SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                   FORM 10-QSB


(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   For the quarterly period ended June 28,1998

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                For the transition period from         to           .
                                              ---------   ----------


                           Commission File No. 0-23226


                              GRILL CONCEPTS, INC.
         ---------------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)




         Delaware                                              13-3319172 
----------------------------                           -------------------------
(State or other jurisdiction                           (IRS Employer 
of incorporation or organization)                        Identification No.)
           


        11661 San Vicente Blvd., Suite 404, Los Angeles, California 90049
        -----------------------------------------------------------------
                    (Address of principal executive offices)


                                 (310) 820-5559
                            -------------------------
                           (Issuer's telephone number)
 
 -------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)


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

     As of August 3,1998,  16,015,553  shares of Common Stock of the issuer were
outstanding.



<PAGE>



                              GRILL CONCEPTS, INC.
                              --------------------
                                      INDEX


                                                                        Page
                                                                       Number
                                                                      --------
PART I - FINANCIAL INFORMATION

 Item 1.  Financial Statements

             Consolidated Condensed Balance Sheets - 
               June 28, 1998 and December 28, 1997................       1
 
             Consolidated Condensed Statements of Operations - 
               For the six months ended June 28, 1998 and 
               June 29, 1997......................................       3

             Consolidated Condensed Statements of Cash Flows - 
               For the six months ended June 28, 1998 and 
               June 29, 1997......................................       4

             Notes to Consolidated Condensed Financial Statements.       5

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

PART II - OTHER INFORMATION

 Item 4.  Submission of Matters to a Vote of Security Holders.....       9

 Item 6.  Exhibits and Reports on Form 8-K........................      10
 
SIGNATURES........................................................      10


<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                      GRILL CONCEPTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEETS


                                     ASSETS


                                                 June 28,           December 28,
                                                   1998                1997
                                              ----------------     -------------
 
Current assets:
     Cash and cash equivalents                   $173,194              $272,567
     Inventories                                  349,271               302,631
     Receivables                                  340,327               375,117
     Prepaid                                    1,167,830               955,329
expenses
                                             -------------        --------------

          Total current assets                  2,030,622             1,905,644
                                             -------------        --------------

Property and equipment, at cost                12,252,277            10,340,678
     Less:  accumulated depreciation          (4,798,188)           (4,277,546)
                                             -------------        --------------

          Property and equipment, net           7,454,089             6,063,132
                                             -------------        --------------

Goodwill                                          233,634               237,636

Liquor licenses                                   613,686               613,686

Other assets                                      366,697               190,757
                                             -------------        --------------


          Total assets                        $10,698,728            $9,010,855
                                             =============        ==============



 
       The accompanying notes are an integral part of these consolidated
                        condensed financial statements.
 

 

                                       1
<PAGE>



                      GRILL CONCEPTS, INC. AND SUBSIDIARIES

                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (Continued)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>

                                                                               June 28,            December 28,
                                                                                 1998                  1997
                                                                           -----------------      ----------------
<S>                                                                        <C>                      <C>    

Current liabilities:
     Bank line of credit                                                         $1,000,000              $480,000
     Accounts payable                                                             1,335,452             1,359,529
     Accrued expenses                                                               981,447               858,050
     Current portion of long term debt                                              354,300               346,208
     Note payable - related party                                                    84,500                84,500
                                                                           -----------------      ----------------

          Total current liabilities                                               3,755,699             3,128,287

Long-term debt, net of current                                                    1,315,083               699,364
                                                                           -----------------      ----------------

          Total liabilities                                                       5,070,782             3,827,651
                                                                           -----------------      ----------------

Minority interest                                                                   267,697                    --
                                                                           -----------------      ----------------          
                                                                           
Stockholders' equity:
    Series B, Convertible Preferred Stock, $.001 par value, authorized
      1,000,000  shares;  shares  issued and  outstanding:  0 in 1998, 32
in       1997.                                                                           --                     1
   Series I, Convertible Preferred Stock,$.001 par value, authorized
      1,000,000 shares, shares issued and outstanding: 1000 shares in
      1998 and 1997                                                                       1                     1
    Series II, Convertible Preferred Stock, $.001 par value, authorized
      1,000,000 shares, shares issued and outstanding: 500 shares in
      1998 and 1997                                                                       1                     1
    Common stock, $.00001 par value: 30,000,000 shares authorized,
      shares issued and outstanding: 16,015,553 in 1998 and
     15,672,481 in 1997                                                                 160                   157

   Additional paid-in capital                                                    11,053,913            11,053,913

   Accumulated deficit                                                          (5,693,826)           (5,870,869)
                                                                           -----------------      ----------------

          Stockholders' equity                                                    5,360,249             5,183,204
                                                                           -----------------      ----------------

          Total liabilities and stockholders' equity                            $10,698,728            $9,010,855
                                                                           -----------------      ----------------
                                                                           -----------------      ----------------  

</TABLE>



       The accompanying notes are an integral part of these consolidated
                         condensed financial statements



                                       2
<PAGE>

                     GRILL CONCEPTS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

<TABLE>

                                                     Three Months Ended                     Six Months Ended
                                              ---------------------------------     ----------------------------------
                                              June 28, 1998     June 29, 1997         June 28,            June 29,
                                                                                        1998                1997
                                              --------------    ---------------     --------------     ---------------
<S>                                          <C>                 <C>                 <C>                 <C>                
Revenues:
    Sales                                        $8,378,563         $7,306,781        $16,739,804         $14,447,501
    Management fees                                  71,715                 --             71,715                  --
                                              --------------    ---------------     --------------     ---------------
              Total revenues                      8,450,280          7,306,781         16,811,519          14,447,501

Cost of sales                                     2,322,926          1,987,026          4,525,977           3,943,243
                                              --------------    ---------------     --------------     ---------------

Gross profit                                      6,127,352          5,319,755         12,285,542          10,504,258
                                              --------------    ---------------     --------------     ---------------

Costs and expenses:
    Restaurant operating expenses                 5,167,635          4,535,844         10,213,003           8,876,711
    General and administrative                      620,005            539,641          1,242,599           1,063,124
    Depreciation and amortization                   277,370            224,978            520,640             424,656
    Amortization of preopening expenses              31,500             85,300             77,100             135,600
                                              --------------    ---------------     --------------     ---------------
              Total operating expenses            6,096,510          5,385,763         12,053,342          10,500,091
                                              --------------    ---------------     --------------     ---------------

Income (loss) from operations                        30,842           (66,008)            232,200               4,167
Non-recurring credit                                                    43,714                                 93,000
Interest expense, net                              (45,642)           (29,567)           (84,760)            (73,614)
                                              --------------    ---------------                        ---------------
                                                                                    --------------
Income (loss) before taxes on income           
    and minority interest                          (14,800)           (51,861)            147,440              23,553

Provision for taxes on income                       (1,200)                 --            (2,400)               (800)
Minority interest                                    32,003                 --             32,003                  --
                                              --------------    ---------------     --------------     ---------------
Net income (loss)                                    16,003          ($51,861)            177,043             $22,753
                                              --------------    ---------------     --------------     ---------------

Preferred stock:
    Dividends accrued                              (12,222)              (417)           (34,550)               (417)
    Accounting deemed dividends                    (40,744)          (126,389)           (82,877)           (126,389)
                                              --------------    ---------------     --------------     ---------------
                                                   (52,966)          (126,806)          (117,427)           (126,806)
                                              --------------    ---------------     --------------     ---------------
Net income (loss)applicable to                    ($36,963)         ($178,667)           $59,616           ($104,053)
    common stock
                                              ==============    ===============     ==============     ===============

Net income (loss) per share
    Basic net income (loss)                           $0.00            ($0.00)              $0.01               $0.00
                                              --------------    ---------------     --------------     ---------------

    Preferred stock
         Dividends                                  ($0.00)            ($0.00)            ($0.00)             ($0.00)
         Accounting deemed dividends                ($0.00)            ($0.01)            ($0.01)             ($0.01)
                                              --------------    ---------------     --------------     ---------------

                                                    ($0.00)            ($0.01)            ($0.01)             ($0.01)
                                              --------------    ---------------     --------------     ---------------

Net loss applicable to common stocks                ($0.00)            ($0.01)            ($0.00)             ($0.01)
                                              ==============    ===============     ==============     ===============
Average weighted shares outstanding              15,802,514         14,708,761         15,753,658          14,518,749
                                              ==============    ===============     ==============     ===============

</TABLE>


        The accompanying notes are an integral part of these consolidated
                             financial statements.



                                       3
<PAGE>


                      GRILL CONCEPTS, INC. AND SUBSIDIARIES

                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS


<TABLE>

                                                                           Six Months Ended
                                                                   -------------------------------
                                                                     June 28,          June 29, 
                                                                       1998              1997
                                                                   -------------     -------------
<S>                                                                 <C>               <C>
 
Cash flows from operating activities:
     Net income                                                        $177,043        $22,753
     Adjustments to reconcile net income to net cash
       provided by operating activities:
        Depreciation and amortization                                   597,740        560,256
        Changes in operating assets and liabilities
          Inventories                                                  (46,640)       (60,024)
          Receivables                                                    34,790
          Prepaid expenses                                            (212,501)         80,808
          Other assets                                                (281,037)      (206,510)
          Accounts payable                                             (24,077)        122,769
          Accrued liabilities                                           123,397        123,097
                                                                   ------------- --------------

     Net cash provided by operating activities                          368,715        643,149
                                                                   ------------- --------------

Cash flows from investing activities:
     Additions to furniture, equipment and improvements             (1,911,599)    (1,653,565)
                                                                   ------------- --------------
     Net cash used in investing activities                          (1,911,599)    (1,653,565)
                                                                   ------------- --------------

Cash flows from financing activities:
     Proceeds from note payable                                         800,000             --
     Proceeds from investment in L.L.C.                                 299,700             --
     Proceeds from issue of Common and Preferred Stock                       --      1,456,630
     Proceeds from line of credit                                       520,000             --
     Payments on long-term debt                                       (176,189)      (173,374)
                                                                   ------------- --------------
     Net cash provided by financial activities                        1,443,511      1,283,250
                                                                   ------------- --------------

Net increase (decrease) in cash and cash equivalents                   (99,373)        272,834

Cash and cash equivalents, beginning of period                          272,567        372,317
                                                                   ------------- --------------

Cash and cash equivalents, end of period                               $173,194       $645,151
                                                                   ------------- --------------
                                                                   ------------- --------------  


Supplemental cash flow information:
     Cash paid during the period for:
       Interest                                                        $101,850        $53,598
       Income taxes                                                       3,400             -- 

</TABLE>
            

       The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       4
<PAGE>



                     GRILL CONCEPTS, INC. AND SUBSIDIARIES

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 


1.   INTERIM FINANCIAL PRESENTATION

     The interim consolidated  financial statements are prepared pursuant to the
     requirements for reporting on Form 10-QSB.  These financial statements have
     not been audited by independent accountants.  The December 28, 1997 balance
     sheet data was  derived  from  audited  financial  statements  but does not
     include  all  disclosures   required  by  generally   accepted   accounting
     principles.  The interim  financial  statements and notes thereto should be
     read in conjunction with the financial statements and notes included in the
     Company's   Form  10-KSB  dated  December  28,  1997.  In  the  opinion  of
     management, these interim financial statements reflect all adjustments of a
     normal  recurring  nature necessary for a fair statement of the results for
     the interim periods presented. The current period results of operations are
     not necessarily indicative of results which ultimately will be reported for
     the full year ending December 27, 1998.


2.   STOCKHOLDERS' EQUITY

     During the quarter  ended June 28, 1998,  22 shares of Series B Convertible
     Preferred Stock were converted resulting in the issuance of an aggregate of
     225,425  shares of common  stock  including  24,512  shares paid in lieu of
     dividends at an average price of $.80 per share.


3.   DEEMED DIVIDEND

     In accordance  with the position of the Securities and Exchange  Commission
regarding accounting for Preferred Stock which is convertible at a discount from
market price for common stock,  the Company has reflected an accounting  "deemed
dividend." This accounting deemed dividend, which relates to the issuance of the
Preferred Stock, is a non-cash  accounting  entry for determining  income (loss)
applicable to common stock and income (loss) per share.

4.   MINORITY INTEREST

     In  connection  with the building of a new  restaurant,  in January 1998, a
     limited  liability  company  was formed for the  operation  of "The  Grill"
     restaurant  in San Jose,  California,  of which the  Company  owns  50.05%.
     Construction  of the restaurant  has been funded by a capital  contribution
     from the Company of $350,350 and by a capital  contribution of $299,700 and
     a $800,000  loan from the other  minority  interest  member of the  limited
     liability company. The consolidated  condensed financial statements include
     the accounts of the limited liability company.


5.   NET INCOME PER SHARE

     Statement of Financial  Accounting  Standards (SFAS) No. 128, "Earnings Per
     Share",  was  adopted in the  fourth  quarter  of 1997 and  supersedes  the
     Company's  previous  standards  for  computing  net income per share  under
     Accounting  Principles  Board  No.  15.  The  new  standard  requires  dual
     presentation  of net  income  per  common  share and net  income per common
     share, assuming dilution,  on the face of the income statement.  Net income
     per  share  data has been  restated  for  1997 in  accordance  with the new
     standard.  Dilutive net income (loss) per share is not presented  since all
     of the dilutive shares are antidilutive for the periods presented.



                                       5

<PAGE>


6.   COMPREHENSIVE INCOME

     SFAS No. 130,  "Reporting  Comprehensive  Income",  was adopted  during the
     first  quarter  of  1998.  The  standard  establishes  guidelines  for  the
     reporting  and  display  of  comprehensive  income  and its  components  in
     financial statements.  Companies are required to report total comprehensive
     income for interim periods  beginning first quarter of 1998.  Disclosure of
     comprehensive  income and its components will be required  beginning fiscal
     year end 1998.  The  adoption of the new standard did not have an impact on
     the Company's  financial  statements since the Company had no comprehensive
     income components as defined in SFAS No. 130 for the periods presented.


7.   FUTURE ACCOUNTING REQUIREMENTS

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures About Segments of
     an Enterprise and Related Information". The standard establishes guidelines
     for  reporting  information  on  operating  segments  in interim and annual
     financial  statements.  The new  standard  will be  effective  for the 1998
     fiscal year.  Abbreviated  quarterly  disclosure will be required beginning
     first quarter of 1999, and will include both 1999 and 1998 information. The
     Company does not believe that the new standard will have a material  impact
     on the reporting of its segments.

     Consistent  with practices in the restaurant  industry,  the Company defers
     its  restaurant  preopening  costs and amortizes  them over a  twelve-month
     period following the opening of the respective  restaurant.  In April 1998,
     The American  Institute of Certified  Public  Accountants  ("AICPA") issued
     Statement  of Position  ("SOP")  98-5  "Reporting  on the Costs of Start-Up
     Activities".  The SOP requires entities to expense as incurred all start-up
     and  preopening  costs that are not otherwise  capitalizable  as long-lived
     assets.  The SOP is effective for fiscal years beginning after December 15,
     1998, with earlier adoption  encouraged.  Restatement of previously  issued
     financial  statements  is not  permitted  by the SOP,  and entities are not
     required to report the pro forma effects of the retroactive  application of
     the new  accounting  standard.  The Company's  adoption of the required new
     accounting principal at January 1, 1999 will involve the recognition of the
     cumulative effect of the change in accounting principle required by the SOP
     as a  one-time  charge  against  earnings,  net of any  related  income tax
     effect,  retroactive  to that  date.  Net  deferred  preopening  costs were
     approximately $218,160 at June 30, 1998.

     In June 1998,  the FASB  issued  SFAS No 133,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities".  This  Statement  requires  that all
     derivative  instruments  be  recorded  on the  balance  sheet at their fair
     value.  Changes in the fair value of  dertivatives  will be  recorded  each
     period in current  earnings or other  comprehensive  income,  depending  on
     whether a derivative is designated as part of a hedge  transaction  and, if
     it is, the type of hedge  transaction.  The new rules will be effective the
     first  quarter of 2000.  The Company does not believe that the new standard
     will have a material impact on the Company's financial statements.  

8.   BANK BORROWING

     In July,  1998 the  Company  renewed  its  credit  facilities  with a bank,
     increasing  its term loan to  $1,500,000,  payable in sixty  equal  monthly
     installments  of $25,000  beginning  September 1, 1998.  Interest at Bank's
     Reference Rate plus 0.25% (8.75% at July 31, 1998) is payable monthly.

     The previous  $1,000,000  revolving  line of credit was reduced to $600,000
     with interest at the same rate as noted above.



                                       6
<PAGE>

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

The following  discussion and analysis  should be read in  conjunction  with the
Company's financial statements and notes thereto included elsewhere in this Form
10-QSB.  Except for the historical  information contained herein, the discussion
in this Form 10-QSB contains  certain  forward  looking  statements that involve
risks and uncertainties,  such as statements of the Company's plans, objectives,
expectations and intentions.  The cautionary statements made in this Form 10-QSB
should be read as being  applicable to all related forward  statements  wherever
they appear in this Form  10-QSB.  The  Company's  actual  results  could differ
materially  from those  discussed here. For a discussion of certain factors that
could cause actual  results to be materially  different,  refer to the Company's
Annual Report on Form 10-KSB for the year ended December 28, 1997.

Material Changes in Results of Operations for the Six Months Ended June 28, 1998
as Compared to the Six Months Ended June 29, 1997.

The results of operations for the 26 week period ended June 28, 1998 include the
operations of eight Daily Grill restaurants; three Pizzeria Uno units; The Grill
restaurant and seven weeks operation of the San Jose Grill restaurant. The first
half of 1997 includes  seven Daily Grill  restaurants  for the full quarter plus
the  Washington,  D.C. Daily Grill for sixteen weeks,  three Pizzeria Uno stores
and The Grill.

The Company's sales for the six month period increased 15.9% to $16,740,000 from
$14,448,000  for the same  period  in 1997.  The  increase  of $2.3  million  is
primarily a result of added sales by the inclusion of the Washington, D.C. Daily
Grill,  for a full six months ($1.0 million),  and a sales  contribution of $0.5
million from the San Jose Grill. Additionally,  same store sales increased 6.0%.
Total  revenues  included  $72,000 of management  fees from a newly  implemented
hotel restaurant management service.

While sales  increased by 15.9% in the 1998 six month period when  compared with
the similar  period in 1997,  cost of sales  increased  14.8% and decreased as a
percentage  of sales from 27.3% to 27.0%.  This  decrease  in cost of sales as a
percentage of sales during the 1998 period is attributable  principally to a new
buying program begun in late 1997 which has reduced net food costs.
 
As a result,  gross profit increased 16.3% from $10,504,000  (72.7% of sales) in
1997 to $12,285,000 (73.4% of sales) in 1998.

Restaurant operating expenses increased 15.1% to $10,213,000 (61.0% of sales) in
1998 from $8,877,000 (61.4% of sales) in 1997. The dollar increase in restaurant
operating  expenses  was  primarily  attributable  to the  operation  of the new
Washington,  D.C.  restaurant for a full six months,  and the opening of the new
San Jose Grill restaurant during the 1998 period.

General and  administrative  expenses increased 16.9% to represent 7.4% of sales
in the 1998 six months  while  amounting  to a similar 7.4% of sales in the 1997
period.  The dollar  increase in the  corporate  overhead  category  amounted to
$179,000 and resulted primarily from added corporate personnel,  merit increases
and related  payroll  costs.  Also, the office space was expanded with increased
rent during the second quarter of 1997.

Depreciation and  amortization  expense,  excluding  amortization of pre-opening
expenses,  increased by $96,000 during the 1998 six month period  reflecting the
operation of the  Washington,  D.C. and San Jose  restaurants.  Amortization  of
preopening  expenses for these new  restaurants  totaled $77,000 during the 1998
period.  The Company had amortization of preopening  expenses of $136,000 during
the similar period in 1997.

The quarter and six month  operations also reflect a minority  interest from the
inclusion of the results of the San Jose Grill L.L.C.

In  accordance  with the  position of the  Securities  and  Exchange  Commission
relating to accounting  for  Preferred  Stock which is  convertible  into common
stock at a discount  from the  market  price of the common  stock,  the  Company
reported a "deemed  dividend" of  approximately  $83,000  during the current six
month period.  Additionally,  the Company  reported accrued or paid dividends on
preferred  stock of $35,000 during the similar  period.  The "deemed  dividend,"
which relates to the issuance of convertible  preferred  stock during 1997, is a
non-cash, non-recurring accounting entry which, along with the accrued dividends
on preferred stock, is a deduction from net income in calculating  income (loss)
applicable to common stock.

                                       7

<PAGE>


Material Changes in Financial Condition, Liquidity and Capital Resources.

At June 28, 1998 the Company had negative  working capital of $1.7 million and a
cash  balance of $0.2  million  compared  to  negative  working  capital of $1.2
million and a cash balance of $0.3  million at December 28, 1997.  The change in
working  capital and cash was primarily  attributable to the added borrowing for
investment in the San Jose Grill and the new Daily Grill under  construction  in
Virginia.

The  Company's  need  for  capital  resources  has  resulted  from,  and for the
foreseeable  future is  expected to relate  primarily  to, the  construction  of
restaurants.  Historically,  the  Company has funded its  day-to-day  operations
through its operating  cash flow,  while funding growth through a combination of
bank borrowing,  loans from  stockholders/officers,  the sale of Debentures, the
sale of  Preferred  Stock,  the  issuance  of  warrants,  and loans  and  tenant
allowances  from  certain of its  landlords.  At June  28,1998,  the Company had
existing  bank  borrowing of $1.6  million,  a loan from a San Jose Grill L.L.C.
member   of  $0.8   million,   an  SBA  loan  of  $0.1   million,   loans   from
stockholders/officers  of $0.1  million and  loans/advances  from a landlord and
others of $0.1 million.

In July,  1998 the  Company  increased  its bank credit  availability  from $1.6
million to $2.1 million.

Construction  of The Grill at the San Jose Fairmont  Hotel was completed and the
restaurant  opened on May 13, 1998. A Daily Grill  restaurant in Tyson's Corner,
Virginia is under  construction  and is expected to open in October,  1998. This
restaurant will be its second Washington, D.C. area Daily Grill restaurant.

     The  Grill  at the San Jose  Fairmont  Hotel  was  built  and is owned  and
operated  by a limited  liability  company  of which the  Company  owns  50.05%.
Construction  of the restaurant has been funded by a capital  contribution  from
the Company of $350,350 and by a capital contribution of $299,700 and a $800,000
loan from the other member of the limited liability  company.  Substantially all
operating cash flows from the limited liability company will be used to pay down
the $800,000 loan prior to the distribution of funds to the members. The Company
will, however, receive a management fee of 5% of sales.

The cost to build new Daily Grill  restaurants  is  anticipated to range from $1
million to $2 million per site depending upon the location and available  tenant
allowances.  The Company has budgeted  $1.2 million to build the Tyson's  Corner
Daily  Grill.  Construction  and  opening of the Tyson's  Corner  Daily Grill is
expected  to be  funded  by a  combination  of  operating  cash  flow  and  bank
borrowing.  The Company recently  increased the amount available under its lines
of credit with a portion of the increased  bank line expected to be used to fund
part of the Tyson's Corner Daily Grill opening.

Other than for the  opening of new  restaurants,  management  believes  that the
Company  has  adequate  resources  on hand  and  through  cash  flow to  sustain
operations for at least the following 12 months.

Future Accounting Requirements

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  About Segments of an
Enterprise and Related  Information".  The standard  establishes  guidelines for
reporting  information  on  operating  segments in interim and annual  financial
statements.  The new  standard  will be  effective  for the  1998  fiscal  year.
Abbreviated  quarterly  disclosure  will be required  beginning first quarter of
1999,  and will  include  both 1999 and 1998  information.  The Company does not
believe that the new standard  will have a material  impact on the  reporting of
its segments.

Consistent  with  practices in the restaurant  industry,  the Company defers its
restaurant  preopening  costs  and  amortizes  them over a  twelve-month  period
following the opening of the respective restaurant.  In April 1998, The American
Institute of Certified Public Accountants ("AICPA") issued Statement of Position
("SOP") 98-5 "Reporting on the Costs of Start-Up  Activities".  The SOP requires
entities to expense as incurred all start-up and  preopening  costs that are not
otherwise  capitalizable as long-lived  assets.  The SOP is effective for fiscal
years  beginning  after  December 15, 1998,  with earlier  adoption  encouraged.
Restatement of previously  issued  financial  statements is not permitted by the
SOP,  and  entities  are not  required  to report  the pro forma  effects of the
retroactive  application of the new accounting standard.  The Company's adoption
of the  required  new  accounting  principal at January 1, 1999 will involve the
recognition  of the  cumulative  effect of the  change in  accounting  principle
required by the SOP as a one-time  charge against  earnings,  net of any related
income tax effect,  retroactive to that date. Net deferred preopening costs were
approximately  $218,160 at June 30, 1998. 

In  June  1998,  the  FASB  issued  SFAS  No  133,  "Accounting  for  Derivative
Instruments and Hedging Activities". This Statement requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of dertivatives  will be recorded each period in current  earnings or
other comprehensive  income,  depending on whether a derivative is designated as
part of a hedge  transaction and, if it is, the type of hedge  transaction.  The
new rules will be  effective  the first  quarter of 2000.  The Company  does not
believe  that the new  standard  will have a  material  impact on the  Company's
financial statements.



                                       8
<PAGE>


Certain Factors Affecting Future Operating Results

In addition to the opening of new restaurants  during 1998, as described  above,
and the various factors  described in the Company's Annual Report on Form 10-KSB
for the year ended  December 28, 1997,  the  following  developments  during the
first half of this year may impact future operating results.

In March 1998,  the Company  initiated a pilot program to provide  management of
the food service  operations at the San Jose Hilton Hotel, for which it receives
a  performance  based fee which began in May,  1998. A similar  arrangement  was
begun  at  the  Burbank  Hilton  in  Burbank,   California,  also  in  May.  The
arrangements  are part of a test  project  developed  by the  Company to provide
hotel  restaurant   management  services.   The  program  will  require  minimal
investment  and risk.  This  project is still in the early  stages  and  further
implementation will depend upon results.

The  Company   continues   in  its  efforts  to  sell  its  Pizza   Restaurants.
Additionally,  the  Company  was  continuing  in its  negotiations  with  CA One
Services to modify the terms of the operating agreement for the LAX Daily Grill.

There can be no  assurance  that the Company will be  successful  in opening new
restaurants in accordance with its anticipated opening schedule; that sufficient
capital  resources will be available to fund scheduled  restaurant  openings and
start-up  costs;  that new restaurants  can be operated  profitably;  that hotel
restaurant management services will produce satisfactory cash flow and operating
results to support such operations;  that additional hotels will elect to retain
the Company's hotel restaurant  management services;  that the Pizza Restaurants
can be sold on terms  satisfactory to the Company;  that proceeds,  if any, from
the sale of the Pizza  Restaurants  can be deployed in a manner so as to replace
the cash flows,  revenues and operating profits from the Pizza Restaurants;  or,
that the  operating  agreement  relating to the LAX Daily Grill can, or will, be
modified on terms deemed acceptable to the Company.

                           PART II - OTHER INFORMATION
 
Item 4.  Submission of Matters to a Vote of Security Holders

(a)  On June 12, 1998, an annual meeting of shareholders of Grill Concepts, Inc.
     was held.

(b)  The  following  directors  were  elected  (by the vote  indicated)  at such
     meeting:

<TABLE>
    <S>                  <C>         <C>    <C>       <C>         <C>      <C>

     Robert Wechsler      9,243,214   For    15,000    Against    22,089    Abstain
     Robert Spivak        9,257,314   For       900    Against    22,089    Abstain
     Michael Weinstock    9,258,214   For         0    Against    22,089    Abstain
     Richard Shapiro      9,258,214   For         0    Against    22,089    Abstain
     Charles Frank        9,258,214   For         0    Against    22,089    Abstain
     Glenn Golenberg      9,243,214   For    15,000    Against    22,089    Abstain
     Peter Balas          9,243,214   For    15,000    Against    22,089    Abstain

</TABLE>



(c)  In addition to the  election of directors  as noted  above,  the  following
     matters were voted upon at such meeting:

     (i)  Approval of adoption of the Grill  Concepts,  Inc. 1998  Comprehensive
          Stock Option and Award Plan (8,938,773 For,  310,797  Against,  30,653
          Abstain)

     (ii) Ratification  of  appointment  of  PriceWaterhouseCoopers LLP  as  the
          Company's independent  certifying  accountants  (9,168,077 For, 23,044
          Against, 89,102 Abstain) Item 6. Exhibits and Reports on Form 8-K

          (a)  Exhibits

               Exhibit No.       Description
               -----------       -----------
                  27          Financial Data Schedule

          (b)  Reports on Form 8-K

                None




                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                              GRILL CONCEPTS, INC.


Dated:  August 10, 1998                       By: /s/ ROBERT SPIVAK
                                                 ------------------------------
                                                 Robert Spivak, President
                                                 and C.E.O



Dated: August 10, 1998                        By: /s/ BEN SUMNER
                                                 ------------------------------
                                                  Ben Sumner, Chief Financial 
                                                  Officer and Accounting Officer