up to an additional 16,000 shares of
common stock, on a pro rata basis, at the same price to the public, and with
the same underwriting discount, as set forth in the table above. The
underwriters may exercise this option any time during the 30-day period after
the date of this Prospectus, but only to cover over-allotments, if any. To the
extent the underwriters exercise the option, each underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of the additional shares as it was obligated to purchase under the
purchase agreement.
 
We intend to use more than 10% of the net proceeds from the sale of the shares
offered by us by this Prospectus to repay indebtedness owed by us to U.S.
Bancorp. See "Use of Proceeds". U.S. Bancorp is an affiliate of Piper
Jaffray Inc., one of the underwriters. The decision of Piper Jaffray to
underwrite this offering was made independently of U.S. Bancorp, which had no
involvement in determining whether or when to underwrite this offering or the
terms of this offering. Piper Jaffray will not receive any benefit from this
offering other than its respective portion of the underwriting fees payable by
us. The offering is being made in compliance with the requirements of Rule
2710(c)(8) of the National Association of Securities Dealers, Inc. Conduct
Rules. This rule provides generally that if more than 10% of the net proceeds
from the sale of stock, not including underwriting compensation, is paid to the
underwriters or their affiliates, the initial public offering price of the
stock may not be higher than that recommended by a "qualified independent
underwriter" ("QIU") meeting certain standards set forth in Rule 2720(c)(3) of
the NASD Conduct Rules. NationsBanc Montgomery Securities LLC has agreed to act
as the QIU in pricing the offering and conducting due diligence. The initial
public offering price of the shares set forth on the cover page of this
Prospectus is no higher than the price recommended by NationsBanc Montgomery.
Moreover, NationsBanc Montgomery, as QIU, has performed due diligence
investigations and has reviewed and participated in the preparation of this
Prospectus.
 
The following table shows the underwriting fees to be paid to the underwriters
in connection with this offering. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option.
 
<TABLE>
<CAPTION>
                                                                  No      Full
                                                               Exercise Exercise
                                                               -------- --------
<S>                                                            <C>      <C>
         Per Share............................................  $        $
         Total................................................  $        $
</TABLE>
 
 
                                       48
<PAGE>
 
Piper Jaffray acted as placement agent in connection with the private placement
of our Series A Convertible Preferred Stock in October 1996. We issued warrants
to purchase 112,000 shares of Series A Convertible Preferred Stock convertible
into 74,666 shares of common stock at an exercise price of $5.625 per common
share to Piper Jaffray for its services as placement agent. These warrants
became exercisable in May 1997 and expire on October 23, 2003. We paid Piper
Jaffray $421,000 for its services as placement agent. Piper Jaffray also
purchased 53,333 shares of Series A Convertible Preferred Stock convertible
into 35,555 shares of common stock at a price of $5.625 per common share, the
same price paid by other investors for the Series A Convertible Preferred
Stock.
 
Piper Jaffray also acted as placement agent in connection with the private
placement of our Series B Convertible Preferred Stock in September 1997. We
issued warrants to purchase 50,000 shares of Series B Convertible Preferred
Stock convertible into 33,333 shares of common stock at an exercise price of
$6.75 per common share to Piper Jaffray for its services as placement agent.
These warrants became exercisable on October 31, 1997 and expire on September
2, 2004. We paid Piper Jaffray $75,000 for its services as placement agent.
 
Standby Fund 1997, an entity controlled by affiliates of Piper Jaffray, and
Piper Jaffray also purchased a total of 55,556 shares of Series B Convertible
Preferred Stock convertible into 37,037 shares of common stock at a price of
$6.75 per common share, the same price paid by other investors for the Series B
Convertible Preferred Stock. Along with the other purchasers of Series B
Preferred Stock, Standby Fund was issued, pro rata, warrants to purchase
1,926 shares of our common stock at an exercise price of $.01 per share. These
warrants only become vested and exercisable upon completion of this offering if
the public offering price per share is less than $13.50.
 
Piper Jaffray has provided investment banking services to us in 1998 and 1999
and will receive fees in the amount of $45,000 for such services.
 
We and the selling shareholders have agreed to indemnify the underwriters and
the QIU against certain liabilities, including civil liabilities under the
Securities Act, or to contribute to payments that the underwriters may be
required to make in respect to those liabilities.
 
The underwriters have informed us that neither they, nor any member of the NASD
participating in the distribution of the offering, will make sales of the
common stock offered by this prospectus to accounts over which they exercise
discretionary authority without the prior specific written approval of the
customer.
 
The offering of our shares of common stock is made for delivery when, as and if
accepted by the underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriters
reserve the right to reject an order for the purchase of shares in whole or
part.
 
We and each of our directors, executive officers and certain principal
shareholders and the selling shareholders have agreed to certain restrictions
on our ability to sell additional shares of our common stock for a period of
180 days after the date of this Prospectus. We have agreed not to directly or
indirectly offer for sale, sell, contract to sell, grant any option for the
sale of, or otherwise issue or dispose of, any shares of common stock, options
or warrants to acquire shares of common stock., or any related security or
instrument, without the prior written consent of Piper Jaffray. The agreements
provide exceptions for (1) sales to underwriters pursuant to the purchase
agreement (2) our sales in connection with the exercise of options granted and
the granting of options to purchase shares under our existing stock option
plans and (3) certain other exceptions.
 
Prior to the offering, there has been no established trading market for the
common stock. The initial public offering price for the shares of common stock
offered by this Prospectus was negotiated by us and the underwriters as
recommended by the QIU. The factors considered in determining the initial
public offering price include the history of and the prospects for the industry
in which we compete, our past and present operations, our historical results of
operations, our prospects for future earnings, the recent market prices of
securities of generally comparable companies and the general condition of the
securities markets at the time of the offering and other relevant factors.
There can be no assurance that the initial public offering price of the common
stock will corresponded to the price at which the common stock will trade in
the public market subsequent to this offering or that an active public market
for the common stock will develop and continue after this offering.
 
 
                                       49
<PAGE>
 
To facilitate the offering, the underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the common stock during
and after the offering. Specifically, the underwriters may over-allot or
otherwise create a short position in the common stock for their own account by
selling more shares of common stock than have been sold to them by us and the
selling shareholders. The underwriters may elect to cover any such short
position by purchasing shares of common stock in the open market or by
exercising the over-allotment option granted to the underwriters. In addition,
the underwriters may stabilize or maintain the price of the common stock by
bidding for or purchasing shares of common stock on the open market and may
impose penalty bids. If penalty bids are imposed, selling concessions allowed
to syndicate members or other broker-dealers participating in the offering are
reclaimed if shares of common stock previously distributed in the offering are
repurchased, whether in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain the
market price of the common stock at a level above that which might otherwise
prevail in the open market. The imposition of a penalty bid may also affect the
price of the common stock to the extent that it discourages resales of the
common stock. The magnitude or effect of any stabilization or other
transactions is uncertain. These transactions may be effected on the Nasdaq
National Market or otherwise and, if commenced, may be discontinued at any
time.
 
                                 LEGAL MATTERS
 
The validity of the shares of common stock offered by this Prospectus and
certain other legal matters will be passed upon for us by Faegre & Benson LLP,
Minneapolis, Minnesota. The validity of the shares of common stock offered by
this Prospectus will be passed upon for the underwriters by Dorsey & Whitney
LLP, Minneapolis, Minnesota.
 
                                    EXPERTS
 
The consolidated financial statements at December 27, 1998 and December 28,
1997 and for each of the two fiscal years in the period ended December 27,
1998, included in this prospectus and registration statement have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein and elsewhere in the registration statement and are included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
 
The consolidated financial statements for the year ended December 31, 1996
included in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
We have filed a registration statement on Form S-1 with the SEC for the stock
we are offering by this Prospectus. This Prospectus does not include all of the
information contained in the registration statement. You
should refer to the registration statement and its exhibits for additional
information. Whenever we make reference in this Prospectus to any of our
contracts, agreements or other documents, the references are not necessarily
complete and you should refer to the exhibits attached to the registration
statement for copies of the actual contract, agreement or other document. When
we complete this offering, we will also be required to file annual, quarterly
and special reports, proxy statements and other information with the SEC.
 
You can read our SEC filings, including the registration statement, over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference facilities at
450 Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You may also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at
450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-
0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available at the office of the Nasdaq
National Market. For further information on obtaining copies of our public
filings at the Nasdaq National Market you should call (212) 656-5060.
 
                                       50
<PAGE>
 
                                   BUCA, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
     <S>                                                                   <C>
     Independent Auditors' Report........................................  F-2
     Report of Independent Public Accountants............................  F-3
     Consolidated Balance Sheets as of December 28, 1997 and December 27,
      1998...............................................................  F-4
     Consolidated Statements of Operations for the fiscal years ended
      December 31, 1996, December 28, 1997 and December 27, 1998 ........  F-5
     Consolidated Statements of Shareholders' Deficit for the fiscal
      years
      ended December 31, 1996, December 28, 1997 and December 27, 1998...  F-6
     Consolidated Statements of Cash Flows for the fiscal years ended
      December 31, 1996, December 28, 1997 and December 27, 1998.........  F-7
     Notes to Consolidated Financial Statements..........................  F-8
</TABLE>
 
 
                                      F-1
<PAGE>
 
                          INDEPENDENT AUDITORS' REPORT
 
Board of Directors
BUCA, Inc. and Subsidiaries
 
We have audited the accompanying consolidated balance sheets of BUCA, Inc. and
Subsidiaries (the Company) as of December 28, 1997 and December 27, 1998, and
the related consolidated statements of operations, shareholders' deficit, and
cash flows for the fiscal years ended December 28, 1997 and December 27, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. The consolidated financial statements
of BUCA, Inc. and Subsidiaries for the fiscal year ended December 31, 1996 were
audited by other auditors whose report, dated March 14, 1997, expressed an
unqualified opinion on those statements.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1997 and 1998 consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the 1997 and 1998 consolidated financial statements present
fairly, in all material respects, the financial position of BUCA, Inc. and
Subsidiaries as of December 28, 1997 and December 27, 1998, and the results of
their operations and their cash flows for the fiscal years then ended in
conformity with generally accepted accounting principles.
 
As discussed in Note 1 to the consolidated financial statements, in fiscal 1997
the Company changed its method of accounting for preopening costs.
 
                                          /s/ Deloitte & Touche LLP
 
February 17, 1999
 
                                      F-2
<PAGE>
 
                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To BUCA, Inc:
 
We have audited the accompanying consolidated statements of operations,
shareholders' deficit and cash flows of BUCA, Inc. (a Minnesota corporation)
and Subsidiaries (the Company) for the year ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based upon our audit.
 
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.
 
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
BUCA, Inc. and Subsidiaries for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
 
                                          /s/ Arthur Andersen LLP
 
Minneapolis, Minnesota
March 14, 1997
 
                                      F-3
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
                          Consolidated Balance Sheets
                    December 28, 1997 and December 27, 1998
              (in thousands, except for share and per share data)
 
<TABLE>
<CAPTION>
                                                              1997      1998
                                                             -------  --------
<S>                                                          <C>      <C>
                           ASSETS
CURRENT ASSETS:
 Cash and cash equivalents.................................. $ 6,099  $  6,576
 Accounts receivable........................................     284     1,160
 Inventories................................................     545       935
 Prepaids and other.........................................     457       585
                                                             -------  --------
   Total current assets.....................................   7,385     9,256
PROPERTY AND EQUIPMENT, net.................................  13,428    27,697
OTHER ASSETS................................................     475       607
                                                             -------  --------
                                                             $21,288  $ 37,560
                                                             =======  ========
           LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
 Accounts payable........................................... $ 2,309  $  3,257
 Accrued expenses...........................................     962     2,638
 Current maturities of long-term debt.......................     320       205
                                                             -------  --------
   Total current liabilities................................   3,591     6,100
LONG-TERM DEBT, less current maturities.....................   5,140     7,661
DEFERRED RENT...............................................      17       239
OTHER LIABILITIES...........................................               127
COMMITMENTS AND CONTINGENCIES (Notes 6, 7, and 8)
REDEEMABLE STOCK (Notes 6 and 9):
 Preferred stock, $.01 par value, cumulative, Series A
  convertible--2,396,800 shares authorized; 2,240,000 shares
  issued and outstanding....................................   8,984     9,665
 Preferred stock, $.01 par value, cumulative, Series B
  convertible--2,100,000 shares authorized; 1,922,222 shares
  issued and outstanding....................................   8,777     9,441
 Preferred stock, $.01 par value, cumulative, Series C
  convertible--3,679,053 shares authorized; 2,614,634 shares
  issued and outstanding....................................            13,154
 Common stock, $.01 par value; 601,929 shares issued and
  outstanding...............................................   4,063     4,713
                                                             -------  --------
                                                              21,824    36,973
SHAREHOLDERS' DEFICIT:
 Undesignated stock, 617,147 shares authorized, none issued
  or outstanding
 Common stock, $.01 par value--13,100,000 shares authorized;
  1,899,246 and 1,914,359 shares issued and outstanding,
  respectively..............................................      19        19
 Accumulated deficit........................................  (9,032)  (13,266)
                                                             -------  --------
                                                              (9,013)  (13,247)
 Notes receivable from shareholders.........................    (271)     (293)
                                                             -------  --------
   Total shareholders' deficit..............................  (9,284)  (13,540)
                                                             -------  --------
                                                             $21,288  $ 37,560
                                                             =======  ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                      F-4
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
                     Consolidated Statements of Operations
                 For the Fiscal Years Ended December 31, 1996,
                    December 28, 1997 and December 27, 1998
              (in thousands, except for share and per share data)
 
<TABLE>
<CAPTION>
                                                1996        1997        1998
                                             ----------  ----------  ----------
<S>                                          <C>         <C>         <C>
RESTAURANT SALES...........................  $   11,316  $   19,030  $   38,483
RESTAURANT COSTS:
 Product...................................       3,471       5,520      10,876
 Labor.....................................       3,723       6,478      12,548
 Direct and occupancy......................       2,242       3,750       7,861
 Depreciation and amortization.............         381         781       1,617
                                             ----------  ----------  ----------
    Total restaurant costs.................       9,817      16,529      32,902
                                             ----------  ----------  ----------
INCOME FROM RESTAURANT OPERATIONS..........       1,499       2,501       5,581
GENERAL AND ADMINISTRATIVE EXPENSES........       1,988       3,760       5,579
PREOPENING COSTS...........................         430       1,140       1,895
                                             ----------  ----------  ----------
OPERATING LOSS.............................        (919)     (2,399)     (1,893)
INTEREST EXPENSE...........................         295         497       1,036
                                             ----------  ----------  ----------
LOSS BEFORE INCOME TAXES AND CUMULATIVE
 EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE..      (1,214)     (2,896)     (2,929)
(BENEFIT) PROVISION FOR INCOME TAXES.......        (101)         72          17
                                             ----------  ----------  ----------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE......................      (1,113)     (2,968)     (2,946)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
 PRINCIPLE RELATED TO PREOPENING COSTS.....                    (351)
                                             ----------  ----------  ----------
NET LOSS...................................  $   (1,113) $   (3,319) $   (2,946)
                                             ==========  ==========  ==========
CUMULATIVE PREFERRED STOCK DIVIDENDS,
 ACCRETION OF PREFERRED STOCK TO REDEMPTION
 VALUE, AND CHANGE IN REDEEMABLE COMMON
 STOCK.....................................      (3,687)     (1,986)     (2,189)
                                             ----------  ----------  ----------
NET LOSS APPLICABLE TO COMMON STOCK........  $   (4,800) $   (5,305) $   (5,135)
                                             ==========  ==========  ==========
NET LOSS PER COMMON SHARE--BASIC AND
 DILUTED...................................  $    (1.96) $    (2.13) $    (2.04)
                                             ==========  ==========  ==========
WEIGHTED AVERAGE COMMON SHARES ASSUMED
OUTSTANDING--BASIC AND DILUTED.............   2,444,666   2,490,136   2,512,309
                                             ==========  ==========  ==========
</TABLE>
 
 
                See notes to consolidated financial statements.
 
                                      F-5
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
                Consolidated Statements of Shareholders' Deficit
                     (in thousands, except for share data)
 
<TABLE>
<CAPTION>
                                                                                  Notes
                           Common Stock       Stock     Additional              Receivable      Total
                         ----------------- Subscription  Paid-in   Accumulated     from     Shareholders'
                          Shares    Amount  Receivable   Capital     Deficit   Shareholders    Deficit
                         ---------  ------ ------------ ---------- ----------- ------------ -------------
<S>                      <C>        <C>    <C>          <C>        <C>         <C>          <C>
BALANCE AT DECEMBER 31,
 1995................... 1,842,738   $18       $ (6)      $  13     $   (173)                 $   (148)
 Collection on stock
  subscription
  receivable............                          6                                                  6
 Change in redeemable
  common stock..........                                    (13)      (3,373)                   (3,386)
 Preferred stock
  dividends.............                                                (111)                     (111)
 Accretion of preferred
  stock.................                                                (190)                     (190)
 Net loss...............                                              (1,113)                   (1,113)
                         ---------   ---       ----       -----     --------      -----       --------
BALANCE AT DECEMBER 31,
 1996................... 1,842,738    18                              (4,960)                   (4,942)
 Issuance of common
  stock options.........                                    350                                    350
 Issuance of common
  stock warrants........                                    544                                    544
 Issuance of common
  stock.................    65,766     1                    389                   $(275)           115
 Repurchase of common
  stock.................    (9,258)                         (50)                                   (50)
 Payments of notes
  receivable due from
  shareholders..........                                                              4              4
 Change in redeemable
  common stock..........                                   (677)                                  (677)
 Preferred stock
  dividends.............                                   (556)        (229)                     (785)
 Accretion of preferred
  stock.................                                                (524)                     (524)
 Net loss...............                                              (3,319)                   (3,319)
                         ---------   ---       ----       -----     --------      -----       --------
BALANCE AT DECEMBER 28,
 1997................... 1,899,246    19                              (9,032)      (271)        (9,284)
 Issuance of common
  stock warrants........                                    761                                    761
 Issuance of common
  stock.................    25,185                          200                    (160)            40
 Repurchase of common
  stock.................   (10,072)                         (60)                                   (60)
 Payments of notes
  receivable due from
  shareholders..........                                                            138            138
 Change in redeemable
  common stock..........                                   (650)                                  (650)
 Preferred stock
  dividends.............                                   (251)      (1,041)                   (1,292)
 Accretion of preferred
  stock.................                                                (247)                     (247)
 Net loss...............                                              (2,946)                   (2,946)
                         ---------   ---       ----       -----     --------      -----       --------
BALANCE AT DECEMBER 27,
 1998................... 1,914,359   $19       $--        $ --      $(13,266)     $(293)      $(13,540)
                         =========   ===       ====       =====     ========      =====       ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                      F-6
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
                     Consolidated Statements of Cash Flows
                 For the Fiscal Years Ended December 31, 1996,
                    December 28, 1997, and December 27, 1998
                                 (in thousands)
 
<TABLE>
<CAPTION>
                                                     1996     1997      1998
                                                    -------  -------  --------
<S>                                                 <C>      <C>      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss.......................................... $(1,113) $(3,319) $ (2,946)
 Adjustments to reconcile net loss to net cash
  (used in) provided by operating activities:
  Depreciation and amortization....................     381      781     1,617
  Cumulative effect of change in accounting
   principle.......................................              351
  Deferred income taxes............................               34
  Loss (gain) on sale of property and equipment....              112       (52)
  Accretion of call premium........................      50       51        51
  Amortization of debt discount....................                        216
  Issuance of common stock and common stock options
   for services....................................              439
  Change in assets and liabilities:
   Accounts receivable.............................     (43)    (130)     (876)
   Inventories.....................................    (101)    (247)     (390)
   Preopening costs................................    (134)
   Prepaids and other..............................     (27)    (370)     (128)
   Accounts payable................................     582      985       948
   Accrued expenses................................     236     (137)    1,676
   Other liabilities...............................                        222
                                                    -------  -------  --------
     Net cash (used in) provided by operating
      activities...................................    (169)  (1,450)      338
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment................  (2,783)  (7,896)  (17,864)
 Escrow deposits...................................    (551)    (131)
 Increase in other assets..........................     (33)     (45)      (48)
 Proceeds from sale of property and equipment......                      2,263
                                                    -------  -------  --------
     Net cash used in investing activities.........  (3,367)  (8,072)  (15,649)
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt..........     896    2,500     3,500
 Principal payments on long-term debt..............    (331)    (489)     (599)
 Collection on stock subscription receivable.......       6
 Payments of notes receivable from shareholders....                4        80
 Repurchase of common stock........................              (30)
 Net proceeds from issuance of preferred stock.....   7,614    8,537    12,958
 Issuance of common stock..........................                         40
 Loan and lease acquisition costs..................             (251)     (191)
 Principal payments on note payable................    (104)    (400)
 Proceeds from issuance of note payable............     400
                                                    -------  -------  --------
     Net cash provided by financing activities.....   8,481    9,871    15,788
                                                    -------  -------  --------
NET INCREASE IN CASH AND CASH EQUIVALENTS..........   4,945      349       477
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.....     805    5,750     6,099
                                                    -------  -------  --------
CASH AND CASH EQUIVALENTS AT END OF YEAR........... $ 5,750  $ 6,099  $  6,576
                                                    =======  =======  ========
</TABLE>
 
                See notes to consolidated financial statements.
 
                                      F-7
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
                   Notes To Consolidated Financial Statements
            Fiscal Years Ended December 31, 1996, December 28, 1997,
                             and December 27, 1998
 
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business--BUCA, Inc. and Subsidiaries (BUCA or the Company) develops
and operates family-style, immigrant Southern Italian restaurants located in
Minnesota, Wisconsin, California, Illinois, Indiana, Arizona, Ohio, Kansas, and
Washington. Effective December 31, 1994, Parasole Restaurant Holdings, Inc.
(Parasole) acquired all the common stock of BUCA, which resulted in BUCA
becoming a wholly owned subsidiary of Parasole. On September 30, 1996, the
Parasole Board of Directors in a spin-off distributed all of the outstanding
common stock of BUCA pro rata to the Parasole shareholders. Prior to a written
action of the Board of Directors on May 14, 1996, the Company was known as BUCA
Ventures, Inc.
 
The Company incurred net losses of $1,113,000, $3,319,000 and $2,946,000 in
1996, 1997 and 1998, respectively, and as of December 27, 1998, had an
accumulated deficit of $13,266,000. Losses have been primarily attributable to
costs and expenses incurred in the completion of the development and opening of
new restaurants and the costs associated with the hiring of senior corporate
management to position the Company for its future expansion plans. Future
revenues and results from operations will depend upon various factors,
including the Company's ability to open new restaurants on a timely and
profitable basis and general economic conditions. The Company's ability to meet
its expansion plans and achieve profitability depends on its ability to obtain
additional financing for the development of new locations currently under
consideration. There are no assurances that such financing will be available on
terms acceptable or favorable to the Company.
 
The Company manages its operations by restaurant. All of the Company's
restaurants operate under the same concept, are marketed to similar customers,
and have comparable economic characteristics. The Company has aggregated its
operating segments into one reportable segment.
 
Principles of Consolidation--The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.
 
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during the reporting
period. Actual results could differ from those estimates.
 
Cash and Cash Equivalents--The Company considers all unrestricted demand
deposits and all unrestricted highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents. At December
28, 1997 and December 27, 1998, cash and cash equivalents consisted primarily
of money market funds.
 
Fair Value of Financial Instruments--At December 28, 1997 and December 27,
1998, the fair values of cash and cash equivalents, accounts receivable, and
accounts payable approximate their carrying value due to the short-term nature
of the instrument. The fair value of debt is estimated at its carrying value
based upon current rates available to the Company. The fair value of the
redeemable preferred stock is estimated at $35,375,000 based upon the December
1998 closing of the Series C preferred stock private placement.
 
Inventories--Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method of valuation. Inventories
consisted of the following as of December 28, 1997 and December 27, 1998 (in
thousands):
 
<TABLE>
<CAPTION>
                                                                       1997 1998
                                                                       ---- ----
      <S>                                                              <C>  <C>
      Food and beverage............................................... $300 $521
      Supplies........................................................  245  414
                                                                       ---- ----
                                                                       $545 $935
                                                                       ==== ====
</TABLE>
 
 
                                      F-8
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
Other Assets--Other assets consisted of the following as of December 28, 1997
and December 27, 1998 (in thousands):
 
<TABLE>
<CAPTION>
                                                                      1997 1998
                                                                      ---- ----
      <S>                                                             <C>  <C>
      Loan and lease acquisition costs, net.......................... $300 $365
      Escrow deposits................................................  131  131
      Other..........................................................   44  111
                                                                      ---- ----
                                                                      $475 $607
                                                                      ==== ====
</TABLE>
 
Loan and lease acquisition costs are being amortized over the term of the
related debt or lease. Accumulated amortization as of December 28, 1997 and
December 27, 1998 was $94,000 and $206,000, respectively.
 
Accrued expenses--Accrued expenses consisted of the following as of December
28, 1997 and December 27, 1998 (in thousands):
 
<TABLE>
<CAPTION>
                                                                    1997  1998
                                                                    ---- ------
      <S>                                                           <C>  <C>
      Accrued payroll and related benefits......................... $315 $1,117
      Gift certificate liability...................................  230    518
      Accrued sales taxes..........................................  241    546
      Other accrued expenses.......................................  176    457
                                                                    ---- ------
                                                                    $962 $2,638
                                                                    ==== ======
</TABLE>
 
Recoverability of Long-Lived Assets--The Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate the carrying
value amount of an asset or group of assets may not be recoverable. The Company
considers a history of operating losses to be its primary indicator of
potential impairment. Assets are grouped and evaluated for impairment at the
lowest level for which there are identifiable cash flows, individual
restaurants. A restaurant is deemed to be impaired if a forecast of
undiscounted future operating cash flows directly related to the restaurant is
less than its carrying amount. If a restaurant is determined to be impaired,
the loss is measured as the amount by which the carrying amount of the
restaurant exceeds its fair value. Fair value is an estimate based on the best
information available, including prices for similar assets or the results of
valuation techniques such as discounted estimated future cash flows as if the
decision to continue to use the impaired restaurant was a new investment
decision. The Company generally measures fair value by discounting estimated
future cash flows.
 
Net Loss Per Share--Basic loss per share is computed by dividing net loss by
the weighted average number of common shares outstanding. Diluted earnings 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 1996, 1997, and 1998 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>
                                    1996               1997               1998
                             ------------------ ------------------ ------------------
                                       Weighted           Weighted           Weighted
                                       Average            Average            Average
                                        Price              Price              Price
                             Number Of   Per    Number of   Per    Number of   Per
                              Shares    Share    Shares    Share    Shares    Share
                             --------- -------- --------- -------- --------- --------
   <S>                       <C>       <C>      <C>       <C>      <C>       <C>
   Stock warrants..........    104,532  $5.63     218,420  $3.73     331,196  $2.46
   Stock options...........     13,331   4.84     581,507   5.38     854,155   6.08
   Convertible preferred
    stock..................  1,493,331   5.63   2,774,808   6.14   4,505,239   6.76
   Convertible subordinated
    debentures.............    565,079   3.15     565,079   3.15     439,506   4.05
                             ---------  -----   ---------  -----   ---------  -----
                             2,176,273  $4.98   4,139,814  $5.50   6,130,096  $6.24
                             =========  =====   =========  =====   =========  =====
</TABLE>
 
 
                                      F-9
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
Postemployment and Postretirement Benefits--The Company does not provide
postemployment health care or postretirement benefits.
 
Stock Compensation--The Company accounts for its stock-based compensation
awards to employees under Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and will disclose the required pro
forma effect on net loss as recommended by Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.
 
Accounting Change--Effective January 1, 1997, the Company changed its method of
accounting for restaurant preopening costs in accordance with Statement of
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities. Prior to
fiscal 1997, preopening costs were deferred and amortized over the initial 12
months of a restaurant's operation. Under the new method, preopening costs are
expensed as incurred. The expensing of preopening costs is prevalent in
industry practice. The change in accounting method increased the 1997 loss
before cumulative effect of change in accounting principle by $834,000.
 
Fiscal Year--The Company changed its fiscal year-end from December 31 to the
last Sunday in December, beginning with the fiscal year ended December 28,
1997. The fiscal years ended December 31, 1996, December 28, 1997, and December
27, 1998 were 52-week years.
 
Comprehensive Income--The Company does not have any items of comprehensive
income in any of the periods presented.
 
Accounting Pronouncements--In June 1998, the Financial Accounting Standards
Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 requires companies to record derivatives on
the balance sheet as assets and liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. SFAS No. 133 is effective for fiscal years beginning
after June 15, 1999, with earlier adoption encouraged. Management has not yet
determined the effects SFAS No. 133 will have on its financial position or the
results of its operations.
 
2. PROPERTY AND EQUIPMENT
 
Property and equipment are recorded at cost. Expenditures for renewals and
betterments are capitalized while repairs and maintenance costs are charged to
expense. The cost of property and equipment is depreciated on the straight-line
method over their estimated useful lives. Leasehold improvements are amortized
on the straight-line method over the shorter of the life of the lease including
extensions or their estimated useful lives. Estimated useful lives are as
follows:
 
<TABLE>
<CAPTION>
                                                                           Years
                                                                           -----
      <S>                                                                  <C>
      Leasehold improvements.............................................. 5-20
      Furniture, fixtures, and equipment.................................. 5-10
      Building............................................................   20
</TABLE>
 
Property and equipment consisted of the following as of December 28, 1997 and
December 27, 1998 (in thousands):
 
<TABLE>
<CAPTION>
                                                                 1997    1998
                                                                ------- -------
      <S>                                                       <C>     <C>
      Leasehold improvements................................... $ 8,639 $19,214
      Furniture, fixtures, and equipment.......................   4,991  10,869
      Land.....................................................     793     267
      Building.................................................     300     114
                                                                ------- -------
                                                                 14,723  30,464
      Less accumulated depreciation and amortization...........   1,295   2,767
                                                                ------- -------
                                                                $13,428 $27,697
                                                                ======= =======
</TABLE>
 
 
                                      F-10
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
In 1998, the Company sold the building and land associated with a restaurant in
Illinois for approximately $1,200,000 and simultaneously entered into an
operating lease for a term of 20 years. The assets were removed from the
financial statements and a deferred gain included as other liabilities on the
consolidated balance sheet of approximately $132,000 was recorded which is
being amortized over the lease term.
 
Additionally, in 1998, the Company purchased the land and building associated
with a restaurant in Minnesota for approximately $375,000.
 
3. NOTE PAYABLE
 
The Company had a $1,000,000 line of credit agreement secured by the assets of
the Company that expired on June 30, 1998.
 
4. LONG-TERM DEBT
 
Long-term debt consisted of the following as of December 28, 1997 and December
27, 1998 (in thousands):
 
<TABLE>
<CAPTION>
                                                                 1997   1998
                                                                ------ ------
   <S>                                                          <C>    <C>
   Notes payable maturing October 2002, $2,500,000 and June
    2003, $3,500,000, with interest payable monthly at 13.5%
    and accretion of common stock warrant value of 4.4%.
    Collateralized by equipment, inventory, accounts
    receivable, trademarks, and copyrights. Net of discounts of
    $544,000 and $1,089,000, respectively, resulting from
    common stock warrants issued to lenders.................... $1,956 $4,911
   Convertible subordinated debentures maturing July 2001 with
    interest payable quarterly at 8.0% until January 1997, at
    which time interest will be adjusted semiannually to 1.0%
    in excess of the prime rate, not to exceed 12.0% per annum
    (9.50% and 8.75% at December 28, 1997 and December 27,
    1998, respectively); includes call premium accretion of
    $165,000 and $216,000, respectively........................  1,945  1,996
   Note payable to bank in monthly installments, including
    interest at 2.0% in excess of the prime rate (10.50% and
    9.75% at December 28, 1997 and December 27, 1998,
    respectively), maturing July 2000, with a principal balloon
    payment upon maturity of $185,000, collateralized by
    equipment, accounts receivable, and inventory..............    363    296
   Note payable to bank in monthly installments, including
    interest at 2.0% in excess of the prime rate (10.50% and
    9.75% at December 28, 1997 and December 27, 1998,
    respectively), maturing May 1999, collateralized by
    equipment, accounts receivable, and inventory..............     97     29
   Note payable to bank in monthly installments including
    interest at 2.0% in excess of the prime rate (10.50% and
    9.75% at December 28, 1997 and December 27, 1998,
    respectively), maturing March 2003, collateralized by
    equipment, accounts receivable, and inventory..............    332    269
   Note payable in monthly installments, including interest at
    7.153%, maturing May 2006, collateralized by equipment,
    guarantees of BUCA and Parasole, and the personal
    guarantees of certain shareholders and the U.S. Small
    Business Administration....................................    402    365
   Capitalized leases..........................................    365    --
                                                                ------ ------
      Total....................................................  5,460  7,866
   Less current maturities.....................................    320    205
                                                                ------ ------
      Total long-term maturities............................... $5,140 $7,661
                                                                ====== ======
</TABLE>
 
 
                                      F-11
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
The Company's loan agreements, among other things, restrict additional
indebtedness and dividend payments and requires the Company to meet certain
financial covenants, the most restrictive of which includes maintaining
tangible net worth of $4,000,000. The Company was in compliance with these
financial covenants at December 27, 1998.
 
The holders of the convertible subordinated debentures are entitled, at their
option for a one year period commencing upon an initial public offering (IPO)
of common stock by BUCA, to convert the entire principal amount held by such
person into fully paid shares of common stock at a specified discount. The
discount amount is based upon the effective date of the IPO: a 30% discount if
the effective date is on or prior to August 1, 1997; a 40% discount if the
effective date is after August 1, 1997 but on or prior to August 1, 1999; and a
50% discount if the effective date is after August 1, 1999 but on or prior to
the conversion rights termination date of July 30, 2001. In accordance with
EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion
Features or Contigently Adjustable Conversion Ratios, the Company will record
an expense associated with the beneficial conversion feature at the effective
date of the IPO. The individual holders of the debentures may elect to have the
debentures paid in full in July 1999, at which time any holder would be
entitled to a premium payment equal to 10% of the original principal sum of the
debenture. In the event the holder retains the debenture to maturity, the
holder will be entitled to a premium payment equal to 20% of the original
principal sum of the debenture. The 20% premium is being accreted over the
debenture term. The debentures are fully subordinated to all obligations of
BUCA to the bank.
 
The future maturities of long-term debt, excluding the discount related to
common stock warrants, are as follows (in thousands):
 
<TABLE>
      <S>                                                                 <C>
      1999............................................................... $  205
      2000...............................................................    328
      2001...............................................................  2,104
      2002...............................................................  2,612
      2003...............................................................  3,570
      Thereafter.........................................................    136
                                                                          ------
                                                                          $8,955
                                                                          ======
</TABLE>
 
On February 5, 1999, the Company refinanced its existing term debt, excluding
the convertible subordinated debentures and the note payable guaranteed by the
U.S. Small Business Administration, with a $15 million credit arrangement that
expires on December 31, 2000. The credit arrangement includes a $7 million term
loan which bears a fixed rate of interest of 9.63% and an $8 million revolving
line of credit which bears interest at prime plus .75% to 1.25%, depending on
the then-applicable cash flow coverage ratio of the Company. In accordance with
the credit agreement, the term loan must be repaid upon the consummation of an
initial public offering along with any borrowings under the revolving line of
credit in excess of $3 million. The credit agreement, among other things,
restricts additional indebtedness and requires the Company to meet certain
financial covenants. In conjunction with the refinancing, the Company will
recognize an extraordinary loss on extinguishment of debt of approximately $1.3
million in 1999 which includes deferred financing costs associated with the
refinanced debt.
 
5. INCOME TAXES
 
Deferred income taxes are recognized for the tax consequences of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income. At December 28, 1997 and December 27, 1998 the Company has
recorded a valuation allowance to reduce recorded deferred tax assets to zero.
 
At December 27, 1998, for income tax return purposes, the Company has estimated
net operating loss carryforwards of approximately $3,500,000. If not used,
these carryforwards will begin to expire in 2003.
 
                                      F-12
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
The (benefit) provision for income taxes consisted of the following for the
fiscal years ended December 31, 1996, December 28, 1997, and December 27, 1998
(in thousands):
 
<TABLE>
<CAPTION>
                                                       1996    1997     1998
                                                       -----  -------  -------
      <S>                                              <C>    <C>      <C>
      Federal......................................... $(107) $    34
      State...........................................     6        4  $    17
      Deferred........................................             34
                                                       -----  -------  -------
      (Benefit) provision for income taxes............ $(101) $    72  $    17
                                                       =====  =======  =======
 
A reconciliation between taxes computed at the expected federal income tax rate
and the effective tax rate for the fiscal years ended December 31, 1996,
December 28, 1997, and December 27, 1998 is as follows (in thousands):
 
<CAPTION>
                                                       1996    1997     1998
                                                       -----  -------  -------
      <S>                                              <C>    <C>      <C>
      Tax benefit computed at statutory rates......... $(425) $(1,162) $(1,025)
      State taxes, net of federal effect..............   (47)    (129)    (114)
      Other...........................................                      12
      Change in valuation allowance...................   371    1,363    1,144
                                                       -----  -------  -------
                                                       $(101) $    72  $    17
                                                       =====  =======  =======
</TABLE>
 
The tax effect of significant temporary differences representing deferred tax
assets is as follows as of December 28, 1997 and December 27, 1998 (in
thousands):
 
<TABLE>
<CAPTION>
                                                                  1997    1998
                                                                 ------  ------
      <S>                                                        <C>     <C>
      Current:
       Preopening costs......................................... $  108  $  228
       Accrued liabilities......................................            131
       Less valuation allowance.................................   (108)   (359)
                                                                 ------  ------
                                                                 $  --   $  --
                                                                 ======  ======
      Noncurrent:
       Preopening costs and property and equipment.............. $  400  $  873
       Call premium accretion...................................     65      84
       Net operating loss carryforwards.........................  1,028   1,380
       Other....................................................             49
       Less valuation allowance................................. (1,493) (2,386)
                                                                 ------  ------
                                                                 $  --   $  --
                                                                 ======  ======
</TABLE>
 
6. EMPLOYEE BENEFIT PLANS
 
Effective with the spin-off of BUCA discussed in Note 1, the BUCA employee
stock ownership plan (ESOP) was established for the benefit of eligible
employees of BUCA. A pro rata portion of the assets held by the Parasole ESOT
were transferred to the BUCA ESOP as of that date, and the BUCA participants
became 100% vested in their accounts. The Parasole ESOT retained the entire
unallocated stock account and the entire obligation under the loan agreement
with the bank. The BUCA ESOP was frozen upon its establishment and no
contributions were made during fiscal 1997 or 1998. BUCA's pro rata portion of
compensation expense related to the Parasole ESOT was $50,000 in 1996.
 
BUCA has entered into a redemption agreement with Parasole whereby BUCA has
agreed to redeem at fair value shares of BUCA stock distributed by the Parasole
ESOT if no public market exists. Additionally, the BUCA stock
 
                                      F-13
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
held in the BUCA ESOP must be redeemed by the Company in accordance with the
plan agreement. At December 28, 1997 and December 27, 1998, 504,702 and 97,227
shares were held in the Parasole ESOT and BUCA ESOP, respectively. Such shares
have been classified as redeemable stock on the consolidated balance sheet.
 
Company employees with one year of service, age 21 or older, who worked at
least 1,000 hours in the prior year are eligible to participate in the
Company's 401(k) Plan. Under the provisions of the plan, the Company may, at
its discretion, make contributions to the 401(k) Plan. Participants are 100%
vested in their own contributions. No contributions were made by the Company
during 1996, 1997 or 1998.
 
7. COMMITMENTS AND CONTINGENCIES
 
Leases--The Company is obligated under various operating leases for restaurant
and storage space and equipment. Generally, the base lease terms are between 5
and 15 years. Certain of the leases provide for additional rents based on a
percentage of annual sales in excess of stipulated minimums. The leases also
require the Company to pay its pro rata share of real estate taxes, operating
expenses, and common area costs. In addition, the Company has received lease
incentives in connection with certain leases. The Company is recognizing the
benefits related to the lease incentives on a straight-line basis over the
applicable lease term. The Company has recorded deferred rent related to their
lease incentives of $17,000 and $239,000 as of December 28, 1997 and December
27, 1998, respectively.
 
Total rent expense, including real estate taxes, operating expenses, and
percentage rent, was $941,000, $1,754,000, and $3,812,000 in 1996, 1997, and
1998, respectively.
 
Approximate future minimum lease obligations, including units which are not yet
open and excluding percentage rents, at December 27, 1998, are as follows (in
thousands):
 
<TABLE>
      <S>                                                               <C>
      1999............................................................. $ 2,989
      2000.............................................................   3,950
      2001.............................................................   4,038
      2002.............................................................   4,118
      2003.............................................................   4,189
      Thereafter.......................................................  29,405
                                                                        -------
      Total future minimum base rents.................................. $48,689
                                                                        =======
</TABLE>
 
Litigation--The Company is subject to certain legal actions arising in the
normal course of business, none of which are expected to have a material effect
on the Company's results of operations, financial condition or cash flows.
 
8. RELATED-PARTY TRANSACTIONS
 
Management Agreement--The Company has entered into a management agreement with
Parasole to provide for certain management and administrative services. The
management agreement may be terminated by Parasole upon one year's written
notice and the Company may terminate the management agreement upon 60 days'
written notice. Management fees of approximately $354,000, $270,000, and
$248,000 were charged to operations in 1996, 1997, and 1998, respectively.
 
Purchase of Inventory--The Company has entered into a vendor relationship with
Parasole whereby the Company purchases bread products and a majority of the
dessert products offered at the Company's Minneapolis-Saint Paul metropolitan
area restaurants. The Company purchases the products at rates which management
believes
 
                                      F-14
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
approximate market rates. The relationship can terminate at any time at the
discretion of the Company; however, the Company expects this relationship to
continue. The Company purchased bakery products in the amount of $211,000,
$180,000, and $169,000 in 1996, 1997, and 1998, respectively.
 
Employment Agreement--The Company entered into an employment agreement with one
of its officers which requires the payment of annual compensation and certain
fringe benefits through 2001 and includes bonus provisions in the form of both
a stock grant and stock options.
 
9. REDEEMABLE STOCK
 
Series A Preferred Stock Private Placement--During October 1996, the Company
issued 2,240,000 shares of Series A preferred stock in a private placement at
an offering price of $3.75 per share. This stock is convertible into 1,493,331
shares of common stock and the preferred shares are redeemable in cash on
October 1, 2003, 2004, and 2005 at the election of the holder and accumulate
dividends at a rate of $.2625 per share annually beginning October 24, 1996.
The shares are redeemable at $3.75 per share plus unpaid and accumulated
dividends. Accumulated undeclared dividends amounted to $699,000 and $1,287,000
at December 28, 1997 and December 27, 1998, respectively. Total liquidation
preference of outstanding shares is $3.75 per share plus, unpaid and
accumulated dividends. The Company received net proceeds of $7,614,000 after
the payment of $786,000 in related offering costs. The net proceeds were used
to pay off certain indebtedness and to fund expansion and operating expenses.
 
Series B Preferred Stock Private Placement--During 1997, the Company issued a
total of 1,922,222 shares of Series B preferred stock in a private placement at
an offering price of $4.50 per share. The stock is convertible into 1,281,477
shares of common stock and the preferred shares are redeemable in cash on
October 1, 2003, 2004, and 2005 at the election of the holder and accumulate
dividends at a rate of $.315 per share annually beginning September 3, 1997.
The shares are redeemable at $4.50 per share plus unpaid and accumulated
dividends. Accumulated undeclared dividends amounted to $197,000 and $802,000
at December 28, 1997 and December 27, 1998, respectively. Total liquidation
preference of outstanding shares is $4.50 per share plus, unpaid and
accumulated dividends. The Company received net proceeds of $8,537,000 after
the payment of $113,000 in related offering costs. The net proceeds were used
to fund expansion and operating expenses.
 
Series C Preferred Stock Private Placement--In October 1998, the Company sold
1,639,025 shares of Series C preferred stock in a private placement at an
offering price of $5.125 per share. The stock is convertible into 1,092,679
shares of common stock. In December 1998, the Company sold an additional
975,609 shares of Series C preferred stock at an offering price of $5.125 per
share. The stock is convertible into 637,752 shares of common stock. Preferred
shares are redeemable in cash on October 1, 2003, 2004, and 2005 at the
election of the holder and accumulate dividends at a rate of $.35875 per share
annually beginning October 13, 1998. The shares are redeemable at $5.125
(1,639,025 shares) and $5.22 (975,609 shares) per share plus unpaid and
accumulated dividends. Accumulated undeclared dividends amounted to $99,000 at
December 27, 1998. Total liquidation preference of outstanding shares is $5.125
(1,639,025) and $5.22 (975,609) per share plus, unpaid and accumulated
dividends. The Company received net proceeds of $12,958,000 after the payment
of $442,000 in related offering expenses. The net proceeds were used to fund
expansion, operating expenses, and pay off certain indebtedness.
 
Additionally, the purchasers of the Series C preferred stock received 2,614,634
"Contingent Value Rights" which entitles the holder to receive additional
shares of common stock if, on or prior to October 12, 2001, the Company has not
effected a qualified public offering or had a publicly traded security with an
average closing price of $18 per share for a period of at least 120 consecutive
trading days. In 1999, the Company agreed to issue 40,195 shares of common
stock contingent upon the completion of the initial public offering (IPO) in
exchange for an agreement which results in the termination of the contingent
value rights.
 
                                      F-15
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
The Series A, B, and C preferred stock are automatically convertible to common
stock upon a public offering that meets each of the following requirements: (i)
the aggregate public offering price is $15 million, (ii) the public offering is
underwritten on a firm commitment basis by an underwriter that is a member of
the New York Stock Exchange, and (iii) the public offering price per share is
at least $18, except as one or more of such requirements may be modified or
waived by holders of two-thirds of the shares of preferred stock then
outstanding.
 
The carrying value of the preferred stock includes cumulative undeclared
dividends and the accretion to the redemption value.
 
10. SHAREHOLDERS' EQUITY
 
Stock Split--On February 17, 1999, the Company effected a two-for-three reverse
stock split which has been retroactively reflected in the consolidated
financial statements.
 
Warrants--The Company has issued warrants to placement agents and debt holders
in connection with the issuances of debt and equity securities. The warrants
are exercisable at various dates through September 2004. No warrants have been
exercised. The fair market value of the warrants were recorded as additional
paid-in capital. The excess of fair market value over exercise price is being
amortized over the respective debt maturity term. A summary of the Company's
common stock warrant activity is as follows:
 
<TABLE>
<CAPTION>
                                                             Number of Weighted
                                                              Common    Average
                                                               Stock     Price
                                                              Shares   Per Share
                                                             --------- ---------
      <S>                                                    <C>       <C>
      Warrants issued--Series A placement agents............  104,532    $5.63
                                                              -------    -----
      Outstanding, December 31, 1996........................  104,532     5.63
      Warrants issued--Series B placement agents............   33,333     6.75
      Warrants issued--debt holders.........................   80,555      .01
                                                              -------    -----
      Outstanding, December 28, 1997........................  218,420     3.73
      Warrants issued--debt holders.........................  112,776      .01
                                                              -------    -----
      Outstanding and exercisable, December 27, 1998........  331,196    $2.46
                                                              =======    =====
</TABLE>
 
Additionally, the Company issued warrants to purchase 66,663 shares of common
stock at $.01 per share to the purchasers of Series B preferred stock. The
warrants vest upon completion of an IPO, but only if the public offering price
per share is less than $13.50.
 
Stock Option Plans--During 1996, the Company adopted the 1996 Incentive Stock
Option Plan (the 1996 Plan), pursuant to which options to acquire an aggregate
of 433,333 shares of the Company's common stock may be granted. Under the 1996
Plan, the Board of Directors may grant options to purchase shares of the
Company's stock to eligible employees for both incentive and nonstatutory stock
options. Options granted under the 1996 Plan vest as determined by the Board of
Directors and are exercisable for a term not to exceed ten years.
 
During 1998, the Board of Directors approved amendments to the 1996 Plan to
increase the number of shares available for issuance under the 1996 Plan to
1,000,000 shares.
 
During 1996, the Company adopted the 1996 Stock Option Plan for Nonemployee
Directors (the Directors' Plan) pursuant to which options to acquire an
aggregate of 26,667 shares of the Company's common stock may be granted to
outside directors. Under the Directors' Plan, 1,333 options will automatically
be granted to each outside director upon election to the Board of Directors,
and thereafter 667 options will be granted annually for each year of continued
service by the outside director. Options granted under the Directors' Plan vest
over one year from date of grant and are exercisable for ten years.
 
 
                                      F-16
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
A summary of the status of the Company's stock options are presented in the
table and narrative below:
 
<TABLE>
<CAPTION>
                                                                       Options
                                                  Weighted            Available
                                                  Average                for
                                                  Extended   Price     Future
                                         Shares    Price     Range      Grant
                                        --------  -------- ---------- ---------
      <S>                               <C>       <C>      <C>        <C>
      Granted..........................   13,331   $4.84   $4.50-5.63
                                        --------   -----   ----------  -------
      Outstanding, December 31, 1996...   13,331    4.84    1.13-5.63  413,335
                                                                       =======
      Granted..........................  700,353    4.61    1.13-6.75
      Terminated....................... (132,177)   1.25    1.13-5.63
                                        --------   -----   ----------  -------
      Outstanding, December 28, 1997...  581,507    5.38    1.13-6.75  111,826
                                                                       =======
      Granted..........................  273,314    7.59    6.75-7.68
      Terminated.......................     (666)   7.68         7.68
                                        --------   -----   ----------  -------
      Outstanding, December 27, 1998...  854,155   $6.08   $1.13-7.68  172,511
                                        ========   =====   ==========  =======
      Exercisable, December 27, 1998...  212,109   $4.47   $1.13-7.68
                                        ========   =====   ==========
</TABLE>
 
During 1998, the Company granted 16,000 stock options to a landlord at a price
of $6.75 per share which were outside of the two stock option plans.
 
The Company has chosen to continue to account for stock-based compensation
using the intrinsic value method prescribed by APB Opinion No. 25 and related
interpretations. No compensation cost has been recognized for options issued to
employees under the Plans when the exercise price of the options granted are at
least equal to the fair value of the common stock on the date of grant. Had
compensation costs for these plans been determined consistent with SFAS No.
123, the Company's net loss would have been increased to the following pro
forma amounts for 1996, 1997, and 1998 (in thousands):
 
<TABLE>
<CAPTION>
                                                         1996    1997    1998
                                                        ------  ------  ------
      <S>                                               <C>     <C>     <C>
      Net loss applicable to common stock:
       As reported..................................... $4,800  $5,305  $5,135
       Pro forma.......................................  4,800   5,773   5,380
      Net loss per common share, basic and diluted:
       As reported..................................... $(1.96) $(2.13) $(2.04)
       Pro forma.......................................  (1.96)  (2.32)  (2.14)
</TABLE>
 
The fair value of each option grant for the pro forma disclosure required by
SFAS No. 123 is estimated on the grant date using the Black-Scholes option-
pricing model with the following assumptions and the results for the grants:
 
<TABLE>
<CAPTION>
                                                   1996      1997       1998
                                                  -------  ---------  ---------
      <S>                                         <C>      <C>        <C>
      Dividend yield.............................    None       None       None
      Expected volatility........................    None       None       None
      Expected life of option.................... 7 years    7 years    7 years
      Risk-free interest rate....................    6.38% 5.76-6.70% 4.63-5.68%
</TABLE>
 
Paisano Partnership Program--On January 1, 1997, the Company implemented the
Paisano Partnership Program for certain restaurant employees. This program
requires restaurant general managers known as Paisano Partners to purchase
approximately $20,000 of the Company's common stock and they also receive stock
options. In addition, kitchen managers also receive stock options. The Company
allows the Paisano Partners the option to finance the
 
                                      F-17
<PAGE>
 
                          BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)
 
initial stock purchase over five years at an interest rate of 8%. At December
28, 1997 and December 27, 1998 the notes receivable balances related to this
financing were $271,000 and $293,000, respectively, were included as contra-
equity. At December 28, 1997 and December 27, 1998, 31,998 and 81,396 shares of
common stock was issued under this program.
 
11. SUPPLEMENTAL CASH FLOW INFORMATION:
 
The following is supplemental cash flow information for the years ended:
 
<TABLE>
<CAPTION>
                                                               1996  1997 1998
                                                               ----- ---- -----
      <S>                                                      <C>   <C>  <C>
      Cash paid during year for:
       Interest..............................................  $ 359 $527 $ 714
       Income taxes..........................................           9    17
      Noncash investing and financing activities:
       Property and equipment additions financed through
        capital lease obligation.............................     18  401
       Shareholder receivable from issuance of common stock..         275   160
       Shareholder receivable reduction due to retirement of
        stock................................................                58
       Escrow deposit transferred to property and equipment..         551
       Accretion of redeemable preferred stock to redemption
        value................................................    190  524   247
       Dividends accrued on redeemable preferred stock.......    111  785 1,292
       Change in value of redeemable common stock............  3,386  677   650
</TABLE>
 
                                      F-18
<PAGE>
 
 
                                2,650,000 Shares
 
                                   BUCA, INC.
 
                                  Common Stock
 
                                     [LOGO]
 
                               ----------------
                                   PROSPECTUS
                               ----------------
 
Until            , all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
Prospectus. This is in addition to the dealers' obligation to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
 
                               Piper Jaffray Inc.
 
                     NationsBanc Montgomery Securities LLC
 
                                         , 1999
<PAGE>
 
                                    PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 13. Other Expenses of Issuance and Distribution
 
Expenses in connection with the issuance and distribution of the shares of
Common Stock being registered hereunder, other than underwriting commissions
and expenses, are estimated below.
 
<TABLE>
     <S>                                                               <C>
     SEC registration fee............................................. $ 10,591
     NASD filing fee..................................................    4,333
     Nasdaq listing fee...............................................   53,700
     Legal fees and expenses..........................................  225,000
     Accounting fees and expenses.....................................  225,000
     Blue Sky fees and expenses.......................................    5,000
     Printing expenses................................................  210,000
     Transfer agent fees and expenses.................................   15,000
     Miscellaneous expenses...........................................  113,876
                                                                       --------
         Total........................................................ $862,500
</TABLE>
 
Item 14. Indemnification of Directors and Officers
 
Section 302A.521 of the Minnesota Statutes requires the Company to indemnify a
person made or threatened to be made a party to a proceeding, by a reason of
the former or present official capacity of the person with respect to the
Company, against judgments, penalties, fines, including without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorneys' fees and
disbursements, if, with respect to the acts or omissions of the person
complained of in the proceeding, such person (1) has not been indemnified by
another organization or employee benefit plan for the same judgments,
penalties, fines, including without limitation, excise taxes assessed against
the person with respect to an employee benefit plan, settlements, and
reasonable expenses, including attorneys' fees and disbursements, incurred by
the person in connection with the proceeding with respect to the same acts or
omissions; (2) acted in good faith; (3) received no improper personal benefit,
and statutory procedure has been followed in the case of any conflict of
interest by a director; (4) in the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and (5) in the case of
acts or omissions occurring in the person's performance in the official
capacity of director or, for a person not a director, in the official capacity
of officer, committee member, employee or agent, reasonably believed that the
conduct was in the best interests of the Company, or in the case of performance
by a director, officer, employee or agent of the Company as a director,
officer, partner, trustee, employee or agent of another organization or
employee benefit plan, reasonably believed that the conduct was not opposed to
the best interests of the Company. In addition, Section 302A.521, subd. 3
requires payment by the Company, upon written request, of reasonable expenses
in advance of final disposition in certain instances. A decision as to required
indemnification is made by a majority of the disinterested Board of Directors
present at a meting at which a disinterested quorum is present, or by a
designated committee of disinterested directors, by special legal counsel, by
the disinterested shareholders, or by a court.
 
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Act, and is therefore unenforceable.
 
Under the terms of the form of Purchase Agreement filed as Exhibit 1.1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain of its officers and persons who control the
Company within the meaning of the Act, against certain liabilities.
 
                                      II-1
<PAGE>
 
Item 15. Recent Sales of Unregistered Securities
 
During the past three years, the Company has sold the following securities
pursuant to exemptions from registration under the Act. The sales referred to
in numbers 1, 2, 3, 4, 6, 7, 12, 14, 15, 16, 17, 20, 21, 28, 30, 33, 34, 37,
39, 40 and 41 were made in reliance upon the exemptions from registration
provided under Section 4(2) of the Act for transactions not involving a public
offering and the sales referred to in numbers 5, 8, 9, 10, 11, 13, 18, 19, 22,
23, 24, 25, 26, 27, 29, 31, 32, 35, 36 and 38 were made in reliance upon the
exemptions from registration provided pursuant to Rule 701 under the Act for
securities sold pursuant to certain compensatory benefit plans and contracts
relating to compensation, and related state securities laws. Unless otherwise
stated, all shares were issued directly by the Company, no underwriters were
involved and, except as otherwise noted below, no discount, commission or other
transaction-related remuneration was paid. Share figures have been adjusted for
the 2-for-3 reverse stock split that was effective on February 17, 1999.
 
    1. On August 27, 1996, the Company granted options to purchase an
       aggregate of 9,332 shares of the Company's common stock at $4.50 per
       share to two of the Company's directors.
 
    2. On October 23, 1996, the Company issued warrants to purchase an
       aggregate of 156,800 shares of its Series A Convertible Preferred
       Stock convertible into 104,532 shares of common stock at $5.625 per
       common share to Piper Jaffray Inc. and Michael Bochert.
 
    3. On October 23, 1996, the Company issued 2,240,000 shares of its Class
       A Convertible Preferred Stock convertible into 1,493,331 shares of
       common stock to outside investors for $8,400,000 or $5.625 per common
       share.
 
    4. On October 24, 1996, the Company granted options to purchase an
       aggregate of 3,999 shares of the Company's common stock at $5.625 per
       share to the Company's directors.
 
    5. On February 1, 1997, the Company granted options to purchase an
       aggregate of 78,331 shares of the Company's common stock at $5.625
       per share to employees of the Company.
 
    6. On February 1, 1997, the Company granted options to purchase 122,854
       shares of the Company's common stock at $1.125 per share to Joseph P.
       Micatrotto under the terms of his employment agreement with the
       Company.
 
    7. On February 1, 1997, the Company sold 16,000 shares of common stock
       to Joseph P. Micatrotto under the terms of his employment agreement
       with the Company for $90,000 or $5.625 per share.
 
    8. On February 6, 1997, the Company granted options to purchase 33,333
       shares of the Company's common stock at $5.625 per share to an
       employee of the Company.
 
    9. On March 1, 1997, the Company granted options to purchase 13,333
       shares of the Company's common stock at $5.625 per share to an
       employee of the Company.
 
    10. On April 21, 1997, the Company sold an aggregate of 31,995 shares of
        common stock to employees of the Company for $179,998.75 or $5.625
        per share.
 
    11. On June 1, 1997, the Company granted options to purchase an
        aggregate of 4,000 shares of the Company's common stock at $5.625
        per share to two of the Company's employees.
 
    12. On July 8, 1997, the Company granted options to purchase 1,333
        shares of the Company's common stock at $5.625 per share to a
        director of the Company.
 
    13. On August 1, 1997, the Company granted options to purchase 13,333
        shares of the Company's common stock at $5.625 per share to an
        employee of the Company.
 
    14. On September 3, 1997, the Company issued warrants to purchase 50,000
        shares of the Company's Class B Convertible Preferred Stock
        convertible into 33,333 shares of common stock at $6.75 per common
        share to Piper Jaffray Inc.
 
 
                                      II-2
<PAGE>
 
    15. On September 3, 1997, the Company sold an aggregate of 961,000
        shares of its Class B Convertible Stock convertible into 640,739
        shares of common stock to outside investors for $4,324.999.50 or
        $6.75 per common share.
 
    16. On October 24, 1997, the Company granted options to purchase an
        aggregate of 1,332 shares of common stock at $6.75 per share to
        directors of the Company.
 
    17. On October 31, 1997, the Company issued warrants to purchase an
        aggregate of 147,218 shares of the Company's common stock at $0.01
        per share to its investors and lenders in connection with the
        Company's subordinated debt transaction.
 
    18. On November 4, 1997, the Company granted options to purchase an
        aggregate of 214,327 shares of the Company's common stock at $6.75
        per share to employees of the Company.
 
    19. On December 18, 1997, the Company sold an aggregate of 11,848 shares
        of common stock to employees of the Company for $79,992, or $6.75
        per share.
 
    20. On December 18, 1997, the Company granted options to purchase 51,511
        shares of the Company's common stock at $1.125 per share and options
        to purchase 186,666 shares of the Company's common stock at $5.675
        per share to Joseph P. Micatrotto under the terms of his employment
        agreement with the Company.
 
    21. On December 19, 1997, the Company sold an aggregate of 961,000
        shares of Series B Convertible Preferred Stock convertible into
        640,739 shares of common stock to outside investors for
        $4,324,999.50 or $6.75 per common share.
 
    22. On January 1, 1998, the Company sold 2,962 shares of common stock to
        an employee of the Company for $20,000, or $6.75 per share.
 
    23. On February 1, 1998, the Company sold 5,924 shares of common stock
        to an employee of the Company for $40,000, or $6.75 per share.
 
    24. On February 1, 1998, the Company granted options to purchase 2,000
        shares of the Company's common stock at $6.75 per share to an
        employee of the Company.
 
    25. On March 1, 1998, the Company sold 2,962 shares of common stock to
        an employee of the Company for $20,000, or $6.75 per share.
 
    26. On April 28, 1998, the Company granted options to purchase 13,333
        shares of the Company's common stock at $6.75 per share to an
        employee of the Company.
 
    27. On May 1, 1998, the Company granted options to purchase 2,000 shares
        of the Company's common stock at $6.75 per share to an employee of
        the Company.
 
    28. On May 18, 1998, the Company issued warrants to purchase an
        aggregate of 112,776 shares of the Company's common stock at $0.01
        per share to its lenders in connection with the Company's
        subordinated debt transaction.
 
    29. On June 1, 1998, the Company granted options to purchase an
        aggregate of 10,000 shares of the Company's common stock at $6.75
        per share and sold 8,886 shares of the Company's common stock for
        $60,000, or $6.75 per share, to employees of the Company.
 
    30. On July 1, 1998, the Company granted options to purchase 666 shares
        of the Company's common stock at $6.75 per share to a director of
        the Company.
 
                                      II-3
<PAGE>
 
    31. On September 1, 1998, the Company granted options to purchase an
        aggregate of 8,000 shares of the Company's common stock at $6.75 per
        share to employees of the Company.
 
    32. On September 1, 1998, the Company sold an aggregate of 10,404 shares
        of common stock to employees of the Company for $80,000, or $6.75
        per share.
 
    33. On October 13, 1998, the Company sold an aggregate of 1,639,025
        shares of its Class C Convertible Preferred Stock convertible into
        1,092,679 shares of common stock to outside investors for
        $9,400,007.02 or $7.6875 per common share.
 
    34. On October 24, 1998, the Company granted options to purchase 1,332
        shares of the Company's common stock at $7.6875 per share to
        directors of the Company.
 
    35. On October 27, 1998, the Company sold 2,601 shares of common stock
        to an employee of the Company for $20,000 or $7.6875 per share.
 
    36. On October 27, 1998, the Company granted options to purchase an
        aggregate of 235,983 shares of the Company's common stock at $7.6875
        per share to employees of the Company.
 
    37. On December 23, 1998, the Company issued 975,609 shares of its
        Series C Convertible Preferred Stock convertible into 637,752 shares
        of common stock to outside investors, for $5,000,000 or $7.84 per
        common share.
 
    38. On January 26, 1999, the Company granted options to purchase 3,333
        shares of the Company's common stock at $7.6875 per share to an
        employee at the Company.
 
    39. On February 15, 1999, the Company granted options to purchase 48,000
        shares of the Company's common stock at $11.25 per share to
        directors of the Company.
 
    40. On February 15, 1999, the Company granted options to purchase
        126,666 shares of the Company's common stock at $11.25 per share to
        Joseph P. Micatrotto.
 
    41. On February 15, 1999, the Company agreed to issue 40,195 shares of
        the Company's common stock to holders of the Series C Preferred
        Stock in connection with the conversion of the Series C Preferred
        Stock.
 
 
                                      II-4
<PAGE>
 
Item 16. Exhibits and Financial Statement Schedules
 
(a) Exhibits
 
<TABLE>
<CAPTION>
 Exhibit No.                             Description
 -----------                             -----------
 <C>         <S>
    *1.1     Form of Underwriting Agreement.
     3.1     Amended and Restated Articles of Incorporation of the Registrant.
     3.2     Amendment to Amended and Restated Articles of Incorporation of the
             Registrant.
     3.3     By-Laws of the Registrant.
    *4.1     Specimen of Common Stock certificate.
    *5.1     Opinion of Faegre & Benson LLP.
    10.1     1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies.
    10.2     Stock Option Plan for Non-Employee Directors
    10.3     BUCA, Inc. Employee Stock Ownership Plan.
   *10.4     BUCA, Inc. 401(k) Plan.
    10.5     Employment Agreement dated as of July 22, 1996, between the
             Registrant and Joseph P. Micatrotto, including amendments and
             option agreements related thereto.
    10.6     Letter Agreement dated April 1, 1997 between the Registrant and
             Greg A. Gadel.
    10.7     Credit Agreement dated as of February 5, 1999 between the
             Registrant, as Borrower, and U.S. Bank National Association, as
             Lender.
    10.8     Security Agreement dated as of February 5, 1999 by the Registrant,
             in favor of U.S. Bank National Association.
    10.9     Form of Series A Convertible Subordinated Debenture due July 30,
             2001 of the Registrant.
    10.10    Form of Stock Purchase Warrant for the purchase of Series A
             Convertible Preferred Stock of the Registrant.
    10.11    Form of Stock Purchase Warrant for the purchase of Series B
             Convertible Preferred Stock of the Registrant.
    10.12    Form of Stock Purchase Warrant dated as of October 31, 1997.
    10.13    Form of Stock Purchase Warrant for the purchase of common stock of
             the Registrant, dated October 31, 1997.
    10.14    Form of Stock Purchase Warrant for the purchase of common stock of
             the Registrant, dated May 19, 1998.
    10.15    Non-Statutory Stock Option Agreement between the Registrant and
             1204 Harmon Partnership for the purchase of 24,000 shares of
             common stock of the Registrant, dated as of June 1, 1998.
    10.16    Stock Purchase Agreement dated as of September 2, 1997 between the
             Registrant and the Purchasers.
    10.17    Securities Purchase Agreement dated as of October 13, 1998 between
             the Registrant and the Purchasers.
    10.18    Redemption Agreement between BUCA, Inc. and Parasole Restaurant
             Holdings, Inc. regarding the Parasole Employee Stock Ownership
             Plan.
    10.19    Form of BUCA, Inc. Contingent Value Rights to Receive Shares of
             Capital Stock.
    21.1     Subsidiaries of the Registrant.
    23.1     Consent of Arthur Andersen LLP.
    23.2     Consent of Deloitte & Touche LLP.
    23.3     Consent of Faegre & Benson LLP (to be included in Exhibit No. 5.1
             to the Registration Statement).
    24.1     Powers of Attorney.
    27.1     Financial Data Schedule.
</TABLE>
 
* To be filed by amendment.
(b) Financial Statement Schedules
 
  None required.
 
 
                                      II-5
<PAGE>
 
Item 17. Undertakings.
 
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Company
pursuant to the provisions summarized in Item 14 above, or otherwise, the
Company has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification is
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act, and will be governed by
the final adjudication of such issue.
 
The undersigned Company hereby undertakes to provide to the Underwriters, at
the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
The undersigned Company hereby undertakes that:
 
   (1) For purposes of determining any liability under the Act, the
   information omitted from the form of prospectus filed as part of this
   registration statement in reliance upon Rule 430A and contained in a form
   of prospectus filed by the Company under Rule 424(b)(1) or (4) or 497(h)
   under the Act shall be deemed to be part of this registration statement as
   of the time it was declared effective.
 
   (2) For the purpose of determining any liability under the Act, each post-
   effective amendment that contains a form of prospectus shall be deemed to
   be a new registration statement relating to the securities offered therein,
   and the offering of such securities at that time shall be deemed to be the
   initial bona fide offering thereof.
 
                                     II-6
<PAGE>
 
                                   SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on February 18, 1999.
 
                                          BUCA, INC.
 
                                                 /s/ Joseph P. Micatrotto
                                          By___________________________________
                                                 Joseph P. Micatrotto
                                                 President and Chief Executive
                                                 Officer
 
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on February 18, 1999.
 
              Signature                                   Title
 
 
      /s/ Joseph P. Micatrotto            President and Chief Executive
_____________________________________     Officer
        Joseph P. Micatrotto              (Principal Executive Officer) and
                                          Director
 
 
          /s/ Greg A. Gadel
_____________________________________     Chief Financial Officer
            Greg A. Gadel                 (Principal Financing and Accounting
                                          Officer)
 
 
            Don W. Hays                   Board of Directors
            Peter J. Mihajlov
            Philip A. Roberts
            John P. Whaley
            David Yarnell
            Paul Zepf
 
--------
*  Joseph P. Micatrotto, by signing his name hereto, does hereby sign this
   document on behalf of each of the above-named officers and/or directors of
   the Company pursuant to powers of attorney duly executed by such persons.
 
 
                                                 /s/ Joseph P. Micatrotto
                                          By___________________________________
                                            Joseph P. Micatrotto, Attorney-in-
                                                           Fact
 
                                      II-7
[{"type": "S-1", "sequence": "1", "description": "FORM S-1", "secsgml_size_bytes": 312298}]
{"company-data": {"conformed-name": "BUCA INC /MN", "cik": "0001046501", "assigned-sic": "", "irs-number": "411802364", "state-of-incorporation": "MN", "fiscal-year-end": "1227"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-72593", "film-number": "99545479"}, "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"}}
As filed with the Securities and Exchange Commission on February 18, 1999
                                                    Registration No. 333-
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                               ----------------
                                   FORM S-1
                            REGISTRATION STATEMENT
                                     Under
                          The Securities Act of 1933
                               ----------------
                                  BUCA, INC.
            (Exact name of Registrant as specified in its charter)
                               ----------------
 
        Minnesota                      5812                  41-1802364
     (State or other             (Primary Standard        (I.R.S. Employer
     jurisdiction of                Industrial           Identification No.)
    incorporation or            Classification Code
      organization)                   Number)
 
                        1300 Nicollet Mall, Suite 3043
                         Minneapolis, Minnesota 55403
  (Address, including zip code, and telephone number, including area code, of
                   Registrant's principal executive offices)
                                ---------------
                             Joseph P. Micatrotto
                     President and Chief Executive Officer
                                  BUCA, Inc.
                        1300 Nicollet Mall, Suite 3043
                         Minneapolis, Minnesota 55403
                                (612) 288-2382
(Name, address, including zip code, and telephone number, including area code,
                             of agent for service)
 
                                  Copies to:
        Douglas P. Long, Esq.                    Jonathan B. Abram, Esq.
         Faegre & Benson LLP                      Dorsey & Whitney LLP
         2200 Norwest Center               Pillsbury Center South, 20th Floor
       90 South Seventh Street                   220 South Sixth Street
    Minneapolis, Minnesota 55402              Minneapolis, Minnesota 55402
                                ---------------
  Approximate date of commencement of proposed sale to public: As soon as
practicable after this Registration Statement becomes effective.
  If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box:  [_]
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering:  [_]
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering:  [_]
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box:  [_]
 
                        CALCULATION OF REGISTRATION FEE
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Proposed
                                             Proposed      Maximum
 Title of Each Class of                      Maximum      Aggregate   Amount of
    Securities to be       Amount to be   Offering Price  Offering   Registration
       Registered         Registered(1)    Per Share(2)   Price(2)       Fee
---------------------------------------------------------------------------------
Common Stock, $.01 par
value................... 3,047,500 Shares     $12.50     $38,093,750   $10,591
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
(1) Includes 397,500 shares of common stock which may be purchased by the
    underwriters to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(a) of the Securities Act of 1933, as amended.
 
  The Registrant hereby amends this Registration Agreement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this Prospectus is not complete and may be changed. We may +
+not sell these securities until the Securities and Exchange Commission        +
+declares our registration statement effective. This Prospectus is not an      +
+offer to sell these securities and is not soliciting an offer to buy these    +
+securities in any state where the offer or sale is not permitted.             +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
                 Subject to completion, dated February 18, 1999
 
2,650,000 Shares
 
BUCA, INC.
 
Common Stock           [LOGO]
 
$   per share
 
            ------------------------------------------------------
 
 . BUCA, Inc. is offering    . This is our initial public offering and no
  2,500,000 shares and        public market currently exists for our shares.
  selling shareholders
  are offering
  150,000 shares.
 
 . We anticipate that the    . Proposed trading symbol: Nasdaq National
  initial public              Market--BUCA.
  offering price will be
  between $10.50 and
  $12.50 per share.
 
                                  ----------
 
This investment involves risk. You should carefully consider the "Risk Factors"
beginning on page 7.
 
            ------------------------------------------------------
            ------------------------------------------------------
Per
                                                            Share     Total
                                                           ------- ------------
Public Offering Price..................................... $       $
Underwriting Discount.....................................
Proceeds to BUCA, Inc. ...................................
Proceeds to Selling Shareholders..........................
------------------------------------------------------
            ------------------------------------------------------
 
The underwriters have a 30-day option to purchase up to 397,500 additional
shares of common stock from us and a selling shareholder to cover over-
allotments, if any.
 
Neither the Securities and Exchange Commission nor any state securities
commission has approved of anyone's investment in these securities or
determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
 
Piper Jaffray Inc.                                        NationsBanc Montgomery
                                                              Securities LLC
 
                The date of this Prospectus is          , 1999.
BUCA (R) and BUCA di BEPPO(R), as well as certain additional names and logos
appearing in this Prospectus, are registered trademarks of BUCA, Inc. This
Prospectus also includes names and trademarks of other companies.
 
 
                                       2
TABLE OF CONTENTS
Page
                                                                          ----
Summary.............................................................   4
     Risk Factors........................................................   7
     Use of Proceeds.....................................................  13
     Dividend Policy.....................................................  13
     Capitalization......................................................  14
     Dilution............................................................  15
     Selected Consolidated Financial Data................................  16
     Management's Discussion and Analysis of Financial Condition and
      Results of Operations..............................................  18
     Business............................................................  25
     Management..........................................................  34
     Certain Relationships and Related Transactions......................  40
     Principal and Selling Shareholders..................................  42
     Shares Eligible for Future Sale.....................................  43
     Description of Capital Stock........................................  44
     Underwriting........................................................  48
     Legal Matters.......................................................  50
     Experts.............................................................  50
     Where You Can Find More Information.................................  50
     Index to Consolidated Financial Statements.......................... F-1
---------------
 
You should rely only on the information contained in this Prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. This Prospectus is not an offer to sell, nor is it
seeking an offer to buy, these securities in any state where the offer or sale
is not permitted. The information in this Prospectus is complete and accurate
as of the date on the front cover, but the information may have changed since
that date.
 
                                       3
SUMMARY
 
The items in the following summary are described in more detail later in this
Prospectus. This summary provides an overview of selected information and does
not contain all the information you should consider. Therefore, you should also
read the more detailed information set out in this Prospectus, including the
financial statements.
 
                                Business of BUCA
 
BUCA, Inc. owns and operates 20 full service, dinner-only restaurants under the
name BUCA di BEPPO. Our restaurants 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. Our food is based on authentic family recipes enjoyed for
generations in the villages of Southern Italy and then adapted to American
ingredients. Our menu features dishes such as the BUCA di BEPPO 1893 salad,
chicken cacciatore, spaghetti with half-pound meat balls, eggplant parmigiana,
ravioli al pomodoro, veal marsala, garlic mashed potatoes, pizza arrabiatta and
tiramisu. These dishes, often seasoned with garlic and served with vine-ripened
tomatoes, communicate the pure, powerful flavors of the immigrant Southern
Italian kitchen. Our oversized portions, served family-style on large platters,
are designed to overwhelm guests with an abundance of high quality food. In
family-style serving, each item is shared by the entire table, which encourages
guests to interact and enjoy the meal together. A full service bar featuring
affordable, quality Italian table wines complements our menu. We believe that
the generous portions, combined with an average check per guest of
approximately $20.00, including beverages, offer our guests exceptional value.
We reinforce this value by encouraging guests to take home their extra food in
our logo-bearing BUCA bags, allowing guests to enjoy an additional BUCA meal at
home.
 
Our BUCA di BEPPO restaurants irreverently exaggerate the cliches of post-War
Italian/American restaurants found in Little Italy in New York City, the North
End of Boston and other Italian neighborhoods of large U.S. cities. We design
our restaurants to be a fun, high-energy destination. The layout of each BUCA
di BEPPO restaurant in a market is unique, which reinforces our image as a
collection of neighborhood restaurants. Restaurant interiors are divided into a
number of distinct rooms with walls covered by hundreds of vintage photos of
Italian families and celebrities, Christmas lights displayed year-round and
other icons of Italian heritage. Boxes of pasta, cans of roasted peppers and
jugs of wine fill window sills and shelves throughout our restaurants. Lively
music from classic artists such as Frank Sinatra and Dean Martin adds to the
fun and energetic atmosphere. Restaurant exteriors feature flashing bare bulb
signage, statuary and humorous neon signs promising "elegant dining" and "air
conditioning." Our food, decor and family-style servings all promote a fun,
celebratory and socially interactive dining experience that emulates a
traditional Italian/American evening meal.
 
From the moment a guest walks in the front door, the BUCA experience is
enhanced by a high level of customer service provided by our knowledgeable,
energetic staff. Servers are trained to introduce guests to the BUCA di BEPPO
concept, explain the menu and encourage guest interaction. The restaurant's
general manager, known as the Paisano Partner, also interacts with guests to
make them feel welcome and is responsible for ensuring their satisfaction with
the dining experience.
 
We believe that our restaurants provide superior unit level economics. In
fiscal 1998, our mature restaurants (those with at least two full years of
operating history) generated average restaurant sales of approximately $3.0
million and average cash flow of approximately $693,000, or 23.5% of restaurant
sales. We believe that our Paisano Partners Program, in which Paisanos purchase
stock and receive a significant portion of their annual cash compensation based
on restaurant cash flow, motivates Paisanos to achieve significantly greater
operating efficiencies and contributes to our superior unit level economics. In
fiscal 1998, our total cash investment per restaurant averaged $1.4 million,
excluding average preopening costs per restaurant of approximately $195,000.
Our current restaurants range in size from approximately 4,500 to 10,000 square
feet, and have approximately 170 to 375 seats. We anticipate that future
restaurants will typically range in size from 7,000 to 9,000 square feet and
have from 250 to 350 seats.
 
We are pursuing a rapid but disciplined expansion strategy. Our objective is to
become the dominant family-style, immigrant Southern Italian restaurant in each
of our markets. We focus primarily on metropolitan markets
 
                                       4
with a population of at least 800,000 that can support multiple BUCA di BEPPO
restaurants. This focus allows us to build brand awareness and realize
operating and management efficiencies within each market. We intend to continue
our expansion throughout the United States with 13 openings planned in fiscal
1999, of which one has already opened, seven are under construction and the
remaining five have signed leases. By the end of fiscal 1999, we plan to have
32 restaurants open in at least 17 markets.
 
The BUCA di BEPPO concept was created by Philip A. Roberts, who opened the
first BUCA di BEPPO restaurant in July 1993. Joseph P. Micatrotto, a second
generation Italian immigrant, joined BUCA as President and Chief Executive
Officer in 1996 to lead our national expansion. Since Mr. Roberts opened the
first BUCA di BEPPO restaurant, the innovation of this concept has attracted
national attention as evidenced by national awards, including a 1998 "Hot
Concepts!" award from Nation's Restaurant News, and awards in all of our local
markets.
 
                                Office Location
 
We were incorporated on December 2, 1994 as a Minnesota corporation. Our
principal executive offices are located at 1300 Nicollet Mall, Minneapolis,
Minnesota 55403 and our telephone number is (612) 288-2382.
 
                                  Risk Factors
 
You should carefully consider the "Risk Factors" described immediately
following this summary.
 
                                  The Offering
 
Common stock offered:
By BUCA, Inc...................... 2,500,000 shares
        By selling shareholders...........   150,000 shares
            Total......................... 2,650,000 shares
Common stock outstanding after the offer-
 ing...................................... 9,559,557 shares(/1/)
Offering price............................ $      per share
Use of proceeds........................... To fund restaurant
                                           development, repay bank debt
                                           and for general corporate purposes.
Proposed Nasdaq National Market symbol.... BUCA
---------------
(/1/) Based on the number of shares outstanding as of January 31, 1999.
 Includes the issuance of 4,545,434 shares of common stock in connection with
 the conversion of all outstanding shares of preferred stock upon the closing
 of this offering. Excludes (i) 1,050,154 shares of common stock issuable upon
 exercise of options outstanding as of the date of this Prospectus (at a
 weighted average exercise price of $6.96 per share); (ii) 397,859 shares of
 common stock issuable upon exercise of warrants outstanding as of the date of
 this Prospectus (at a weighted average exercise price of $2.05 per share); and
 (iii) 257,971 shares of common stock issuable (from and after the completion
 of this offering) upon conversion of subordinated debt outstanding as of the
 date of this Prospectus, assuming a public offering price of $11.50 per share.
 
 
                                       5
SUMMARY CONSOLIDATED FINANCIAL DATA
              (IN THOUSANDS, EXCEPT PER SHARE AND OPERATING DATA)
FISCAL YEAR ENDED(/1/)
                                -----------------------------------------------
                                DECEMBER 31, DECEMBER 28,
                                    1996         1997       DECEMBER 27, 1998
                                ------------ ------------ ---------------------
CONSOLIDATED STATEMENTS OF OP-
 ERATIONS DATA:
Restaurant sales..............    $11,316      $19,030           $38,483
Income from restaurant
 operations...................      1,499        2,501             5,581
Operating loss................       (919)      (2,399)           (1,893)
Net loss......................     (1,113)      (3,319)           (2,946)
Net loss applicable to common
 stock........................     (4,800)      (5,305)           (5,135)
Net loss per common share--
 basic and diluted............    $ (1.96)     $ (2.13)          $ (2.04)
Common shares assumed
 outstanding--basic and
 diluted......................      2,445        2,490             2,512
Pro forma net loss per common
 share--basic and
 diluted(/2/).................                                   $  (.42)
Common shares assumed
 outstanding pro forma--basic
 and diluted(/2/).............                                     7,060
OPERATING DATA:
Comparable restaurant sales
 increase(/3/)................        0.2%         9.4%             13.5%
Average weekly restaurant
 sales........................    $47,343      $48,307           $52,971
Restaurants open at end of
 period.......................          6           11                19
DECEMBER 27, 1998
                                -----------------------------------------------
                                                 PRO            PRO FORMA
                                   ACTUAL     FORMA(/2/)  AS ADJUSTED(/2/)(/4/)
                                ------------ ------------ ---------------------
CONSOLIDATED BALANCE SHEET
 DATA:
Cash and cash equivalents.....    $ 6,576      $ 6,576           $25,451
Total assets..................     37,560       37,560            63,135
Total debt, including current
 portion......................      7,866        9,266               466
Redeemable stock(/5/).........     36,973          --                --
Common shareholders'
 (deficit)/equity.............    (13,540)      22,033            49,408
---------------
 
(/1/)We changed our fiscal year-end from December 31 to the last Sunday in
     December, beginning with the fiscal year ended December 28, 1997.
(/2/)Pro forma information gives effect, as of and for the period ending
     December 27, 1998, to (i) the issuance of shares of common stock in
     connection with the conversion of all outstanding shares of preferred
     stock upon the closing of this offering; (ii) the termination of our
     obligation to redeem shares of common stock held in the Parasole Employee
     Stock Ownership Trust and the BUCA Employee Stock Ownership Plan (the
     "Redeemable Common Stock") upon the closing of this offering; and (iii)
     the repayment of outstanding subordinated and bank debt in the amount of
     $6,600,000 with borrowings of $7,000,000 under our credit facility with
     U.S. Bank.
(/3/)The calculation of comparable restaurant sales increase includes
     restaurants open for 12 full calendar months, as adjusted to provide
     comparable 52-week fiscal years.
(/4/)As adjusted to give effect as of December 27, 1998 to (i) our receipt of
     the estimated net proceeds of $25,875,000 from the sale of 2,500,000
     shares of common stock offered by us at an assumed initial public offering
     price of $11.50 per share; (ii) application of a portion of the net
     proceeds of this offering to repay amounts outstanding under our credit
     facility with U.S. Bank and the resulting write-off of deferred financing
     costs; and (iii) the special non-cash charge of approximately $1,300,000
     related to the discount applicable to the right of holders of $1,780,000
     of outstanding subordinated debt of BUCA to convert such debt into common
     stock after the closing of this offering.
(/5/)Includes Series A, Series B and Series C preferred stock and the
     Redeemable Common Stock.
 
 
                                ---------------
Except as otherwise noted, all information in this Prospectus assumes (i) no
exercise of the underwriters' over-allotment option, (ii) no exercise of
options or warrants to purchase shares of common stock or the conversion of
outstanding convertible subordinated debt into shares of common stock and (iii)
the issuance of shares of common stock in connection with the conversion of all
outstanding shares of preferred stock upon the closing of this offering.
Information in this Prospectus also gives effect to a two-for-three reverse
split of the common stock effected on February 17, 1999.
 
                                       6
RISK FACTORS
 
You should carefully consider the following risk factors before you decide to
buy our common stock. You should also consider the other information in this
Prospectus. If any of the following risks actually occur, our business,
financial condition, operating results or cash flows, could be materially
adversely affected. This could cause the trading price of our common stock to
decline, and you may lose part or all of your investment.
 
This Prospectus also contains certain forward-looking statements that involve
risks and uncertainties. These statements relate to our future plans,
objectives, expectations and intentions. These statements may be identified by
the use of words such as "expects," "anticipates," "intends," "plans" and
similar expressions. Our actual results could differ materially from those
discussed in these statements. Factors that could contribute to these
differences include those discussed below and elsewhere in this Prospectus.
 
We May Continue to Incur Net Losses
 
Since we were formed, we have incurred net losses of approximately $7.6 million
through the end of fiscal 1998, primarily due to restaurant development and the
costs of hiring senior management to develop and implement our expansion
strategy. We intend to continue to expend significant financial and management
resources on the development of additional restaurants. We cannot predict
whether we will be able to achieve or sustain revenue growth, profitability or
positive cash flow in the future. See "Selected Consolidated Financial Data"
and "Management's Discussion and Analysis of Financial Conditions and Results
of Operations."
 
We Face Uncertainties as We Expand Operations
 
To continue to grow, we must open new BUCA di BEPPO restaurants on a timely and
profitable basis. We expanded from 11 restaurants at the end of fiscal 1997 to
19 restaurants at the end of fiscal 1998. We expect to open an additional 13
restaurants during fiscal 1999, one of which is already open. Our ability to
expand successfully will depend on a number of factors, some of which are
beyond our control, including the:
 
    .identification and availability of suitable restaurant sites;
 
    .competition for restaurant sites;
 
    .negotiation of favorable leases;
 
    .timely development in certain cases of commercial, residential, street
          or highway construction near our restaurants;
 
    .management of construction and development costs of new restaurants;
 
    .securing required governmental approvals and permits;
 
    .recruitment of qualified operating personnel (particularly Paisano
          Partners and kitchen managers);
 
    .competition in new markets; and
 
    .general economic conditions.
 
We have experienced delays in restaurant openings from time to time and may
experience delays in the future. Delays or failures in opening new restaurants
could materially adversely affect our business, financial condition, operating
results or cash flows.
 
In addition, we contemplate entering new markets in which we have no operating
experience. These new markets may have different demographic characteristics,
competitive conditions, consumer tastes and discretionary spending
 
                                       7
patterns than our existing markets, which may cause our new restaurants to be
less successful in these new markets than in our existing markets.
 
We May Not Be Able to Achieve and Manage Planned Expansion
 
We face many business risks associated with rapidly growing companies,
including the risk that our existing management, information systems and
financial controls will be inadequate to support our planned expansion. We
cannot predict whether we will be able to respond on a timely basis to all of
the changing demands that our planned expansion will impose on management and
these systems and controls. If we fail to continue to improve management,
information systems and financial controls or encounter unexpected difficulties
during expansion, our business, financial condition, operating results or cash
flows could be materially adversely affected.
 
Furthermore, we may from time to time seek to acquire the operations of other
restaurants to expand the BUCA di BEPPO concept. To do so successfully, we
would need to identify suitable acquisition candidates, obtain financing on
acceptable terms, and negotiate acceptable acquisition terms. Even if we are
successful in making acquisitions, they may have a material adverse effect on
our operating results, particularly in the fiscal quarters immediately
following the completion of an acquisition, while the acquisition is being
integrated into our operations. We do not currently have any definitive
agreements, arrangements or understandings regarding any particular
acquisition.
 
We Will Experience Fluctuations in Operating Results
 
Our operating results will fluctuate significantly because of several factors,
including the timing of new restaurant openings and related expenses,
profitability of new restaurants, increases or decreases in comparable
restaurant sales, general economic conditions, consumer confidence in the
economy, changes in consumer preferences, competitive factors and weather
conditions. In the past, our preopening costs have varied significantly from
quarter to quarter primarily due to the timing of restaurant openings. We
typically incur most preopening costs for a new restaurant within the two
months immediately preceding, and the month of, its opening. In addition, our
labor and operating costs for a newly opened restaurant during the first three
to six months of operation are materially greater than what can be expected
after that time, both in aggregate dollars and as a percentage of restaurant
sales. Accordingly, the volume and timing of new restaurant openings in any
quarter has had and is expected to continue to have a significant impact on
quarterly preopening costs and labor and direct and occupancy costs. We
anticipate that preopening costs, labor and direct and occupancy costs will
significantly increase as a percent of restaurant sales in the second and third
quarters of fiscal 1999. Due to these factors, results for a quarter may not
indicate results to be expected for any other quarter or for a full fiscal
year. In the future, results of operations may fall below the expectations of
public market analysts and investors. In that event, the price of our common
stock would likely decrease. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
 
We Have Significant Future Capital Needs and Availability of Additional Funding
is Uncertain
 
We will need substantial capital to finance our expansion plans, which require
funds for capital expenditures, preopening costs and potential initial
operating losses related to new restaurant openings. We estimate that capital
expenditures during fiscal 1999 will be approximately $17.0 million and that
capital expenditures during future years will exceed this amount. In addition,
we have experienced negative cash flow from operations of approximately
$169,000 in fiscal 1996 and $1.5 million in fiscal 1997, while experiencing a
positive cash flow from operations of approximately $338,000 in fiscal 1998.
Although we expect that the net proceeds of this offering, combined with other
resources, will be sufficient to fund our capital requirements through at least
the next 12 months, this may not be the case. We may be required to seek
additional capital earlier than anticipated if:
 
    .future actual cash flows from operations fail to meet our expectations;
 
    .costs and capital expenditures for new restaurant development exceed
       anticipated amounts;
 
    .we are unable to obtain sale-leaseback financing of certain
       restaurants;
 
    .landlord contributions, loans and other incentives are lower than
       expected; or
 
    .we are required to reduce prices to respond to competitive pressures.
 
                                       8
In the future, we will require additional funding for our expansion plans. We
may not be able to obtain additional financing on acceptable terms. If adequate
funds are not available, we will have to curtail projected growth, which could
materially adversely affect our business, financial condition, operating
results or cash flows. Moreover, if we issue additional equity securities, your
holdings may be diluted. See "Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."
 
We Face Risks Because of Our Small Restaurant Base
 
We currently operate 20 restaurants, nine of which opened in the last 12
months. Due to our small restaurant base, poor operating results at any one or
more restaurants could materially adversely affect our business, financial
condition, operating results or cash flows. Our operating results achieved to
date may not be indicative of our future operating results with a larger number
of restaurants.
 
Our Operations are Susceptible to Changes in Food Costs
 
Our profitability depends in part on our ability to anticipate and react to
changes in food costs. We rely on SYSCO Corporation, a national food
distributor, as the primary distributor of our food. Although we believe that
alternative distribution sources are available, any increase in distribution
prices or failure to perform by SYSCO could cause our food costs to increase.
Further, various factors beyond our control, including adverse weather
conditions and governmental regulation, may affect our food costs. We cannot
predict whether we will be able to anticipate and react to changing food costs
by adjusting our purchasing practices and menu prices, and a failure to do so
could materially adversely affect our business, financial condition, operating
results or cash flows.
 
We Depend Upon Our Key Personnel
 
Our future success significantly depends on the continued services and
performance of our senior management, particularly Joseph P. Micatrotto, our
President and Chief Executive Officer, and Greg A. Gadel, our Chief Financial
Officer. Our performance also depends on our ability to motivate and retain our
other executive officers and key employees. Competition for these employees is
intense. The loss of the services of members of our senior management or the
inability to attract additional personnel as needed could materially adversely
affect our business, financial condition, operating results or cash flows. See
"Management."
 
Changes in Consumer Preferences or Discretionary Consumer Spending Could
Negatively Impact Our Results
 
Our restaurants feature immigrant Southern Italian cuisine served family-style.
Our continued success depends, in part, upon the popularity of this type of
Italian cuisine and this style of informal dining. Shifts in consumer
preferences away from our cuisine or dining style could materially adversely
affect our future profitability. Also, our success depends to a significant
extent on numerous factors affecting discretionary consumer spending, including
economic conditions, disposable consumer income and consumer confidence.
Adverse changes in these factors could reduce guest traffic or impose practical
limits on pricing, either of which could materially adversely affect our
business, financial condition, operating results or cash flows.
 
We Operate in a Highly Competitive Industry
 
The restaurant industry is highly competitive. We compete on the basis of the
taste, quality, and price of food offered, guest service, ambiance and overall
dining experience. Our competitors include a large and diverse group of
restaurant chains and individual restaurants, serving both Italian and non-
Italian cuisine. The family-style Italian sector of the restaurant industry is
growing and is attracting an increasing number of competitors. These
competitors range from independent local operators that have opened restaurants
in various markets, to well-capitalized national restaurant companies. Many of
these competitors have substantially greater financial resources and operating
histories than we do. We will likely face direct competition in each of the
markets we enter. See "Business--Competition."
 
                                       9
We Could Face Potential Labor Shortages
 
Our success depends in part upon our ability to attract, motivate and retain a
sufficient number of qualified employees, including restaurant managers,
kitchen staff and wait staff, necessary to keep pace with our expansion
schedule. Qualified individuals needed to fill these positions are in short
supply in certain areas, and the inability to recruit and retain such
individuals may delay the planned openings of new restaurants or result in high
employee turnover in existing restaurants which could have a material adverse
effect on our business, financial condition, operating results or cash flows.
Additionally, competition for qualified employees could require us to pay
higher wages to attract sufficient employees, which could result in higher
labor costs.
 
We are Subject to Extensive Government Regulation
 
The restaurant business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. While at this time we have been able to obtain and
maintain necessary governmental licenses, permits and approvals, the failure to
maintain such licenses, permits and approvals, including food and liquor
licenses, could have a material adverse effect on our operating results.
Difficulties or failure in obtaining required licenses and approvals could
result in delaying or canceling the opening of new restaurants. Local
authorities may suspend or deny renewal of our food and liquor licenses if they
determine that our conduct does not meet the standards for initial grant or
renewal. Although we have satisfied restaurant and liquor licensing for our
existing restaurants, we cannot predict whether we will be able to maintain
these approvals or obtain these approvals at future locations.
 
We also are subject to certain states' "dram shop" statutes. These statutes
generally provide a person injured by an intoxicated person the right to
recover damages from an establishment that served alcoholic beverages to the
intoxicated person. We carry liquor liability coverage as part of our existing
comprehensive general liability insurance. The imposition, however, of a
judgment substantially in excess of our insurance coverage, or our failure to
obtain and maintain insurance coverage, could materially and adversely affect
us.
 
Various federal and state labor laws govern our relationship with our employees
and affect operating costs. These laws include minimum wage requirements,
overtime, unemployment tax rates, workers' compensation rates, citizenship
requirements and sales taxes. Significant additional government-imposed
increases in minimum wages, paid leaves of absence and mandated health
benefits, or increased tax reporting and tax payment requirements for employees
who receive gratuities could materially adversely affect us. Furthermore,
changes in the laws of certain states, or a reduction in the number of states
that allow tips to be credited toward minimum wage requirements also could
materially adversely affect us. In addition, the Federal Americans with
Disabilities Act prohibits discrimination on the basis of disability in public
accomodations and employment. Although our restaurants are designed to be
accessible to the disabled, we could be required to make modifications to our
restaurants to provide service to, or make reasonable accomodation for,
disabled persons. See "Business--Government Regulation."
 
We Face Risk of Litigation
 
We are from time to time the subject of complaints or litigation from guests
alleging illness, injury or other food quality, health or operational concerns.
Adverse publicity resulting from these allegations may materially adversely
affect us and our restaurants, regardless of whether the allegations are valid
or whether BUCA is liable. In addition, employee claims against us based on,
among other things, discrimination, harrassment or wrongful termination may
divert our financial and management resources that would otherwise be used to
benefit the future performance of our operations. We have been subject to these
employee claims from time to time, and a significant increase in the number of
these claims or any increase in the number of successful claims could
materially adversely affect our business, financial condition, operating
results or cash flows.
 
We Face Uncertainty Regarding Risk of Year 2000 Compliance
 
BUCA and third parties with which we do business, rely on numerous computer
programs for day to day operations. We cannot predict whether we will be able
to effectively address our year 2000 issues in a timely and
 
                                       10
cost-efficient manner and without interruption to our business. We have
initiated discussions with our significant suppliers regarding their plans to
solve year 2000 issues where their systems interface with our systems or
otherwise impact our operations. We cannot predict whether year 2000
difficulties encountered by our suppliers and other third parties with whom we
do business will have a material adverse impact on our business, financial
conditions, operating results or cash flows. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Impact of Year
2000."
 
We Could Face Consolidated Tax Group Liability
 
Prior to our spin-off in late fiscal 1996, we were a member of the consolidated
tax group of Parasole Restaurant Holdings, Inc. Under the Internal Revenue
Code, as a former member of the consolidated tax group, we could be held liable
for unpaid federal tax liabilities, if any, of the consolidated tax group
through the end of 1996 in the event of nonpayment by Parasole.
 
Our Existing Shareholders Will Retain Significant Control
 
Upon completion of this offering, our executive officers, directors and
principal shareholders and their affiliates will own approximately 56.9% of the
outstanding shares of common stock (or 54.5% if the underwriters' over-
allotment option is completely exercised). As a result, they may be able to
control us and direct our affairs, including the election of directors and
approval of significant corporate transactions. This concentration of ownership
also may delay, defer or prevent a change in control of BUCA, and make some
transactions more difficult or impossible without the support of these
shareholders. These transactions might include proxy contests, mergers, tender
offers, open market purchase programs or other purchases of common stock that
could give our shareholders the opportunity to realize a premium over the then
prevailing market price for shares of common stock. See "Management" and
"Principal and Selling Shareholders."
 
Our Common Stock May Not Have a Public Market
 
Prior to this offering, there has been no public market for our common stock.
The initial public offering price of our common stock will be determined by
negotiations among us, the selling shareholders and the underwriters. We cannot
predict whether an active trading market for the common stock will develop or
continue after the completion of this offering or whether the market price of
our common stock will decline below the initial public offering price. See
"Underwriting."
 
Our Common Stock Price May Be Volatile
 
The market price of our common stock could fluctuate significantly in response
to quarterly operating results and other factors, including many over which we
have no control and that may not be directly related to us. The stock market
has from time to time experienced extreme price and volume fluctuations, which
have often been unrelated or disproportionate to the operating performance of
particular companies. Fluctuations or decreases in the trading price of our
common stock may adversely affect your ability to trade your shares. In
addition, such fluctuations could adversely affect our ability to raise capital
through future equity financings. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Results of Operations."
 
A Significant Number of Shares Will Be Eligible for Future Sale Either in the
Market or Through Exercise of Registration Rights
 
The 2,650,000 shares of common stock sold in this offering (and any shares sold
upon exercise of the Underwriters' over-allotment option) will be freely
tradable without restriction under the Securities Act of 1933, as amended,
except for any such shares held by our executive officers, directors and
certain principal shareholders ("affiliates"). The remaining 6,909,557 shares
of common stock are "restricted shares" within the meaning of Rule 144 under
the Securities Act and sales of these shares are subject to restrictions under
the Securities Act. Of these restricted shares,          are subject to lock-up
agreements under which the holders have agreed not to sell or otherwise dispose
of any of their shares for a period of 180 days after the date of this
Prospectus without the prior written consent of Piper Jaffray Inc. In its sole
discretion and at any time without notice, Piper Jaffray may release all or
 
                                       11
any portion of the shares subject to the lock-up agreements. All of the
restricted shares subject to lock-up agreements will become available for sale
in the public market immediately following expiration of the 180-day lock-up
period, subject (to the extent applicable) to the volume and other limitations
of Rule 144 or Rule 701 under the Securities Act. Upon closing of this offering
       restricted shares not subject to lock-up agreements or contractual
restrictions will become available for sale in the public market, subject to
the limitations of Rule 144. In addition, beginning 90 days after the date of
this Prospectus,        restricted shares not subject to lock-up agreements or
contractual restrictions will become available for sale in the public market,
subject to the volume and other limitations of Rule 144. In addition, after
expiration of the lock-up period, some of our securityholders have the
contractual right to require us to register some of their shares of common
stock for future sale.
 
We intend to file a registration statement on Form S-8 covering all shares of
common stock issuable upon exercise of stock options in effect on the date of
this Prospectus and stock options or other stock rights to be granted under our
stock option plans. Upon this registration on Form S-8, an additional 1,034,154
shares of common stock, together with any additional shares of common stock
that will be issuable pursuant to stock options or other stock rights granted
in the future under our stock option plans, will be eligible for sale in the
public market.
 
Sales of substantial amounts of common stock in the public market, or the
perception that these sales may occur, could adversely affect the prevailing
market price of our common stock and our ability to raise capital through a
public offering of our equity securities. See "Shares Eligible for Future
Sale," "Principal and Selling Shareholders" and "Description of Capital Stock."
 
Your Holdings Will Be Diluted
 
The price that we are offering the shares to you in this offering is
substantially higher than the net tangible book value per share of common
stock. You will therefore incur immediate and substantial dilution of $6.41 per
share (assuming an initial public offering price of $11.50 per share). See
"Dilution."
 
 
                                       12
USE OF PROCEEDS
 
The net proceeds to us from the sale of the 2,500,000 shares of common stock
offered by us at an assumed initial public offering price of $11.50 per share
are estimated to be approximately $25,875,000, after deducting the underwriting
discount and estimated offering expenses (approximately $29,955,000 if the
over-allotment option granted by us is exercised in full). We will not receive
any of the proceeds from the sale of shares of common stock by the selling
shareholders.
 
We intend to use approximately $17.0 million of the net proceeds of this
offering to finance the development of new BUCA di BEPPO restaurants during the
next twelve months and $7.0 million to retire existing bank debt. Our agreement
with our commercial lender requires us to (i) repay all amounts outstanding
under our $7.0 million term loan with the lender, which bears interest at 9.63%
and matures on December 31, 2000, and (ii) to repay all amounts outstanding in
excess of $3.0 million under our revolving line of credit with the lender,
which bears interest at lender's prevailing reference rate plus 0.75% to 1.25%
(based on the then-applicable cash flow coverage ratio) and expires on December
31, 2000. This debt was incurred to repay other BUCA debt and for the
development of restaurants. The balance of the net proceeds from this offering
will be used to finance the development of BUCA di BEPPO restaurants in
subsequent periods and for general corporate purposes. We may also use a
portion of the net proceeds for the acquisition of other restaurant operations
to expand the BUCA di BEPPO concept. We do not currently have any definitive
agreements, arrangements or understandings regarding any particular
acquisition. Pending application of the net proceeds, we intend to invest the
net proceeds in short-term, investment-grade, interest-bearing securities. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources."
 
                                DIVIDEND POLICY
 
  We have never declared or paid cash dividends. We currently intend to retain
all future earnings for the operation and expansion of our business and do not
anticipate paying cash dividends on the common stock in the foreseeable future.
Any payment of cash dividends in the future will be at the discretion of our
Board and will depend upon our results of operations, earnings, capital
requirements, contractual restrictions and other factors deemed relevant by our
Board. In addition, our current credit facility restricts our ability to pay
cash dividends.
 
 
                                       13
CAPITALIZATION
 
The following table sets forth, at December 27, 1998, our consolidated cash and
cash equivalents and capitalization: (i) on an actual basis; (ii) on a pro
forma basis to reflect the issuance of common stock in connection with the
conversion of the preferred stock upon the closing of this offering and the
termination of our redemption obligations with repect to the Redeemable Common
Stock; and (iii) on a pro forma as adjusted basis to reflect the sale of the
shares of common stock offered by us by this Prospectus at an assumed initial
public offering price of $11.50 per share and the application of the estimated
net proceeds from the offering. See "Use of Proceeds." This table should be
read in conjunction with the Consolidated Financial Statements and Notes
thereto and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Prospectus.
December 27, 1998
                                 ----------------------------------------------
                                                                Pro Forma
                                  Actual   Pro Forma(/1/) As Adjusted(/1/)(/2/)
                                 --------  -------------- ---------------------
                                                (in thousands)
Cash and cash equivalents....... $  6,576     $ 6,576            $25,451
                                 ========     =======            =======
Long-term debt, less current
 portion........................ $  7,661     $ 7,661            $   261
Redeemable stock(/3/)...........   36,973         --                 --
Common stock: $.01 par value;
 13,100,000 shares authorized,
 1,914,359 shares issued and
 outstanding, actual; 7,059,557
 shares issued and outstanding,
 pro forma;
 9,559,557 shares issued and
 outstanding, pro forma as
 adjusted(/4/)..................       19          71                 96
Additional paid-in capital......      --       36,921             65,871
Accumulated deficit.............  (13,266)    (14,666)           (16,266)
                                 --------     -------            -------
                                  (13,247)     22,326             49,701
Notes receivable from
 shareholders...................     (293)       (293)              (293)
  Total common shareholders'
   (deficit) equity ............  (13,540)     22,033             49,408
                                 --------     -------            -------
  Total capitalization.......... $ 31,094     $29,694            $49,669
                                 ========     =======            =======
---------------
 
(/1/)Pro forma information gives effect as of December 27, 1998 to (i) the
     issuance of shares of common stock in connection with the conversion of
     all outstanding shares of preferred stock upon the closing of this
     offering; (ii) the termination of our redemption obligations with respect
     to the Redeemable Common Stock upon the closing of this offering; and
     (iii) the repayment of outstanding subordinated and bank debt in the
     amount of $6,660,000 with borrowings of $7,000,000 under our credit
     facility with U.S. Bank.
(/2/)Adjusted to give effect to (i) our receipt of the estimated net proceeds
     of $25,875,000 from the sale of 2,500,000 shares of common stock offered
     by us at an assumed public offering price of $11.50 per share; (ii) the
     application of a portion of the net proceeds of this offering to repay
     amounts outstanding under our credit facility with U.S. Bank and the
     resulting write-off of deferred financing costs; and (iii) the non-cash
     charge of approximately $1,300,000 related to the discount applicable to
     the right of holders of $1,780,000 of outstanding subordinated debt of
     BUCA to convert such debt into common stock after the closing of this
     offering.
(/3/)Includes Series A, Series B and Series C preferred stock and the
     Redeemable Common Stock.
(/4/)Excludes (i) 1,050,154 shares of common stock issuable upon exercise of
     options outstanding as of the date of this Prospectus; (ii) 397,859 shares
     of common stock issuable upon exercise of warrants outstanding as of the
     date of this Prospectus; and (iii) 257,971 shares of common stock issuable
     (from and after the completion of this offering) upon conversion of
     subordinated debt outstanding as of the date of this Prospectus, assuming
     a public offering price of $11.50 per share. See "Management--Stock
     Incentive Plans and Stock Options," "Certain Relationships and Related
     Transactions" and "Description of Capital Stock."
 
                                       14
DILUTION
 
Our net tangible book value as of December 27, 1998 was approximately $22.8
million, or $3.23 per share of common stock. Net tangible book value per share
is determined by dividing BUCA's net tangible worth (tangible assets less
liabilities) by the aggregate number of shares of common stock outstanding,
giving effect to the conversion of the preferred stock and the elimination of
our redemption obligations with respect to the Redeemable Common Stock. After
giving effect to the sale of the 2,500,000 shares of common stock offered
hereby at an assumed initial public offering price of $11.50 per share and the
application of the net proceeds therefrom, our pro forma net tangible book
value as of December 27, 1998 would have been approximately $48.7 million, or
$5.09 per share of common stock. This represents an immediate increase in net
tangible book value of $1.86 per share to existing shareholders and an
immediate dilution of $6.41 per share to new investors. The following table
illustrates this per share dilution:
Assumed initial public offering price per share (mid-range)........       $11.50
  Net tangible book value per share before this offering........... $3.23
  Increase per share attributable to new investors.................  1.86
                                                                    -----
Pro forma net tangible book value per share after this offering....         5.09
                                                                          ------
Dilution per share to new investors................................       $ 6.41
                                                                          ======
The following table sets forth as of December 27, 1998, giving effect to the
conversion of the preferred stock, the difference between the number of shares
of common stock purchased from us, the total consideration paid to us and the
average price per share paid by existing shareholders and by new investors (at
an assumed initial public offering price of $11.50 per share):
AVERAGE
                                   SHARES PURCHASED  TOTAL CONSIDERATION  PRICE
                                   ----------------- -------------------   PER
                                    NUMBER   PERCENT   AMOUNT    PERCENT  SHARE
                                   --------- ------- ----------- ------- -------
Existing shareholders............. 7,059,557   73.8% $30,962,000   51.9% $ 4.39
New investors..................... 2,500,000   26.2   28,750,000   48.1   11.50
                                   ---------  -----  -----------  -----  ------
  Total........................... 9,559,557  100.0% $59,712,000  100.0% $ 6.25
                                   =========  =====  ===========  =====  ======
Sales by the selling shareholders in this offering will reduce the number of
shares held by existing shareholders to 6,909,557, or 72.3% of the total number
of shares of common stock outstanding, and will increase the number of shares
held by new investors to 2,650,000, or 27.7% of the total number of shares of
common stock outstanding after the offering. The foregoing table excludes (i)
1,050,154 shares of common stock issuable upon exercise of options outstanding
as of the date of this Prospectus (at a weighted average exercise price of
$6.96 per share); (ii) 397,859 shares of common stock issuable upon exercise of
warrants outstanding as of the date of this Prospectus (at a weighted average
exercise price of $2.05 per share); and (iii) 257,971 shares of common stock
issuable (from and after the completion of this offering) upon conversion of
subordinated debt outstanding as of the date of this Prospectus, assuming a
public offering price of $11.50 per share. To the extent these shares are
issued, there will be further dilution to new investors. See "Management--
Employment Agreements," "Management--"Stock Incentive Plans," "Certain
Relationships and Related Transactions" and "Description of Capital Stock."
 
                                       15
SELECTED CONSOLIDATED FINANCIAL DATA
           (IN THOUSANDS, EXCEPT SHARE, PER SHARE AND OPERATING DATA)
 
The following selected consolidated financial data for the five fiscal years
ended December 27, 1998 are derived from our audited consolidated financial
statements. The Consolidated Financial Statements and the Notes thereto for
each of the three fiscal years ended December 27, 1998, and the reports of
independent public accountants on those years, are included elsewhere in this
Prospectus. This Selected Consolidated Financial Data should be read in
conjunction with the Consolidated Financial Statements and the Notes thereto,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and other financial information included elsewhere in this
Prospectus. We changed our fiscal year-end from December 31 to the last Sunday
in December, beginning with the fiscal year ended December 28, 1997.
FISCAL YEAR ENDED
                            ----------------------------------------------------------------
                            DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 28, DECEMBER 27,
                                1994         1995         1996         1997         1998
                            ------------ ------------ ------------ ------------ ------------
CONSOLIDATED STATEMENTS OF
OPERATIONS DATA:
Restaurant sales..........   $    4,114   $    7,142   $   11,316   $   19,030   $   38,483
Restaurant costs:
  Product.................        1,345        2,303        3,471        5,520       10,876
  Labor...................        1,354        2,258        3,723        6,478       12,548
  Direct and occupancy....          829        1,270        2,242        3,750        7,861
  Depreciation and
   amortization...........           79          173          381          781        1,617
                             ----------   ----------   ----------   ----------   ----------
    Total restaurant
     costs................        3,607        6,004        9,817       16,529       32,902
                             ----------   ----------   ----------   ----------   ----------
Income from restaurant
 operations...............          507        1,138        1,499        2,501        5,581
General and administrative
 expenses.................          332          656        1,988        3,760        5,579
Preopening costs..........          151          183          430        1,140        1,895
                             ----------   ----------   ----------   ----------   ----------
Operating income (loss)...           24          299         (919)      (2,399)      (1,893)
Interest expense..........           98          219          295          497        1,036
                             ----------   ----------   ----------   ----------   ----------
Income (loss) before
 income taxes and
 cumulative effect of
 change in accounting
 principle................          (74)          80       (1,214)      (2,896)      (2,929)
Provision (benefit) for
 income taxes.............            1           43         (101)          72           17
                             ----------   ----------   ----------   ----------   ----------
Income (loss) before
 cumulative effect of
 change in accounting
 principle................          (75)          37       (1,113)      (2,968)      (2,946)
Cumulative effect of
 change in accounting
 principle related to
 preopening costs.........          --           --           --          (351)         --
                             ----------   ----------   ----------   ----------   ----------
Net income (loss).........   $      (75)  $       37   $   (1,113)  $   (3,319)  $   (2,946)
                             ==========   ==========   ==========   ==========   ==========
Cumulative preferred stock
 dividends, accretion of
 preferred stock to
 redemption value, and
 change in redeemable
 common stock.............          --           --        (3,687)      (1,986)      (2,189)
                             ----------   ----------   ----------   ----------   ----------
Net income (loss)
 applicable to common
 stock....................   $      (75)  $       37   $   (4,800)  $   (5,305)  $   (5,135)
                             ==========   ==========   ==========   ==========   ==========
Net income (loss) per
 share--basic and
 diluted..................   $     (.03)  $      .02   $    (1.96)  $    (2.13)  $    (2.04)
                             ==========   ==========   ==========   ==========   ==========
Weighted average common
 shares assumed
 outstanding--basic and
 diluted shares ..........    2,444,666    2,444,666    2,444,666    2,490,136    2,512,309
                             ==========   ==========   ==========   ==========   ==========
Pro forma net income
 (loss) per share--
 basic and diluted (/1/)..                                                            $(.42)
                                                                                 ==========
Common shares assumed
 outstanding pro forma--
 basic and diluted(/1/)...                                                        7,059,557
                                                                                 ==========
16
FISCAL YEAR ENDED
                                        --------------------------------------
                                        DECEMBER 31, DECEMBER 28, DECEMBER 27,
                                            1996         1997         1998
                                        ------------ ------------ ------------
OPERATING DATA:
Comparable restaurant sales in-
 crease(/2/)...........................       0.2%         9.4%        13.5%
Average weekly restaurant sales........   $47,343      $48,307      $52,971
Restaurants open at end of period......         6           11           19
AS OF
                         ----------------------------------------------------------------
                         DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 28, DECEMBER 27,
                             1994         1995         1996         1997         1998
                         ------------ ------------ ------------ ------------ ------------
CONSOLIDATED BALANCE
 SHEET DATA:
Cash and cash equiva-
 lents..................    $1,222       $  805      $ 5,750      $ 6,099      $  6,576
Total assets............     2,480        4,477       12,771       21,288        37,560
Total debt, including
 current portion........     2,062        2,907        3,940        5,460         7,866
Redeemable stock(/3/)...       --           --        11,301       21,824        36,973
Shareholders' deficit...      (179)        (148)      (4,942)      (9,284)      (13,540)
---------------
 
(/1/)Pro forma information gives effect as of December 27, 1998 to (i) the
     issuance of shares of common stock in connection with the conversion of
     all outstanding shares of preferred stock upon the closing of this
     offering; (ii) the termination of our obligation to redeem the Redeemable
     Common Stock upon the closing of this offering; and (iii) the repayment of
     outstanding subordinated and bank debt in the amount of $6,600,000 with
     borrowings of $7,000,000 under our credit facility with U.S. Bank.
(/2/)The calculation of comparable restaurant sales increase includes
     restaurants open for 12 full calendar months, as adjusted to provide
     comparable 52-week fiscal years.
(/3/)Includes Series A, Series B and Series C preferred stock and the
     Redeemable Common Stock.
 
 
                                       17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                                   OPERATIONS
 
The following discussion of the financial condition and results of operations
should be read in conjunction with our Consolidated Financial Statements and
Notes thereto appearing elsewhere in this Prospectus.
 
Overview
 
We own and operate 20 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. In late 1996, BUCA, then a wholly
owned subsidiary of Parasole Restaurant Holding, Inc., was spun-off to the
shareholders of Parasole. At the time of the spin-off, we operated five
restaurants and had recently hired Joseph P. Micatrotto as President and Chief
Executive Officer. Since then, Mr. Micatrotto has hired an experienced
management team to embark on a strategic expansion of the BUCA di BEPPO
concept, targeted at major metropolitan areas throughout the United States.
Since late 1996, we have pursued a rapid but disciplined expansion strategy,
opening two restaurants in 1996, five in 1997 and eight in 1998. We intend to
open 13 new restaurants in fiscal 1999, of which one opened in Louisville,
Kentucky, in January, seven are under construction and the remaining five have
signed leases.
 
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 9.4%
in fiscal 1997 and 13.5% in fiscal 1998. 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 continue in the future; however, we expect that the impact of
new restaurant openings on total comparable restaurant sales will decrease as
our mature restaurant base continues to increase.
 
During fiscal 1997 and fiscal 1998, we expanded the use of daily specials and
began other measures to build sales in existing restaurants and reduce our
product costs as a percentage of restaurant sales. Each day, every restaurant
offers from two to four specials. These daily specials are selected from a list
of approximately 60 recipes. These daily specials typically are priced higher
than normal menu items and generate higher margins. We have increased sales of
specials from approximately 10% of restaurant sales in fiscal 1996 to
approximately 15% of restaurant sales in fiscal 1998. The increase in sales of
specials along with price increases of approximately 2% in fiscal 1997 and 3%
in fiscal 1998 have produced an increase in our average check from $17.50 in
fiscal 1996 to $18.80 in fiscal 1997 and to $20.00 in fiscal 1998. In addition
to achieving reduced costs through our sales of daily specials, we have
achieved cost efficiencies through the improved management of product
purchasing. Each restaurant orders items primarily from our national
distributor, SYSCO Corporation, on terms negotiated by our centralized
purchasing staff. We expect to introduce a new wine list in the second quarter
of fiscal 1999, which is intended to increase wine sales and reduce the cost of
wine as a percentage of wine sales.
 
During fiscal 1999, we expect to incur special non-cash charges in the
aggregate amount of approximately $3.0 million related to the early repayment
of debt. On February 5, 1999, we entered into a new credit facility with U.S.
Bank National Association. A portion of this facility was used to repay our
outstanding subordinated debt in the amount of $6.0 million. This early
repayment of debt resulted in a one-time extraordinary charge of approximately
$1.4 million in the first quarter of fiscal 1999. We also have outstanding $1.8
million of convertible subordinated debt that is convertible, at the option of
the holders, into common stock at a conversion price equal to 60% of the
initial public offering price. As a consequence of this right, we will
recognize a special non-cash
 
                                       18
charge of approximately $1.3 million in the second quarter of fiscal 1999. In
addition, the $7.0 million term loan portion of our credit facility with U.S.
Bank is required to be repaid upon the completion of this offering. This will
result in a one-time extraordinary charge of approximately $300,000 in the
second quarter of fiscal 1999 for the write-off of costs related to this loan.
 
Our restaurant sales are comprised almost entirely of the sales of food and
beverages. In fiscal 1998, alcohol sales accounted for 26.6% of total
restaurant sales. 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. 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. 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. Management believes that future expansion and resulting
increases in restaurant sales will require proportionately smaller incremental
increases in general and administrative expenses, causing general and
administrative expenses as a percentage of sales to decrease further in the
future.
 
We adopted a fiscal year ending on the last Sunday in December beginning in
1997. Prior to that, our fiscal year followed the calendar year. Therefore,
fiscal 1997 included only 362 days instead of 364 days. Our fiscal quarters
include two four week periods followed by a five week period. Fiscal 2000 will
be a 53-week-year, with the final quarter of the fiscal year totaling 14 weeks.
 
 
                                       19
RESULTS OF OPERATIONS
 
Our operating results for fiscal years 1996, 1997 and 1998 expressed as a
percentage of restaurant sales were as follows:
FISCAL YEAR ENDED
                                         --------------------------------------
                                         DECEMBER 31, DECEMBER 28, DECEMBER 27,
                                             1996         1997         1998
                                         ------------ ------------ ------------
CONSOLIDATED STATEMENT OF OPERATIONS
 DATA:
Restaurant sales.......................     100.0%       100.0%       100.0%
  Restaurant costs:
   Product.............................      30.7         29.0         28.3
   Labor...............................      32.9         34.0         32.6
   Direct and occupancy................      19.8         19.7         20.4
   Depreciation and amortization ......       3.4          4.1          4.2
Income from restaurant operations......      13.2         13.1         14.5
General and administrative expenses....      17.6         19.8         14.5
Preopening costs.......................       3.7          6.0          4.9
                                            -----        -----        -----
Operating loss.........................      (8.1)       (12.6)        (4.9)
Interest expense.......................       2.6          2.6          2.7
                                            -----        -----        -----
Loss before income taxes and cumulative
 effect of change in accounting princi-
 ple...................................     (10.7)       (15.2)        (7.6)
(Benefit) provision for income taxes...      (0.9)         0.4          --
Net loss...............................      (9.8)%      (17.4)%       (7.7)%
                                            =====        =====        =====
FISCAL YEAR ENDED DECEMBER 27, 1998 COMPARED TO FISCAL YEAR ENDED DECEMBER 28,
1997
 
RESTAURANT SALES. Restaurant sales increased by $19.5 million, or 102.2%, to
$38.5 million in fiscal 1998 from $19.0 million in fiscal 1997. The increase
was attributable to restaurant sales of $9.8 million at new restaurants opened
in fiscal 1998 and to increased sales at restaurants open prior to fiscal 1998.
Comparable restaurant sales increased by 13.5% in fiscal 1998, primarily as a
result of increased guest visits, increased sales of daily specials and a price
increase of approximately 3% in July 1998. The price increase and sales of
daily specials resulted in an increase in the average check per guest to $20.00
in fiscal 1998 from $18.80 in fiscal 1997.
 
PRODUCT. Product costs as a percentage of restaurant sales decreased to 28.3%
in fiscal 1998 from 29.0% in fiscal 1997. This reduction was a result of
management's efforts to reduce the cost of food products and improve margins.
We entered into an agreement with a national food distributor which reduced our
food product costs beginning in the second quarter of fiscal 1997. We also
sought to increase the percentage of daily specials that are sold at the
restaurants.
 
LABOR. Labor costs decreased as a percentage of restaurant sales to 32.6% in
fiscal 1998 from 34.0% in fiscal 1997. This decrease primarily resulted from
improved management of hourly staff levels and lower average wage costs because
of the opening of new stores in states that allow tips credit toward minimum
wage requirements.
 
 
                                       20
Direct and Occupancy. Direct and occupancy costs increased as a percentage of
restaurant sales to 20.4% in fiscal 1998 from 19.7% in fiscal 1997. This
increase was a result of the higher occupancy costs in our California
restaurants opened in the last half of fiscal 1997 and during fiscal 1998, as
well as an increase in supplies usage during fiscal 1998.
 
Depreciation and Amortization. Depreciation and amortization expenses increased
approximately $836,000 to $1.6 million in fiscal 1998 from approximately
$781,000 in fiscal 1997. This increase was the result of depreciation
recognized on capital expenditures for new restaurants.
 
General and Administrative. General and administrative expenses increased $1.8
million to $5.6 million in fiscal 1998 from $3.8 million in fiscal 1997.
General and administrative expenses decreased as a percentage of restaurant
sales to 14.5% in fiscal 1998 from 19.8% in fiscal 1997. This increase in
dollars was primarily the result of the addition of management personnel in
fiscal 1997 and fiscal 1998, resulting in $600,000 of additional compensation
and benefits and $300,000 of additional travel expenses, and an increase in
legal fees of $600,000. We expect that general and administrative expenses will
continue to increase in dollar amount in the future, but decrease as a
percentage of restaurant sales because our expansion plans will require
proportionately smaller incremental increases in general and administrative
expenses.
 
Preopening. Preopening costs increased $400,000 to $1.9 million in fiscal 1998
from $1.5 million (inclusive of the cumulative effect of the change in
accounting principle related to preopening expenses) in fiscal 1997 due to the
greater number of restaurants that were opened or under development in fiscal
1998 compared to fiscal 1997.
 
Interest Expense. Interest expense increased $539,000 to $1.0 million in fiscal
1998 from $497,000 in fiscal 1997 due to an increase in our long-term debt.
 
Provision for Income Taxes. The provision for income taxes for fiscal 1998 and
fiscal 1997 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 or fiscal
1997 for the losses generated in previous years as utilization of these losses
in future periods was deemed uncertain. At December 27, 1998, we had a net
operating loss carryforward of approximately $3.5 million, and a $3.5 million
deferred tax asset related primarily to preopening costs which will reverse in
the future. The net operating loss carryforwards begin to expire in fiscal
2003. 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.
 
Fiscal Year Ended December 28, 1997 Compared to Fiscal Year Ended December 31,
1996
 
Restaurant Sales. Restaurant sales increased by $7.7 million, or 68.2%, to
$19.0 million in fiscal 1997 from $11.3 million in fiscal 1996. The increase
was attributable to restaurant sales of $7.0 million at new restaurants opened
in fiscal 1997 and to increased sales at restaurants open prior to fiscal 1997.
Increased guest visits as well as the increased sales of daily specials
contributed to the comparable restaurant sales gain of 9.4% in fiscal 1997. We
implemented a price increase of approximately 2% in June 1997. The increased
sales of daily specials and the price increase in fiscal 1997 contributed to
the increase in the average check per guest to $18.80 in fiscal 1997 from
$17.50 in fiscal 1996.
 
Product. Product costs as a percentage of restaurant sales decreased to 29.0%
in fiscal 1997 from 30.7% in fiscal 1996. This decrease was a result of the
agreement entered into with a national food distributor in the second quarter
of fiscal 1997, as well as efforts to reduce excess food preparation costs and
the increased sales of daily specials.
 
Labor. Labor costs increased as a percentage of restaurant sales to 34.0% in
fiscal 1997 from 32.9% in fiscal 1996. This increase was a result of the
increased number of new restaurants opened in fiscal 1997 compared to fiscal
1996, and the timing of these openings in each year. Labor costs at new
restaurants generally are higher both in dollars and as a percentage of
restaurant sales for the first six months after opening.
 
 
                                       21
DIRECT AND OCCUPANCY. Direct and occupancy costs decreased as a percentage of
restaurant sales to 19.7% in fiscal 1997 from 19.8% in fiscal 1996. This
decrease was primarily due to more favorable lease terms associated with new
restaurants opened in 1997.
 
DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
approximately $781,000 in fiscal 1997 from approximately $381,000 in fiscal
1996. This increase was principally the result of depreciation recognized on
capital expenditures for new restaurants opened in fiscal 1997.
 
GENERAL AND ADMINISTRATIVE. General and administrative expenses increased
$1.8 million to $3.8 million in fiscal 1997, from $2.0 million in fiscal 1996.
General and administrative expenses increased as a percentage of restaurant
sales to 19.8% in fiscal 1997 from 17.6% in fiscal 1996. The increase in fiscal
1997 was primarily related to the costs associated with adding management staff
necessary to operate BUCA as a separate company. For most of fiscal 1996, we
operated as wholly owned subsidiary of Parasole Restaurant Holdings, Inc.
 
PREOPENING. Preopening costs in fiscal 1997 increased to $1.5 million
(including the cumulative effect of the change in accounting principle related
to preopening costs) from approximately $430,000 in fiscal 1996. This increase
was a result of the increased number of new stores developed in fiscal 1997 as
well as the $351,000 charge for the change in accounting principle related to
preopening costs.
 
INTEREST EXPENSE. Interest expense increased to approximately $497,000 in
fiscal 1997 from approximately $295,000 in fiscal 1996 due primarily to the
increase in our long-term debt.
 
BENEFIT/PROVISION FOR INCOME TAXES. The provision for income taxes for fiscal
1997 represents certain minimum state taxes based upon taxable factors other
than earnings and a minor charge for federal taxes primarily related to
deferred income taxes. In fiscal 1996, we recorded a benefit of $101,000
related to the net operating loss carryforwards. In fiscal 1997, 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.
 
QUARTERLY RESULTS
 
Our quarterly operating results will fluctuate significantly as a result of a
variety of factors, including the timing of new restaurant openings and related
expenses, profitability of new restaurants, increases or decreases in
comparable restaurant sales, general economic conditions, consumer confidence
in the economy, changes in consumer preferences, competitive factors and
weather conditions. In the past, we have experienced significant variability in
preopening costs from quarter to quarter. These fluctuations are primarily a
function of the timing of restaurant openings. We typically incur the most
significant portion of preopening costs associated with a given restaurant
within the two months immediately preceding, and the month of, the opening of
the restaurant. In addition, our experience to date has been that labor and
direct and occupancy costs associated with a newly opened restaurant for the
first three to six months of operation are materially greater than what can be
expected after that time, both in aggregate dollars and as a percentage of
restaurant sales. Accordingly, the volume and timing of new restaurant openings
in any quarter has had and is expected to continue to have a significant impact
on quarterly preopening costs and labor and direct and occupancy costs. We
anticipate that this effect will significantly increase preopening costs, labor
and direct and occupancy costs as a percentage of sales in the second and third
quarters of fiscal 1999.
 
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 $7.6 million. We have
funded our capital requirements through private sales of equity securities,
debt financing and sale-leaseback arrangements. Net cash used in operating
activities was $1.5 million for fiscal 1997 and net cash provided by operations
was $338,000 for fiscal 1998.
 
We use cash primarily to fund the development and construction of new
restaurants. Net cash used in investing activities was $8.1 million for fiscal
1997 and $15.6 million for fiscal 1998. Capital expenditures were $7.9 million
for fiscal 1997 and $17.9 million for fiscal 1998. During fiscal 1997 and 1998,
we purchased the land and building
 
                                       22
for our Wheeling, Cleveland and St. Paul locations. We subsequently entered
into sale-leaseback arrangements for both the Wheeling and Cleveland locations
during 1998. These purchases of land and buildings, along with our expansions
of the Seattle and St. Paul restaurants, accounted for approximately
$2.2 million of fiscal 1998 capital expenditures. We intend to open 13
restaurants in fiscal 1999, one of which has already opened. Total capital
expenditures are expected to be approximately $17.0 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. Total capitalized investment includes the
capitalized lease value of the property, which can vary greatly depending on
the specific trade area. To date, all of our restaurants are renovations of
existing facilities. In 1999, we will build at least two restaurants based on
our prototype designs. These designs are expected to require between
$1.5 million and $2 million in total cash investment per restaurant. This
investment represents an incremental $500,000 increase over the historical cash
investment for remodeled restaurants. We plan to 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 $9.9 million in fiscal 1997 and
$15.8 million in fiscal 1998. Financing activities in fiscal 1997 and fiscal
1998 consisted primarily of sales of preferred stock as well as the incurrence
of additional long-term debt. We have an $8.0 million revolving line of credit
which matures on December 31, 2000 under which we currently have no borrowings
and which bears interest at the bank's reference rate plus .75% to 1.25%. We
also have a $7.0 million term loan which expires on December 31, 2000 and bears
a fixed rate of interest of 9.63%. Pursuant to the terms of the credit
agreement, the term loan must be repaid upon the consummation of this offering.
In addition, we must repay any borrowings under the revolving line of credit in
excess of $3.0 million, which will become the line's credit limit. The credit
agreement contains covenants which 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 on us. After this offering, we
intend to renegotiate our line of credit and we believe that the lender will be
willing to increase the amount of the line of credit on terms and conditions
which are comparable to those contained in our existing line of credit, or that
other financing will be available in an amount and on terms and conditions
which are adequate to meet our currently planned working capital and liquidity
needs. However, we cannot predict whether our existing lender will ultimately
agree to any increase or whether any alternative financing will be available.
 
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 after this offering
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 this offering and
available borrowings will be sufficient to fund our capital requirements
through at least the next twelve months. If additional capital is required, we
may need to raise additional capital through public or private equity or debt
financings. Future capital funding transactions may result in dilution to you.
We cannot predict whether additional capital will be available on favorable
terms, if at all.
 
We lease restaurant and office facilities and certain real property under
operating leases expiring between fiscal 1999 and fiscal 2018. Future minimum
lease payments under operating leases, including restaurant facilities
currently under construction or yet to be constructed as of December 27, 1998
were as follows: $3.0 million in fiscal 1999, $4.0 million in fiscal 2000, $4.0
million in fiscal 2001, $4.1 million in fiscal 2002, $4.2 million in fiscal
2003 and thereafter $29.4 million.
 
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
 
                                       23
affect our labor costs. To date, inflation has not had a material impact on our
operating results. See "Risk Factors--We Face Risks Because of Our Small
Restaurant Base" and "--We are Subject to Extensive Government Regulation."
 
YEAR 2000 COMPLIANCE
 
We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The "year 2000 problem" is
pervasive and complex as virtually every computer operation will be affected in
some way by the rollover of the two digit year value to "00". The issue is
whether computer systems will properly recognize date-sensitive information
when the year changes to 2000. We have reviewed both our information technology
and our non-information technology systems to determine whether they are year
2000 compliant, and we have not identified any material systems which are not
year 2000 compliant. We have substantially completed year 2000 testing of our
systems and have identified those components deemed noncompliant. We have
initiated formal communications with all significant suppliers and service
providers to determine the extent to which we are vulnerable to those third
parties' failure to solve the year 2000 problem. We have received written
assurances of year 2000 compliance from a majority of the third parties with
whom we have relationships, including our national food distributor, and
payroll and credit card service providers. Unless public suppliers of water,
electricity and natural gas are disrupted for a substantial period of time (in
which case our business may be materially adversely affected), we believe that
our operations will not be significantly disrupted even if third parties with
whom we have relationships are not year 2000 compliant. We will develop a
contingency plan to deal with potential third party failure issues. Testing and
replacement of all systems is scheduled to be completed by June 30, 1999. A
decision to implement a contingency plan is expected by June 30, 1999. We
estimate that we incurred approximately $100,000 in fiscal 1998 to address year
2000 issues, principally testing our existing systems, and that we will incur
an additional $100,000 in fiscal 1999 to replace certain system components
deemed non-year 2000 compliant. These amounts do not include insurance proceeds
used to replace hardware and software systems destroyed in the recent fire at
our headquarters with new systems represented to be year 2000 compliant. See
"Business--Properties." However, uncertainty exists concerning the potential
costs and effects associated with any year 2000 compliance, and we intend to
continue to make efforts to ensure that third parties with whom we have
relationships are year 2000 compliant. Any year 2000 compliance problem of ours
or our vendors could materially adversely affect our business, financial
condition, operating results or cash flows, and could prohibit us from
operating our restaurants.
 
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
 
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
lending bank's reference rate plus 0.75% to 1.25%. Because we have no
borrowings under our revolving line of credit and we do not believe that the
maximum available borrowings under the revolving line of credit are material,
we do not believe this risk will be material.
 
We have no derivative financial instruments or derivative commodity instruments
in our cash and cash equivalents and investments. We invest our cash and cash
equivalents and investments in investment grade, highly liquid investments,
consisting of money market instruments, bank certificates of deposit and
overnight investments in commercial paper. We anticipate investing our net
proceeds from this offering in similar investment grade and highly liquid
investments pending their use as described in this Prospectus. See "Use of
Proceeds." Primarily all of our transactions are conducted, and our accounts
are denominated, in United States dollars. Accordingly, we are not exposed to
foreign currency risk.
 
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 average price increases 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.
 
                                       24
BUSINESS
 
Overview
 
BUCA, Inc. owns and operates 20 full service, dinner-only restaurants under the
name BUCA di BEPPO. Our restaurants 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. Our food is based on authentic family recipes enjoyed for
generations in the villages of Southern Italy and then adapted to American
ingredients. Our menu features dishes such as the BUCA di BEPPO 1893 salad,
chicken cacciatore, spaghetti with half-pound meat balls, eggplant parmigiana,
ravioli al pomodoro, veal marsala, garlic mashed potatoes, pizza arrabiatta and
tiramisu. These dishes, often seasoned with garlic and served with vine-ripened
tomatoes, communicate the pure, powerful flavor of the immigrant Southern
Italian kitchen. Our oversized portions, served family-style on large platters,
are designed to overwhelm guests with an abundance of high quality food. In
family-style serving, each item is shared by the entire table, which encourages
guests to interact and enjoy the meal together. A full service bar featuring
affordable, quality Italian table wines complements our menu. We believe that
the generous portions, combined with an average check per guest of
approximately $20.00, including beverages, offer our guests exceptional value.
We reinforce this value by encouraging guests to take home their extra food in
our logo-bearing BUCA bags, allowing guests to enjoy an additional BUCA meal at
home.
 
Our BUCA di BEPPO restaurants irreverently exaggerate the cliches of post-War
Italian/American restaurants found in Little Italy in New York City, the North
End of Boston and other Italian neighborhoods of large U.S. cities. We design
our restaurants to be a fun, high-energy destination. The layout of each BUCA
di BEPPO restaurant in a market is unique, which reinforces our image as a
collection of neighborhood restaurants. Restaurant interiors are divided into a
number of distinct rooms with walls covered by hundreds of vintage photos of
Italian families and celebrities, Christmas lights displayed year-round and
other icons of Italian heritage. Boxes of pasta, cans of roasted peppers and
jugs of wine fill window sills and shelves throughout our restaurants. Lively
music from classic artists such as Frank Sinatra and Dean Martin adds to the
fun and energetic atmosphere. Restaurant exteriors feature flashing bare bulb
signage, statuary and humorous neon signs promising "elegant dining" and "air
conditioning." Our food, decor and family-style servings all promote a fun,
celebratory and socially interactive dining experience that emulates a
traditional Italian/American evening meal.
 
Our Business Strategy
 
Our objective is to become the dominant family-style, immigrant Southern
Italian restaurant in each of our markets. To achieve our objective, we have
developed the following strategies:
 
Offer Vital, Vibrant and Powerfully Flavored Food.  BUCA di BEPPO restaurants
feature foods with the pure, powerful flavors of the immigrant Southern Italian
kitchen. Our BUCA di BEPPO 1893 salad, for example, combines a large bed of
greens with olives, two kinds of cheese, mortadella, pepperoni, peperoncini,
onions, cucumbers and tomatoes. Our chicken vesuvio features fresh, tender
chicken, seasoned with oregano, sauteed with spicy Italian sausage and tossed
in a sauce of olive oil, sweet white wine, garlic, chunks of tomato, broccoli,
red onion and white cannellini beans. For dessert, our cannoli's three crispy
shells are covered with powdered sugar and filled with a thick, creamy ricotta
and sweet mascarpone, sprinkled with pistachios and covered in chocolate sauce.
 
Create a Fun, Energetic, Destination Dining Experience.  BUCA di BEPPO promotes
a fun, irreverent and socially interactive atmosphere. The family-style,
participatory dining format, "kitschy" decor, unique restaurant layouts, and
festive atmosphere all combine to make our restaurants entertaining and fun for
guests. We believe that this atmosphere results in BUCA di BEPPO restaurants
being a destination for diners who will seek out our restaurant locations. We
also believe this atmosphere is attractive for a wide variety of dining
occasions, including weekend evenings, business occasions, family celebrations
as well as regular weeknight dining.
 
 
                                       25
Provide Superior Dining Value.  Our restaurants provide high quality,
moderately priced food in oversized portions. We believe that the generous
portions, combined with an average check per guest of approximately $20.00,
including beverages, offer our guests exceptional value. We reinforce this
value by encouraging guests to take home their extra food in our logo-bearing
BUCA Bags, allowing guests to enjoy an additional BUCA meal at home.
 
Achieve Excellent Restaurant Economics.  We believe that our restaurants
provide superior unit level economics. During fiscal 1998, our mature
restaurants (those with at least two full years of operating history) generated
average restaurant sales of approximately $3.0 million and average cash flow of
approximately $693,000, or 23.5% of restaurant sales.
 
Leverage Our Paisano Partners Program.  We believe that our Paisano Partners
Program, in which restaurant general managers purchase BUCA stock, receive
stock options and share in their restaurant's profits, enables us to attract
and retain managers with greater experience and of a higher caliber than the
industry average. We believe this program motivates our Paisanos to achieve
significantly greater operating efficiencies, results in lower turnover and
contributes to our superior unit level economics.
 
Pursue Rapid but Disciplined Restaurant Expansion.  Since fiscal 1997, BUCA has
pursued a rapid but disciplined restaurant development strategy. Our current
development plan is to open 13 new restaurants in fiscal 1999, of which one is
already open, seven are under construction and the remaining five have signed
leases.
 
Create a Passionate Culture of Service.  We foster a passionate culture of
guest service among our employees by emphasizing consideration of the guest
first in all decisions. From the moment a guest walks in the front door, the
BUCA di BEPPO experience is enhanced by a high level of guest service provided
by a knowledgeable, energetic staff. Servers are trained to introduce guests to
the BUCA di BEPPO concept, explain the menu and encourage guest interaction.
The Paisano also interacts with guests to make them feel welcome and is
responsible for ensuring their satisfaction with the dining experience.
 
The BUCA di BEPPO Concept
 
The BUCA di BEPPO concept was created in Minneapolis in 1993 by our founder,
Philip A. Roberts. Mr. Roberts designed the restaurants to take advantage of
the long-standing popularity of Italian cuisine and certain dominant consumer
trends, including the growing casualness of American society and an increasing
desire among consumers for value. The BUCA di BEPPO concept irreverently
exaggerates the cliches of traditional post-War neighborhood Italian/American
restaurants but also pays tribute to and emulates their reverence for food,
vibrant atmosphere, colorful decor and high degree of social interaction. After
the initial BUCA di BEPPO restaurants proved to be successful, Joseph P.
Micatrotto, a second generation Italian immigrant, joined our company as
President and CEO to help refine the concept and lead BUCA's national
expansion. The innovation of this concept has attracted national attention as
evidenced by national awards won by BUCA, including a 1998 "Hot Concepts!"
award from Nation's Restaurant News, and awards in all of our local markets.
 
Powerfully Flavored High Quality Food.  We believe that the authenticity,
quality and consistency of our food is the most important component of our
long-term success. In contrast to the levity of our decor and ambiance, we take
menu development and food preparation very seriously. Our menu is based on
authentic family recipes enjoyed for generations in the villages of Southern
Italy and then adapted to American ingredients. We make regular trips to
Southern Italy and Sicily to find new recipes for our menu that are then
extensively tested and refined before introduction in our restaurants.
 
Some of our most popular menu items include the BUCA di BEPPO 1893 salad,
chicken cacciatore, spaghetti with half-pound meat balls, eggplant parmigiana,
ravioli al pomodoro, veal marsala, garlic mashed potatoes, pizza arrabiatta and
tiramisu. Our foods, often seasoned with garlic and served with vine-ripened
tomatoes, communicate
 
                                       26
the pure, powerful flavors of the immigrant Southern Italian kitchen. We also
offer daily specials centered around a genre of Southern Italian cooking called
"cucina di povera," which translates as "cuisine of the poor." These daily
specials consist of year-round specials such as manicotti or cannelloni as well
as seasonal specials such as mozzarella caprese that is offered only in the
summer in order to assure the availability of high quality ingredients and to
take advantage of seasonal customer demand. We believe that our daily specials
play a vital role in keeping the menu fresh and allow us to test prospective
permanent menu items. In fiscal 1998, daily specials accounted for
approximately 16% of food sales.
 
To ensure that the food we are serving is of consistently high quality, we have
developed extensive quality control practices. For example, every member of our
kitchen staff must participate in a thorough training program. We also have
strict specifications that ensure only high quality ingredients are used in our
food. A kitchen manager at each restaurant is responsible for making a final
check of each item to assure it meets our high quality standards before it
leaves the kitchen.
 
Our menu pricing is consistent within a market, but may differ slightly from
one market to the next. Menu entrees range in price from $9.95 to $19.95 and
are designed to be shared by the entire party at the table. The average check
per guest is approximately $20.00, including beverages. In fiscal 1998,
alcoholic beverages, primarily table wine, accounted for 26.6% of total
restaurant sales.
 
Family-Style Serving and Ambiance. BUCA di BEPPO restaurants' oversized
portions, served family-style on large platters, are designed to overwhelm
guests with an abundance of high quality food. An order of our spaghetti and
meatballs, for example, features 2.5 pounds of pasta and three half-pound
meatballs, covered by a pound of marinara sauce. Our chicken cacciatore
consists of a whole chicken served on two pounds of garlic mashed potatoes,
ladled with cacciatore sauce and weighs seven pounds. Guests can enjoy their
meal with bottles of Italian table wine of up to five liters in size.
 
In family-style serving, each item is shared by the entire table, which
encourages guests to interact and enjoy the meal together. We locate menu
boards on our restaurant's walls instead of distributing individual menus,
encouraging guests to wander from their seats to read the menu. Guests take
note of what other tables have ordered and may interact with other parties. We
believe the fun and socially interactive dining experience typical of a meal at
one of our restaurants differentiates us from our competitors and promotes
guest loyalty from a wide range of guests. We maintain a policy of serving
dinner-only which reinforces our family-style concept.
 
We believe that serving guests family-style offers us a competitive advantage.
Because larger portions are more efficient to produce and serve, cost savings
are passed along to the guest. Furthermore, by exclusively serving larger
portions, we are able to consistently and emphatically make a value statement
to our guests. We reinforce this value by encouraging guests to take home their
extra food in our logo-bearing BUCA bags, allowing them to enjoy an additional
BUCA meal at home.
 
Irreverent Decor and Unique Layout. Our restaurants are designed with an
irreverence that exaggerates the cliches of traditional post-War
Italian/American neighborhood restaurants. Our restaurant exteriors are
typically clad in faux flagstone and painted Tuscan red, feature flashing bare
bulb signage, statuary, fake flowers and humorous neon window signs promising
"elegant dining," "sanitary bathrooms" and "air conditioning." Our restaurant
interiors are decorated with hundreds of vintage photos of Italian and
Italian/American families and celebrities, bright strings of Christmas lights
displayed year-round and numerous other icons of Italian heritage. Boxes of
pasta, cans of olive oil and roasted peppers and jugs of wine fill window sills
and shelves throughout our restaurants. Lively music from classic artists such
as Frank Sinatra and Dean Martin adds to the fun and energetic atmosphere. The
combined effect of these exaggerated cliches is a lighthearted, tongue-in-
cheek, "kitschy" atmosphere that makes BUCA di BEPPO restaurants fun and
entertaining destinations.
 
The individual layout of each BUCA di BEPPO restaurant in a market is unique.
The restaurant's collection of individual dining rooms provide a variety of
seating possibilities. We believe that this individuality reinforces the
 
                                       27
image of BUCA as a collection of quirky neighborhood restaurants. In most of
our restaurants, for example, guests must pass through the kitchen before being
seated. Some elements such as the signage, menu and service are consistent
throughout all restaurants. All restaurants feature a visible pizza kitchen,
several distinct dining rooms and a bar that is used primarily as a waiting
area.
 
BUCA di BEPPO restaurants are designed to accommodate groups, with a
predominance of tables seating four to six guests and many tables seating
parties of eight or more. Additionally, most locations feature a "Pope's Table"
and a "Kitchen Table." The Pope's Table is a large table that seats 16 to 20
people and occupies a marquee location in the restaurant. The Kitchen Table
seats six to ten people in the heart of the restaurant's loud and boisterous
kitchen, providing the ultimate BUCA di BEPPO experience.
 
Exemplary Guest Service. At BUCA, we are committed to guest satisfaction. From
the moment guests walk in the door, they are treated as part of the BUCA di
BEPPO family. The server ensures that first-time guests understand the BUCA di
BEPPO family-style servings and provides an explanation of the menu, if
necessary. When guests are ordering, our server highlights the daily specials
and helps them determine an appropriate amount of food to order. We emphasize
to our employees that they should consider the guest first in all decisions
they make. The restaurant's Paisano Partner interacts with guests to make them
feel welcome and is responsible for ensuring their satisfaction with the dining
experience. We also contract with an independent company to send its personnel
to dine in each of our restaurants unannounced at least twice each month. After
each visit, these anonymous diners issue a written report with both subjective
impressions and objective grading of our restaurants in several operational
areas.
 
Unit Level Economics
 
During fiscal 1998, our mature restaurants (those with at least two full years
of operating history) generated average restaurant sales of approximately $3.0
million. During fiscal 1998, these mature restaurants generated average cash
flow of approximately $693,000, or 23.5% of restaurant sales, and average
restaurant operating income of approximately $593,000, or 20.0% of restaurant
sales. We currently lease all but one of our restaurant locations and plan to
lease most, if not all, of our future restaurant sites. We anticipate that, on
average, new restaurants will require a cash investment of $1.0 million to $1.5
million. In fiscal 1998, our total cash investment per restaurant averaged
approximately $1.4 million, excluding preopening costs of approximately
$195,000. Preopening costs for future restaurants are expected to range from
$175,000 to $210,000 per restaurant. However, individual unit investment costs
could vary due to a variety of factors, including competition for sites,
location, construction costs, unit size and the mix of conversions, build-to-
suit and leased locations.
 
Our current restaurants range in size from 4,500 to 10,000 square feet and have
approximately 170 to 375 seats. We anticipate that future restaurants will
typically range in size from 7,000 to 9,000 square feet and have approximately
250 to 350 seats. From time to time, we have expanded the size of existing
restaurants to meet demand.
 
 
                                       28
Current Restaurant Locations
 
We currently own and operate the following 20 restaurants, located in 11
markets:
Location                                          Date Opened  Square Feet Seats
--------                                         ------------- ----------- -----
Minneapolis, Minnesota.......................... July 1993        4,465     172
St. Paul, Minnesota............................. May 1994         9,991     375
Eden Prairie, Minnesota......................... June 1995        8,025     230
Milwaukee, Wisconsin............................ November 1995    9,210     293
Palo Alto, California........................... July1996         5,192     197
Seattle, Washington............................. November 1996    8,213     328
Chicago, Illinois............................... May 1997         5,340     185
Wheeling, Illinois.............................. May 1997         6,426     225
San Francisco, California....................... August 1997      6,393     202
Lynnwood, Washington............................ November 1997    6,890     262
Pasadena, California............................ December 1997    6,739     250
Indianapolis, Indiana........................... February 1998    7,678     326
Encino, California.............................. March 1998       6,080     248
Redondo Beach, California....................... June 1998        6,152     272
Lombard, Illinois............................... July 1998        8,278     328
Scottsdale, Arizona............................. October 1998     8,230     298
Burnsville, Minnesota........................... November 1998    7,340     312
Cleveland, Ohio................................. November 1998    9,430     256
Kansas City, Kansas............................. December 1998    7,494     298
Louisville, Kentucky............................ January 1999     8,315     244
We expect that twelve additional restaurants will open during the remainder of
fiscal 1999. Construction has commenced on seven of these sites, one each in
Claremont, California; Denver, Colorado; Washington, D.C.; Des Moines, Iowa;
Detroit, Michigan; Buffalo, New York; and Columbus, Ohio. In addition, we have
10 signed leases for future sites, including five sites for restaurants we
expect to open in 1999. We also have entered into a lease for a 10,000 square
foot restaurant to be opened during fiscal 2000 at Universal Studios in Los
Angeles. We are currently negotiating additional leases for potential future
locations.
 
Expansion Strategy and Site Selection
 
Beginning in fiscal 1997, following the hiring of Joseph P. Micatrotto as our
President and CEO, we accelerated our rate of restaurant expansion. Mr.
Micatrotto previously had been instrumental in the expansion of two national
restaurant chains, Chi-Chi's Mexican Restaurants and Panda Express. Today we
are focused on growing our restaurant base in a rapid but disciplined manner.
We intend to open 13 new restaurants in fiscal 1999, of which one is already
open, seven are under construction and the remaining five have signed leases.
By the end of fiscal 1999, we plan to have 32 restaurants open in at least 17
markets. We intend to continue expanding BUCA primarily in metropolitan markets
of the United States with a population of at least 800,000 which we believe can
support multiple BUCA di BEPPO restaurants. We do, however, plan to enter one
or more smaller markets within the next 12 months. We believe that the majority
of our future growth will come from opening new restaurants. From time to time,
we will evaluate opportunities to acquire and convert other restaurant
operations to the BUCA di BEPPO concept, but we do not currently have any
definitive agreements, arrangements or understandings regarding any particular
acquisition.
 
We have designated teams of employees that are responsible for opening new
restaurant locations, including kitchen personnel and other individuals who are
trained as hosts, servers, bartenders and managers. Our training programs
enable us to promote existing employees and managers as new restaurants open.
We believe that through our training programs and the hiring of outside
personnel we will be able to support our expansion strategy.
 
 
                                       29
We believe that our concept is extremely flexible and can be successfully
operated in a number of different settings. We have located our restaurants in
both urban and suburban areas with equal success. Our restaurants have been
successfully opened both as freestanding structures and as tenants in larger
multi-purpose buildings. To date, all of our restaurant sites involved the
remodeling of existing structures. To develop efficiencies and to increase
flexibility with respect to locations, we have developed prototype designs for
new construction. While our restaurants typically share common interior decor
elements, the layouts of our restaurants differ to accommodate different types
of buildings and different square footage of available space.
 
We believe that a restaurant's location is a critical factor in determining its
success. Accordingly, we thoroughly analyze each prospective site before
signing a lease. Restaurant sites must be approved by the Real Estate Site
Approval Committee, consisting of two outside directors, our Chairman, CEO, CFO
and the prospective Divisional Vice President. As a dinner-only concept, we are
most concerned about locating restaurants close to areas where our guests
typically spend their evening hours. The criteria we consider when selecting a
site include: the site's visibility, traffic patterns, general accessibility
and availability of suitable parking, competition within the site's trade area,
availability of restaurant-level employees and proximity of shopping,
entertainment activities, office parks, and tourist attractions. In general, we
prefer to open our restaurants within larger metropolitan areas with higher
population densities and above-average household incomes.
 
Operations
 
Restaurant Management. Our ability to effectively manage restaurants over a
diverse geographic area will continue to be critical to our overall success. We
currently have three Divisional Vice Presidents of Operations who report
directly to the Chief Operations Officer. Each Divisional Vice President
supervises a multi-state geographic area and is expected to effectively manage
up to 15 restaurants. Our Divisional Vice Presidents supervise each Paisano
within his or her territory with the goal of achieving an expected return on
investment through the successful implementation and operation of the BUCA di
BEPPO concept. We believe that our Divisional Vice Presidents can accomplish
this broad supervisory task in large part because of the high caliber of our
Paisano Partners, who we also believe have more experience than the average
restaurant general manager in the industry. In addition, because we are a
dinner-only concept, the number of meal shifts that the Paisano Partner and,
indirectly, the Divisional Vice President, must supervise are approximately
one-half of most restaurants in the industry. The typical restaurant management
team consists of the Paisano Partner, Kitchen Manager, Assistant General
Manager and Assistant Kitchen Manager. Under the Paisano Partners Program, this
management team receives a percentage of incremental restaurant cash flow after
their restaurant achieves certain minimum performance levels. Each member of
our restaurant management team is cross-trained in all operational areas. As we
grow our restaurants and expand geographically, we expect to add additional
Divisional Vice Presidents.
 
Recruiting. We actively recruit and select individuals who share our passion of
guest service. Testing and multiple interviews are used to aid in the selection
of new employees at all levels. We have developed a competitive compensation
plan for restaurant management that includes a base salary, competitive
benefits package including a 401(k) plan, and participation in a management
incentive plan that rewards the restaurant management team for achieving
performance objectives. All of our employees are entitled to discounted meals
at our restaurants; in addition, all restaurant employees are invited to the
daily pre-shift meal held at each restaurant. We also enjoy the recruiting
advantage of being a one-meal-period-only restaurant concept, which provides
employees with a more regular schedule than they might have at other restaurant
concepts. In addition, because they are working only a dinner shift, where tips
are usually greater than other meals, servers realize better per hour
compensation than most other multiple meal concepts. It is our policy to
promote from within, but we recognize the need to supplement this policy with
outside recruiting at this stage of our growth and as new markets are opened.
 
Training. We provide all new employees with intensive training to ensure they
are provided with the tools to excel in their position. This training
encompasses classroom instruction, on-the-job training programs for each
position, and testing of the new employee's progress at pre-determined stages
within the training schedule. Each new member of the restaurant management team
receives a minimum of 12 weeks of training before being assigned to a
restaurant location. All management employees receive kitchen training. In
addition to the formal training
 
                                       30
programs, we maintain detailed operating procedure manuals, standards,
controls, food line management systems and a food culture book to complement
the training received at all levels.
 
Operational Control Systems. All of our restaurants use personal computer
systems integrated with point-of-sale and back-of-the-house management systems
to monitor restaurant sales, product costs and labor costs on a daily basis.
Financial controls are maintained through a centralized accounting system,
which includes a sophisticated theoretical food cost program and a labor
scheduling and tracking program. Physical inventories of food and beverage
items are taken on a weekly basis. Daily, weekly and monthly financial
information is provided to each restaurant and to the Divisional Vice
Presidents for analysis and comparison to our budget and to comparable
restaurants. We closely monitor restaurant sales, cost of sales, labor and
other restaurant trends on a daily, weekly and monthly basis. We believe that
our current systems are adequate for our planned expansion strategy.
 
Hours of Restaurant Operation. BUCA di BEPPO restaurants are open seven days a
week for dinner only, typically opening at 5:00 p.m. during the week and 4:00
p.m. on the weekends and closing at the Paisano's discretion, typically 10:00
p.m. on weekdays and 11:00 p.m. on weekends. Additionally, our restaurants open
at noon on selected holidays.
 
Marketing
 
Our marketing strategy is to communicate the BUCA di BEPPO brand through many
creative and non-traditional avenues. We focus our efforts on getting people in
the local community (particularly civic, business and media leaders) to talk
about the BUCA di BEPPO experience. During fiscal 1998, we spent an aggregate
of 2.5% of restaurant sales on marketing efforts. We expect to continue
investing approximately 2% to 3% of restaurant sales in marketing efforts in
the future, primarily in connection with the opening of new restaurants.
 
In connection with new restaurant openings, we contract with local public
relations firms to assist us in establishing and sustaining the BUCA di BEPPO
brand. By organizing events like pre-opening parties and concierge dinners,
these firms focus primarily on introducing BUCA di BEPPO restaurants to opinion
leaders, such as civic and media personalities, and to hospitality industry
leaders such as key hotel staff, meeting planners and convention and visitors
bureau representatives.
 
We sustain restaurant awareness primarily through unpaid media exposure and
word-of-mouth advertising, including grassroots neighborhood marketing efforts,
primarily by the Paisano Partner. BUCA di BEPPO restaurants have achieved
particular success by delivering a sample of menu items to drive-time radio
personalities and morning television hosts, earning free media exposure (and
often invitations for scheduled return engagements) while developing
relationships with high-profile media personalities.
 
To reinforce our image as a collection of unique neighborhood restaurants, the
Paisano Partner works diligently to establish a community presence. Through
ongoing neighborhood marketing efforts, supported by our marketing department,
the Paisano Partner establishes relationships with area businesses and
residents, participates in high-profile events and festivals, and takes
advantage of opportunities to introduce area residents and workers to the
restaurant. Because of their credibility as local business owners and community
members, Paisano Partners play an integral role in establishing BUCA di BEPPO
in the neighborhood.
 
We engage to a limited extent in paid advertising, including billboards, radio
spots, and newspaper and magazine ads. We also utilize a variety of printed
marketing materials, including restaurant location brochures, hotel concierge
cards, take-out menus and direct mailings. Typical themes in these materials
include: "Recorded Music in Every Room," "Cocktails in the Lounge and at Your
Table" and "Vinyl Booths Mean No Static Cling For the Ladies." All marketing
communications work to establish each of our restaurants as an irreverent,
distinct, casual and welcoming neighborhood immigrant Southern Italian
restaurant.
 
 
                                       31
Purchasing
 
We endeavor to obtain high quality menu ingredients and other supplies and
services for our operations from reliable sources at competitive prices. To
this end, we continually research and evaluate various ingredients and products
in an effort to maintain the highest quality and to be responsive to changing
consumer tastes. Our centralized purchasing staff, under the direction of our
Vice President of Purchasing, procures the products specified by our Food and
Beverage Department, specifies the products to be used at our restaurants,
designates the vendors and provides suppliers with detailed ingredient
specifications. To maximize purchasing efficiencies and to provide for the
freshest ingredients for our menu items, each restaurant's management
determines the quantities of food and supplies required. To obtain the lowest
possible prices for the required high quality and consistency, each restaurant
orders items primarily from our national food distributor, SYSCO Corporation,
on terms negotiated by our centralized purchasing staff. We believe that all
essential food and beverage products are available from several qualified
suppliers at competitive prices should an alternative source be required.
 
Competition
 
The restaurant industry is intensely competitive with respect to price,
service, the type and quality of food offered, location and other factors. We
have many well established competitors, both nationally and locally owned
Italian and non-Italian concepts, with substantially greater financial
resources and a longer history of operations than we do. We compete with other
restaurant and retail establishments for sites. Changes in consumer tastes,
economic conditions, demographic trends and the location and number of, and
type of food served by, competing restaurants could adversely affect our
business as could the unavailability of experienced management and hourly
employees.
 
Properties
 
All of our restaurants but one are located in leased facilities. Current
restaurant leases have expiration dates ranging from 2003 to 2018, with all of
the leases providing for five-year options to renew for at least one additional
term.
 
The building formerly housing our executive offices suffered extensive fire
damage in December 1998. Our executive offices are now temporarily located in
approximately 10,000 square feet of leased space in Minneapolis, Minnesota.
 
Employees
 
At January 31, 1999, we had 1,400 employees. Forty served in administrative or
executive capacities, 85 served as restaurant management personnel, and the
remainder were hourly restaurant personnel.
 
None of our employees are covered by collective bargaining agreements, and we
have never experienced an organized work stoppage or strike. We believe that
our working conditions and compensation packages are competitive and consider
relations with our employees to be very good.
 
Intellectual Property
 
We have registered the servicemarks "BUCA" and "BUCA di BEPPO" with the United
States Patent and Trademark Office. We believe that our trademarks and other
proprietary rights have significant value and are important to the marketing of
our restaurant concept. We have in the past and expect to continue to
vigorously protect our proprietary rights. We cannot predict, however, whether
steps taken by us to protect our proprietary
 
                                       32
rights will be adequate to prevent misappropriation of these rights or the use
by others of restaurant features based upon, or otherwise similar to, our
concept. It may be difficult for us to prevent others from copying elements of
our concept and any litigation to enforce our rights will likely be costly. In
addition, other local restaurant operations with names similar to those we use
may try to prevent us from using our marks in those locales.
 
Government Regulations
 
Our restaurants are subject to regulation by federal agencies and to licensing
and regulation by state and local health, sanitation, building, zoning, safety,
fire and other departments relating to the development and operation of
restaurants. These regulations include matters relating to environmental,
building, construction and zoning requirements and the preparation and sale of
food and alcoholic beverages. Our facilities are licensed and subject to
regulation under state and local fire, health and safety codes.
 
Each of our restaurants is required to obtain a license to sell alcoholic
beverages on the premises from a state authority and, in certain locations,
county and/or municipal authorities. Typically, licenses must be renewed
annually and may be revoked or suspended for cause at any time. Alcoholic
beverage control regulations relate to numerous aspects of the daily operations
of each of our restaurants, including minimum age of patrons and employees,
hours of operation, advertising, wholesale purchasing, inventory control and
handling, and storage and dispensing of alcoholic beverages. We have not
encountered any material problems relating to alcoholic beverage licenses to
date. The failure to receive or retain a liquor license in a particular
location could adversely affect that restaurant and our ability to obtain such
a license elsewhere.
 
We are subject to "dram-shop" statutes in the states in which restaurants are
located. These statutes generally provide a person injured by an intoxicated
person the right to recover damages from an establishment that wrongfully
served alcoholic beverages to the intoxicated individual. We carry liquor
liability coverage as part of our existing comprehensive general liability
insurance, which we believe is consistent with coverage carried by other
entities in the restaurant industry. Although we are covered by insurance, a
judgement against us under a dram-shop statute in excess of our liability
coverage could have a material adverse effect on us.
 
Our operations are also subject to federal and state laws governing such
matters as wages, working conditions, citizenship requirements and overtime.
Some states have set minimum wage requirements higher than the federal level.
Significant numbers of hourly personnel at our restaurants are paid at rates
related to the federal minimum wage and, accordingly, increases in the minimum
wage will increase labor costs. Other governmental initiatives such as mandated
health insurance, if implemented, could adversely affect us as well as the
restaurant industry in general. We are also subject to the Americans With
Disability Act of 1990, which, among other things, may require certain
renovations to its restaurants to meet federally mandated requirements. The
cost of these renovations is not expected to materially affect us.
 
Legal Proceedings
 
From time to time, we are a defendant in litigation arising in the ordinary
course of our business, including claims resulting from "slip and fall"
accidents, claims under federal and state laws governing access to public
accommodations, employment-related claims and claims from guests alleging
illness, injury or other food quality, health or operational concerns. To date,
none of such litigation, some of which is covered by insurance, has had a
material effect on us.
 
                                       33
MANAGEMENT
 
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
 
Set forth below is certain information concerning our executive officers,
directors and key employees:
NAME                     AGE              POSITION WITH COMPANY
  ----                     --- ------------------------------------------------
Joseph P.
   Micatrotto(/1/)          47 President, Chief Executive Officer and Director
  Greg A. Gadel             39 Chief Financial Officer, Treasurer and Secretary
  Leonard A. Ghilani        38 Chief Operations Officer
  Philip A. 
   Roberts(/1/)(/2/)        60 Chairman of the Board
  Peter J. Mihajlov(/3/)    59 Director
  Don W. Hays(/2/)          57 Director
  John P. Whaley(/2/)(/3/)  46 Director
  David Yarnell(/1/)(/3/)   43 Director
  Paul Zepf(/2/)            34 Director
  Daniel E. Durenberger     31 Divisional Vice President
  Joseph J. Kohaut          35 Divisional Vice President
  Joseph J. Talarico        44 Divisional Vice President
  John J. Motschenbacher    36 Vice President of Finance and Purchasing
  Robert R. Parent          51 Vice President of Development
  Jennifer Percival         39 Vice President of Family Relations
  Vittorio Renda            44 Vice President of Food and Beverage
  Lane Schmiesing           42 Vice President of Marketing
---------------
  (/1/)Member of Executive Committee.
  (/2/)Member of the Compensation Committee.
  (/3/)Member of Audit Committee.
 
Joseph P. Micatrotto joined BUCA in 1996 as our President and Chief Executive
Officer. Mr. Micatrotto's twenty-five year career in restaurant management
includes being CEO of Panda Management Company, Inc. where he led the company's
expansion and president and CEO of Chi-Chi's Mexican Restaurant, Inc., where he
was instrumental in its national growth. Mr. Micatrotto is active on various
boards and industry groups. He has been nominated to the Board of Directors of
the National Restaurant Association.
 
Greg A. Gadel has been BUCA's Chief Financial Officer and Treasurer since 1997
and its Secretary since 1998. Prior to joining BUCA, Mr. Gadel was CFO for the
32-unit restaurant chain, Leeann Chin. In addition he previously was vice
president and controller for the largest Chi-Chi's franchisee, Consul
Corporation. He has also worked for Marriot, McDonald's and the Deloitte &
Touche LLP accounting firm, and has over 15 years experience in the restaurant
industry. Mr. Gadel is a member of the American Institute of Certified Public
Accountants.
 
Leonard A. Ghilani joined BUCA in 1998 as a Divisional Vice President and was
named Chief Operations Officer in 1999. He was previously with Einstein Noah
Bagel Corporation where he spent two and a half years as Vice President of
Operations. Prior to his employment with Einstein Noah Bagel Corporation, Mr.
Ghilani worked for Chi-Chi's Mexican Restaurant, Inc., where he held several
positions including Divisional Vice President, District Manager, General
Manager and Kitchen Manager.
 
Philip A. Roberts co-founded BUCA in 1993 and currently serves as Chairman of
our Board of Directors. Mr. Roberts is also a principal of Parasole Restaurant
Holdings, Inc., which he co-founded in 1986. Mr. Roberts has been involved in
the restaurant industry since 1977, when he co-founded with Mr. Mihajlov the
first of several privately-held restaurant companies, which later merged to
form Parasole.
 
 
                                       34
Peter J. Mihajlov co-founded BUCA in 1993 and currently serves as a Director.
Mr. Mihajlov is also a principal of Parasole, which he co-founded in 1986. Mr.
Mihajlov has been in the restaurant industry since 1977, when he and Mr.
Roberts co-founded the first of several privately-held restaurant companies,
which later merged to form Parasole. Prior to that, Mr. Mihajlov served in a
variety of marketing and business management positions within The Pillsbury
Company over the course of seventeen years.
 
Don W. Hays co-founded BUCA in 1993 and currently serves as a Director. Mr.
Hays is also a principal of Parasole, which he co-founded in 1986. Prior to
that, Mr. Hays founded Hospitality Management Group, Inc. in 1977, which later
merged to form Parasole. Mr. Hays has been involved in the restaurant industry
since 1964, when he joined Dayton's Restaurant Division, of which he later
became Director of Operations.
 
John P. Whaley has served as a Director of BUCA since 1996. He is a partner of
Norwest Equity Partners and Norwest Venture Partners, and has been a partner or
officer of these and affiliated private equity investment funds since 1977. He
is also a director of several privately held companies.
 
David Yarnell has served as a Director of BUCA since 1996. He has been a Vice
President of Consumer Venture Partners since June 1993. He has been a General
Partner of Brand Equity Ventures since April 1997. Mr. Yarnell also serves on
the Board of Directors of Cyberian Outpost, a publicly held company.
 
Paul Zepf  has served as a Director of BUCA since 1998. He has been a Managing
Director of Centre Partners Management L.L.C., which manages Centre Capital
Investors II, L.P. and related private equity investment funds, since 1995. He
is also a Managing Director of Corporate Advisors, L.P., which he joined in
1989. He is a director of The Learning Company, LaSalle Re Holdings Limited,
and Firearms Training Systems, Inc. He is also a director of Nationwide Credit,
Inc., a privately held company with public bonds.
 
Daniel E. Durenberger joined BUCA in 1993 as Paisano of the original BUCA di
BEPPO restaurant in Minneapolis, Minnesota and was promoted to his current
position of Divisional Vice President in 1998. From 1996 to 1998, Mr.
Durenberger served as Director of Training and Team Development at BUCA. Prior
to joining BUCA, he held various management positions at the Madison Hotel in
Washington, D.C.
 
Joseph J. Kohaut joined BUCA in 1997 as a Divisional Vice President. From 1994
to 1997, Mr. Kohaut was a regional manager with Panda Management Company, Inc.,
where he was responsible for developing his region from five to 14 operating
units. Mr. Kohaut has more than 18 years of restaurant industry experience,
including general management and operations positions with Chi-Chi's and Ground
Round prior to joining Panda.
 
Joseph J. Talarico joined BUCA in 1997 as a Divisional Vice President. Prior to
joining BUCA, Mr. Talarico served as Vice President of Development and Training
for the Chevy's Mexican Restaurant division of Pepsico from 1994 to 1997. For
the 12 years prior to joining Pepsico, Mr. Talarico held several positions with
Chi-Chi's, including General Manager, Area Supervisor and Vice President of
Training and Development.
 
John J. Motschenbacher joined BUCA as Corporate Controller in 1998 and was
named Vice President of Finance and Purchasing in 1999. Prior to joining BUCA,
Mr. Motschenbacher held the position of Controller at Cafe Odyssey, Leann Chin
and Bon Appetit. He also held various accounting positions at Consul
Corporation, the largest Chi-Chi's franchisee.
 
Robert R. Parent joined BUCA in 1998 as Vice President of Development. He was
previously with Don Pablo's, the Dallas-based division of Apple South, Inc.
(renamed Avado Brands, Inc.) and operator of the 93-unit Don Pablo's Mexican
restaurant chain, where he served as Senior Vice President of Development. Mr.
Parent brings 17 years of retail and restaurant site development experience to
BUCA. He previously held various real estate development positions with the Red
Lobster and Olive Garden casual dining restaurant chains.
 
Jennifer Percival joined BUCA in 1999 as Vice President of Family Resources.
Ms. Percival was previously with Lufthansa Service USA Corp.'s Venice Market
division, a Dallas-based company operating in-flight catering and
 
                                       35
specialty concepts, where she served as Vice President of Human Resources for
the U.S. Ms. Percival has more than 20 years of restaurant industry and human
resources experience. Prior to her work with Lufthansa, she held various
management and human resources positions with La Madeleine and TGI Friday's
restaurant companies.
 
Vittorio Renda has been with BUCA since 1993, first as its Director of Culinary
Development and since 1996 as Vice President of Food and Beverage. From 1982 to
1993, Mr. Renda served in various culinary and management roles for Parasole
and its predecessor companies, with the exception of 1989-1991 when he was
General Manager and Executive Chef with the DeBartolo Corporation. Mr. Renda
developed his culinary skills working throughout Italy in the twelve years
prior to joining Parasole. Mr. Renda was born and raised in Calabria, Italy.
 
Lane Schmiesing joined BUCA in 1997 as Vice President of Marketing. He was
formerly with Rare Hospitality, Inc., where he spent three years as Vice
President of Marketing. He brings to BUCA 20 years of restaurant marketing
experience. He has developed award winning advertising and promotional
campaigns for such brands as Dairy Queen, Bonanza Restaurants and Longhorn
Steakhouses. A member of the Board of Directors of the Marketing Executive
Group of the National Restaurant Association, he is also a frequent guest
lecturer at colleges and universities on the topics of strategic marketing and
brand identity.
 
BOARD OF DIRECTORS; COMMITTEES
 
Our Board consists of seven members. Members of the Board are elected each year
at our annual meeting of shareholders, and serve until their respective
successors have been elected and qualified. Pursuant to the terms of Mr.
Micatrotto's employment agreement, the Board is required to use its best
efforts to cause Mr. Micatrotto to continue to be elected to the Board as long
as he is our Chief Executive Officer.
 
The Executive Committee of the Board, comprised of Messrs. Micatrotto, Roberts
and Yarnell, provides advice and counsel to the Chief Executive Officer
regarding the day to day operations of BUCA. While the Executive Committee may
recommend policies and actions for the Board's consideration, it does not have
the authority to take any action on behalf of the Board.
 
The Compensation Committee of the Board, comprised of Messrs. Roberts, Hays,
Whaley and Zepf, is responsible for reviewing and establishing the compensation
structure for our officers and directors, including salaries, participation in
incentive compensation and benefit plans, stock option plans and other forms of
compensation, and is responsible for administering our 1996 Incentive Plan and
the Stock Option Plan for Non-employee Directors. See "Stock Incentive Plan and
Stock Options."
 
The Audit Committee of the Board, comprised of Messrs. Mihajlov, Whaley and
Yarnell, is responsible for recommending to the Board our independent auditors,
analyzing the reports and recommendations of the auditors and reviewing
internal audit procedures and controls.
 
LIMITATION OF LIABILITY AND INDEMNIFICATION
 
Pursuant to provisions of the Minnesota Business Corporation Act, we have
adopted provisions in our Articles of Incorporation that provide that our
directors shall not be personally liable for monetary damages to the company or
our shareholders for a breach of fiduciary duty as a director to the full
extent that the act permits the limitation or elimination of the liability of
directors.
 
DIRECTOR COMPENSATION
 
Our directors are reimbursed for certain reasonable expenses incurred in
attending Board meetings. Directors who are also employees of the company
receive no remuneration for services as members of the Board or any board
committee. Directors who are not employed by the company have received certain
grants of stock options. See "Stock Incentive Plans and Stock Options."
 
                                       36
Executive Compensation
 
Summary Compensation Table. The following table contains information concerning
compensation for fiscal 1998 earned by our President and Chief Executive
Officer and our Chief Financial Officer, our executive officers whose total
salary and bonus for this period exceeded $100,000.
 
                     Fiscal 1998 Summary Compensation Table
Long-Term
                                                                     Compensation
                                            Annual Compensation         Awards
                                        ---------------------------  ------------
                                                       Other Annual   Securities
               Name and                 Salary  Bonus  Compensation   Underlying
          Principal Position              ($)    ($)       ($)       Options (#)
          ------------------            ------- ------ ------------  ------------
Joseph P. Micatrotto................... 300,573 39,339  65,200(/1/)     13,333
 President and Chief Executive Officer
Greg A. Gadel.......................... 135,000 54,000   6,000(/2/)     23,333
 Chief Financial Officer
---------------
 
(/1/)Includes car allowance, living expenses and college tuition for Mr.
     Micatrotto's child.
(/2/)Represents car allowance.
 
Stock Option Grants Table. The following table sets forth certain information
concerning all stock options granted during fiscal 1998 to the named executive
officers. We did not grant any stock appreciation rights or restricted stock
awards during fiscal 1998.
 
                        Fiscal 1998 Stock Option Grants
Potential Realizable
                                                                                         Value at Assumed
                                                                                       Annual Rates of Stock
                                                                                      Price Appreciation For
                                                               Option Term               Option Term(/2/)
                                                     -------------------------------- -----------------------
                         Number of      Percent of
                           Shares      Total Options
                         Underlying     Granted to    Exercise or
                          Options      Employees in    Base Price      Expiration
          Name            Granted          1998      ($/Share)(/1/)       Date          5% ($)      10% ($)
          ----           ----------    ------------- -------------- ----------------- ----------- -----------
Joseph P. Micatrotto....   13,333(/3/)     5.25           7.68      December 15, 2008     147,360     295,300
Greg A. Gadel...........   23,333(/4/)     9.19           7.68      December 15, 2008     257,883     516,780
---------------
 
(/1/)The exercise price may be paid in cash, in shares of common stock valued
     at fair market value on the exercise date, or in a combination of cash and
     shares.
(/2/)The hypothetical potential appreciation shown in these columns reflects
     the required calculations at annual assumed appreciation rates of 5% and
     10%, as set by the Securities and Exchange Commission, and therefore is
     not intended to represent either historical appreciation or anticipated
     future appreciation of the common stock.
(/3/)The entire grant of options vested immediately upon grant and all options
     are transferrable.
(/4/)The grant vests 20% per year beginning one year from the date of grant.
 
No stock options were exercised by the named executive officers during fiscal
1998. Mr. Micattrotto also received certain options to purchase common stock in
February 1999 in connection with the amendment of his employment agreement. See
"Employment Agreements."
 
Fiscal Year-End Option Value Table. The following table sets forth certain
information concerning unexercised stock options held by the named executive
officers as of fiscal 1998 year-end.
 
                                       37
AGGREGATE 1998 FISCAL YEAR-END OPTION VALUE TABLE
NUMBER OF SHARES              VALUE OF
                              UNDERLYING UNEXERCISED         IN-THE-MONEY
                                    OPTIONS AT                OPTIONS AT
                                 DECEMBER 27, 1998      DECEMBER 27, 1998(/1/)
                             ------------------------- -------------------------
NAME                         EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----                         ----------- ------------- ----------- -------------
Joseph P. Micatrotto........   131,520      140,000    $1,016,183    $822,500
Greg A. Gadel...............    10,333       79,666        58,456     321,507
---------------
 
(/1/)There was no public trading market for the common stock as of December
     27, 1998. Accordingly, these values have been calculated, in accordance
     with the rules of the SEC, on the basis of the initial public offering
     price per share minus the applicable exercise price per share.
 
EMPLOYMENT AGREEMENTS
 
We entered into an employment agreement with Joseph P. Micatrotto on July 22,
1996, which was subsequently amended and restated in February 1999. Under the
terms of the agreement, Mr. Micatrotto is currently serving as our President
and Chief Executive Officer for a term expiring on December 31, 2003. The
agreement provides that Mr. Micatrotto's annual salary will be $325,000 for
the current year, $335,000 for the year ended December 31, 2000, $350,000 for
the year ended December 31, 2001 and for the remainder of the term it will be
an amount determined by the Board, but not less than the prior year's amount.
Mr. Micatrotto is eligible to receive a yearly bonus based upon certain
performance criteria established by the Board. In connection with the
amendment of Mr. Micatrotto's employment agreement in February 1999,
Mr. Micatrotto received options to purchase 126,666 shares of our common stock
at an exercise price of $11.25 per share, 6,666 of which vest on each of
December 31, 1999, 2000 and 2001 and 53,334 of which vest on each of December
31, 2002 and 2003. We also have agreed to reimburse Mr. Micatrotto's
reasonable and necessary business expenses. Mr. Micatrotto is entitled to the
following termination benefits:
 
    .     If Mr. Micatrotto is terminated by us for cause (as defined in the
          agreement) or if Mr. Micatrotto terminates his employment, he will
          receive no additional compensation or termination benefits.
 
    .     If Mr. Micatrotto is terminated because of death or physical or
          mental disability, he or his estate will be entitled to a
          termination payment of two years' base salary then in effect,
          payable in 24 equal monthly installments.
 
    .     If Mr. Micatrotto terminates his employment upon 30 days' prior
          written notice following a change in control of the company (as
          defined in the agreement), because his duties are substantially
          reduced or negatively altered (as defined in the agreement)
          without his prior written consent, or if Mr. Micatrotto's
          employment is terminated by us without cause following a change in
          control or within 180 days prior to a change in control and the
          termination is related to the change in control, he will be
          entitled to a termination payment of 18 months' base salary then
          in effect, payable in 18 monthly installments. If Mr. Micatrotto
          terminates employment as a result of a change in control, but his
          duties have not been substantially reduced or negatively altered,
          he will be entitled to a termination payment of 12 months' base
          salary then in effect, payable in 12 monthly installments.
 
    .     If Mr. Micatrotto is terminated by us without cause and not
          associated with a change in control, he will be entitled to a
          termination payment of 18 months' base salary then in effect,
          payable in 18 monthly installments.
 
The agreement also contains certain fringe benefits, confidentiality and non-
competition provisions. See "Executive Compensation."
 
                                      38
On April 1, 1997, we entered into a letter agreement with Greg A. Gadel under
which Mr. Gadel will be entitled one year's base compensation in effect at the
time of termination if his employment is terminated as a result of a change in
control of BUCA or if he terminates his employment following a change in
control if his duties are substantially reduced or negatively altered.
 
Stock Incentive Plan and Stock Options
 
1996 Stock Incentive Plan. The 1996 Stock Incentive Plan of BUCA, Inc. and
Affiliated Companies provides an incentive to our key employees through the
award of stock options, stock appreciation rights, restricted stock, restricted
stock units, stock-based awards, or other performance awards that may be
granted in cash, shares of stock, or other property and are related to
performance goals. The plan is administered by the Compensation Committee of
the Board. The committee has full power and authority, subject to the terms of
the plan, to designate participants and the type and terms of any awards. Any
options granted may be incentive stock options or nonqualified stock options,
must be for no longer than 10 years and, except under limited circumstances,
are not transferable. The base price for any stock appreciation right must be
not less than 100% of the fair market value of a share of stock at the date of
grant.
 
The plan will be effective until October 1, 2006, but may be amended, altered,
suspended or discontinued at any time by the Board, subject to certain limited
exceptions. We have reserved 1,500,000 shares for issuance under the plan.
 
Stock Option Plan for Non-Employee Directors. The Stock Option Plan for Non-
Employee Directors is also administered by the Compensation Committee of the
Board. Prior to its termination in February 1999, the plan provided for option
grants of common stock to each director who was not an employee of BUCA and had
not been an employee for at least one year, in the amount of 1,333 shares on
first election or appointment to the Board and 666 shares on each of the
following anniversaries. The purchase price was 100% of the fair market value
of the common stock, as defined in the plan, at the time the option was
granted. The term of each option is ten years; however, the option is not
exercisable for the first year and will terminate if the optionee ceases to be
a director in the one-year period following the grant of the option. The
options are not transferable other than by will or the laws of descent and
distribution. We have reserved 26,666 shares for issuance under the plan. All
options outstanding under the plan when terminated shall remain outstanding. In
connection with the termination of the plan, the Board approved grants of
options to purchase 8,000 shares of common stock to each of the six non-
employee directors of BUCA under the 1996 Stock Incentive Plan. These options
have an exercise price of $11.25 per share, are immediately exercisable and
expire 10 years after grant.
 
Paisano Partners Program. We have established the Paisano Partners Programs for
our general managers, kitchen managers and assistant managers. The Paisano
Partners Program for general managers has three primary components: profit
sharing, the purchase of shares of our common stock and a stock option grant.
The profit sharing component allows the general manager to participate in the
profits of the restaurant he or she manages. In order to participate in the
Paisano Partners Program, general managers are required to purchase shares of
our common stock worth approximately $20,000, at fair market value. We will
also loan the general managers the purchase price of the stock at 8% interest,
with the entire amount payable over five years. Under the stock purchase
agreement we enter into with each general manager, we have certain repurchase
rights regarding the stock. General managers also receive a one-time option
grant to purchase 2,000 shares of our common stock at fair market value on the
date of grant. The options are exercisable only upon completion of five years
of employment as a Paisano Partner and expire 10 years after the date of grant.
Participants in the Paisano Partners Program for kitchen managers participate
in profit sharing and receive a one-time option grant to purchase 1,000 shares
of our common stock on the same terms as that provided to general managers, but
have no right to purchase shares under the program. Participants in the Paisano
Partners Program for assistant managers participate in profit sharing but
receive no options and have no right to purchase shares.
 
Compensation Committee Interlocks and Insider Participation
 
Philip A. Roberts, Don W. Hays, John P. Whaley and Paul Zepf, directors of
BUCA, are members of the Board's Compensation Committee.
 
                                       39
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
On September 30, 1996, we were spun off from our parent, Parasole Restaurant
Holdings, Inc. through a share dividend of our common stock pro rata among the
Parasole shareholders. The Parasole shareholders at the time of the dividend
included the Parasole Employer Stock Ownership Trust, owner of more than 5% of
a class of our capital stock, and Philip A. Roberts, Peter J. Mihajlov and Don
W. Hays, directors of the company and owners of more than 5% of a class of our
capital stock.
 
Series A Preferred Financing. In October 1996, we sold shares of Series A
Convertible Preferred Stock convertible into 1,493,331 shares of common stock
for an aggregate purchase price of $8,400,000, or $5.625 per common share. Upon
completion of this offering, all shares of our outstanding Series A Convertible
Preferred Stock will automatically convert into shares of common stock.
 
The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series A Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:
5% Shareholders(/1/)                                  Shares Purchased(/2/)
     --------------------                                  ---------------------
Norwest Equity Partners V, L.P.......................        711,111
     Consumer Venture Partners II, L.P....................        266,666
     Northwood Ventures...................................        266,666
     Regent Capital Partners, L.P.........................        177,778
---------------
 
(/1/)See notes to "Principal and Selling Shareholders" for information relating
     to the beneficial ownership of shares and identification of affiliated
     shareholders.
(/2/)Represents number of shares of common stock issuable upon conversion of
     purchased shares of Series A Convertible Preferred Stock.
 
Series B Preferred Financing. In September 1997, we sold shares of Series B
Convertible Preferred Stock convertible into 640,739 shares of common stock for
an aggregate purchase price of $4,324,999.50, or $6.75 per common share. In
December 1997, we sold additional shares of Series B Convertible Preferred
Stock convertible into 640,738 shares of common stock for an aggregate purchase
price of $4,324,999.50, or $6.75 per common share. Upon completion of this
offering, all shares of our outstanding Series B Convertible Preferred Stock
will automatically convert into shares of common stock.
 
The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series B Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:
5% Shareholders(/1/)                                  Shares Purchased(/2/)
     --------------------                                  ---------------------
Norwest Equity Partners V, L.P.......................        370,370
     National Dining Concepts, Inc........................        296,296
     Walden Investors.....................................        237,036
     Consumer Venture Partners II, L.P....................        148,148
     Northwood Ventures...................................        148,147
---------------
 
(/1/)See notes to "Principal and Selling Shareholders" for information relating
     to the beneficial ownership of shares and identification of affiliated
     shareholders.
(/2/)Represents number of shares of common stock issuable upon conversion of
     purchased shares of Series B Convertible Preferred Stock.
 
Series C Preferred Financing. In October 1998, we sold shares of Series C
Convertible Preferred Stock convertible into 1,092,679 shares of common stock
and related contingent value rights for an aggregate purchase price of
$8,400,007.02, or $7.6875 per common share. In December 1998, we sold
additional shares of Series C Convertible Preferred Stock convertible into
637,752 shares of common stock and related contingent value rights for an
aggregate purchase price of $5,000,000, or $7.84 per common share. The
contingent value rights entitle the holders to receive, in the aggregate, up to
610,082 shares of common stock if certain events regarding our common stock do
not occur prior to October 2001.
 
Upon completion of this offering, all shares of our outstanding Series C
Convertible Preferred Stock will automatically convert into shares of common
stock and the related contingent value rights will terminate. In
 
                                       40
connection with such conversion and termination, an aggregate of 40,195
additional shares of common stock will be issued to the holders of the Series C
Convertible Preferred Stock immediately after the completion of this offering.
 
The following beneficial holders of more than 5% of a class of our capital
stock purchased shares of the Series C Convertible Preferred Stock having an
aggregate purchase price of at least $60,000:
5% SHAREHOLDERS(/1/)                                  SHARES PURCHASED(/2/)
     --------------------                                  ---------------------
Centre Capital Investors II, L.P.....................       1,288,156
     Norwest Equity Partners V, L.P.......................         282,802
     Northwood Ventures...................................          65,040
     Walden-SBIC, L.P.....................................          45,994
     Regent Capital Partners, L.P.........................          48,439
---------------
 
(/1/)See notes to "Principal and Selling Shareholders" for information relating
     to the beneficial ownership of shares and identification of affiliated
     shareholders.
(/2/)Represents number of shares of common stock issuable upon conversion of
     purchased shares of Series C Convertible Preferred Stock.
 
SUBORDINATED DEBT TRANSACTIONS. In October 1997, we entered into a subordinated
loan transaction under which we borrowed $2,500,000, including $500,000 from
Regent Capital Partners, L.P. Regent is a beneficial owner of more than 5% of a
class of our capital stock. In connection with the transaction, we also issued
warrants to purchase 16,111 shares of our common stock at $0.01 per share to
Regent. In May 1998, we borrowed an additional $3,500,000, including $1,500,000
from Regent. In connection with the May transaction, we also issued warrants to
purchase 48,332 shares of our common stock at $0.01 per share to Regent. The
indebtedness was repaid by us from amounts borrowed under our current credit
facilities.
 
In connection with these subordinated debt transactions, we issued warrants to
purchase an aggregate of 66,663 shares of our common stock at $0.01 per share
to the purchasers of our Series B Convertible Preferred Stock. The warrants
vest upon completion of our initial public offering, but only if the public
offering price per share is less than $13.50.
 
AGREEMENTS WITH PARASOLE. We have entered into an Amended and Restated
Management Agreement dated January 1, 1997, as amended, with Parasole. Philip
Roberts, Don Hays and Peter Mihajlov are officers, directors and shareholders
of Parasole as well as our directors and holders of more than 5% of a class of
our capital stock. Under the management agreement, Parasole provides
development and design support in connection with our new restaurants. In
exchange for these services, we pay Parasole a fee of $12,500 for each new
restaurant we open. Prior to the amendment of the management agreement, we
agreed to pay Parasole an accounting charge of $1,000 per month for the first
24 months after a new restaurant's opening. While we no longer incur new
charges under the amended management agreement, the 24-month period has not
expired for all of our restaurants opened prior to the amendment of the
management agreement. The amount paid by us to Parasole under the management
agreement in fiscal 1996 was $354,000, in fiscal 1997 was $270,000 and fiscal
1998 was $248,000.
 
We have a vendor relationship with Parasole Good Earth Bakery, owned by
Parasole, through which the bakery provides various baked goods to our
restaurants in the Minneapolis/St. Paul market. The relationship can be
terminated at any time at our discretion. The amount paid by us to the bakery
in fiscal 1996 was $211,000, in fiscal 1997 was $180,000, and in fiscal 1998
was $169,000. We believe the terms of the supply arrangement are at least as
favorable as we could obtain from unrelated parties.
 
We have a Redemption Agreement with Parasole under which we are obligated to
repurchase shares of our common stock held by the Parasole Employee Stock
Ownership Trust under certain conditions. The Parasole Employee Stock Ownership
Plan holds a total of 499,936 shares of our common stock. Parasole has similar
obligations regarding its stock held by our ESOP.
 
OTHER TRANSACTIONS. Steven Roberts, son of Philip Roberts, our director and a
holder of more than 5% of a class of our capital stock, from time to time
performs architectural services for us under a letter agreement. The amount
paid by us to Mr. Roberts for these services in fiscal 1998 was $99,947.
 
                                       41
PRINCIPAL AND SELLING SHAREHOLDERS
 
The following table sets forth certain information regarding the beneficial
ownership of our common stock as of the date of this Prospectus and as adjusted
to reflect the sale of the 2,500,000 shares of common stock offered by us by
this Prospectus by (i) each shareholder known by us to beneficially own more
than five percent of any class of our capital stock, (ii) each of our
directors, (iii) the named executive officers, (iv) all of our directors and
executive officers as a group and (v) the selling shareholders. Except as
otherwise noted below, each of the shareholders identified in the table has
sole voting and investment power with respect to the shares of common stock
beneficially owned by the person. The following table gives effect to the
conversion of all outstanding shares of our preferred stock, which will occur
automatically upon the closing of the offering and assumes that the price of
the common stock in this offering will be less than $13.50, causing certain
warrants we issued to vest.
SHARES
                                  BENEFICIALLY
                                 OWNED PRIOR TO            SHARES BENEFICIALLY
                                THE OFFERING(/1/) SHARES  OWNED AFTER OFFERING
                                -----------------  BEING  -----------------------
NAME OF BENEFICIAL OWNER         NUMBER   PERCENT OFFERED   NUMBER      PERCENT
------------------------        --------- ------- ------- ------------ ----------
Norwest Equity Partners V,
 L.P.(/2/)....................  1,400,072  19.8      --      1,400,072     14.6
Centre Capital Investors II,
 L.P.(/3/)....................  1,326,153  18.8      --      1,326,153     13.9
Philip A. Roberts(/4/)........  1,138,898  16.1   50,000     1,088,898     11.4
Peter J. Mihajlov(/5/)........  1,138,862  16.1   50,000     1,088,862     11.4
Don W. Hays(/6/)..............  1,132,330  16.0   50,000     1,082,330     11.3
Parasole Employee Stock Owner-
 ship Trust(/7/)..............    499,936   7.1      --        499,936      5.2
Northwood Ventures(/8/).......    491,058   6.9      --        491,058      5.1
Consumer Venture Partners II,
 L.P.(/9/)....................    431,854   6.1      --        431,854      4.5
National Dining Concepts,
 Inc.(/10/)...................    311,710   4.4      --        311.710      3.3
Walden Investors(/11/)........    296,420   4.2      --        296,420      3.1
Regent Capital Partners,
 L.P.(/12/)...................    299,569   4.2      --        299,569      3.1
John P. Whaley(/13/)..........  1,400,072  19.8      --      1,400,072     14.6
David Yarnell(/14/)...........    431,854   6.1      --        431,854      4.5
Paul Zepf(/15/)...............  1,326,153  18.7      --      1,326,153     13.9
Joseph P. Micatrotto(/16/)....    244,747   3.4      *         244,747      2.5
Greg A. Gadel(/17/)...........     10,335   --       --         10,335      --
All directors and officers as
 a group (9 persons)..........  5,531,701  76.0              5,381,701     55.0
---------------
 
*  Mr. Micatrotto has granted to the underwriters an option to purchase up to
   an additional 16,000 shares of common stock as part of their option to cover
   over-allotments, if any. This option will be exercised on a pro rata basis
   with the option granted by BUCA.
(/1/)Beneficial ownership is determined in accordance with the rules of the
     Securities and Exchange Commission that generally attribute beneficial
     ownership of securities to persons who possess sole or shared voting power
     and/or investment power with respect to those securities and includes
     shares of common stock issuable pursuant to the exercise of stock options
     that are immediately exercisable or exercisable within 60 days. Unless
     otherwise indicated, the persons or entities identified in this table have
     sole voting and investment power with respect to all shares shown as
     beneficially owned by them. Percentage ownership calculations prior to and
     after the offering are based on 7,059,557 shares and 9,559,557 shares,
     respectively, of common stock outstanding. As of February 17, 1999, we had
     107 shareholders of record.
(/2/)Includes (i) warrants for the purchase of 19,268 shares of common stock
     exercisable within 60 days held by Norwest; (ii) 6,522 shares of common
     stock to be issued to Norwest upon completion of the offering; and (iii)
     options for the purchase of 9,999 shares of common stock exercisable
     within 60 days granted to John P. Whaley. The address for Norwest is 222
     South Ninth Street, Minneapolis, Minnesota 55402.
(/3/)Includes (i) 602,561 shares owned by State Board of Administration of
     Florida; (ii) 129,122 shares owned by Centre Capital Tax-Exempt Investors
     II, L.P.; (iii) 86,338 shares owned by Centre Capital Offshore Investors
     II, L.P.; (iv) 67,264 shares owned by Centre Partners Coinvestment, L.P.;
     (v) 6,082 shares owned by Centre Parallel Management Partners, L.P.; (vi)
     9,240 shares of common stock to be issued upon completion of the offering
     to Centre Capital Investors II, L.P.; (vii) 14,033 shares of common stock
     to be issued upon completion of the offering to State Board of
     Administration of Florida; (viii) 3,007 shares of common stock to be
     issued upon completion of the offering to Centre Capital Tax-Exempt
     Investors II, L.P.; (ix) 2,010 shares of common stock to be issued upon
     completion of the offering to Centre Capital Offshore Investors II, L.P.;
     (x) 1,566 shares of common stock to be issued upon completion of the
     offering to Centre Partners Coinvestment, L.P.; (xi) 141 shares of common
     stock to be issued upon completion of the offering to Centre Parallel
     Management Partners, L.P.; and (xii) options for the purchase of 8,000
     shares of common stock exercisable within 60 days granted to Paul Zepf.
     The address for Centre is 30 Rockefeller Plaza, New York, New York 10020.
 
                                       42
(/4/)Includes (i) 133,333 shares owned by the Roberts Family Limited
     Partnership II; (ii) 106,666 shares owned by Mr. Roberts' wife; (iii)
     options for the purchase of 8,000 shares of common stock exercisable
     within 60 days granted to Mr. Roberts; (iv) options for the purchase of 35
     shares of common stock exercisable within 60 days granted to Mr. Robert's
     wife; (v) 499,936 shares of common stock held by the
   Parasole ESOT, of which Mr. Roberts is a co-trustee, and (vi) 97,226 shares
   of common stock held by the BUCA Employee Stock Ownership Plan, of which Mr.
   Roberts is a co-trustee. The address for Mr. Roberts is 1300 Nicollet Mall,
   Minneapolis, Minnesota 55403.
(/5/)Includes (i) 166,666 shares owned by the Mihajlov Family Limited
     Partnership; (ii) 106,666 shares owned by Mr. Mihajlov's wife; (iii)
     13,066 shares held in the Mihajlov Irrevocable Grandchildren's Trust; (iv)
     options for the purchase of 8,000 shares of common stock exercisable
     within 60 days granted to Mr. Mihajlov; (v) 499,936 shares of common stock
     held by the Parasole ESOT, of which Mr. Mihajlov is a co-trustee; and (vi)
     97,226 shares of common stock held by the BUCA Employee Stock Ownership
     Plan, of which Mr. Mihajlov is a co-trustee. The address for Mr. Mihajlov
     is 2908 Hennepin Avenue South, Minneapolis, Minnesota 55408.
(/6/)Includes (i) 133,333 shares owned by the Hays Family Limited Partnership;
     (ii) 100,133 shares owned by Mr. Hays' wife; (iii) options for the
     purchase of 8,000 shares of common stock exercisable within 60 days
     granted to Mr. Hays; (iv) 499,936 shares of common stock held by the
     Parasole ESOT, of which Mr. Hays is a co-trustee; and (v) 97,226 shares of
     common stock held by the BUCA Employee Stock Ownership Plan, of which Mr.
     Hays is a co-trustee. The address for Mr. Hays is 2908 Hennepin Avenue
     South, Minneapolis, Minnesota 55408.
(/7/)The address for the Parasole ESOT is 2908 Hennepin Avenue South,
     Minneapolis, Minnesota 55408.
(/8/)Includes (i) 89,466 shares owned by Northwood Capital Partners LLC; (ii)
     1,350 shares of common stock to be issued upon completion of the offering
     to Northwood Ventures; (iii) 149 shares of common stock to be issued upon
     completion of the offering to Northwood Capital Partners LLC; (iv)
     warrants for the purchase of 6,166 shares of common stock exercisable
     within 60 days held by Northwood Ventures; (v) warrants for the purchase
     of 1,541 shares of common stock exercisable within 60 days held by
     Northwood Capital Partners LLC; and (vi) options for the purchase of 1,999
     shares of common stock exercisable within 60 days granted to Henry T.
     Wilson. The address for Northwood is 485 Underhill Boulevard, Syosset, New
     York 11791.
(/9/)Includes (i) warrants for the purchase of 7,707 shares of common stock
     exercisable within 60 days held by Consumer Venture Partners II, L.P.; and
     (ii) options for the purchase of 9,333 shares of common stock exercisable
     within 60 days granted to David Yarnell. The address for Consumer Venture
     is 3 Pickwick Plaza, Greenwich, Connecticut 06830.
(/10/)Includes warrants to purchase 15,414 shares of common stock exercisable
      within 60 days held by National Dining Concepts, Inc. As of the date of
      this prospectus National Dining Concepts, Inc. holds 23.1% of our Series
      B Preferred Stock and upon closing of the offering, National Dining
      Concepts, Inc. will hold less than 5% of our Common Stock.
(/11/)Includes (i) 22,222 shares owned by Walden Ventures; (ii) 7,407 shares
      owned by Walden Capital Partners; (iii) 172,780 shares owned by Walden-
      SBIC, L.P.; (iv) 28,770 shares owned by Walden Technology Ventures II,
      L.P. (v) warrants to purchase 2,697 shares of common stock exercisable
      within 60 days held by Walden Investors; (vi) warrants to purchase 1,156
      shares of common stock exercisable within 60 days held by Walden
      Ventures; (vii) warrants to purchase 385 shares of common stock
      exercisable within 60 days held by Walden Capital Partners; (viii)
      warrants to purchase 6,936 shares of common stock exercisable within 60
      days held by Walden-SBIC, L.P.; (ix) warrants to purchase 1,156 shares of
      common stock exercisable within 60 days held by Walden Technology
      Ventures II, L.P.; (x) 909 shares of common stock to be issued upon
      completion of the offering to Walden-SBIC, L.P.; and (xi) 151 shares of
      common stock to be issued upon completion of the offering to Walden
      Technology Ventures II, L.P. As of the date of this Prospectus, Walden
      holds 18.5% of our Series B Preferred Stock and upon closing of the
      offering, Walden will hold less than 5% of our common stock. The address
      for Walden is 750 Battery Street, Suite 700, San Francisco, California
      94111.
(/12/)Includes (i) warrants to purchase 385 shares of common stock exercisable
      within 60 days held by Regent Capital Partners, L.P.; (ii) warrants to
      purchase 64,443 shares of common stock stock exercisable within 60 days
      held by Regent Capital Partners, L.P.; and (iii) 1,117 shares of common
      stock to be issued upon completion of the offering to Regent Capital
      Partners, L.P. As of the date of this prospectus, Regent Capital
      Partners, L.P. holds 11.9% of our Series A Preferred Stock and upon
      closing of the offering, Regent Capital Partners, L.P. will hold less
      than 5% of our common stock. The address for Regent Capital Partners,
      L.P. is 505 Park Avenue, Suite 1700, New York, New York 10022.
(/13/)Consists of options for the purchase of 9,999 shares of common stock
      exercisable within 60 days granted to Mr. Whaley and 1,390,073 shares of
      common stock owned by Norwest Equity Partners V, L.P. Mr. Whaley
      disclaims beneficial ownership of the 1,390,073 shares of common stock
      owned by Norwest Equity Partners V, L.P.
(/14/)Consists of (i) options for the purchase of 9,333 shares of common stock
      exercisable within 60 days granted to Mr. Yarnell; (ii) 414,814 shares of
      common stock owned by Consumer Venture Partners II, L.P.; and (iii)
      warrants for the purchase of 7,707 shares of common stock exercisable
      within 60 days held by Consumer Venture Partners II, L.P.
(/15/)Consists of (i) options to purchase 8,000 shares of common stock
      exercisable within 60 days granted to Mr. Zepf; and (ii) 1,318,153 shares
      of common stock beneficially owned by Centre Capital Investors II, L.P.
(/16/)Includes (i) options for the purchase of 131,521 shares of common stock
      exercisable within 60 days granted to Mr. Micatrotto and (ii) 97,226
      shares of common stock held by the BUCA Employee Stock Ownership Plan, of
      which Mr. Micatrotto is a co-trustee.
(/17/)Consists of options for the purchase of 10,335 shares of common stock
      exercisable within 60 days granted to Mr. Gadel.
 
                        SHARES ELIGIBLE FOR FUTURE SALE
 
Upon the consummation of this offering, the 2,650,000 shares sold in this
offering will be freely tradable without restriction under the Securities Act,
unless purchased by an "affiliate" of BUCA, as that term is defined in Rule 144
 
                                       43
under the Securities Act. Holders of an aggregate of            shares of
Common Stock, have entered into lock-up agreements under which they have agreed
that they will not, without the prior written consent of Piper Jaffray, offer,
sell or otherwise dispose of, any shares of Common Stock, options or warrants
to acquire shares of Common Stock or securities exchangeable for or convertible
into shares of Common Stock owned by them during the 180-day period following
the date of this Prospectus. Piper Jaffray may, in its sole discretion at any
time without notice, release any portion of the shares subject to the lock-up
agreements during the 180-day period. Upon closing of this offering,
shares of Common Stock will be eligible for immediate resale in the public
market subject to the limitations of Rule 144. Of such shares, approximately
          will be eligible for resale in the public market pursuant to Rule
144(k) without regard to the volume and manner of sale limitations in Rule 144.
 
In general, under Rule 144 as currently in effect, a person (or persons whose
shares are aggregated), including an affiliate, who has beneficially owned
shares for at least one year, within any three-month period commencing 90 days
after the date of this Prospectus, may sell a number of shares that does not
exceed the greater of (i) one percent of the number of shares of Common Stock
then outstanding (approximately 95,596 shares immediately after this offering)
or (ii) the average weekly trading volume of the Common Stock during the four
calendar weeks preceding such sale. Sales under Rule 144 are generally subject
to certain manner of sale provisions and notice requirements and to the
availability of current public information about the Company. Under Rule
144(k), a person who is not deemed to have been an affiliate of the Company at
any time during the 90 days preceding a sale, and who has beneficially owned
the shares proposed to be sold for at least two years, is entitled to sell such
shares without having to comply with the manner of sale, public information,
volume limitation or notice provisions of Rule 144. Under Rule 701 under the
Securities Act, persons who purchase shares upon exercise of options granted
prior to the effective date of this offering are entitled to sell such shares
90 days after the effective date of this offering in reliance on Rule 144,
without having to comply with the holding period requirements of Rule 144 and,
in the case of non-affiliates, without having to comply with the public
information, volume limitation or notice provisions of Rule 144.
 
We intend to file a registration statement on Form S-8 covering all shares of
common stock issuable upon exercise of stock options in effect on the date of
this Prospectus and stock options or other benefits to be granted under our
1996 Stock Incentive Plan and Stock Option Plan for Non-Employee Directors. We
have outstanding stock options with respect to an aggregate of approximately
1,034,154 shares of common stock as of the date of this Prospectus. Upon this
registration on Form S-8, an additional 1,034,154 shares of common stock,
together with any additional shares of common stock which will be issuable
pursuant to stock options or other benefits to be granted under the 1996 Stock
Incentive Plan, will be eligible for sale in the public market.
 
Prior to the offering, there has been no market for the common stock, and we
cannot predict the effect, if any, that public sales of shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Sales of substantial amounts of common stock in the public market
following the offering, or the perception that sales may occur, could adversely
affect the prevailing market price of the common stock and our ability to raise
capital through a public offering our equity securities. See "Risk Factors--Our
Common Stock may not have a Public Market."
 
                          DESCRIPTION OF CAPITAL STOCK
 
We are authorized to issue 21,893,000 shares of stock, par value $.01 per
share, of which 13,100,000 are designated as common shares, 2,396,800 are
designated as shares of Series A Convertible Preferred Stock, 2,100,000 are
designated as shares of Series B Convertible Preferred Stock, and 3,679,053 are
designated as shares of Series C Convertible Preferred Stock. Automatically
upon the closing of the offering, all outstanding shares of our preferred
stock, together with all accrued and unpaid dividends on the preferred stock,
will convert automatically into shares of common stock at the applicable
conversion price. As of the date of this Prospectus, we had 7,059,557 shares of
common stock outstanding, and 617,147 undesignated shares. In March 1999, we
will hold a shareholders' meeting for the purpose of increasing the number of
authorized shares of common stock to 20,000,000 and the number of undesignated
shares to 5,000,000 The following discussion assumes receipt of the required
approval for certain modification to the terms of the outstanding series of
preferred stock, which are necessary for the automatic conversion of the
preferred stock into common stock.
 
                                       44
Common Stock
 
Holders of common stock are entitled to one vote per share on all matters to be
voted upon by shareholders. All shares of common stock rank equally as to
voting and all other matters. The shares of common stock have no preemptive or
conversion rights, no redemption or sinking fund provisions, are not liable for
further call or assessment, and are not entitled to cumulative voting rights,
except for shares of common stock held in the Parasole Employee Stock Ownership
Trust and the Buca Employee Stock Ownership Plan, which have redemption rights
that will terminate upon the closing of this offering. See Note 6 to Notes to
Consolidated Financial Statements. The outstanding shares of common stock are
fully paid and non-assessable.
 
Subject to the prior rights of holders of preferred stock, the holders of
common stock are entitled to receive dividends when and as declared by the
Board out of funds legally available for dividends, when, as and if declared
and paid to the holders of common stock. We have never declared or paid cash
dividends. We currently intend to retain all future earnings for the operation
and expansion of our business and do not anticipate paying cash dividends on
the common stock in the foreseeable future. See "Dividend Policy."
 
Upon a liquidation of the company, after creditors had been paid in full and
after shares of any series of preferred stock had received the preferential
amounts to which the shares are entitled upon liquidation, the holders of
common stock would be entitled to receive a pro rata distribution per share of
the excess amount.
 
We have applied for listing of the common stock on the Nasdaq National Market
under the symbol "BUCA."
 
Preferred Stock
 
Upon completion of the offering, all of our issued and outstanding Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock, and Series C
Convertible Preferred Stock will be converted into an aggregate of 4,505,239
shares of common stock, at the applicable conversion price of each series of
preferred stock as provided in our Articles of Incorporation. Upon conversion,
all accrued and unpaid dividends on the preferred stock will be eliminated.
 
Additional Preferred Stock
 
The Articles of Incorporation empower the Board to issue the undesignated stock
from time to time in one or more series and to fix the designation, privileges,
preferences and rights and the qualifications, limitations and restrictions of
those shares, including dividend rights, conversion rights, voting rights,
redemption rights, terms of sinking funds, liquidation preferences and the
number of shares constituting any series or the designation of the series,
which could decrease the amount of earnings and assets available for
distribution to holders of common stock or adversely affect the rights and
powers, including voting rights, of the holders of the common stock without any
further vote or action by the shareholders. The rights of the holders of common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred shares that may be issued by us in the future. The
issuance of new preferred stock could have the effect of delaying or preventing
a change in control of the company or make removal of management more
difficult. Additionally, the issuance of new preferred stock may have the
effect of decreasing the market price of the common stock, and may adversely
affect the voting and other rights of the holders of common stock. While we
have no present intention to issue any shares of new preferred stock, any
issuance could have the effect of making it more difficult for a third party to
acquire a majority of our outstanding voting stock.
 
Series A Convertible Subordinated Debentures
 
We have outstanding $1.8 million in principal amount of Series A Convertible
Subordinated Debentures due July 30, 2001. Under the debentures, we have agreed
to pay interest at a rate adjusted semi-annually equal to one percent in excess
of the rate announced or published by U.S. Bank National Association as its
reference or prime rate in effect on the banking day immediately prior to
January 1 and July 1 of each year. The holders may elect to have their
debentures paid in full on July 30, 1999 and receive a premium payment from us
equal to 10% of the original principal sum of the debenture. Upon completion of
this offering, the holders of the debentures will have
 
                                       45
the right, for a period of one year, to covert the entire principal amount of
their debentures into shares of our common stock at a price per share equal to
60% of the price of the common stock being sold in this offering. If the holder
holds the debenture until maturity, the holder is entitled to a premium payment
from us equal to 20% of the original principal sum of the debenture.
 
STOCK OPTION
 
In 1998, we granted a non-qualified stock option to purchase up to 16,000
shares of our common stock at an exercise price of $6.75 per share to
1204 Harmon Partnership. The options vest in eight equal annual amounts
beginning on May 31, 1999. The option expires upon the earlier to occur of
May 31, 2008 or, at our option, upon payment to 1204 Harmon Partnership of the
excess of the fair market value of the common stock underlying the option over
the exercise price upon the occurrence of certain circumstances. The options
provide for adjustments in the number of shares (to the nearest whole share)
subject to the option and the exercise price to give effect to any distribution
of assets (other than regular dividends) or debt securities to holders of
common stock or any change made in the number of outstanding common stock by a
recapitalization, reclassification, combination, share dividend, share
division, share combination or other similar change.
 
WARRANTS
 
We issued warrants to purchase 156,800 shares of Series A Convertible Preferred
Stock at an exercise price of $3.75 per share to our placement agents in
connection with the private placement of our Series A Convertible Preferred
Stock in October 1996. These warrants became exercisable in May 1997 and expire
on October 23, 2003. Upon the closing of this offering, these warrants will
automatically convert into warrants to purchase 104,532 shares of common stock
at an exercise price of $5.625 per common share.
 
We issued warrants to purchase 50,000 shares of Series B Convertible Preferred
Stock at an exercise price of $4.50 per share to our placement agent in the
connection with the private placement of our Series B Convertible Preferred
Stock. These warrants become exercisable on October 31, 1997 and expire on
September 2, 2004. Upon closing of this offering, these warrants will
automatically convert into warrants to purchase 33,333 shares of common stock
at an exercise price of $6.75 per common share.
 
We issued warrants to purchase an aggregate of 66,663 shares of common stock at
an exercise price of $.01 per share to the purchasers of our Series B
Convertible Preferred Stock. These warrants will become vested and exercisable
if the public offering price per share in this offering is less than $13.50.
These warrants expire on September 30, 2002.
 
As partial consideration for subordinated loan financings of $6.0 million, we
issued warrants to purchase a total of 193,331 shares of common stock at an
exercise price of $.01 per share to our lenders. These warrants expire on
September 20, 2002 with respect to 80,555 shares and on June 30, 2003 with
respect to the remaining shares. We granted the warrantholders the right to
sell their warrants to us for a period of 30 days immediately prior to their
expiration at a purchase price equal to the fair market value of the shares of
common stock issuable upon exercise of the warrant. This right will expire upon
the closing of this offering.
 
All of these warrants provide for anti-dilution adjustments in the event of
stock splits, stock dividends, sales by us of our stock at, or issuance of
options or warrants containing an exercise price of, less than fair market
value or merger, consolidation, recapitalization or similar transactions.
 
REGISTRATION AND OTHER RIGHTS
 
We have granted registration rights to the holders of shares of common stock
issued in exchange for any of our preferred shares under the terms of the
Securities Purchase Agreement dated as of October 13, 1998 by and between us
and the purchasers named in the agreement. Following the closing of this
offering, approximately 4,643,104 shares of common stock, including 204,528
shares subject to outstanding warrants, will be entitled to these rights. Under
the terms of the Securities Purchase Agreement, the holders have the right to
require us to register their shares at our expense under certain circumstances.
In addition, the holders have the right to have any or all of their shares
included, at our expense, in a registration statement relating to common stock
filed by us, subject to certain limitations, including the right of an
underwriter to limit the number of the holders' shares to be
 
                                       46
included in the registration. In connection with any registration under these
provisions, we are required to indemnify the holders participating in an
offering against certain liabilities, including civil liabilities under the
Securities Act. Warrants to purchase an aggregate of 137,865 shares of our
common stock issued in connection with the sales of the Series A Convertible
Preferred Stock and the Series B Convertible Preferred Stock contain similar
registration rights provisions.
 
We also granted piggyback registration rights under the warrants to purchase
193,331 shares of our common stock granted to the lenders in our subordinated
debt transactions. See "Certain Relationships and Related Transactions--
Subordinated Debt Transactions." The rights are subject to certain limitations,
including the right of an underwriter to limit the number of the holders'
shares to be included in the registration. The warrants grant the holders the
right to sell the warrants back to us for a period of 30 days prior to their
expiration at a purchase price equal to the fair market value of the shares of
common stock issuable upon exercise of the warrants and grant the holders
certain co-sale rights with respect to sales of shares by Philip A. Roberts,
Peter J. Mihajlov, Don W. Hays, Joseph P. Micatrotto or Barbara Marshall.
 
Under the terms of a Non-Statutory Stock Option Agreement between us and 1204
Harmon Partnership, we have granted the holder piggyback registration rights
with respect to the 16,000 shares covered by the option agreement. The rights
are subject to certain limitations, including the right of an underwriter to
limit the number of the holders' shares to be included in the registration. In
connection with any registration under these provisions, we are required to
indemnify the holder participating in an offering against certain liabilities,
including civil liabilities under the Securities Act.
 
Certain Provisions of Minnesota Law
 
Certain provisions of Minnesota law described below could have an anti-takeover
effect. These provisions are intended to provide management flexibility to
enhance the likelihood of continuity and stability in the composition of our
Board of Directors and in the policies formulated by the Board and to
discourage an unsolicited takeover of the company, if the Board determines that
such a takeover is not in the best interests of the company and our
shareholders. However, these provisions could have the effect of discouraging
certain attempts to acquire the company which could deprive our shareholders of
opportunities to sell their shares of common stock at prices higher than
prevailing market prices.
 
Section 302A.671 of the Minnesota Statutes applies, with certain exceptions, to
any acquisitions of our voting stock (from a person other than us, and other
than in connection with certain mergers and exchanges to which we are party)
resulting in the beneficial ownership of 20% or more of the voting stock then
outstanding. Section 302A.671 requires approval of the granting of voting
rights for the shares received pursuant to any such acquisitions by a majority
vote of our shareholders. In general, shares acquired without this approval are
denied voting rights and can be called for redemption at their then fair market
value by us within 30 days after the acquiring person has failed to deliver a
timely information statement to us or the date the shareholders voted not to
grant voting rights to the acquiring person's shares.
 
Section 302A.673 of the Minnesota Statutes generally prohibits any business
combination by us, or any subsidiary of us, with any shareholder that purchases
10% or more of our voting shares (an "interested shareholder") within four
years following the interested shareholder's share acquisition date, unless the
business combination is approved by a committee of all of the disinterested
members of our Board of Directors before the interested shareholder's share
acquisition date.
 
Section 302A.675 of the Minnesota Statutes generally prohibits an offeror from
acquiring shares of a publicly held Minnesota corporation within two years
following the offeror's last purchase of the corporation's shares pursuant to a
takeover offer with respect to that class, unless the corporation's
shareholders are able to sell their shares to the offeror upon substantially
equivalent terms as those provided in the earlier takeover offer. This statute
will not apply if the acquisition of shares is approved by a committee of all
of the disinterested members of our Board of Directors before the purchase of
any shares by the offeror pursuant to a takeover offer.
 
Transfer Agent and Registrar
 
Norwest Bank Minnesota, National Association has been appointed as the transfer
agent and registrar for our common stock.
 
                                       47
UNDERWRITING
 
The underwriters named below have agreed to buy, subject to the terms and
conditions of the purchase agreement, the number of shares listed opposite
their names below. The underwriters are committed to purchase and pay for all
of the shares if any are purchased (other than those shares covered by the
over-allotment option described below).
Number
          Underwriters                                                 of Shares
          ------------                                                 ---------
Piper Jaffray Inc. .........................................
          NationsBanc Montgomery Securities LLC.......................
                                                                       ---------
              Total................................................... 2,650,000
                                                                       =========
The underwriters have advised us and the selling shareholders that they propose
to offer the shares to the public at $      per share. The underwriters propose
to offer the shares to certain dealers at the same price less a concession of
not more than $     per share. The underwriters may allow and the dealers may
reallow a concession of not more than $     per share on sales to certain other
brokers and dealers. After the offering, these figures may be changed by the
underwriters.
 
We have granted to the underwriters an option to purchase up to an additional
381,500 shares of common stock from us and Joseph P. Micatrotto has granted to
the underwriters an option to purchase up to an additional 16,000 shares of
common stock, on a pro rata basis, at the same price to the public, and with
the same underwriting discount, as set forth in the table above. The
underwriters may exercise this option any time during the 30-day period after
the date of this Prospectus, but only to cover over-allotments, if any. To the
extent the underwriters exercise the option, each underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of the additional shares as it was obligated to purchase under the
purchase agreement.
 
We intend to use more than 10% of the net proceeds from the sale of the shares
offered by us by this Prospectus to repay indebtedness owed by us to U.S.
Bancorp. See "Use of Proceeds". U.S. Bancorp is an affiliate of Piper
Jaffray Inc., one of the underwriters. The decision of Piper Jaffray to
underwrite this offering was made independently of U.S. Bancorp, which had no
involvement in determining whether or when to underwrite this offering or the
terms of this offering. Piper Jaffray will not receive any benefit from this
offering other than its respective portion of the underwriting fees payable by
us. The offering is being made in compliance with the requirements of Rule
2710(c)(8) of the National Association of Securities Dealers, Inc. Conduct
Rules. This rule provides generally that if more than 10% of the net proceeds
from the sale of stock, not including underwriting compensation, is paid to the
underwriters or their affiliates, the initial public offering price of the
stock may not be higher than that recommended by a "qualified independent
underwriter" ("QIU") meeting certain standards set forth in Rule 2720(c)(3) of
the NASD Conduct Rules. NationsBanc Montgomery Securities LLC has agreed to act
as the QIU in pricing the offering and conducting due diligence. The initial
public offering price of the shares set forth on the cover page of this
Prospectus is no higher than the price recommended by NationsBanc Montgomery.
Moreover, NationsBanc Montgomery, as QIU, has performed due diligence
investigations and has reviewed and participated in the preparation of this
Prospectus.
 
The following table shows the underwriting fees to be paid to the underwriters
in connection with this offering. These amounts are shown assuming both no
exercise and full exercise of the over-allotment option.
No      Full
                                                               Exercise Exercise
                                                               -------- --------
Per Share............................................  $        $
         Total................................................  $        $
48
Piper Jaffray acted as placement agent in connection with the private placement
of our Series A Convertible Preferred Stock in October 1996. We issued warrants
to purchase 112,000 shares of Series A Convertible Preferred Stock convertible
into 74,666 shares of common stock at an exercise price of $5.625 per common
share to Piper Jaffray for its services as placement agent. These warrants
became exercisable in May 1997 and expire on October 23, 2003. We paid Piper
Jaffray $421,000 for its services as placement agent. Piper Jaffray also
purchased 53,333 shares of Series A Convertible Preferred Stock convertible
into 35,555 shares of common stock at a price of $5.625 per common share, the
same price paid by other investors for the Series A Convertible Preferred
Stock.
 
Piper Jaffray also acted as placement agent in connection with the private
placement of our Series B Convertible Preferred Stock in September 1997. We
issued warrants to purchase 50,000 shares of Series B Convertible Preferred
Stock convertible into 33,333 shares of common stock at an exercise price of
$6.75 per common share to Piper Jaffray for its services as placement agent.
These warrants became exercisable on October 31, 1997 and expire on September
2, 2004. We paid Piper Jaffray $75,000 for its services as placement agent.
 
Standby Fund 1997, an entity controlled by affiliates of Piper Jaffray, and
Piper Jaffray also purchased a total of 55,556 shares of Series B Convertible
Preferred Stock convertible into 37,037 shares of common stock at a price of
$6.75 per common share, the same price paid by other investors for the Series B
Convertible Preferred Stock. Along with the other purchasers of Series B
Preferred Stock, Standby Fund was issued, pro rata, warrants to purchase
1,926 shares of our common stock at an exercise price of $.01 per share. These
warrants only become vested and exercisable upon completion of this offering if
the public offering price per share is less than $13.50.
 
Piper Jaffray has provided investment banking services to us in 1998 and 1999
and will receive fees in the amount of $45,000 for such services.
 
We and the selling shareholders have agreed to indemnify the underwriters and
the QIU against certain liabilities, including civil liabilities under the
Securities Act, or to contribute to payments that the underwriters may be
required to make in respect to those liabilities.
 
The underwriters have informed us that neither they, nor any member of the NASD
participating in the distribution of the offering, will make sales of the
common stock offered by this prospectus to accounts over which they exercise
discretionary authority without the prior specific written approval of the
customer.
 
The offering of our shares of common stock is made for delivery when, as and if
accepted by the underwriters and subject to prior sale and to withdrawal,
cancellation or modification of the offering without notice. The underwriters
reserve the right to reject an order for the purchase of shares in whole or
part.
 
We and each of our directors, executive officers and certain principal
shareholders and the selling shareholders have agreed to certain restrictions
on our ability to sell additional shares of our common stock for a period of
180 days after the date of this Prospectus. We have agreed not to directly or
indirectly offer for sale, sell, contract to sell, grant any option for the
sale of, or otherwise issue or dispose of, any shares of common stock, options
or warrants to acquire shares of common stock., or any related security or
instrument, without the prior written consent of Piper Jaffray. The agreements
provide exceptions for (1) sales to underwriters pursuant to the purchase
agreement (2) our sales in connection with the exercise of options granted and
the granting of options to purchase shares under our existing stock option
plans and (3) certain other exceptions.
 
Prior to the offering, there has been no established trading market for the
common stock. The initial public offering price for the shares of common stock
offered by this Prospectus was negotiated by us and the underwriters as
recommended by the QIU. The factors considered in determining the initial
public offering price include the history of and the prospects for the industry
in which we compete, our past and present operations, our historical results of
operations, our prospects for future earnings, the recent market prices of
securities of generally comparable companies and the general condition of the
securities markets at the time of the offering and other relevant factors.
There can be no assurance that the initial public offering price of the common
stock will corresponded to the price at which the common stock will trade in
the public market subsequent to this offering or that an active public market
for the common stock will develop and continue after this offering.
 
 
                                       49
To facilitate the offering, the underwriters may engage in transactions that
stabilize, maintain or otherwise affect the price of the common stock during
and after the offering. Specifically, the underwriters may over-allot or
otherwise create a short position in the common stock for their own account by
selling more shares of common stock than have been sold to them by us and the
selling shareholders. The underwriters may elect to cover any such short
position by purchasing shares of common stock in the open market or by
exercising the over-allotment option granted to the underwriters. In addition,
the underwriters may stabilize or maintain the price of the common stock by
bidding for or purchasing shares of common stock on the open market and may
impose penalty bids. If penalty bids are imposed, selling concessions allowed
to syndicate members or other broker-dealers participating in the offering are
reclaimed if shares of common stock previously distributed in the offering are
repurchased, whether in connection with stabilization transactions or
otherwise. The effect of these transactions may be to stabilize or maintain the
market price of the common stock at a level above that which might otherwise
prevail in the open market. The imposition of a penalty bid may also affect the
price of the common stock to the extent that it discourages resales of the
common stock. The magnitude or effect of any stabilization or other
transactions is uncertain. These transactions may be effected on the Nasdaq
National Market or otherwise and, if commenced, may be discontinued at any
time.
 
                                 LEGAL MATTERS
 
The validity of the shares of common stock offered by this Prospectus and
certain other legal matters will be passed upon for us by Faegre & Benson LLP,
Minneapolis, Minnesota. The validity of the shares of common stock offered by
this Prospectus will be passed upon for the underwriters by Dorsey & Whitney
LLP, Minneapolis, Minnesota.
 
                                    EXPERTS
 
The consolidated financial statements at December 27, 1998 and December 28,
1997 and for each of the two fiscal years in the period ended December 27,
1998, included in this prospectus and registration statement have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their reports
appearing herein and elsewhere in the registration statement and are included
in reliance upon the reports of such firm given upon their authority as experts
in accounting and auditing.
 
The consolidated financial statements for the year ended December 31, 1996
included in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
 
                      WHERE YOU CAN FIND MORE INFORMATION
 
We have filed a registration statement on Form S-1 with the SEC for the stock
we are offering by this Prospectus. This Prospectus does not include all of the
information contained in the registration statement. You
should refer to the registration statement and its exhibits for additional
information. Whenever we make reference in this Prospectus to any of our
contracts, agreements or other documents, the references are not necessarily
complete and you should refer to the exhibits attached to the registration
statement for copies of the actual contract, agreement or other document. When
we complete this offering, we will also be required to file annual, quarterly
and special reports, proxy statements and other information with the SEC.
 
You can read our SEC filings, including the registration statement, over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference facilities at
450 Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You may also obtain copies of the documents
at prescribed rates by writing to the Public Reference Section of the SEC at
450 Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-
0330 for further information on the operation of the public reference
facilities. Our SEC filings are also available at the office of the Nasdaq
National Market. For further information on obtaining copies of our public
filings at the Nasdaq National Market you should call (212) 656-5060.
 
                                       50
BUCA, INC.
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
                                                                           ----
Independent Auditors' Report........................................  F-2
     Report of Independent Public Accountants............................  F-3
     Consolidated Balance Sheets as of December 28, 1997 and December 27,
      1998...............................................................  F-4
     Consolidated Statements of Operations for the fiscal years ended
      December 31, 1996, December 28, 1997 and December 27, 1998 ........  F-5
     Consolidated Statements of Shareholders' Deficit for the fiscal
      years
      ended December 31, 1996, December 28, 1997 and December 27, 1998...  F-6
     Consolidated Statements of Cash Flows for the fiscal years ended
      December 31, 1996, December 28, 1997 and December 27, 1998.........  F-7
     Notes to Consolidated Financial Statements..........................  F-8
F-1
INDEPENDENT AUDITORS' REPORT
 
Board of Directors
BUCA, Inc. and Subsidiaries
 
We have audited the accompanying consolidated balance sheets of BUCA, Inc. and
Subsidiaries (the Company) as of December 28, 1997 and December 27, 1998, and
the related consolidated statements of operations, shareholders' deficit, and
cash flows for the fiscal years ended December 28, 1997 and December 27, 1998.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits. The consolidated financial statements
of BUCA, Inc. and Subsidiaries for the fiscal year ended December 31, 1996 were
audited by other auditors whose report, dated March 14, 1997, expressed an
unqualified opinion on those statements.
 
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 1997 and 1998 consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
 
In our opinion, the 1997 and 1998 consolidated financial statements present
fairly, in all material respects, the financial position of BUCA, Inc. and
Subsidiaries as of December 28, 1997 and December 27, 1998, and the results of
their operations and their cash flows for the fiscal years then ended in
conformity with generally accepted accounting principles.
 
As discussed in Note 1 to the consolidated financial statements, in fiscal 1997
the Company changed its method of accounting for preopening costs.
 
                                          /s/ Deloitte & Touche LLP
 
February 17, 1999
 
                                      F-2
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To BUCA, Inc:
 
We have audited the accompanying consolidated statements of operations,
shareholders' deficit and cash flows of BUCA, Inc. (a Minnesota corporation)
and Subsidiaries (the Company) for the year ended December 31, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based upon our audit.
 
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audit provides a reasonable basis for
our opinion.
 
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
BUCA, Inc. and Subsidiaries for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
 
                                          /s/ Arthur Andersen LLP
 
Minneapolis, Minnesota
March 14, 1997
 
                                      F-3
BUCA, INC. AND SUBSIDIARIES
 
                          Consolidated Balance Sheets
                    December 28, 1997 and December 27, 1998
              (in thousands, except for share and per share data)
1997      1998
                                                             -------  --------
ASSETS
CURRENT ASSETS:
 Cash and cash equivalents.................................. $ 6,099  $  6,576
 Accounts receivable........................................     284     1,160
 Inventories................................................     545       935
 Prepaids and other.........................................     457       585
                                                             -------  --------
   Total current assets.....................................   7,385     9,256
PROPERTY AND EQUIPMENT, net.................................  13,428    27,697
OTHER ASSETS................................................     475       607
                                                             -------  --------
                                                             $21,288  $ 37,560
                                                             =======  ========
           LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
 Accounts payable........................................... $ 2,309  $  3,257
 Accrued expenses...........................................     962     2,638
 Current maturities of long-term debt.......................     320       205
                                                             -------  --------
   Total current liabilities................................   3,591     6,100
LONG-TERM DEBT, less current maturities.....................   5,140     7,661
DEFERRED RENT...............................................      17       239
OTHER LIABILITIES...........................................               127
COMMITMENTS AND CONTINGENCIES (Notes 6, 7, and 8)
REDEEMABLE STOCK (Notes 6 and 9):
 Preferred stock, $.01 par value, cumulative, Series A
  convertible--2,396,800 shares authorized; 2,240,000 shares
  issued and outstanding....................................   8,984     9,665
 Preferred stock, $.01 par value, cumulative, Series B
  convertible--2,100,000 shares authorized; 1,922,222 shares
  issued and outstanding....................................   8,777     9,441
 Preferred stock, $.01 par value, cumulative, Series C
  convertible--3,679,053 shares authorized; 2,614,634 shares
  issued and outstanding....................................            13,154
 Common stock, $.01 par value; 601,929 shares issued and
  outstanding...............................................   4,063     4,713
                                                             -------  --------
                                                              21,824    36,973
SHAREHOLDERS' DEFICIT:
 Undesignated stock, 617,147 shares authorized, none issued
  or outstanding
 Common stock, $.01 par value--13,100,000 shares authorized;
  1,899,246 and 1,914,359 shares issued and outstanding,
  respectively..............................................      19        19
 Accumulated deficit........................................  (9,032)  (13,266)
                                                             -------  --------
                                                              (9,013)  (13,247)
 Notes receivable from shareholders.........................    (271)     (293)
                                                             -------  --------
   Total shareholders' deficit..............................  (9,284)  (13,540)
                                                             -------  --------
                                                             $21,288  $ 37,560
                                                             =======  ========
See notes to consolidated financial statements.
 
                                      F-4
BUCA, INC. AND SUBSIDIARIES
 
                     Consolidated Statements of Operations
                 For the Fiscal Years Ended December 31, 1996,
                    December 28, 1997 and December 27, 1998
              (in thousands, except for share and per share data)
1996        1997        1998
                                             ----------  ----------  ----------
RESTAURANT SALES...........................  $   11,316  $   19,030  $   38,483
RESTAURANT COSTS:
 Product...................................       3,471       5,520      10,876
 Labor.....................................       3,723       6,478      12,548
 Direct and occupancy......................       2,242       3,750       7,861
 Depreciation and amortization.............         381         781       1,617
                                             ----------  ----------  ----------
    Total restaurant costs.................       9,817      16,529      32,902
                                             ----------  ----------  ----------
INCOME FROM RESTAURANT OPERATIONS..........       1,499       2,501       5,581
GENERAL AND ADMINISTRATIVE EXPENSES........       1,988       3,760       5,579
PREOPENING COSTS...........................         430       1,140       1,895
                                             ----------  ----------  ----------
OPERATING LOSS.............................        (919)     (2,399)     (1,893)
INTEREST EXPENSE...........................         295         497       1,036
                                             ----------  ----------  ----------
LOSS BEFORE INCOME TAXES AND CUMULATIVE
 EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE..      (1,214)     (2,896)     (2,929)
(BENEFIT) PROVISION FOR INCOME TAXES.......        (101)         72          17
                                             ----------  ----------  ----------
LOSS BEFORE CUMULATIVE EFFECT OF CHANGE IN
 ACCOUNTING PRINCIPLE......................      (1,113)     (2,968)     (2,946)
CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING
 PRINCIPLE RELATED TO PREOPENING COSTS.....                    (351)
                                             ----------  ----------  ----------
NET LOSS...................................  $   (1,113) $   (3,319) $   (2,946)
                                             ==========  ==========  ==========
CUMULATIVE PREFERRED STOCK DIVIDENDS,
 ACCRETION OF PREFERRED STOCK TO REDEMPTION
 VALUE, AND CHANGE IN REDEEMABLE COMMON
 STOCK.....................................      (3,687)     (1,986)     (2,189)
                                             ----------  ----------  ----------
NET LOSS APPLICABLE TO COMMON STOCK........  $   (4,800) $   (5,305) $   (5,135)
                                             ==========  ==========  ==========
NET LOSS PER COMMON SHARE--BASIC AND
 DILUTED...................................  $    (1.96) $    (2.13) $    (2.04)
                                             ==========  ==========  ==========
WEIGHTED AVERAGE COMMON SHARES ASSUMED
OUTSTANDING--BASIC AND DILUTED.............   2,444,666   2,490,136   2,512,309
                                             ==========  ==========  ==========
See notes to consolidated financial statements.
 
                                      F-5
BUCA, INC. AND SUBSIDIARIES
 
                Consolidated Statements of Shareholders' Deficit
                     (in thousands, except for share data)
Notes
                           Common Stock       Stock     Additional              Receivable      Total
                         ----------------- Subscription  Paid-in   Accumulated     from     Shareholders'
                          Shares    Amount  Receivable   Capital     Deficit   Shareholders    Deficit
                         ---------  ------ ------------ ---------- ----------- ------------ -------------
BALANCE AT DECEMBER 31,
 1995................... 1,842,738   $18       $ (6)      $  13     $   (173)                 $   (148)
 Collection on stock
  subscription
  receivable............                          6                                                  6
 Change in redeemable
  common stock..........                                    (13)      (3,373)                   (3,386)
 Preferred stock
  dividends.............                                                (111)                     (111)
 Accretion of preferred
  stock.................                                                (190)                     (190)
 Net loss...............                                              (1,113)                   (1,113)
                         ---------   ---       ----       -----     --------      -----       --------
BALANCE AT DECEMBER 31,
 1996................... 1,842,738    18                              (4,960)                   (4,942)
 Issuance of common
  stock options.........                                    350                                    350
 Issuance of common
  stock warrants........                                    544                                    544
 Issuance of common
  stock.................    65,766     1                    389                   $(275)           115
 Repurchase of common
  stock.................    (9,258)                         (50)                                   (50)
 Payments of notes
  receivable due from
  shareholders..........                                                              4              4
 Change in redeemable
  common stock..........                                   (677)                                  (677)
 Preferred stock
  dividends.............                                   (556)        (229)                     (785)
 Accretion of preferred
  stock.................                                                (524)                     (524)
 Net loss...............                                              (3,319)                   (3,319)
                         ---------   ---       ----       -----     --------      -----       --------
BALANCE AT DECEMBER 28,
 1997................... 1,899,246    19                              (9,032)      (271)        (9,284)
 Issuance of common
  stock warrants........                                    761                                    761
 Issuance of common
  stock.................    25,185                          200                    (160)            40
 Repurchase of common
  stock.................   (10,072)                         (60)                                   (60)
 Payments of notes
  receivable due from
  shareholders..........                                                            138            138
 Change in redeemable
  common stock..........                                   (650)                                  (650)
 Preferred stock
  dividends.............                                   (251)      (1,041)                   (1,292)
 Accretion of preferred
  stock.................                                                (247)                     (247)
 Net loss...............                                              (2,946)                   (2,946)
                         ---------   ---       ----       -----     --------      -----       --------
BALANCE AT DECEMBER 27,
 1998................... 1,914,359   $19       $--        $ --      $(13,266)     $(293)      $(13,540)
                         =========   ===       ====       =====     ========      =====       ========
See notes to consolidated financial statements.
 
                                      F-6
BUCA, INC. AND SUBSIDIARIES
 
                     Consolidated Statements of Cash Flows
                 For the Fiscal Years Ended December 31, 1996,
                    December 28, 1997, and December 27, 1998
                                 (in thousands)
1996     1997      1998
                                                    -------  -------  --------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net loss.......................................... $(1,113) $(3,319) $ (2,946)
 Adjustments to reconcile net loss to net cash
  (used in) provided by operating activities:
  Depreciation and amortization....................     381      781     1,617
  Cumulative effect of change in accounting
   principle.......................................              351
  Deferred income taxes............................               34
  Loss (gain) on sale of property and equipment....              112       (52)
  Accretion of call premium........................      50       51        51
  Amortization of debt discount....................                        216
  Issuance of common stock and common stock options
   for services....................................              439
  Change in assets and liabilities:
   Accounts receivable.............................     (43)    (130)     (876)
   Inventories.....................................    (101)    (247)     (390)
   Preopening costs................................    (134)
   Prepaids and other..............................     (27)    (370)     (128)
   Accounts payable................................     582      985       948
   Accrued expenses................................     236     (137)    1,676
   Other liabilities...............................                        222
                                                    -------  -------  --------
     Net cash (used in) provided by operating
      activities...................................    (169)  (1,450)      338
CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchase of property and equipment................  (2,783)  (7,896)  (17,864)
 Escrow deposits...................................    (551)    (131)
 Increase in other assets..........................     (33)     (45)      (48)
 Proceeds from sale of property and equipment......                      2,263
                                                    -------  -------  --------
     Net cash used in investing activities.........  (3,367)  (8,072)  (15,649)
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from issuance of long-term debt..........     896    2,500     3,500
 Principal payments on long-term debt..............    (331)    (489)     (599)
 Collection on stock subscription receivable.......       6
 Payments of notes receivable from shareholders....                4        80
 Repurchase of common stock........................              (30)
 Net proceeds from issuance of preferred stock.....   7,614    8,537    12,958
 Issuance of common stock..........................                         40
 Loan and lease acquisition costs..................             (251)     (191)
 Principal payments on note payable................    (104)    (400)
 Proceeds from issuance of note payable............     400
                                                    -------  -------  --------
     Net cash provided by financing activities.....   8,481    9,871    15,788
                                                    -------  -------  --------
NET INCREASE IN CASH AND CASH EQUIVALENTS..........   4,945      349       477
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.....     805    5,750     6,099
                                                    -------  -------  --------
CASH AND CASH EQUIVALENTS AT END OF YEAR........... $ 5,750  $ 6,099  $  6,576
                                                    =======  =======  ========
See notes to consolidated financial statements.
 
                                      F-7
BUCA, INC. AND SUBSIDIARIES
 
                   Notes To Consolidated Financial Statements
            Fiscal Years Ended December 31, 1996, December 28, 1997,
                             and December 27, 1998
 
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
 
Nature of Business--BUCA, Inc. and Subsidiaries (BUCA or the Company) develops
and operates family-style, immigrant Southern Italian restaurants located in
Minnesota, Wisconsin, California, Illinois, Indiana, Arizona, Ohio, Kansas, and
Washington. Effective December 31, 1994, Parasole Restaurant Holdings, Inc.
(Parasole) acquired all the common stock of BUCA, which resulted in BUCA
becoming a wholly owned subsidiary of Parasole. On September 30, 1996, the
Parasole Board of Directors in a spin-off distributed all of the outstanding
common stock of BUCA pro rata to the Parasole shareholders. Prior to a written
action of the Board of Directors on May 14, 1996, the Company was known as BUCA
Ventures, Inc.
 
The Company incurred net losses of $1,113,000, $3,319,000 and $2,946,000 in
1996, 1997 and 1998, respectively, and as of December 27, 1998, had an
accumulated deficit of $13,266,000. Losses have been primarily attributable to
costs and expenses incurred in the completion of the development and opening of
new restaurants and the costs associated with the hiring of senior corporate
management to position the Company for its future expansion plans. Future
revenues and results from operations will depend upon various factors,
including the Company's ability to open new restaurants on a timely and
profitable basis and general economic conditions. The Company's ability to meet
its expansion plans and achieve profitability depends on its ability to obtain
additional financing for the development of new locations currently under
consideration. There are no assurances that such financing will be available on
terms acceptable or favorable to the Company.
 
The Company manages its operations by restaurant. All of the Company's
restaurants operate under the same concept, are marketed to similar customers,
and have comparable economic characteristics. The Company has aggregated its
operating segments into one reportable segment.
 
Principles of Consolidation--The consolidated financial statements include the
accounts of the Company and its subsidiaries. All significant intercompany
balances and transactions have been eliminated.
 
Use of Estimates--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of sales and expenses during the reporting
period. Actual results could differ from those estimates.
 
Cash and Cash Equivalents--The Company considers all unrestricted demand
deposits and all unrestricted highly liquid debt instruments purchased with
original maturities of three months or less to be cash equivalents. At December
28, 1997 and December 27, 1998, cash and cash equivalents consisted primarily
of money market funds.
 
Fair Value of Financial Instruments--At December 28, 1997 and December 27,
1998, the fair values of cash and cash equivalents, accounts receivable, and
accounts payable approximate their carrying value due to the short-term nature
of the instrument. The fair value of debt is estimated at its carrying value
based upon current rates available to the Company. The fair value of the
redeemable preferred stock is estimated at $35,375,000 based upon the December
1998 closing of the Series C preferred stock private placement.
 
Inventories--Inventories are stated at the lower of cost or market. Cost is
determined by the first-in, first-out method of valuation. Inventories
consisted of the following as of December 28, 1997 and December 27, 1998 (in
thousands):
1997 1998
                                                                       ---- ----
Food and beverage............................................... $300 $521
      Supplies........................................................  245  414
                                                                       ---- ----
                                                                       $545 $935
                                                                       ==== ====
F-8
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
Other Assets--Other assets consisted of the following as of December 28, 1997
and December 27, 1998 (in thousands):
1997 1998
                                                                      ---- ----
Loan and lease acquisition costs, net.......................... $300 $365
      Escrow deposits................................................  131  131
      Other..........................................................   44  111
                                                                      ---- ----
                                                                      $475 $607
                                                                      ==== ====
Loan and lease acquisition costs are being amortized over the term of the
related debt or lease. Accumulated amortization as of December 28, 1997 and
December 27, 1998 was $94,000 and $206,000, respectively.
 
Accrued expenses--Accrued expenses consisted of the following as of December
28, 1997 and December 27, 1998 (in thousands):
1997  1998
                                                                    ---- ------
Accrued payroll and related benefits......................... $315 $1,117
      Gift certificate liability...................................  230    518
      Accrued sales taxes..........................................  241    546
      Other accrued expenses.......................................  176    457
                                                                    ---- ------
                                                                    $962 $2,638
                                                                    ==== ======
Recoverability of Long-Lived Assets--The Company reviews long-lived assets for
impairment whenever events or changes in circumstances indicate the carrying
value amount of an asset or group of assets may not be recoverable. The Company
considers a history of operating losses to be its primary indicator of
potential impairment. Assets are grouped and evaluated for impairment at the
lowest level for which there are identifiable cash flows, individual
restaurants. A restaurant is deemed to be impaired if a forecast of
undiscounted future operating cash flows directly related to the restaurant is
less than its carrying amount. If a restaurant is determined to be impaired,
the loss is measured as the amount by which the carrying amount of the
restaurant exceeds its fair value. Fair value is an estimate based on the best
information available, including prices for similar assets or the results of
valuation techniques such as discounted estimated future cash flows as if the
decision to continue to use the impaired restaurant was a new investment
decision. The Company generally measures fair value by discounting estimated
future cash flows.
 
Net Loss Per Share--Basic loss per share is computed by dividing net loss by
the weighted average number of common shares outstanding. Diluted earnings 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 1996, 1997, and 1998 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:
1996               1997               1998
                             ------------------ ------------------ ------------------
                                       Weighted           Weighted           Weighted
                                       Average            Average            Average
                                        Price              Price              Price
                             Number Of   Per    Number of   Per    Number of   Per
                              Shares    Share    Shares    Share    Shares    Share
                             --------- -------- --------- -------- --------- --------
Stock warrants..........    104,532  $5.63     218,420  $3.73     331,196  $2.46
   Stock options...........     13,331   4.84     581,507   5.38     854,155   6.08
   Convertible preferred
    stock..................  1,493,331   5.63   2,774,808   6.14   4,505,239   6.76
   Convertible subordinated
    debentures.............    565,079   3.15     565,079   3.15     439,506   4.05
                             ---------  -----   ---------  -----   ---------  -----
                             2,176,273  $4.98   4,139,814  $5.50   6,130,096  $6.24
                             =========  =====   =========  =====   =========  =====
F-9
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
Postemployment and Postretirement Benefits--The Company does not provide
postemployment health care or postretirement benefits.
 
Stock Compensation--The Company accounts for its stock-based compensation
awards to employees under Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and will disclose the required pro
forma effect on net loss as recommended by Statement of Financial Accounting
Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.
 
Accounting Change--Effective January 1, 1997, the Company changed its method of
accounting for restaurant preopening costs in accordance with Statement of
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities. Prior to
fiscal 1997, preopening costs were deferred and amortized over the initial 12
months of a restaurant's operation. Under the new method, preopening costs are
expensed as incurred. The expensing of preopening costs is prevalent in
industry practice. The change in accounting method increased the 1997 loss
before cumulative effect of change in accounting principle by $834,000.
 
Fiscal Year--The Company changed its fiscal year-end from December 31 to the
last Sunday in December, beginning with the fiscal year ended December 28,
1997. The fiscal years ended December 31, 1996, December 28, 1997, and December
27, 1998 were 52-week years.
 
Comprehensive Income--The Company does not have any items of comprehensive
income in any of the periods presented.
 
Accounting Pronouncements--In June 1998, the Financial Accounting Standards
Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 requires companies to record derivatives on
the balance sheet as assets and liabilities, measured at fair value. Gains or
losses resulting from changes in the values of those derivatives would be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. SFAS No. 133 is effective for fiscal years beginning
after June 15, 1999, with earlier adoption encouraged. Management has not yet
determined the effects SFAS No. 133 will have on its financial position or the
results of its operations.
 
2. PROPERTY AND EQUIPMENT
 
Property and equipment are recorded at cost. Expenditures for renewals and
betterments are capitalized while repairs and maintenance costs are charged to
expense. The cost of property and equipment is depreciated on the straight-line
method over their estimated useful lives. Leasehold improvements are amortized
on the straight-line method over the shorter of the life of the lease including
extensions or their estimated useful lives. Estimated useful lives are as
follows:
Years
                                                                           -----
Leasehold improvements.............................................. 5-20
      Furniture, fixtures, and equipment.................................. 5-10
      Building............................................................   20
Property and equipment consisted of the following as of December 28, 1997 and
December 27, 1998 (in thousands):
1997    1998
                                                                ------- -------
Leasehold improvements................................... $ 8,639 $19,214
      Furniture, fixtures, and equipment.......................   4,991  10,869
      Land.....................................................     793     267
      Building.................................................     300     114
                                                                ------- -------
                                                                 14,723  30,464
      Less accumulated depreciation and amortization...........   1,295   2,767
                                                                ------- -------
                                                                $13,428 $27,697
                                                                ======= =======
F-10
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
In 1998, the Company sold the building and land associated with a restaurant in
Illinois for approximately $1,200,000 and simultaneously entered into an
operating lease for a term of 20 years. The assets were removed from the
financial statements and a deferred gain included as other liabilities on the
consolidated balance sheet of approximately $132,000 was recorded which is
being amortized over the lease term.
 
Additionally, in 1998, the Company purchased the land and building associated
with a restaurant in Minnesota for approximately $375,000.
 
3. NOTE PAYABLE
 
The Company had a $1,000,000 line of credit agreement secured by the assets of
the Company that expired on June 30, 1998.
 
4. LONG-TERM DEBT
 
Long-term debt consisted of the following as of December 28, 1997 and December
27, 1998 (in thousands):
1997   1998
                                                                ------ ------
Notes payable maturing October 2002, $2,500,000 and June
    2003, $3,500,000, with interest payable monthly at 13.5%
    and accretion of common stock warrant value of 4.4%.
    Collateralized by equipment, inventory, accounts
    receivable, trademarks, and copyrights. Net of discounts of
    $544,000 and $1,089,000, respectively, resulting from
    common stock warrants issued to lenders.................... $1,956 $4,911
   Convertible subordinated debentures maturing July 2001 with
    interest payable quarterly at 8.0% until January 1997, at
    which time interest will be adjusted semiannually to 1.0%
    in excess of the prime rate, not to exceed 12.0% per annum
    (9.50% and 8.75% at December 28, 1997 and December 27,
    1998, respectively); includes call premium accretion of
    $165,000 and $216,000, respectively........................  1,945  1,996
   Note payable to bank in monthly installments, including
    interest at 2.0% in excess of the prime rate (10.50% and
    9.75% at December 28, 1997 and December 27, 1998,
    respectively), maturing July 2000, with a principal balloon
    payment upon maturity of $185,000, collateralized by
    equipment, accounts receivable, and inventory..............    363    296
   Note payable to bank in monthly installments, including
    interest at 2.0% in excess of the prime rate (10.50% and
    9.75% at December 28, 1997 and December 27, 1998,
    respectively), maturing May 1999, collateralized by
    equipment, accounts receivable, and inventory..............     97     29
   Note payable to bank in monthly installments including
    interest at 2.0% in excess of the prime rate (10.50% and
    9.75% at December 28, 1997 and December 27, 1998,
    respectively), maturing March 2003, collateralized by
    equipment, accounts receivable, and inventory..............    332    269
   Note payable in monthly installments, including interest at
    7.153%, maturing May 2006, collateralized by equipment,
    guarantees of BUCA and Parasole, and the personal
    guarantees of certain shareholders and the U.S. Small
    Business Administration....................................    402    365
   Capitalized leases..........................................    365    --
                                                                ------ ------
      Total....................................................  5,460  7,866
   Less current maturities.....................................    320    205
                                                                ------ ------
      Total long-term maturities............................... $5,140 $7,661
                                                                ====== ======
F-11
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
The Company's loan agreements, among other things, restrict additional
indebtedness and dividend payments and requires the Company to meet certain
financial covenants, the most restrictive of which includes maintaining
tangible net worth of $4,000,000. The Company was in compliance with these
financial covenants at December 27, 1998.
 
The holders of the convertible subordinated debentures are entitled, at their
option for a one year period commencing upon an initial public offering (IPO)
of common stock by BUCA, to convert the entire principal amount held by such
person into fully paid shares of common stock at a specified discount. The
discount amount is based upon the effective date of the IPO: a 30% discount if
the effective date is on or prior to August 1, 1997; a 40% discount if the
effective date is after August 1, 1997 but on or prior to August 1, 1999; and a
50% discount if the effective date is after August 1, 1999 but on or prior to
the conversion rights termination date of July 30, 2001. In accordance with
EITF 98-5, Accounting for Convertible Securities with Beneficial Conversion
Features or Contigently Adjustable Conversion Ratios, the Company will record
an expense associated with the beneficial conversion feature at the effective
date of the IPO. The individual holders of the debentures may elect to have the
debentures paid in full in July 1999, at which time any holder would be
entitled to a premium payment equal to 10% of the original principal sum of the
debenture. In the event the holder retains the debenture to maturity, the
holder will be entitled to a premium payment equal to 20% of the original
principal sum of the debenture. The 20% premium is being accreted over the
debenture term. The debentures are fully subordinated to all obligations of
BUCA to the bank.
 
The future maturities of long-term debt, excluding the discount related to
common stock warrants, are as follows (in thousands):
1999............................................................... $  205
      2000...............................................................    328
      2001...............................................................  2,104
      2002...............................................................  2,612
      2003...............................................................  3,570
      Thereafter.........................................................    136
                                                                          ------
                                                                          $8,955
                                                                          ======
On February 5, 1999, the Company refinanced its existing term debt, excluding
the convertible subordinated debentures and the note payable guaranteed by the
U.S. Small Business Administration, with a $15 million credit arrangement that
expires on December 31, 2000. The credit arrangement includes a $7 million term
loan which bears a fixed rate of interest of 9.63% and an $8 million revolving
line of credit which bears interest at prime plus .75% to 1.25%, depending on
the then-applicable cash flow coverage ratio of the Company. In accordance with
the credit agreement, the term loan must be repaid upon the consummation of an
initial public offering along with any borrowings under the revolving line of
credit in excess of $3 million. The credit agreement, among other things,
restricts additional indebtedness and requires the Company to meet certain
financial covenants. In conjunction with the refinancing, the Company will
recognize an extraordinary loss on extinguishment of debt of approximately $1.3
million in 1999 which includes deferred financing costs associated with the
refinanced debt.
 
5. INCOME TAXES
 
Deferred income taxes are recognized for the tax consequences of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income. At December 28, 1997 and December 27, 1998 the Company has
recorded a valuation allowance to reduce recorded deferred tax assets to zero.
 
At December 27, 1998, for income tax return purposes, the Company has estimated
net operating loss carryforwards of approximately $3,500,000. If not used,
these carryforwards will begin to expire in 2003.
 
                                      F-12
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
The (benefit) provision for income taxes consisted of the following for the
fiscal years ended December 31, 1996, December 28, 1997, and December 27, 1998
(in thousands):
1996    1997     1998
                                                       -----  -------  -------
Federal......................................... $(107) $    34
      State...........................................     6        4  $    17
      Deferred........................................             34
                                                       -----  -------  -------
      (Benefit) provision for income taxes............ $(101) $    72  $    17
                                                       =====  =======  =======
 
A reconciliation between taxes computed at the expected federal income tax rate
and the effective tax rate for the fiscal years ended December 31, 1996,
December 28, 1997, and December 27, 1998 is as follows (in thousands):
1996    1997     1998
                                                       -----  -------  -------
Tax benefit computed at statutory rates......... $(425) $(1,162) $(1,025)
      State taxes, net of federal effect..............   (47)    (129)    (114)
      Other...........................................                      12
      Change in valuation allowance...................   371    1,363    1,144
                                                       -----  -------  -------
                                                       $(101) $    72  $    17
                                                       =====  =======  =======
The tax effect of significant temporary differences representing deferred tax
assets is as follows as of December 28, 1997 and December 27, 1998 (in
thousands):
1997    1998
                                                                 ------  ------
Current:
       Preopening costs......................................... $  108  $  228
       Accrued liabilities......................................            131
       Less valuation allowance.................................   (108)   (359)
                                                                 ------  ------
                                                                 $  --   $  --
                                                                 ======  ======
      Noncurrent:
       Preopening costs and property and equipment.............. $  400  $  873
       Call premium accretion...................................     65      84
       Net operating loss carryforwards.........................  1,028   1,380
       Other....................................................             49
       Less valuation allowance................................. (1,493) (2,386)
                                                                 ------  ------
                                                                 $  --   $  --
                                                                 ======  ======
6. EMPLOYEE BENEFIT PLANS
 
Effective with the spin-off of BUCA discussed in Note 1, the BUCA employee
stock ownership plan (ESOP) was established for the benefit of eligible
employees of BUCA. A pro rata portion of the assets held by the Parasole ESOT
were transferred to the BUCA ESOP as of that date, and the BUCA participants
became 100% vested in their accounts. The Parasole ESOT retained the entire
unallocated stock account and the entire obligation under the loan agreement
with the bank. The BUCA ESOP was frozen upon its establishment and no
contributions were made during fiscal 1997 or 1998. BUCA's pro rata portion of
compensation expense related to the Parasole ESOT was $50,000 in 1996.
 
BUCA has entered into a redemption agreement with Parasole whereby BUCA has
agreed to redeem at fair value shares of BUCA stock distributed by the Parasole
ESOT if no public market exists. Additionally, the BUCA stock
 
                                      F-13
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
held in the BUCA ESOP must be redeemed by the Company in accordance with the
plan agreement. At December 28, 1997 and December 27, 1998, 504,702 and 97,227
shares were held in the Parasole ESOT and BUCA ESOP, respectively. Such shares
have been classified as redeemable stock on the consolidated balance sheet.
 
Company employees with one year of service, age 21 or older, who worked at
least 1,000 hours in the prior year are eligible to participate in the
Company's 401(k) Plan. Under the provisions of the plan, the Company may, at
its discretion, make contributions to the 401(k) Plan. Participants are 100%
vested in their own contributions. No contributions were made by the Company
during 1996, 1997 or 1998.
 
7. COMMITMENTS AND CONTINGENCIES
 
Leases--The Company is obligated under various operating leases for restaurant
and storage space and equipment. Generally, the base lease terms are between 5
and 15 years. Certain of the leases provide for additional rents based on a
percentage of annual sales in excess of stipulated minimums. The leases also
require the Company to pay its pro rata share of real estate taxes, operating
expenses, and common area costs. In addition, the Company has received lease
incentives in connection with certain leases. The Company is recognizing the
benefits related to the lease incentives on a straight-line basis over the
applicable lease term. The Company has recorded deferred rent related to their
lease incentives of $17,000 and $239,000 as of December 28, 1997 and December
27, 1998, respectively.
 
Total rent expense, including real estate taxes, operating expenses, and
percentage rent, was $941,000, $1,754,000, and $3,812,000 in 1996, 1997, and
1998, respectively.
 
Approximate future minimum lease obligations, including units which are not yet
open and excluding percentage rents, at December 27, 1998, are as follows (in
thousands):
1999............................................................. $ 2,989
      2000.............................................................   3,950
      2001.............................................................   4,038
      2002.............................................................   4,118
      2003.............................................................   4,189
      Thereafter.......................................................  29,405
                                                                        -------
      Total future minimum base rents.................................. $48,689
                                                                        =======
Litigation--The Company is subject to certain legal actions arising in the
normal course of business, none of which are expected to have a material effect
on the Company's results of operations, financial condition or cash flows.
 
8. RELATED-PARTY TRANSACTIONS
 
Management Agreement--The Company has entered into a management agreement with
Parasole to provide for certain management and administrative services. The
management agreement may be terminated by Parasole upon one year's written
notice and the Company may terminate the management agreement upon 60 days'
written notice. Management fees of approximately $354,000, $270,000, and
$248,000 were charged to operations in 1996, 1997, and 1998, respectively.
 
Purchase of Inventory--The Company has entered into a vendor relationship with
Parasole whereby the Company purchases bread products and a majority of the
dessert products offered at the Company's Minneapolis-Saint Paul metropolitan
area restaurants. The Company purchases the products at rates which management
believes
 
                                      F-14
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
approximate market rates. The relationship can terminate at any time at the
discretion of the Company; however, the Company expects this relationship to
continue. The Company purchased bakery products in the amount of $211,000,
$180,000, and $169,000 in 1996, 1997, and 1998, respectively.
 
Employment Agreement--The Company entered into an employment agreement with one
of its officers which requires the payment of annual compensation and certain
fringe benefits through 2001 and includes bonus provisions in the form of both
a stock grant and stock options.
 
9. REDEEMABLE STOCK
 
Series A Preferred Stock Private Placement--During October 1996, the Company
issued 2,240,000 shares of Series A preferred stock in a private placement at
an offering price of $3.75 per share. This stock is convertible into 1,493,331
shares of common stock and the preferred shares are redeemable in cash on
October 1, 2003, 2004, and 2005 at the election of the holder and accumulate
dividends at a rate of $.2625 per share annually beginning October 24, 1996.
The shares are redeemable at $3.75 per share plus unpaid and accumulated
dividends. Accumulated undeclared dividends amounted to $699,000 and $1,287,000
at December 28, 1997 and December 27, 1998, respectively. Total liquidation
preference of outstanding shares is $3.75 per share plus, unpaid and
accumulated dividends. The Company received net proceeds of $7,614,000 after
the payment of $786,000 in related offering costs. The net proceeds were used
to pay off certain indebtedness and to fund expansion and operating expenses.
 
Series B Preferred Stock Private Placement--During 1997, the Company issued a
total of 1,922,222 shares of Series B preferred stock in a private placement at
an offering price of $4.50 per share. The stock is convertible into 1,281,477
shares of common stock and the preferred shares are redeemable in cash on
October 1, 2003, 2004, and 2005 at the election of the holder and accumulate
dividends at a rate of $.315 per share annually beginning September 3, 1997.
The shares are redeemable at $4.50 per share plus unpaid and accumulated
dividends. Accumulated undeclared dividends amounted to $197,000 and $802,000
at December 28, 1997 and December 27, 1998, respectively. Total liquidation
preference of outstanding shares is $4.50 per share plus, unpaid and
accumulated dividends. The Company received net proceeds of $8,537,000 after
the payment of $113,000 in related offering costs. The net proceeds were used
to fund expansion and operating expenses.
 
Series C Preferred Stock Private Placement--In October 1998, the Company sold
1,639,025 shares of Series C preferred stock in a private placement at an
offering price of $5.125 per share. The stock is convertible into 1,092,679
shares of common stock. In December 1998, the Company sold an additional
975,609 shares of Series C preferred stock at an offering price of $5.125 per
share. The stock is convertible into 637,752 shares of common stock. Preferred
shares are redeemable in cash on October 1, 2003, 2004, and 2005 at the
election of the holder and accumulate dividends at a rate of $.35875 per share
annually beginning October 13, 1998. The shares are redeemable at $5.125
(1,639,025 shares) and $5.22 (975,609 shares) per share plus unpaid and
accumulated dividends. Accumulated undeclared dividends amounted to $99,000 at
December 27, 1998. Total liquidation preference of outstanding shares is $5.125
(1,639,025) and $5.22 (975,609) per share plus, unpaid and accumulated
dividends. The Company received net proceeds of $12,958,000 after the payment
of $442,000 in related offering expenses. The net proceeds were used to fund
expansion, operating expenses, and pay off certain indebtedness.
 
Additionally, the purchasers of the Series C preferred stock received 2,614,634
"Contingent Value Rights" which entitles the holder to receive additional
shares of common stock if, on or prior to October 12, 2001, the Company has not
effected a qualified public offering or had a publicly traded security with an
average closing price of $18 per share for a period of at least 120 consecutive
trading days. In 1999, the Company agreed to issue 40,195 shares of common
stock contingent upon the completion of the initial public offering (IPO) in
exchange for an agreement which results in the termination of the contingent
value rights.
 
                                      F-15
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
 
The Series A, B, and C preferred stock are automatically convertible to common
stock upon a public offering that meets each of the following requirements: (i)
the aggregate public offering price is $15 million, (ii) the public offering is
underwritten on a firm commitment basis by an underwriter that is a member of
the New York Stock Exchange, and (iii) the public offering price per share is
at least $18, except as one or more of such requirements may be modified or
waived by holders of two-thirds of the shares of preferred stock then
outstanding.
 
The carrying value of the preferred stock includes cumulative undeclared
dividends and the accretion to the redemption value.
 
10. SHAREHOLDERS' EQUITY
 
Stock Split--On February 17, 1999, the Company effected a two-for-three reverse
stock split which has been retroactively reflected in the consolidated
financial statements.
 
Warrants--The Company has issued warrants to placement agents and debt holders
in connection with the issuances of debt and equity securities. The warrants
are exercisable at various dates through September 2004. No warrants have been
exercised. The fair market value of the warrants were recorded as additional
paid-in capital. The excess of fair market value over exercise price is being
amortized over the respective debt maturity term. A summary of the Company's
common stock warrant activity is as follows:
Number of Weighted
                                                              Common    Average
                                                               Stock     Price
                                                              Shares   Per Share
                                                             --------- ---------
Warrants issued--Series A placement agents............  104,532    $5.63
                                                              -------    -----
      Outstanding, December 31, 1996........................  104,532     5.63
      Warrants issued--Series B placement agents............   33,333     6.75
      Warrants issued--debt holders.........................   80,555      .01
                                                              -------    -----
      Outstanding, December 28, 1997........................  218,420     3.73
      Warrants issued--debt holders.........................  112,776      .01
                                                              -------    -----
      Outstanding and exercisable, December 27, 1998........  331,196    $2.46
                                                              =======    =====
Additionally, the Company issued warrants to purchase 66,663 shares of common
stock at $.01 per share to the purchasers of Series B preferred stock. The
warrants vest upon completion of an IPO, but only if the public offering price
per share is less than $13.50.
 
Stock Option Plans--During 1996, the Company adopted the 1996 Incentive Stock
Option Plan (the 1996 Plan), pursuant to which options to acquire an aggregate
of 433,333 shares of the Company's common stock may be granted. Under the 1996
Plan, the Board of Directors may grant options to purchase shares of the
Company's stock to eligible employees for both incentive and nonstatutory stock
options. Options granted under the 1996 Plan vest as determined by the Board of
Directors and are exercisable for a term not to exceed ten years.
 
During 1998, the Board of Directors approved amendments to the 1996 Plan to
increase the number of shares available for issuance under the 1996 Plan to
1,000,000 shares.
 
During 1996, the Company adopted the 1996 Stock Option Plan for Nonemployee
Directors (the Directors' Plan) pursuant to which options to acquire an
aggregate of 26,667 shares of the Company's common stock may be granted to
outside directors. Under the Directors' Plan, 1,333 options will automatically
be granted to each outside director upon election to the Board of Directors,
and thereafter 667 options will be granted annually for each year of continued
service by the outside director. Options granted under the Directors' Plan vest
over one year from date of grant and are exercisable for ten years.
 
 
                                      F-16
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
 
A summary of the status of the Company's stock options are presented in the
table and narrative below:
Options
                                                  Weighted            Available
                                                  Average                for
                                                  Extended   Price     Future
                                         Shares    Price     Range      Grant
                                        --------  -------- ---------- ---------
Granted..........................   13,331   $4.84   $4.50-5.63
                                        --------   -----   ----------  -------
      Outstanding, December 31, 1996...   13,331    4.84    1.13-5.63  413,335
                                                                       =======
      Granted..........................  700,353    4.61    1.13-6.75
      Terminated....................... (132,177)   1.25    1.13-5.63
                                        --------   -----   ----------  -------
      Outstanding, December 28, 1997...  581,507    5.38    1.13-6.75  111,826
                                                                       =======
      Granted..........................  273,314    7.59    6.75-7.68
      Terminated.......................     (666)   7.68         7.68
                                        --------   -----   ----------  -------
      Outstanding, December 27, 1998...  854,155   $6.08   $1.13-7.68  172,511
                                        ========   =====   ==========  =======
      Exercisable, December 27, 1998...  212,109   $4.47   $1.13-7.68
                                        ========   =====   ==========
During 1998, the Company granted 16,000 stock options to a landlord at a price
of $6.75 per share which were outside of the two stock option plans.
 
The Company has chosen to continue to account for stock-based compensation
using the intrinsic value method prescribed by APB Opinion No. 25 and related
interpretations. No compensation cost has been recognized for options issued to
employees under the Plans when the exercise price of the options granted are at
least equal to the fair value of the common stock on the date of grant. Had
compensation costs for these plans been determined consistent with SFAS No.
123, the Company's net loss would have been increased to the following pro
forma amounts for 1996, 1997, and 1998 (in thousands):
1996    1997    1998
                                                        ------  ------  ------
Net loss applicable to common stock:
       As reported..................................... $4,800  $5,305  $5,135
       Pro forma.......................................  4,800   5,773   5,380
      Net loss per common share, basic and diluted:
       As reported..................................... $(1.96) $(2.13) $(2.04)
       Pro forma.......................................  (1.96)  (2.32)  (2.14)
The fair value of each option grant for the pro forma disclosure required by
SFAS No. 123 is estimated on the grant date using the Black-Scholes option-
pricing model with the following assumptions and the results for the grants:
1996      1997       1998
                                                  -------  ---------  ---------
Dividend yield.............................    None       None       None
      Expected volatility........................    None       None       None
      Expected life of option.................... 7 years    7 years    7 years
      Risk-free interest rate....................    6.38% 5.76-6.70% 4.63-5.68%
Paisano Partnership Program--On January 1, 1997, the Company implemented the
Paisano Partnership Program for certain restaurant employees. This program
requires restaurant general managers known as Paisano Partners to purchase
approximately $20,000 of the Company's common stock and they also receive stock
options. In addition, kitchen managers also receive stock options. The Company
allows the Paisano Partners the option to finance the
 
                                      F-17
BUCA, INC. AND SUBSIDIARIES
 
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Concluded)
 
initial stock purchase over five years at an interest rate of 8%. At December
28, 1997 and December 27, 1998 the notes receivable balances related to this
financing were $271,000 and $293,000, respectively, were included as contra-
equity. At December 28, 1997 and December 27, 1998, 31,998 and 81,396 shares of
common stock was issued under this program.
 
11. SUPPLEMENTAL CASH FLOW INFORMATION:
 
The following is supplemental cash flow information for the years ended:
1996  1997 1998
                                                               ----- ---- -----
Cash paid during year for:
       Interest..............................................  $ 359 $527 $ 714
       Income taxes..........................................           9    17
      Noncash investing and financing activities:
       Property and equipment additions financed through
        capital lease obligation.............................     18  401
       Shareholder receivable from issuance of common stock..         275   160
       Shareholder receivable reduction due to retirement of
        stock................................................                58
       Escrow deposit transferred to property and equipment..         551
       Accretion of redeemable preferred stock to redemption
        value................................................    190  524   247
       Dividends accrued on redeemable preferred stock.......    111  785 1,292
       Change in value of redeemable common stock............  3,386  677   650
F-18
2,650,000 Shares
 
                                   BUCA, INC.
 
                                  Common Stock
 
                                     [LOGO]
 
                               ----------------
                                   PROSPECTUS
                               ----------------
 
Until            , all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
Prospectus. This is in addition to the dealers' obligation to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
 
                               Piper Jaffray Inc.
 
                     NationsBanc Montgomery Securities LLC
 
                                         , 1999
PART II
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
Item 13. Other Expenses of Issuance and Distribution
 
Expenses in connection with the issuance and distribution of the shares of
Common Stock being registered hereunder, other than underwriting commissions
and expenses, are estimated below.
SEC registration fee............................................. $ 10,591
     NASD filing fee..................................................    4,333
     Nasdaq listing fee...............................................   53,700
     Legal fees and expenses..........................................  225,000
     Accounting fees and expenses.....................................  225,000
     Blue Sky fees and expenses.......................................    5,000
     Printing expenses................................................  210,000
     Transfer agent fees and expenses.................................   15,000
     Miscellaneous expenses...........................................  113,876
                                                                       --------
         Total........................................................ $862,500
Item 14. Indemnification of Directors and Officers
 
Section 302A.521 of the Minnesota Statutes requires the Company to indemnify a
person made or threatened to be made a party to a proceeding, by a reason of
the former or present official capacity of the person with respect to the
Company, against judgments, penalties, fines, including without limitation,
excise taxes assessed against the person with respect to an employee benefit
plan, settlements, and reasonable expenses, including attorneys' fees and
disbursements, if, with respect to the acts or omissions of the person
complained of in the proceeding, such person (1) has not been indemnified by
another organization or employee benefit plan for the same judgments,
penalties, fines, including without limitation, excise taxes assessed against
the person with respect to an employee benefit plan, settlements, and
reasonable expenses, including attorneys' fees and disbursements, incurred by
the person in connection with the proceeding with respect to the same acts or
omissions; (2) acted in good faith; (3) received no improper personal benefit,
and statutory procedure has been followed in the case of any conflict of
interest by a director; (4) in the case of a criminal proceeding, had no
reasonable cause to believe the conduct was unlawful; and (5) in the case of
acts or omissions occurring in the person's performance in the official
capacity of director or, for a person not a director, in the official capacity
of officer, committee member, employee or agent, reasonably believed that the
conduct was in the best interests of the Company, or in the case of performance
by a director, officer, employee or agent of the Company as a director,
officer, partner, trustee, employee or agent of another organization or
employee benefit plan, reasonably believed that the conduct was not opposed to
the best interests of the Company. In addition, Section 302A.521, subd. 3
requires payment by the Company, upon written request, of reasonable expenses
in advance of final disposition in certain instances. A decision as to required
indemnification is made by a majority of the disinterested Board of Directors
present at a meting at which a disinterested quorum is present, or by a
designated committee of disinterested directors, by special legal counsel, by
the disinterested shareholders, or by a court.
 
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers or persons controlling the Company pursuant to
the foregoing provisions, the Company has been informed that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Act, and is therefore unenforceable.
 
Under the terms of the form of Purchase Agreement filed as Exhibit 1.1 hereto,
the Underwriters have agreed to indemnify, under certain conditions, the
Company, its directors, certain of its officers and persons who control the
Company within the meaning of the Act, against certain liabilities.
 
                                      II-1
Item 15. Recent Sales of Unregistered Securities
 
During the past three years, the Company has sold the following securities
pursuant to exemptions from registration under the Act. The sales referred to
in numbers 1, 2, 3, 4, 6, 7, 12, 14, 15, 16, 17, 20, 21, 28, 30, 33, 34, 37,
39, 40 and 41 were made in reliance upon the exemptions from registration
provided under Section 4(2) of the Act for transactions not involving a public
offering and the sales referred to in numbers 5, 8, 9, 10, 11, 13, 18, 19, 22,
23, 24, 25, 26, 27, 29, 31, 32, 35, 36 and 38 were made in reliance upon the
exemptions from registration provided pursuant to Rule 701 under the Act for
securities sold pursuant to certain compensatory benefit plans and contracts
relating to compensation, and related state securities laws. Unless otherwise
stated, all shares were issued directly by the Company, no underwriters were
involved and, except as otherwise noted below, no discount, commission or other
transaction-related remuneration was paid. Share figures have been adjusted for
the 2-for-3 reverse stock split that was effective on February 17, 1999.
 
    1. On August 27, 1996, the Company granted options to purchase an
       aggregate of 9,332 shares of the Company's common stock at $4.50 per
       share to two of the Company's directors.
 
    2. On October 23, 1996, the Company issued warrants to purchase an
       aggregate of 156,800 shares of its Series A Convertible Preferred
       Stock convertible into 104,532 shares of common stock at $5.625 per
       common share to Piper Jaffray Inc. and Michael Bochert.
 
    3. On October 23, 1996, the Company issued 2,240,000 shares of its Class
       A Convertible Preferred Stock convertible into 1,493,331 shares of
       common stock to outside investors for $8,400,000 or $5.625 per common
       share.
 
    4. On October 24, 1996, the Company granted options to purchase an
       aggregate of 3,999 shares of the Company's common stock at $5.625 per
       share to the Company's directors.
 
    5. On February 1, 1997, the Company granted options to purchase an
       aggregate of 78,331 shares of the Company's common stock at $5.625
       per share to employees of the Company.
 
    6. On February 1, 1997, the Company granted options to purchase 122,854
       shares of the Company's common stock at $1.125 per share to Joseph P.
       Micatrotto under the terms of his employment agreement with the
       Company.
 
    7. On February 1, 1997, the Company sold 16,000 shares of common stock
       to Joseph P. Micatrotto under the terms of his employment agreement
       with the Company for $90,000 or $5.625 per share.
 
    8. On February 6, 1997, the Company granted options to purchase 33,333
       shares of the Company's common stock at $5.625 per share to an
       employee of the Company.
 
    9. On March 1, 1997, the Company granted options to purchase 13,333
       shares of the Company's common stock at $5.625 per share to an
       employee of the Company.
 
    10. On April 21, 1997, the Company sold an aggregate of 31,995 shares of
        common stock to employees of the Company for $179,998.75 or $5.625
        per share.
 
    11. On June 1, 1997, the Company granted options to purchase an
        aggregate of 4,000 shares of the Company's common stock at $5.625
        per share to two of the Company's employees.
 
    12. On July 8, 1997, the Company granted options to purchase 1,333
        shares of the Company's common stock at $5.625 per share to a
        director of the Company.
 
    13. On August 1, 1997, the Company granted options to purchase 13,333
        shares of the Company's common stock at $5.625 per share to an
        employee of the Company.
 
    14. On September 3, 1997, the Company issued warrants to purchase 50,000
        shares of the Company's Class B Convertible Preferred Stock
        convertible into 33,333 shares of common stock at $6.75 per common
        share to Piper Jaffray Inc.
 
 
                                      II-2
15. On September 3, 1997, the Company sold an aggregate of 961,000
        shares of its Class B Convertible Stock convertible into 640,739
        shares of common stock to outside investors for $4,324.999.50 or
        $6.75 per common share.
 
    16. On October 24, 1997, the Company granted options to purchase an
        aggregate of 1,332 shares of common stock at $6.75 per share to
        directors of the Company.
 
    17. On October 31, 1997, the Company issued warrants to purchase an
        aggregate of 147,218 shares of the Company's common stock at $0.01
        per share to its investors and lenders in connection with the
        Company's subordinated debt transaction.
 
    18. On November 4, 1997, the Company granted options to purchase an
        aggregate of 214,327 shares of the Company's common stock at $6.75
        per share to employees of the Company.
 
    19. On December 18, 1997, the Company sold an aggregate of 11,848 shares
        of common stock to employees of the Company for $79,992, or $6.75
        per share.
 
    20. On December 18, 1997, the Company granted options to purchase 51,511
        shares of the Company's common stock at $1.125 per share and options
        to purchase 186,666 shares of the Company's common stock at $5.675
        per share to Joseph P. Micatrotto under the terms of his employment
        agreement with the Company.
 
    21. On December 19, 1997, the Company sold an aggregate of 961,000
        shares of Series B Convertible Preferred Stock convertible into
        640,739 shares of common stock to outside investors for
        $4,324,999.50 or $6.75 per common share.
 
    22. On January 1, 1998, the Company sold 2,962 shares of common stock to
        an employee of the Company for $20,000, or $6.75 per share.
 
    23. On February 1, 1998, the Company sold 5,924 shares of common stock
        to an employee of the Company for $40,000, or $6.75 per share.
 
    24. On February 1, 1998, the Company granted options to purchase 2,000
        shares of the Company's common stock at $6.75 per share to an
        employee of the Company.
 
    25. On March 1, 1998, the Company sold 2,962 shares of common stock to
        an employee of the Company for $20,000, or $6.75 per share.
 
    26. On April 28, 1998, the Company granted options to purchase 13,333
        shares of the Company's common stock at $6.75 per share to an
        employee of the Company.
 
    27. On May 1, 1998, the Company granted options to purchase 2,000 shares
        of the Company's common stock at $6.75 per share to an employee of
        the Company.
 
    28. On May 18, 1998, the Company issued warrants to purchase an
        aggregate of 112,776 shares of the Company's common stock at $0.01
        per share to its lenders in connection with the Company's
        subordinated debt transaction.
 
    29. On June 1, 1998, the Company granted options to purchase an
        aggregate of 10,000 shares of the Company's common stock at $6.75
        per share and sold 8,886 shares of the Company's common stock for
        $60,000, or $6.75 per share, to employees of the Company.
 
    30. On July 1, 1998, the Company granted options to purchase 666 shares
        of the Company's common stock at $6.75 per share to a director of
        the Company.
 
                                      II-3
31. On September 1, 1998, the Company granted options to purchase an
        aggregate of 8,000 shares of the Company's common stock at $6.75 per
        share to employees of the Company.
 
    32. On September 1, 1998, the Company sold an aggregate of 10,404 shares
        of common stock to employees of the Company for $80,000, or $6.75
        per share.
 
    33. On October 13, 1998, the Company sold an aggregate of 1,639,025
        shares of its Class C Convertible Preferred Stock convertible into
        1,092,679 shares of common stock to outside investors for
        $9,400,007.02 or $7.6875 per common share.
 
    34. On October 24, 1998, the Company granted options to purchase 1,332
        shares of the Company's common stock at $7.6875 per share to
        directors of the Company.
 
    35. On October 27, 1998, the Company sold 2,601 shares of common stock
        to an employee of the Company for $20,000 or $7.6875 per share.
 
    36. On October 27, 1998, the Company granted options to purchase an
        aggregate of 235,983 shares of the Company's common stock at $7.6875
        per share to employees of the Company.
 
    37. On December 23, 1998, the Company issued 975,609 shares of its
        Series C Convertible Preferred Stock convertible into 637,752 shares
        of common stock to outside investors, for $5,000,000 or $7.84 per
        common share.
 
    38. On January 26, 1999, the Company granted options to purchase 3,333
        shares of the Company's common stock at $7.6875 per share to an
        employee at the Company.
 
    39. On February 15, 1999, the Company granted options to purchase 48,000
        shares of the Company's common stock at $11.25 per share to
        directors of the Company.
 
    40. On February 15, 1999, the Company granted options to purchase
        126,666 shares of the Company's common stock at $11.25 per share to
        Joseph P. Micatrotto.
 
    41. On February 15, 1999, the Company agreed to issue 40,195 shares of
        the Company's common stock to holders of the Series C Preferred
        Stock in connection with the conversion of the Series C Preferred
        Stock.
 
 
                                      II-4
Item 16. Exhibits and Financial Statement Schedules
 
(a) Exhibits
Exhibit No.                             Description
 -----------                             -----------
*1.1     Form of Underwriting Agreement.
     3.1     Amended and Restated Articles of Incorporation of the Registrant.
     3.2     Amendment to Amended and Restated Articles of Incorporation of the
             Registrant.
     3.3     By-Laws of the Registrant.
    *4.1     Specimen of Common Stock certificate.
    *5.1     Opinion of Faegre & Benson LLP.
    10.1     1996 Stock Incentive Plan of BUCA, Inc. and Affiliated Companies.
    10.2     Stock Option Plan for Non-Employee Directors
    10.3     BUCA, Inc. Employee Stock Ownership Plan.
   *10.4     BUCA, Inc. 401(k) Plan.
    10.5     Employment Agreement dated as of July 22, 1996, between the
             Registrant and Joseph P. Micatrotto, including amendments and
             option agreements related thereto.
    10.6     Letter Agreement dated April 1, 1997 between the Registrant and
             Greg A. Gadel.
    10.7     Credit Agreement dated as of February 5, 1999 between the
             Registrant, as Borrower, and U.S. Bank National Association, as
             Lender.
    10.8     Security Agreement dated as of February 5, 1999 by the Registrant,
             in favor of U.S. Bank National Association.
    10.9     Form of Series A Convertible Subordinated Debenture due July 30,
             2001 of the Registrant.
    10.10    Form of Stock Purchase Warrant for the purchase of Series A
             Convertible Preferred Stock of the Registrant.
    10.11    Form of Stock Purchase Warrant for the purchase of Series B
             Convertible Preferred Stock of the Registrant.
    10.12    Form of Stock Purchase Warrant dated as of October 31, 1997.
    10.13    Form of Stock Purchase Warrant for the purchase of common stock of
             the Registrant, dated October 31, 1997.
    10.14    Form of Stock Purchase Warrant for the purchase of common stock of
             the Registrant, dated May 19, 1998.
    10.15    Non-Statutory Stock Option Agreement between the Registrant and
             1204 Harmon Partnership for the purchase of 24,000 shares of
             common stock of the Registrant, dated as of June 1, 1998.
    10.16    Stock Purchase Agreement dated as of September 2, 1997 between the
             Registrant and the Purchasers.
    10.17    Securities Purchase Agreement dated as of October 13, 1998 between
             the Registrant and the Purchasers.
    10.18    Redemption Agreement between BUCA, Inc. and Parasole Restaurant
             Holdings, Inc. regarding the Parasole Employee Stock Ownership
             Plan.
    10.19    Form of BUCA, Inc. Contingent Value Rights to Receive Shares of
             Capital Stock.
    21.1     Subsidiaries of the Registrant.
    23.1     Consent of Arthur Andersen LLP.
    23.2     Consent of Deloitte & Touche LLP.
    23.3     Consent of Faegre & Benson LLP (to be included in Exhibit No. 5.1
             to the Registration Statement).
    24.1     Powers of Attorney.
    27.1     Financial Data Schedule.
* To be filed by amendment.
(b) Financial Statement Schedules
 
  None required.
 
 
                                      II-5
Item 17. Undertakings.
 
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers, and controlling persons of the Company
pursuant to the provisions summarized in Item 14 above, or otherwise, the
Company has been advised that, in the opinion of the Commission, such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification is
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company
in the successful defense of any action, suit, or proceeding) is asserted by
such director, officer, or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act, and will be governed by
the final adjudication of such issue.
 
The undersigned Company hereby undertakes to provide to the Underwriters, at
the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
 
The undersigned Company hereby undertakes that:
 
   (1) For purposes of determining any liability under the Act, the
   information omitted from the form of prospectus filed as part of this
   registration statement in reliance upon Rule 430A and contained in a form
   of prospectus filed by the Company under Rule 424(b)(1) or (4) or 497(h)
   under the Act shall be deemed to be part of this registration statement as
   of the time it was declared effective.
 
   (2) For the purpose of determining any liability under the Act, each post-
   effective amendment that contains a form of prospectus shall be deemed to
   be a new registration statement relating to the securities offered therein,
   and the offering of such securities at that time shall be deemed to be the
   initial bona fide offering thereof.
 
                                     II-6
SIGNATURES
 
Pursuant to the requirements of the Securities Act of 1933, the Company has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Minneapolis, State of
Minnesota, on February 18, 1999.
 
                                          BUCA, INC.
 
                                                 /s/ Joseph P. Micatrotto
                                          By___________________________________
                                                 Joseph P. Micatrotto
                                                 President and Chief Executive
                                                 Officer
 
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities indicated
on February 18, 1999.
 
              Signature                                   Title
 
 
      /s/ Joseph P. Micatrotto            President and Chief Executive
_____________________________________     Officer
        Joseph P. Micatrotto              (Principal Executive Officer) and
                                          Director
 
 
          /s/ Greg A. Gadel
_____________________________________     Chief Financial Officer
            Greg A. Gadel                 (Principal Financing and Accounting
                                          Officer)
 
 
            Don W. Hays                   Board of Directors
            Peter J. Mihajlov
            Philip A. Roberts
            John P. Whaley
            David Yarnell
            Paul Zepf
 
--------
*  Joseph P. Micatrotto, by signing his name hereto, does hereby sign this
   document on behalf of each of the above-named officers and/or directors of
   the Company pursuant to powers of attorney duly executed by such persons.
 
 
                                                 /s/ Joseph P. Micatrotto
                                          By___________________________________
                                            Joseph P. Micatrotto, Attorney-in-
                                                           Fact
 
                                      II-7