SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark  One)

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

                  For the quarterly period ended June 26, 2005

                                       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 registrant 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)(Zip code)

                                 (310) 820-5559
                                 --------------
              (Registrant's telephone number, including area code)

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

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

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).     Yes [ ]          No  [X]


As  of  August  10,  2005,  5,660,546  shares of Common Stock of the issuer were
outstanding.

<PAGE>

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

                                      INDEX


                                                                           Page
                                                                          Number
                                                                          ------

PART  I  -  FINANCIAL  INFORMATION

Item  1.  Financial  Statements

          Condensed  Consolidated  Balance  Sheets  -
            June  26,  2005  and  December  26,  2004  (unaudited)             2

          Condensed  Consolidated  Statements  of  Operations  -
            For  the  three  months  and  six  months  ended  June
            26,  2005  and  June  27,  2004  (restated)  (unaudited)           4

          Condensed  Consolidated  Statements  of  Cash  Flows  -
            For  the  six  months  ended  June  26,  2005  and
            June  27,  2004  (restated)  (unaudited)                           5

          Notes  to  Condensed  Consolidated  Financial  Statements            6

Item  2.  Management's  Discussion and Analysis of Financial Condition
          and  Results  of  Operations                                        17

Item  3.  Quantitative and Qualitative Disclosures About Market Risk          30

Item  4.  Controls  and  Procedures                                           30

PART  II  -  OTHER  INFORMATION

Item  2.  Unregistered Sales of Equity Securities and Use of Proceeds         31

Item  4.  Submission  of  Matters  to  a  Vote  of  Security Holders          32

Item  6.  Exhibits                                                            33

SIGNATURES                                                                    34

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM  1.  FINANCIAL  STATEMENTS


<TABLE>
<CAPTION>
                 GRILL CONCEPTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED BALANCE SHEETS

                             (UNAUDITED)
                                ASSETS

                                                June  26,  December  26,
                                                  2005         2004
                                               -----------  -----------
<S>                                                <C>          <C>
Current assets:
   Cash and cash equivalents                   $ 1,537,000  $ 1,407,000
   Inventories                                     675,000      620,000
   Receivables, net of reserve ($182,000 in
     2005 and $143,000 in 2004)                    860,000      836,000
   Reimbursement receivables from
     managed outlets                               806,000      928,000
   Prepaid expenses                                675,000    2,372,000
                                               -----------  -----------

     Total current assets                        4,553,000    6,163,000

Furniture, equipment, & improvements, net       14,179,000   11,864,000

Goodwill, net                                      205,000      205,000
Restricted cash                                  1,042,000      882,000
Note receivable                                     88,000      101,000
Liquor licenses                                    411,000      350,000
Other assets                                       178,000      184,000
                                               -----------  -----------

     Total assets                              $20,656,000  $19,749,000
                                               ===========  ===========
</TABLE>

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

                                        2
<PAGE>

<TABLE>
<CAPTION>
                  GRILL CONCEPTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED  BALANCE SHEETS
                               (UNAUDITED)
                               (Continued)

            LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY

                                                           June  26,     December  26,
                                                             2005            2004
                                                       ---------------   ---------------
<S>                                                           <C>              <C>
Current liabilities:
   Accounts payable                                       $  1,659,000   $ 1,988,000
   Accrued expenses                                          2,983,000     2,548,000
   Accrued managed outlet operating expenses                   806,000       928,000
   Current portion of long term debt                           111,000       196,000
   Current portion notes payable - related parties             303,000       294,000
                                                       ---------------   ---------------
      Total current liabilities                              5,862,000     5,954,000

Long-term debt                                                 227,000       148,000
Notes payable - related parties                                752,000       829,000
Other long-term liabilities                                  7,725,000     8,054,000
                                                       ---------------   ---------------
      Total liabilities                                     14,566,000    14,985,000

Minority interest                                            1,429,000       934,000

Stockholders' equity:
   Series I, Convertible Preferred Stock, $.001 par
     value; 1,000,000 shares authorized, none
     issued and outstanding in 2005 and 2004                         -             -
   Series II, 10% Convertible Preferred Stock, $.001 par
     value; 1,000,000 shares, authorized, 500 shares
     issued and outstanding in 2005 and 2004                         -             -
   Common stock, $.00004 par value; 12,000,000 shares
     authorized in 2005 and 2004, 5,660,546 shares
     issued and outstanding in 2005, 5,650,146 shares
     issued and outstanding in 2004                                  -             -
  Additional paid-in capital                                13,673,000    13,649,000
  Accumulated deficit                                       (9,012,000)   (9,819,000)
                                                       ---------------   ---------------
      Total stockholders' equity                             4,661,000     3,830,000
                                                       ---------------   ---------------
      Total liabilities, minority interest and
        stockholders' equity                             $  20,656,000   $19,749,000
                                                       ===============   ===============
</TABLE>

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

                                        3
<PAGE>

<TABLE>
<CAPTION>
                                  GRILL CONCEPTS, INC. AND SUBSIDIARIES
                            CONDENSED CONSOLIDATED  STATEMENTS OF OPERATIONS
                                               (Unaudited)

                                                  Three  Months  Ended                  Six  Months  Ended
                                             --------------------------------   ---------------------------------
                                             June  26,  2005   June  27,  2004   June  26,  2005   June  27,  2004
                                             ---------------   ---------------   ---------------   ---------------
Revenues:                                                         (restated)                          (restated)
<S>                                                <C>               <C>               <C>               <C>
   Sales                                         $13,417,000      $12,181,000       $26,804,000       $25,194,000
   Cost reimbursements                             5,085,000        2,903,000         8,554,000         6,093,000
   Management and license fees                       369,000          306,000           725,000           602,000
                                             ---------------   ---------------   ---------------   ---------------
     Total revenues                               18,871,000       15,390,000        36,083,000        31,889,000

Operating expenses:
   Cost of sales                                   3,814,000        3,607,000         7,552,000         7,379,000
   Restaurant operating expenses                   8,047,000        7,627,000        15,748,000        15,299,000
   Reimbursed costs                                5,085,000        2,903,000         8,554,000         6,093,000
   General and administrative                      1,224,000        1,041,000         2,270,000         2,221,000
   Depreciation and amortization                     482,000          485,000           943,000           964,000
   Pre-opening costs                                 153,000            1,000           244,000           148,000
                                             ---------------   ---------------   ---------------   ---------------
     Total operating expenses                     18,805,000       15,664,000        35,311,000        32,104,000
                                             ---------------   ---------------   ---------------   ---------------

Income (loss) from operations                         66,000         (274,000)          772,000          (215,000)
Interest expense, net                                (43,000)         (66,000)          (80,000)         (132,000)
                                             ---------------   ---------------   ---------------   ---------------

Income (loss) before provision for
income taxes and minority interest                    23,000         (340,000)          692,000          (347,000)

Provision for income taxes                          (131,000)          (5,000)         (209,000)          (28,000)
Minority interest in loss of subsidiaries            233,000          214,000           324,000           361,000
                                             ---------------   ---------------   ---------------   ---------------

Net income (loss)                                    125,000         (131,000)          807,000           (14,000)
Preferred dividends accrued                          (12,000)         (12,000)          (25,000)          (25,000)
                                             ---------------   ---------------   ---------------   ---------------

Net income (loss) applicable to
 common stock                                    $   113,000      $  (143,000)      $   782,000       $   (39,000)
                                             ===============   ===============   ===============   ===============

Net income (loss) per share applicable
   to common stock:
     Basic net income (loss)                     $      0.02      $     (0.03)      $      0.14       $     (0.01)
                                             ===============   ===============   ===============   ===============

     Diluted net income (loss)                   $      0.02      $     (0.03)      $      0.13       $     (0.01)
                                             ===============   ===============   ===============   ===============

Weighted average shares outstanding:
     Basic                                         5,652,230        5,590,445         5,651,188         5,568,155
                                             ===============   ===============   ===============   ===============
     Diluted                                       6,064,781        5,590,445         6,018,508         5,568,155
                                             ===============   ===============   ===============   ===============
</TABLE>

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

                                        4
<PAGE>

<TABLE>
<CAPTION>
                       GRILL CONCEPTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED  STATEMENTS OF CASH FLOWS
                                    (Unaudited)

                                                          Six  Months  Ended
                                                        --------------------------
                                                          June  26,     June  27,
                                                            2005          2004
                                                        ------------  ------------
Cash flows from operating activities:                                   (restated)
<S>                                                          <C>           <C>
   Net income (loss)                                     $   807,000  $   (14,000)
   Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                           943,000      964,000
     Stock based compensation expense                              -       71,000
     Allowance for doubtful accounts                          39,000        6,000
     Amortized deferred rent and lease incentives           (329,000)    (174,000)
     Gain on sale of assets                                        -       (1,000)
     Minority interest in loss of subsidiaries              (324,000)    (361,000)

   Changes in operating assets and liabilities:
     Inventories                                             (55,000)      (1,000)
     Receivables                                             (63,000)      45,000
     Reimbursable costs receivable                           122,000       41,000
     Prepaid expenses and other current assets               (75,000)    (151,000)
     Tenant improvement allowances                         1,772,000    1,002,000
     Other assets                                             (4,000)      28,000
     Accounts payable                                       (329,000)     736,000
     Accrued expenses                                        419,000     (181,000)
     Reimburseable costs payable                            (122,000)     (41,000)
                                                        ------------  ------------
   Net cash provided by operating activities               2,801,000    1,969,000
                                                        ------------  ------------

Cash flows from investing activities:
   Proceeds from disposal of assets                                -        1,000
   Restricted cash                                          (160,000)           -
   Purchase of liquor license                                (61,000)      (5,000)
   Purchase of furniture, equipment and improvements      (3,248,000)  (1,431,000)
                                                        ------------  ------------
Net cash used in investing activities                     (3,469,000)  (1,435,000)
                                                        ------------  ------------

Cash flows from financing activities:
   Proceeds from minority interest in LLC                    976,000       35,000
   Return of capital and profits to minority shareholder    (143,000)    (135,000)
   Collections on note receivable                             15,000            -
   Proceeds from equipment financing                         118,000            -
   Proceeds from exercise of stock options                    24,000            -
   Payments to related parties                               (68,000)    (116,000)
   Payments on long-term debt                               (124,000)    (182,000)
                                                        ------------  ------------
Net cash provided by (used in) financing activities          798,000     (398,000)
                                                        ------------  ------------

Net increase in cash and cash equivalents                    130,000      136,000
Cash and cash equivalents, beginning of period             1,407,000    1,496.000
                                                        ------------  ------------
Cash and cash equivalents, end of period                 $ 1,537,000  $ 1,632,000
                                                        ============  ============

Supplemental cash flow information:
   Cash paid during the period for:
     Interest                                            $    81,000  $   100,000
     Income taxes                                            129,000       93,000
</TABLE>

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

                                        5
<PAGE>

                      GRILL CONCEPTS, INC. AND SUBSIDIARIES
     NOTES  TO  CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS
                                  (Unaudited)

1.     INTERIM  FINANCIAL  PRESENTATION

The interim condensed consolidated financial statements are prepared pursuant to
the requirements for reporting on Form 10-Q. These financial statements have not
been  audited by our independent registered public accounting firm. The December
26,  2004  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-K  for  the year ended December 26, 2004. In the opinion of management,
these interim financial statements reflect all adjustments of a normal recurring
nature  necessary for a fair presentation 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 25, 2005.

2004  RESTATEMENT  OF  FINANCIAL  STATEMENTS

The  Company  began  a  review  of  its  lease  accounting  policies  following
announcements  in  February 2005 that the Chief Accountant of the Securities and
Exchange  Commission  ("SEC")  issued  a  letter  to  the  American Institute of
Certified  Public  Accountants  expressing  the  SEC  staff's  views relating to
certain lease accounting issues. As a result of this review, the Company revised
its  accounting  for  leases  in  2004  and  restated  its  historical financial
statements  as  of  June  27,  2004  to  correct  for  these errors in its lease
accounting.

Historically,  the  Company  recognized straight-line rents and amortized tenant
improvement  allowances  using  the  initial  non-cancelable  term  of the lease
commencing  on the date rent payments began. Under generally accepted accounting
principles,  as  highlighted  in  the  SEC  guidance,  the  Company  should have
recognized  rent  expense  (net  of  the  related  tenant  improvement allowance
amortization)  on  a straight-line basis over the initial non-cancelable term of
the  lease, beginning on the later of when the Company had access to the site or
the  lease was executed. The impact of correctly calculating rent expense was to
decrease  restaurant  operating expenses and decrease general and administrative
expenses  by $2,000 and $1,000, respectively, for the three months and by $4,000
and $2,000 for the six months ended June 27, 2004.

                                        6
<PAGE>

     In  closing  the 2004 books and records, the Company reviewed the estimated
useful  lives  that  it was using to amortize its leasehold improvements. In the
case  of  six  restaurants, it was found that the incorrect lives had been used.
The  Company has revised the amortization period to reflect the shorter of their
estimated useful lives or the initial lease term. The impact of the change is to
increase  depreciation  and  amortization expense by $30,000 and $61,000 for the
three and six months ended June 27, 2004.

A  portion  of  the  above adjustments was recorded on the books of the LLC's in
which  we have a majority ownership or we consolidate under FIN 46. As discussed
in  the  footnotes  to  Form  10K dated December 26, 2004, the Company allocates
results  to  the  minority  interests  based  on the underlying economics of the
investment.  The  impact  of  the above adjustments increased the amount of loss
allocated to the minority interests by $48,000 and $95,000, respectively for the
three and six months ended June 27, 2004.

During  fourth  quarter  of  2004,  the  Company  eliminated  amounts  that  had
previously  been recorded as restaurant sales revenue arising from complimentary
meals  and  promotional  activities.  The Company's previous method of recording
these  activities  as  restaurant sales revenue with a corresponding increase in
operating  expense  is  not  in  accordance  with  generally accepted accounting
principles.  Historically  the  amounts  associated with complimentary meals and
promotional  activities  have  been  recorded  as  restaurant  revenues, with an
offsetting  amount  in  restaurant  operations  and  corporate  general  and
administrative  expenses. As revised, the Company has eliminated all amounts for
complimentary  meals  and  promotional  activities.  As  a  result  of  these
adjustments,  revenues  were  decreased  by $465,000 in the second quarter 2004,
restaurant  operating  expenses  decreased  by  $424,000  and  general  and
administrative  expenses  decreased by $41,000. The adjustments for the full six
month  period  ended  June  27,  2004  was a decrease in revenues of $962,000, a
decrease  in restaurant operating expenses of $875,000 and a decrease in general
and  administrative  expenses  of  $87,000.  These adjustments have no impact on
previously reported income and are non-cash.

The  effects  of  our  revisions  to  previously reported Consolidated Financial
Statements  as  of  and  for  the  quarter ended June 27, 2004 are summarized as
follows.

                                        7
<PAGE>

The following table reflects the effects of the restatement on the Consolidated
Statement of Operations:

<TABLE>
<CAPTION>
                                                                   JUNE 27, 2004
                                                       THREE MONTHS              SIX MONTHS
                                               AS PREVIOUSLY  RESTATED   AS PREVIOUSLY   RESTATED
                                                 REPORTED                  REPORTED
<S>                                                <C>          <C>          <C>           <C>
Sales                                           12,646,000   12,181,000   26,156,000   25,194,000
Total Revenue                                   15,855,000   15,390,000   32,851,000   31,889,000
Restaurant operating expenses                    8,054,000    7,628,000   16,179,000   15,300,000
General & administrative                         1,083,000    1,041,000    2,310,000    2,221,000
Depreciation & amortization                        454,000      485,000      903,000      964,000
Total operating expenses                        12,494,000(1)15,664,000   25,632,000   32,104,000
Loss from operations                              (246,000)    (274,000)    (160,000)    (215,000)
Loss before taxes                                 (312,000)    (340,000)    (292,000)    (347,000)
Loss before minority interest                     (317,000)    (345,000)    (320,000)    (375,000)
Minority interest                                  166,000      214,000      266,000      361,000
Net loss                                          (151,000)    (131,000)     (54,000)     (14,000)
Net loss applicable to common stock               (163,000)    (143,000)     (79,000)     (39,000)
Net loss per share applicable to common stock:
   Basic                                            ($0.03)      ($0.03)      ($0.01)      ($0.01)
   Diluted                                          ($0.03)      ($0.03)      ($0.01)      ($0.01)
<FN>
(1)  Includes cost of sales amounts that were not included in the "Total operating expenses" subtotal in
     prior financial statements.
</TABLE>


The following table reflects the effects of the restatement on the Consolidated
Statement of Cash Flows:

<TABLE>
<CAPTION>
                                                                      JUNE 27, 2004
                                                       AS PREVIOUSLY REPORTED    RESTATED
<S>                                                            <C>                 <C>
Cash flows from operating activities
  Net loss                                                   (54,000)             (14,000)
  Depreciation and amortization                              903,000              964,000
  Minority interest in net loss of subsidiaries             (266,000)            (361,000)
  Tenant improvement allowances                                    -            1,002,000
  Other long term liabilities                               (167,000)            (174,000)
  Net cash provided by operating activities                  968,000            1,969,000

  Tenant improvement allowances                            1,002,000                    -
  Net cash provided by (used in) financing activities        603,000             (398,000)
</TABLE>

RECLASSIFICATIONS

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

                                        8
<PAGE>

2.     PRO-FORMA STOCK-BASED COMPENSATION

The  Company  accounts  for  stock-based  employee  compensation arrangements in
accordance  with  provisions  of Accounting Principles Board ("APB") Opinion No.
25, "Accounting for Stock Issued to Employees," and related interpretations, and
complies  with  the  disclosure  provisions  of  SFAS  No.  123, "Accounting for
Stock-Based  Compensation."  Under  APB 25, compensation expense is based on the
difference, if any, on the date of grant between the fair value of the Company's
stock  and  the amount an employee must pay to acquire the stock. Because, prior
to  June  30, 2004, grants under the plan required variable accounting treatment
due  to  the  cashless  exercise  feature  of  those  options (described below),
compensation  expense  was,  through that date, remeasured at each balance sheet
date  based  on the difference between the current market price of the Company's
stock  and  the  option  exercise price. An accrual for compensation expense was
determined based on the proportionate vested amount of each option as prescribed
by  Financial  Interpretation  No. 28, "Accounting for Stock Appreciation Rights
and Other Variable Stock Option or Award Plans." Each period, adjustments to the
accrual  are  recognized in the income statement. The Company accounts for stock
and  options to non-employees at fair value in accordance with the provisions of
SFAS No. 123 and the Emerging Issues Task Force Consensus on Issue No. 96-18.

On  June  1,  1995, the Company's Board of Directors adopted the Grill Concepts,
Inc.  1995  Stock  Option  Plan  (the "1995 Plan") and on June 12, 1998 the 1998
Stock Option Plan (the "1998 Plan") was adopted. These Plans provide for options
to  be  issued  to the Company's employees and others. The exercise price of the
shares under option shall be equal to or exceed 100% of the fair market value of
the  shares  at  the  date of grant. The options generally vest over a five-year
period.  The  terms  of  the  option  grants  originally allowed the employee to
exercise  the  option  by surrendering a portion of the vested shares in lieu of
paying  cash,  subject  to  the  terms  of  the plan including the rights of the
Compensation  Committee  to amend grants in any manner that the committee in its
sole discretion deems to not adversely impact the option holders.

On June 23, 2004, the Company's Compensation Committee, as administrators of the
Company's  stock option plan, resolved that the cashless exercise feature in the
Company's  stock  option  plan  will  not  be  permitted, and a notification was
subsequently  given to all employees on July 30, 2004. Effective with this date,
the  Company  reverted  back  to  accounting  for  its  options  under the fixed
accounting treatment.

                                        9
<PAGE>

The Company has adopted the disclosure-only provisions of SFAS No. 123, and will
continue to use the intrinsic value-based method of accounting prescribed by APB
Opinion No. 25, "Accounting for Stock Issued to Employees." During the six-month
period  ended  June  26,  2005 there were no options granted. There were options
exercised  and cancelled. Pro forma compensation expense for the Company's stock
option  plans determined based on the fair value at the grant date for awards is
as follows:

<TABLE>
<CAPTION>
                                    Three Months              Six Months
                                        2005          2004       2005         2004
                                        ----          ----       ----         ----
                                                   (restated)             (restated)
<S>                                     <C>           <C>        <C>        <C>
Net income (loss), as reported       $  125,000   $ (131,000)  $807,000   $(14,000)
Add: stock compensation expense
   recorded, net of taxes                     -     (116,000)         -     71,000
Deduct: stock compensation
expense under fair value method,
net of taxes                            (36,000)     (43,000)   (76,000)   (73,000)
                                     ----------------------------------------------
Net income (loss), pro forma         $   89,000   $ (290,000)  $731,000   $(16,000)
                                     ==============================================
Net income (loss) per share, as
reported:
    Basic                            $     0.02   $    (0.03)  $   0.14   $  (0.01)
    Diluted                          $     0.02   $    (0.03)  $   0.13   $  (0.01)
Net income (loss) per share, pro
forma:
    Basic                            $     0.01   $    (0.05)  $   0.12   $  (0.01)
    Diluted                          $     0.01   $    (0.05)  $   0.12   $  (0.01)
</TABLE>

3.     RESTRICTED CASH

In  January 2004 a $700,000 certificate of deposit was established at Union Bank
to  act  as  collateral  for  the Standby Letter of Credit opened to support our
Workers Compensation policy. In January 2005 an additional $160,000 was added to
the  certificate  of  deposit. Other restricted cash consists of $72,000 held in
escrow  for  the  Daily  Grill at Continental Park in El Segundo, California and
$110,000  that  was  placed  with  our  insurance  claims  processor in 2004 for
worker's compensation claims.

4.     PREPAID EXPENSES AND OTHER CURRENT ASSETS

Most  lease  agreements contain one or more of the following; tenant improvement
allowances,  rent  holidays,  rent  escalation  clauses  and/or  contingent rent
provisions.

Rent  is recognized on a straight-line basis, including the restaurant build-out
period.  This  period is normally prior to the commencement of rent payments and
is  commonly  called  the  rent  holiday  period. The build-out period generally
begins  when  the  Company  enters  the space and begins to make improvements in
preparation for intended use. The Company expenses rent on a straight-line basis
during  the  build-out period. Tenant improvement allowances are also recognized
on  a  straight-line basis beginning at the same time as the commencement of the
straight-line rent expense.

                                       10
<PAGE>

Prepaid expenses and other current assets at June 26, 2005 and December 26, 2004
were comprised of:

<TABLE>
<CAPTION>
                                  2005       2004
                                --------  ----------
<S>                                <C>       <C>
Lease incentive receivables     $ 79,000  $1,851,000
Prepaid expenses, other          596,000     521,000
                                --------  ----------
Total prepaid assets and other
current assets                  $675,000  $2,372,000
                                ========  ==========
</TABLE>

5.     LONG TERM DEBT

During  the  second  quarter  of  2005, we borrowed $118,000 under the equipment
financing  portion  of our credit facility. This financing has a term of 5 years
and an interest rate of approximately 8.1%.

The  Company  is  negotiating an extension of the equipment financing portion of
the credit facility. The credit facility also contains a $500,000 line of credit
that  is available in its entirety. The line of credit has been extended and has
a termination date of August 2006.

6.     OTHER LONG-TERM LIABILITIES

In  connection  with  certain of the Company's leases, the landlord has provided
the Company with tenant improvement allowances. These lease incentives have been
recorded  as  long-term liabilities and are being amortized over the life of the
lease.  Additionally, the Company recognizes a liability for deferred rent where
lease  payments  are  lower  than  rental  expense recognized on a straight-line
basis.

Other Long-Term Liabilities at June 26, 2005 and December 26, 2004 were
comprised of:

<TABLE>
<CAPTION>
                                      2005        2004
                                   ----------  ----------
<S>                                   <C>         <C>
Lease Incentives                   $5,397,000  $5,653,000
Deferred Rent                       2,328,000   2,401,000
                                   ----------  ----------
Total Other Long-Term Liabilities  $7,725,000  $8,054,000
                                   ==========  ==========
</TABLE>

7.     RECENT  ACCOUNTING  PRONOUNCEMENTS

In  April  2004,  the EITF reached final consensus on EITF 03-06, "Participating
Securities  and  the  Two-Class  Method  under  FASB  Statement  No. 128," which
requires  companies that have participating securities to calculate earnings per
share  using  the  two-class  method.  This  method  requires  the allocation of
undistributed  earnings  to the common shares and participating securities based
on  the  proportion of undistributed earnings that each would have been entitled
to  had  all  the periods earnings been distributed. EITF 03-06 is effective for
fiscal periods beginning after March 31, 2004 and earnings per share reported in
prior  periods  presented must be retroactively adjusted in order to comply with
EITF  03-06. The Company adopted EITF 03-06 for the quarter ended June 27, 2004,
however  there  has  been no impact on the Company's financial statements as the
preferred shares are not participating securities.

On  December  16,  2004,  the Financial Accounting Standards Board (FASB) issued
FASB  Statement No. 123 (revised 2004), Share-Based Payment, which is a revision
of  FASB  Statement  No. 123, Accounting for Stock-Based Compensation. Statement
123(R)  supersedes  APB  No.  25, and amends FASB Statement No. 95, Statement of
Cash  Flows.  Generally,  the  approach  in  Statement  123(R) is similar to the
approach  described  in  Statement  123.  However, Statement 123(R) requires all
share-based  payments  to employees, including grants of employee stock options,
to  be recognized in the statement of operations based on their fair values. Pro
forma disclosure is no longer an alternative.

                                       11
<PAGE>

As  permitted by Statement 123, we currently account for share-based payments to
employees  using  APB  No.  25's  intrinsic value method and, as such, generally
recognize  no  compensation  cost  for  employee stock options. Accordingly, the
adoption  of  Statement 123(R)'s fair value method may have a significant impact
on  our  result  of  operations,  although it will have no impact on our overall
financial  position.  The  impact  of  adoption  of  Statement  123(R) cannot be
predicted  at this time because it will depend on levels of share-based payments
granted  in  the  future.  However,  had  we  adopted  Statement 123(R) in prior
periods,  the  impact  of  that  standard  would have approximated the impact of
Statement  123  as  described  in  the  disclosure  of  pro forma net income and
earnings per share in note 2 above.

We expect to adopt Statement 123(R) in the first quarter of 2006.


8.     DISTRIBUTION OF CAPITAL AND PREFERRED RETURNS

The  Company's San Jose Grill, Chicago - Grill on the Alley, Grill on Hollywood,
South  Bay  Daily  Grill  and Downtown Daily Grill restaurants are each owned by
limited  liability companies (the "LLCs") in which the Company serves as manager
and  owns  a controlling interest. Each of the LLCs has minority interest owners
some  of whom have participating rights in the joint venture such as the ability
to  approve  operating  and  capital  budgets  and  the  borrowing  of money. In
connection with the financing of each of the LLCs, the minority members may have
certain  rights  to priority distributions of capital until they have received a
return  of  their  initial  investments  ("Return of Member Capital") as well as
rights  to  receive  defined  preferred  returns  on  their  invested  capital
("Preferred Return").

The  Universal  CityWalk  Daily  Grill  is owned by a partnership ("the CityWalk
Partnership")  for  which we serve as manager. Our partner has certain rights to
priority  distribution  of capital from the CityWalk Partnership until they have
received their initial investment ("Return of Member Capital").

The  following  tables set forth a summary for each of the LLCs and the CityWalk
Partnership  of  (1)  the  distributions  of  capital  to the Members and/or the
Company during the six months ended June 26, 2005, (2) the unreturned balance of
the  capital  contributions  of the Members and/or the Company at June 26, 2005,
and  (3)  the accrued but unpaid preferred returns due to the Members and/or the
Company at June 26, 2005:


SAN JOSE GRILL LLC

Distributions of capital, preferred
return and profit during the six
months ended June 26, 2005:                Members      $           143,000
                                                        ===================
                                           Company      $           144,000
                                                        ===================
Unreturned Initial Capital
Contributions at June 26, 2005:            Members      $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members      $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================

                                       12
<PAGE>

CHICAGO - GRILL ON THE ALLEY LLC

Distributions of capital and note
repayments during the six months
ended June 26, 2005:                       Members (a)  $           126,000
                                                        ===================
                                           Company      $                 -
                                                        ===================
Unreturned Initial Capital
Contributions at June 26, 2005:            Members      $           992,000
                                                        ===================
                                           Company      $                 -
                                                        ===================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members      $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================


THE GRILL ON HOLLYWOOD LLC

Distributions of capital during the
six months ended June 26, 2005:            Members      $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================
Unreturned Initial Capital
Contributions at June 26, 2005:            Members      $         1,200,000
                                                        ===================
                                           Company      $           250,000
                                                        ===================
Accrued but unpaid
PreferredReturns at June 26, 2005:         Members (b)  $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================

                                       13
<PAGE>

SOUTH BAY DAILY GRILL (CONTINENTAL PARK LLC)

Distributions of capital during the
six months ended June 26, 2005:            Members      $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================
Unreturned Initial and Additional
Capital Contributions at June 26,
2005:                                      Members      $         1,100,000
                                                        ===================
                                           Company      $           450,000
                                                        ===================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members (b)  $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================


UNIVERSAL CITYWALK DAILY GRILL

Distributions of capital during the
six months ended June 26, 2005:            Members      $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================
Unreturned Initial and Additional
Capital Contributions at June 26,
2005:                                      Members      $         1,346,106
                                                        ===================
                                           Company      $           246,106
                                                        ===================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members (b)  $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================


DOWNTOWN DAILY GRILL (612 FLOWER DAILY GRILL, LLC)

Distributions of capital during the
six months ended June 26, 2005:            Members      $                 -
                                                        ===================
                                           Company      $                 -
                                                        ===================
Unreturned Initial Capital
Contributions at June 26, 2005:            Members      $           846,000
                                                        ===================
                                           Company      $           222,000
                                                        ===================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members      $            14,134
                                                        ===================
                                           Company      $             6,626
                                                        ===================

                                       14
<PAGE>
(a)  Distribution  of  capital  and  note  repayments  as  of  June  26,  2005
     includes $84,000 of capital and note repayments and $42,000 of interest and
     preferred return.
(b)  Due  to  the  under  performance  of  the  restaurants the preferred return
     is not being accrued. The Company is not liable to pay the preferred return
     distributions,  such  that  they represent a non-recourse obligation of the
     subsidiary  entity.  If  preferred  returns  were  accrued for The Grill on
     Hollywood the member would have an accrued preferred return of $652,000 and
     the  Company  would  have  an  accrued  preferred  return  of  $136,000. If
     preferred  returns  were  accrued  for the South Bay Daily Grill the member
     would  have  an  accrued preferred return of $283,000 and the Company would
     have  an  accrued  preferred  return of $131,000. If preferred returns were
     accrued  for  the  CityWalk  Partnership  the  Member would have an accrued
     preferred return of $474,000.

9.     PER SHARE DATA

Pursuant  to  SFAS  No. 128, "Earnings Per Share," basic net income per share is
computed  by  dividing the net income attributable to common shareholders by the
weighted-average  number of common shares outstanding during the period. Diluted
net  income  per  share  is  computed by dividing the net income attributable to
common  shareholders  by  the  weighted-average  number  of  common  and  common
equivalent  shares  outstanding  during  the  period.  Common  share equivalents
included  in  the  diluted  computation  represent  shares issuable upon assumed
exercise  of  stock options, warrants and convertible preferred stocks using the
treasury stock method.

     A  reconciliation  of earnings available to common stockholders and diluted
earnings  available  to  common  stockholders  and  the related weighted average
shares for the six and three-month periods ended June 26, 2005 and June 27, 2004
follow:

<TABLE>
<CAPTION>

     Six months                            2005                       2004
                                   Earnings     Shares      Earnings      Shares
                                                           (restated)
                                   ---------------------------------------------
<S>                                   <C>        <C>          <C>          <C>
Net income (loss)                  $807,000              $  (14,000)
Less: preferred stock dividend      (25,000)                (25,000)
                                   ---------               ---------
Earnings (deficit) available for
common stockholders                 782,000    5,651,188    (39,000)  5,568,155
Dilutive securities:
   Stock options                          -       93,196          -           -
   Warrants                               -      274,124          -           -
                                   ---------  -----------  ---------  ---------
Dilutive earnings (deficit)
available to common stockholders   $782,000    6,018,508   $(39,000)  5,568,155
                                   ============================================
</TABLE>

                                       15
<PAGE>

For the six months ended June 26, 2005, 303,375 options, 58,620 warrants and 500
shares of convertible preferred stock were excluded from the calculation because
they  were  anti-dilutive.  For  the  six  months  ended  June 27, 2004, 763,175
options,  1,722,787  warrants and 500 shares of convertible preferred stock were
excluded from the calculation because they were anti-dilutive.

<TABLE>
<CAPTION>

     Three months                          2005                       2004
                                   Earnings     Shares      Earnings      Shares
                                                           (restated)
                                   ---------------------------------------------
<S>                                   <C>        <C>          <C>         <C>
Net income (loss)                  $125,000               $ (131,000)
Less: preferred stock dividend      (12,000)                 (12,000)
                                   ---------               ----------
Earnings (deficit) available for
common stockholders                 113,000    5,652,230    (143,000)  5,590,445
Dilutive securities:
   Stock options                          -       99,561           -           -
   Warrants                               -      312,990           -           -
                                   ---------  -----------  ----------  ---------
Dilutive earnings (deficit)
available to common stockholders   $113,000    6,064,781   $(143,000)  5,590,445
                                   =============================================
</TABLE>

For  the  three months ended June 26, 2005, 303,375 options, 58,620 warrants and
500  shares  of  convertible  preferred stock were excluded from the calculation
because  they  were  anti-dilutive.  For  the  three months ended June 27, 2004,
763,175  options,  1,722,787  warrants  and  500 shares of convertible preferred
stock were excluded from the calculation because they were anti-dilutive.


10.     LITIGATION  CONTINGENCIES

In June 2004, one of our former hourly restaurant employees filed a class action
lawsuit  against  us  in  the  Superior Court of California of Orange County. We
requested  and  were granted a motion to move the suit from Orange County to Los
Angeles  County.  The lawsuit was then filed in the Superior Court of California
of  Los  Angeles  in  December  2004.  The  plaintiff  has alleged violations of
California  labor  laws  with  respect  to  providing  meal and rest breaks. The
lawsuit  sought  unspecified amounts of penalties and other monetary payments on
behalf  of the plaintiffs and other purported class members. We believe that all
of  our  employees  were provided with the opportunity to take all required meal
and  rest  breaks. The Court has issued a total stay on the case until the Court
of  Appeals  hears  two similar cases. Our next hearing is scheduled for October
2005.  Concurrently,  discovery  is continuing in these matters and we intend to
vigorously  defend  our  position  in  all of these matters although the outcome
cannot be ascertained at this time.

In  November 2004, a sexual harassment case was filed against us in the Superior
Court  of  California  of Los Angeles. We filed a motion to dismiss and the case
was  dismissed  with  the  plaintiff  having the right to re-file. The plaintiff
re-filed  the  case.  We are pursuing settlement, discovery will begin in August
and  we  filed  a third motion to dismiss in July 2005 as we believe the suit is
unfounded. We have accrued legal costs up to our insurance deductible of $50,000
in this matter.

                                       16
<PAGE>

11.     SUBSEQUENT  EVENTS

CLOSURE OF THE LA CIENEGA DAILY GRILL

As  of  July  31,  2005 the lease for the La Cienega Daily Grill expired and the
restaurant  was  closed.  The shopping center where this restaurant was is being
renovated;  after  completion  of  renovations  we  intend  to  reevaluate  the
feasibility of re-opening in the center.


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-Q.  Except for the historical information contained herein, the discussion in
this  Form  10-Q  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-Q
should  be  read  as  being applicable to all related forward looking statements
wherever  they  appear  in  this  Form  10-Q. 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-K for the year ended December 26, 2004.

2004  RESTATEMENT  OF  FINANCIAL  STATEMENTS

The  Company  began  a  review  of  its  lease  accounting  policies  following
announcements  in  February 2005 that the Chief Accountant of the Securities and
Exchange  Commission  ("SEC")  issued  a  letter  to  the  American Institute of
Certified  Public  Accountants  expressing  the  SEC  staff's  views relating to
certain lease accounting issues. As a result of this review, the Company revised
its  accounting  for  leases  in  2004  and  restated  its  historical financial
statements  as  of  and  for  each  fiscal year end 2003, 2002, 2001 and 2000 to
correct  for these errors in its lease accounting. The accompanying consolidated
financial  statements  for the six months ended June 27, 2004 have been restated
from those originally issued to reflect the change in lease accounting.

Historically,  the  Company  recognized straight-line rents and amortized tenant
improvement  allowances  using  the  initial  non-cancelable  term  of the lease
commencing  on the date rent payments began. Under generally accepted accounting
principles,  as  highlighted  in  the  SEC  guidance,  the  Company  should have
recognized  rent  expense  (net  of  the  related  tenant  improvement allowance
amortization)  on  a straight-line basis over the initial non-cancelable term of
the  lease, beginning on the later of when the Company had access to the site or
the  lease was executed. The impact of correctly calculating rent expense was to
decrease  restaurant  operating expenses and decrease general and administrative
expenses  by $2,000 and $1,000, respectively, for the three months and by $4,000
and $2,000 for the six months ended June 27, 2004.

                                       17
<PAGE>

In closing the 2004 books and records, the Company reviewed the estimated useful
lives  that  it was using to amortize its leasehold improvements. In the case of
six  restaurants,  it  was  found  that  the  incorrect lives had been used. The
Company  has  revised  the  depreciation  period to reflect the shorter of their
estimated useful lives or the initial lease term. The impact of the change is to
increase  depreciation  and  amortization expense by $30,000 and $61,000 for the
three and six months ended June 27, 2004.

A  portion  of  the  above adjustments was recorded on the books of the LLC's in
which  we have a majority ownership or we consolidate under FIN 46. As discussed
in  the  footnotes  to  the  consolidated financial statements to Form 10K dated
December 26, 2004, the Company allocates results to the minority interests based
on  the  underlying  economics  of  the  investment.  The  impact  of  the above
adjustments  increased the amount of loss allocated to the minority interests by
$48,000 and $95,000 for the three and six months ended June 27, 2004.

During  fourth  quarter  of  2004,  the  Company  eliminated  amounts  that  had
previously  been recorded as restaurant sales revenue arising from complimentary
meals  and  promotional  activities.  The Company's previous method of recording
these activities as restaurant sales revenue is not in accordance with generally
accepted  accounting  principles.  Historically  the  amounts  associated  with
complimentary  meals and promotional activities have been recorded as restaurant
revenues,  with  an  offsetting  amount  in  restaurant operations and corporate
general  and administrative expenses. As revised, the Company has eliminated all
amounts for complimentary meals and promotional activities. As a result of these
adjustments,  revenue  and  expenses  were  decreased by $465,000 for the second
quarter  2004,  restaurant  operating expenses decreased by $424,000 and general
and  administrative  expenses decreased by $41,000. The adjustments for the full
six  month  period ended June 27, 2004 was a decrease in revenues of $962,000, a
decrease  in restaurant operating expenses of $875,000 and a decrease in general
and  administrative  expenses  of  $87,000.  These adjustments have no impact on
previously reported income and are non-cash.

The  effects  of  our  revisions  to  previously reported Consolidated Financial
Statements  as  of  and  for  the  quarter ended June 27, 2004 are summarized as
follows.

                                       18
<PAGE>

The following table reflects the effects of the restatement on the Consolidated
Statement of Operations:


<TABLE>
<CAPTION>
                                                             JUNE 27, 2004
                                                THREE MONTHS              SIX MONTHS
                                        AS PREVIOUSLY  RESTATED   AS PREVIOUSLY  RESTATED
                                          REPORTED                  REPORTED
<S>                                          <C>          <C>          <C>          <C>
Sales                                    12,646,000   12,181,000   26,156,000   25,194,000
Total Revenue                            15,855,000   15,390,000   32,851,000   31,889,000
Restaurant operating expenses             8,054,000    7,628,000   16,179,000   15,300,000
General & administrative                  1,083,000    1,041,000    2,310,000    2,221,000
Depreciation & amortization                 454,000      485,000      903,000      964,000
Total operating expenses                 12,494,000(1)15,664,000   25,632,000   32,104,000
Loss from operations                       (246,000)    (274,000)    (160,000)    (215,000)
Loss before taxes                          (312,000)    (340,000)    (292,000)    (347,000)
Loss before minority interest              (317,000)    (345,000)    (320,000)    (375,000)
Minority interest                           166,000      214,000      266,000      361,000
Net loss                                   (151,000)    (131,000)     (54,000)     (14,000)
Net loss applicable to common stock        (163,000)    (143,000)     (79,000)     (39,000)
Net loss per share applicable to common
stock:
   Basic                                     ($0.03)      ($0.03)      ($0.01)      ($0.01)
   Diluted                                   ($0.03)      ($0.03)      ($0.01)      ($0.01)
<FN>
(1)  Includes cost of sales amounts that were not included in the "Total operating expenses"
     subtotal in prior financial statements.
</TABLE>


The following table reflects the effects of the restatement on the Consolidated
Statement of Cash Flows:

<TABLE>
<CAPTION>
                                                                        JUNE 27, 2004
                                                       AS PREVIOUSLY REPORTED    RESTATED
<S>                                                             <C>                 <C>
Cash flows from operating activities
  Net loss                                                   (54,000)            (14,000)
  Depreciation and amortization                              903,000             964,000
  Minority interest in net loss of subsidiaries             (266,000)           (361,000)
  Tenant improvement allowances                                    -           1,002,000
  Other long term liabilities                               (167,000)           (174,000)
  Net cash provided by operating activities                  968,000           1,969,000

  Tenant improvement allowances                            1,002,000                   -
  Net cash provided by (used in) financing activities        603,000            (398,000)
</TABLE>

                                       19
<PAGE>

RESULTS OF OPERATIONS

The  following  table sets forth, for the periods indicated, information derived
from  the  Company's  consolidated  statements  of  operations  expressed  as  a
percentage  of  total  operating  revenues.

<TABLE>
<CAPTION>
                                      Three Months Ended                Six Months Ended
                                   -------------------------       -------------------------
                                   June 26,        June 27,        June 26,       June 27,
                                     2005            2004            2005           2004
                                    ------          ------          ------         ------
                                                  (restated)                     (restated)
<S>                                    <C>            <C>             <C>            <C>
Revenues:                               %              %                %              %
   Company restaurant sales           71.1           79.1             74.3           79.0
   Reimbursed managed outlet
     Operating expenses               26.9           18.9             23.7           19.1
   Management and license fees         2.0            2.0              2.0            1.9
                                     ------         ------          ------         ------
     Total operating revenues        100.0          100.0            100.0          100.0

  Cost of sales                       20.2           23.4             20.9           23.1
  Restaurant operating expense        42.6           49.6             43.6           48.0
  Managed outlet operating expense    26.9           18.9             23.7           19.1
  General and administrative expense   6.5            6.8              6.3            7.0
  Depreciation and amortization        2.6            3.2              2.6            3.0
  Pre-opening expenses                 0.8              -              0.7            0.5
                                     ------         ------          ------         ------
     Total operating expenses         99.6          101.9             97.8          100.7
                                     ------         ------          ------         ------

   Operating income (loss)             0.4           (1.9)             2.2           (0.7)

Interest expense, net                 (0.2)          (0.4)            (0.2)          (0.4)
                                     ------         ------          ------         ------
Income (loss) before provision for
income taxes, minority interest and
equity in loss of joint venture        0.2           (2.3)             2.0           (1.1)

Provision for income taxes            (0.7)          (0.0)            (0.6)          (0.1)

Minority interest in net loss
of subsidiaries                        1.2            1.4              0.9            1.1
                                     ------         ------          ------         ------
Net income (loss)                      0.7           (0.9)             2.3           (0.1)
                                     ======         ======          ======         ======
</TABLE>



The  following table sets forth, for the periods indicated, information deprived
from  the Company's consolidated financial statements of operations expressed as
a  percentage  of  total  restaurant  sales.
<TABLE>
<CAPTION>

                                      Three Months Ended                Six Months Ended
                                   -------------------------       -------------------------
                                   June 26,        June 27,        June 26,       June 27,
                                     2005            2004            2005           2004
                                    ------          ------          ------         ------
                                                  (restated)                     (restated)
<S>                                  <C>             <C>             <C>            <C>
Revenues:                             %               %               %              %
   Company restaurant sales        100.0            100.0           100.0          100.0

   Cost of sales                    28.4             29.6            28.2           29.3
   Restaurant operating expenses    60.0             62.6            58.8           60.7
</TABLE>

                                       20
<PAGE>

The following table sets forth certain unaudited financial information and other
restaurant data relating to Company owned restaurants and Company managed and/or
licensed  restaurants.

<TABLE>
<CAPTION>
                                  Second Quarter     Year-to-date     Total open at
                                     Openings          Openings      End of Quarter
                                 ----------------  ---------------  ----------------
                                 FY 2005  FY 2004  FY 2005  FY2004  FY 2005  FY 2004
                                 -------  -------  -------  ------  -------  -------
<S>                                <C>      <C>      <C>      <C>     <C>      <C>
Daily Grill restaurants:
  Company owned                        1        -        2       1       13       11
  Managed and/or licensed              -        -        -       -        8        7
Grill on the Alley restaurants:
  Company owned                        -        -        -       -        4        4
Other restaurants
  Managed and/or licensed              -        -        -       -        -        1
                                 -------  -------  -------  ------  -------  -------
Total                                  1        -        2       1       25       23
                                 =======  =======  =======  ======  =======  =======
</TABLE>


<TABLE>
<CAPTION>
                                           Three Months Ended            Six Months Ended
                                      --------------------------  --------------------------
                                         June 26,      June 27,     June 26,       June 27,
                                          2005          2004          2005          2004
                                      ------------  ------------  ------------  ------------
<S>                                       <C>           <C>           <C>           <C>
Weighted average weekly sales
 per company owned restaurant:
   Daily Grill                        $    58,824   $    59,554   $    61,792   $    61,900
   Grill on the Alley                      79,939        70,480        80,826        73,798

Change in comparable restaurant (1):
   Daily Grill                              (1.5)%         3.3%         (1.3)%         6.1%
   Grill on the Alley                       13.4%         (5.9)%         9.5%         (0.1)%

Total sales:
   Daily Grill                        $ 9,260,000   $ 8,516,000   $18,398,000   $17,519,000
   Grill on the Alley                   4,157,000     3,665,000     8,406,000     7,675,000
                                      ------------  ------------  ------------  ------------

Total consolidated sales              $13,417,000   $12,181,000   $26,804,000   $25,194,000
                                      ============  ============  ============  ============
<FN>
(1)  When  computing comparable restaurant sales, restaurants open for at least 12 months
     are  compared  from  period  to  period.
</TABLE>

We  also  earn management and license fee revenue based on a percentage of gross
sales at restaurants under management and licensing arrangements. Our management
and  license  fee revenue typically is earned at a rate of five to eight percent
of  reported  sales  at  these  restaurants.  The  sales of managed and licensed
restaurants  are  not  included  in  our  statements  of operations. However, we
consider  the  disclosure of these sales to be a key indicator of brand strength
and  important to understanding how changes in sales at the managed and licensed
restaurants impact our revenue.

                                       21
<PAGE>

Sales  at  non-Company owned Grill Concepts-branded restaurants, categorized as,
managed  and  licensed  restaurants  were  as  follows:

<TABLE>
<CAPTION>
                               Three  Months  Ended         Six  Months  Ended
                             ------------------------  --------------------------
                              June  26,    June  27,     June  26,     June  27,
                                2005         2004          2005          2004
                             -----------  -----------  ------------  ------------
<S>                              <C>          <C>          <C>           <C>
Managed Daily Grills          4,512,000    3,579,000     9,113,000     7,473,000
Licensed Daily Grills         1,961,000    2,061,000     3,770,000     4,270,000
                             -----------  -----------  ------------  ------------
                             $6,473,000   $5,640,000   $12,883,000   $11,743,000
                             ===========  ===========  ============  ============

Management and license fees
  Percent of gross sales          5.7%         5.4%          5.6%          5.1%
</TABLE>


MATERIAL  CHANGES  IN  RESULTS  OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED
JUNE  26,  2005  AS  COMPARED  TO  THE  THREE AND SIX MONTHS ENDED JUNE 27, 2004

Revenues.  Total  revenues  increased  22.6% to $18.9 million from $15.4 million
for  the  2005  second quarter in the 2004 second quarter and increased 13.2% to
$36.1  million  for the 2005 year-to-date period from $31.9 million for the 2004
year-to-date  period.  For  the  quarter,  total  revenues  consisted  of  sales
revenues  of  $13.4  million,  up  10.2% from $12.2 million in the 2004 quarter,
management  and  license  fee  of  $369,000,  up 20.6% from $306,000 in the 2004
quarter,  and  reimbursed managed outlet expenses of $5.1 million, up 75.2% from
$2.9  million  in the 2004 quarter.  For the year-to-date period, total revenues
consisted  of sales revenues of $26.8 million, up from $25.2 million in the 2004
year-to-date  period,  management  and  license fees of $725,000, up 20.4% from,
$602,000 in the 2004 year-to-date period, and reimbursed managed outlet expenses
of  $8.6  million,  up  41%  from  $6.1 million in the 2004 year-to-date period.

Sales  for  Daily  Grill  restaurants increased by 8.7% from $8.5 million in the
2004 quarter to $9.3 million in the 2005 period.  The increase in sales revenues
for  the Daily Grill restaurants from 2004 to 2005 was primarily attributable to
opening  of  the  Santa Monica Daily Grill ($0.6 million) and the Downtown Daily
Grill  ($0.3 million) partially offset by a decrease in same store sales of 1.5%
($0.1  million)  for  restaurants  open for the entire 26 weeks in both 2004 and
2005.  The  decrease  in same store sales was principally attributable to the La
Cienega Daily Grill, which accounted for $0.1 million, or 75.6%, of the decrease
in  same  store  sales.

Sales  for  Daily Grill restaurants increased by 5.0% from $17.5 million for the
six months in 2004 to $18.4 million in 2005.  The increase in sales revenues for
the  Daily  Grill restaurants from 2004 to 2005 was primarily due to the opening
of the Santa Monica Daily Grill, the Downtown Daily Grill and the Bethesda Daily
Grill  ($1.1  million)  partially offset by a decrease in same store sales ($0.2
million).  Management  considers  performance  of same store or comparable store
sales to be an important measure of growth when evaluating performance. Weighted
average  weekly sales at the Daily Grill restaurants decreased 0.2% from $61,900
in  2004  to  $61,792 in 2005.  Comparable restaurant sales and weighted average
weekly  sales  at  the  Daily  Grill restaurants in 2005 reflected a decrease in
guest counts during the period partially offset by improved average checks.  The
decrease  in  same  store  sales  and  average  weekly  sales  was  principally
attributable  to the La Cienega Daily Grill where average weekly sales decreased
9.5%  for  the  six  months  of 2005 compared to 2004 due to a decrease in guest
counts.

                                       22
<PAGE>


Sales  for  Grill  restaurants  increased by 13.4% from $3.7 million in the 2004
quarter  to  $4.2 million in 2005.  The increase in sales revenues for the Grill
restaurants  from  2004  to  2005  was primarily attributable to increased guest
counts  and  partially  by  improved  check  averages.

Sales for Grill restaurants increased 9.5% from $7.7 million to $8.4 million for
the  six month periods. The increase in sales revenues for the Grill restaurants
from  2004 to 2005 was attributable to improved check averages and guest counts.
Weighted  average  weekly  sales  at  the  Grill restaurants increased 9.5% from
$73,798  in  2004  to  $80,826  in  2005.

Management  and  license  fee  revenues  were  attributable  to hotel restaurant
management  services  which accounted for $300,000 of management fees during the
2005  quarter as compared to $250,000 during the 2004 quarter and licensing fees
of  $69,000 during the 2005 quarter compared to $56,000 during the 2004 quarter.
The  increase  in  management  and  license fees during 2005 was attributable to
management of the Long Beach Daily Grill beginning in November 2004 and improved
sales  at  the  Burbank,  Houston  and  LAX  Daily  Grills.

For  the  year-to-date  period,  management  and  license  fee  revenues  were
attributable  to  hotel  restaurant  management  services  which  accounted  for
$605,000  of  management  fees  during  the  2005 period as compared to $488,000
during  the 2004 period and licensing fees of $120,000 during the 2005 period as
compared  to  $114,000  during  the 2004 period.  The increase in management and
license  fees during 2005 was attributable to management of the Long Beach Daily
Grill  beginning  in  November  2004  and  improved  sales at the San Francisco,
Georgetown,  Burbank,  Houston  and  LAX  Daily  Grills.

Reimbursed  managed outlet expenses represent amounts incurred by the Company on
behalf  of managed outlets for which the Company receives reimbursement from the
owner.  The  increase  in  revenues  attributable  to  reimbursed managed outlet
expenses  for  both  the quarter and year-to-date period was attributable to the
opening  of  the  Long  Beach Daily Grill in November 2004 and increased cost of
goods  and  payroll  at  the  San  Francisco  and Georgetown Daily Grills due to
improved  sales.

Operating  Expenses  and  Operating Results. Total operating expenses, including
cost  of  sales,  restaurant operating expenses, reimbursable costs, general and
administrative  expense,  depreciation  and amortization, and pre-opening costs,
increased  20.1%  to  $18.8  million  in the 2005 quarter (representing 99.7% of
revenues)  from $15.7 million in 2004 (representing 101.8% of revenues). For the
six  months,  total  operating  expenses  increased  10.0%  to  $35.3  million
(representing 97.9% of revenues) from $32.1 million in 2004 (representing 100.7%
of revenues).

                                       23
<PAGE>

Cost  of Sales. While sales revenues increased by 10.2% ($1,236,000) in the 2005
quarter and 6.4% ($1,610,000) for the six months as compared to 2004, total cost
of  sales  increased by 5.7%, or $207,000, for the quarter and 2.3% or $173,000,
for  the six months ended June 26, 2005 as compared to the same periods in 2004.
The  dollar  increase  in  cost  of sales is primarily due to the opening of the
Santa  Monica  and  Downtown Daily Grills ($245,000 for the quarter and $274,000
for the six months). Cost of sales as a percentage of restaurant sales was 28.4%
for  the quarter and 28.2% for the six months ended June 26, 2005 as compared to
29.6%  for the second quarter and 29.3% for the year-to-date period in 2004. The
decrease  in  cost  of  sales as a percentage of total sales was attributable to
menu changes during the second quarter and six months of 2005.


Restaurant  operating  expenses.  Restaurant  operating  expenses  increased  by
$419,000,  or 5.5%, for the quarter and $448,000, or 2.9%, for the six months as
compared  to  the  same  periods  in  2004.  The  dollar  increase in restaurant
operating  expenses for the quarter was primarily attributable to the opening of
the  Santa  Monica  Daily  Grill  in  March  2005 ($355,000), the opening of the
Downtown Daily Grill in May 2005 ($163,000) and an increase in professional fees
($47,000)  and  repairs  and  maintenance  ($38,000)  at  comparable restaurants
partially offset by a decrease in operating expenses at the Bethesda Daily Grill
in  its  second  year ($122,000) and decreased payroll and benefits ($39,000) at
comparable  restaurants.  The  dollar increase in operating expenses for the six
months was primarily attributable to the opening of the Santa Monica Daily Grill
($420,000)  and  the Downtown Daily Grill ($177,000), an increase in repairs and
maintenance  ($84,000) and professional fees ($54,000) at comparable restaurants
partially  offset  by a reduction in operating costs at the Bethesda Daily Grill
($117,000)  and  decreased  occupancy  costs  ($92,000) and payroll ($76,000) at
comparable  restaurants.  Restaurant  operating  expenses,  as  a  percentage of
restaurant sales, decreased in the second quarter from 62.6% in 2004 to 60.0% in
2005. For the six months, the percentages were 60.7% in 2004 and 58.8% in 2005.

Reimbursed  Costs.  Reimbursed  costs  increased 75.2% from $2.9 million to $5.1
million  for  the quarter and 40.4% from $6.1 million in to $8.6 million in 2005
for  the  six  months. These expenses represent the operating costs for which we
are  the  primary obligor of the restaurants we do not consolidate. The increase
is  primarily  due to the opening of the Long Beach Daily Grill in November 2004
and  increased  cost  of  goods  and payroll at the San Francisco and Georgetown
Daily Grills due to improved sales.

General  and  Administrative. General and administrative expense increased 17.6%
for  the  quarter and 2.2% for the six months as compared to the same periods in
2004.  As  a  percentage of revenues, general and administrative expense totaled
6.5%  for  the  quarter  and 6.3% for the six months as compared to 6.8% for the
quarter  and  7.0% for the six months in 2004. The increase in total general and
administrative expense of $183,000, or 17.6%, for the 2005 quarter was primarily
attributable  to  increases in wages and related benefits. The increase in total
general  and  administrative expense of $49,000, or 2.2%, for the 2005 six month
period  is  attributable  to  increases  in wages and related benefits offset by
reduced travel costs and office expenses.

Depreciation  and  Amortization. Depreciation and amortization expense decreased
by  0.6% for the quarter and decreased 2.2% for the six months compared to 2004,
representing  3.5%  of  restaurant  sales for the six months of 2005 and 3.8% of
sales in 2004. The decrease in depreciation and amortization expense for the six
months  was  primarily  due  to the completion of depreciation of equipment at a
number of the Daily Grill restaurants.

                                       24
<PAGE>

Pre-opening  Costs.  Pre-opening  costs  totaled $153,000 in the 2005 quarter as
compared to $1,000 in the 2004 quarter and $244,000 in the 2005 six month period
as  compared with $148,000 in 2004. These pre-opening costs were attributable to
the  opening  in January 2004 of the Bethesda Daily Grill and the opening of the
Santa Monica and Downtown Daily Grills in 2005.

Interest  Expense.  Total interest expense, net, decreased by $23,000, or 34.9%,
during  the quarter and $52,000, or 39.4%, during the six months compared to the
same  periods  in  2004.  The  decrease  in  interest  expense  was  primarily
attributable to substantially reduced warrant amortization in 2005.

Provision  for  income  taxes.  The  income  tax  provision  for the quarter was
$131,000  an increase of $126,000 over the prior year and for the six months was
$209,000  an  increase  of  $181,000  over  the prior year. The tax provision is
comprised  of  state taxes, alternative minimum taxes for 2005 and several large
credits  (in  2004  the Company had federal net operating loss to carry forward,
which  were  utilized  in  fiscal  2004).  The  tax  rates in 2005 and 2004 were
comprised of the federal and state statutory rates, less any permanent items and
tax credits based on the annual estimated effective tax rates for the respective
years.

Minority  Interest.  We reported a minority interest in the loss of our majority
owned  subsidiaries  of  $233,000  during the 2005 second quarter as compared to
$214,000  during  the  2004 quarter.  For the six months, we reported a minority
interest  in the loss of majority owned subsidiaries of $324,000 during 2005 and
$361,000  during  2004.  The change in minority interest in loss for the quarter
and  six months was primarily attributable to pre-opening costs for the Downtown
Daily  Grill  partially  offset  by  improved operating results at the South Bay
Daily  Grill  and  the  Hollywood  Grill.

Net  Income.  We  reported  net  income  of  $125,000 for the second quarter and
$807,000  for  the  six months of 2005 as compared to a net loss of $131,000 for
the  second  quarter  and  $14,000  for  the  six  months  in  2004.

MATERIAL  CHANGES  IN  FINANCIAL  CONDITION,  LIQUIDITY  AND  CAPITAL RESOURCES.

At  June  26,  2005  we  had negative working capital of $1.3 million and a cash
balance of $1.5 million compared to positive working capital of $0.2 million and
a  cash  balance  of  $1.4  million  at  December  26,  2004.

Net  cash  provided  by  operations  during  the  six months ended June 26, 2005
totaled  $2,801,000  compared to $1,969,000 during the six months ended June 27,
2004.  The  increase  in  cash  provided  by  operations primarily resulted from
increased  profitability  of  $821,000  and  in tenant improvement allowances of
$770,000  partially  offset  by  changes  in  operating  assets and liabilities.

Net  cash used in investing activities during the six months ended June 26, 2005
totaled  $3,469,000  compared to $1,435,000 during the six months ended June 27,
2004.  Cash  used  in investing activities related primarily to the purchases of
furniture,  fixtures and equipment for the Santa Monica Daily Grill ($1,141,000)
and  the  Downtown  Daily  Grill  ($1,802,000).

Net  cash  provided by financing activities during the six months ended June 26,
2005  totaled  $798,000 compared to $398,000 used in financing activities during
the  six  months  ended  June  27,  2004.  Cash provided by financing activities
during  the  current  period  related  to  proceeds from LLC members ($976,000),
equipment financing ($118,000), and exercise of stock option ($24,000) offset by
reductions  in  debt  ($192,000)  and  distribution  of  profits to the minority
investor  in  San  Jose  Grill,  LLC  ($143,000).

                                       25
<PAGE>

Financing  Facilities.  At  June  26, 2005, the Company had $157,000 owing under
equipment  lease  financing  transactions, a loan from a member of Chicago - The
Grill  on the Alley, LLC of $0.9 million, equipment loans of $0.1 million, loans
from  stockholders/officers of $0.2 million, and loans/advances from a landlord,
the SBA and others of $0.1 million. Construction of the Santa Monica Daily Grill
was  paid  for  through  a  $2.2  million  tenant improvement allowance of which
$1,327,000  was  received  during the first six months of 2005.  Construction of
the  Downtown  Daily  Grill  was  funded  through  a $600,000 tenant improvement
allowance,  minority member contribution of $1,250,000 and the Company's capital
contribution  of  $251,000.  As  of  June  26,  2005,  $575,000  of  the  tenant
improvement  allowance  on  the  Downtown  Daily Grill has been received.  These
tenant  incentive  allowances  have been recorded in other long-term liabilities
and  are  being  amortized  against  rent  expense  over  the  lease  terms.

In  June  2004, we finalized an agreement with respect to the establishment of a
new  bank  credit facility.  Under the terms of the new bank credit facility, we
have  been  provided with financing in the form of a revolving line of credit in
the amount of $500,000, an irrevocable standby letter of credit in the amount of
$700,000,  increased  to $860,000 in January 2005 and equipment financing in the
amount  of  $500,000.  As  of  June  26,  2005  we have utilized $162,000 of the
equipment financing.  The facility has a one-year term, is secured by assets and
is  subject  to certain standard borrowing covenants.   The bank has renewed the
credit  facility  extending  the  term  to  August  4,  2006.

Operating  Leases  and  Contractual  Obligations.  At  June  26,  2005,  we were
obligated  under  eighteen leases covering the premises in which our Daily Grill
and  Grill  Restaurants  are located as well as leases on our executive offices.
Such  restaurant  leases  and  the  executive  office lease contain minimum rent
provisions which provide for the payment of minimum aggregate rental payments of
approximately  $25.1  million over the life of those leases, with minimum annual
rental  payments  of  $3.3  million in 2005, $6.1 million between 2006 and 2007,
$4.8 million between 2008 and 2009, and $10.9 million thereafter.  There were no
material  changes  in  our obligations under operating leases or other contracts
during  the  quarter  ended  June 26, 2005 as compared to those described in the
Company's  Form  10-K  for  the  year  ended  December  26,  2004.

Commitments  Relating  to  Managed  Restaurants  and LLCs.  Under certain of our
operating  and  management  agreements we have an obligation to potentially make
additional  cash  advances  and/or  contributions  and  may  not  realize  any
substantial  returns for some time.  The agreements and arrangements under which
we may be required to make cash advances or contributions, guarantee obligations
or  defer  receipt of cash are described in the Company's Form 10-K for the year
ended  December  26,  2004.  There were no material developments with respect to
those  agreements  and  arrangements  during  the  quarter  ended June 26, 2005.

Detailed information regarding the initial capital contributions to the LLCs and
the CityWalk Partnership, Preferred Returns for each, management fees payable to
the  Company and principal distribution provisions are included in the Company's
Form  10-K for the year ended December 26, 2004.  The following tables set forth
a  summary  for  each  of  the  LLCs  and  the  CityWalk  Partnership of (1) the
distributions of capital to the Members and/or the Company during the six months
ended  June 26, 2005, (2) the unreturned balance of the capital contributions of
the  Members  and/or  the  Company  at June 26, 2005, and the accrued but unpaid
preferred  returns  due  to  the  Members  and/or  the Company at June 26, 2005:

                                       26
<PAGE>

SAN JOSE GRILL LLC

Distributions of capital, preferred
return and profit during the six
months ended June 26, 2005:                 Members     $                143,000
                                                        ========================
                                            Company     $                144,000
                                                        ========================
Unreturned Initial Capital
Contributions at June 26, 2005:             Members     $                      -
                                                        ========================
                                            Company     $                      -
                                                        ========================
Accrued but unpaid Preferred
Returns at June 26, 2005:                   Members     $                      -
                                                        ========================
                                            Company     $                      -
                                                        ========================


CHICAGO - GRILL ON THE ALLEY LLC

Distributions of capital and note
repayments during the six months
ended June 26, 2005:                       Members (a)  $                126,000
                                                        ========================
                                           Company      $                      -
                                                        ========================
Unreturned Initial Capital
Contributions at June 26, 2005:            Members      $                992,000
                                                        ========================
                                           Company      $                      -
                                                        ========================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members      $                      -
                                                        ========================
                                           Company      $                      -
                                                        ========================


THE GRILL ON HOLLYWOOD LLC

Distributions of capital during the
six months ended June 26, 2005             Members      $                      -
                                                        ========================
                                           Company      $                      -
                                                        ========================
Unreturned Initial Capital
Contributions at June 26, 2005:            Members      $              1,200,000
                                                        ========================
                                           Company      $                250,000
                                                        ========================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members (b)  $                      -
                                                        ========================
                                           Company (b)  $                      -
                                                        ========================

                                       27
<PAGE>

SOUTH BAY DAILY GRILL (CONTINENTAL PARK LLC)

Distributions of capital during the
six months ended June 26, 2005:            Members      $                      -
                                                        ========================
                                           Company      $                      -
                                                        ========================
Unreturned Initial and Additional
Capital Contributions at June 26,
2005:                                      Members      $              1,100,000
                                                        ========================
                                           Company      $                450,000
                                                        ========================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members (b)  $                      -
                                                        ========================
                                           Company (b)  $                      -
                                                        ========================

UNIVERSAL CITYWALK DAILY GRILL

Distributions of capital during the
six months ended June 26, 2005:            Members      $                      -
                                                        ========================
                                           Company      $                      -
                                                        ========================
Unreturned Initial and Additional
Capital Contributions at June 26,
2005:                                      Members      $              1,346,106
                                                        ========================
                                           Company      $                246,106
                                                        ========================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members (b)  $                      -
                                                        ========================
                                           Company      $                      -
                                                        ========================

DOWNTOWN DAILY GRILL (612 FLOWER DAILY GRILL, LLC)

Distributions of capital during the
six months ended June 26, 2005:            Members      $                      -
                                                        ========================
                                           Company      $                      -
                                                        ========================
Unreturned Initial Capital
Contributions at June 26, 2005:            Members      $                846,000
                                                        ========================
                                           Company      $                222,000
                                                        ========================
Accrued but unpaid Preferred
Returns at June 26, 2005:                  Members      $                 14,134
                                                        ========================
                                           Company      $                  6,626
                                                        ========================

                                       28
<PAGE>

a)   Distribution  of  capital  and  note  repayments  as  of  June  26,  2005
     includes $84,000 of capital and note repayments and $42,000 of interest and
     preferred  return.

b)   Due  to  the  under  performance  of  the  restaurants the preferred return
     is not being accrued. The Company is not liable to pay the preferred return
     distributions,  such  that  they represent a non-recourse obligation of the
     subsidiary  entity.  If  preferred  returns  were  accrued for The Grill on
     Hollywood the Member would have an accrued preferred return of $652,000 and
     the  Company  would  have  an  accrued  preferred  return  of  $136,000. If
     preferred  returns  were  accrued  for the South Bay Daily Grill the Member
     would  have  an  accrued preferred return of $283,000 and the Company would
     have  a preferred return of $131,000. If preferred returns were accrued for
     the  CityWalk Partnership the Member would have an accrued preferred return
     of 474,000.

CRITICAL ACCOUNTING POLICIES

The  Company's discussion and analysis of its financial condition and results of
operations  are  based  upon the Company's financial statements, which have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States  of  America.  The  Company  believes certain critical accounting
policies  affect  its  more  significant  judgments  and  estimates  used in the
preparation  of  its  financial  statements.  A  description  of  the  Company's
critical  accounting  policies  is  set forth in the Company's Form 10-K for the
year  ended December 26, 2004.  As of, and for the quarter ended, June 26, 2005,
there  have  been  no  material  changes  or  updates  to the Company's critical
accounting  policies.


RECENTLY  ISSUED  ACCOUNTING  PRONOUNCEMENTS

In  April  2004, the EITF reached final consensus on EITF 03-06,  "Participating
Securities  and  the  Two-Class  Method  under  FASB  Statement  No. 128," which
requires  companies that have participating securities to calculate earnings per
share  using  the  two-class  method.  This  method  requires  the allocation of
undistributed  earnings  to the common shares and participating securities based
on  the  proportion of undistributed earnings that each would have been entitled
to  had  all  the periods earnings been distributed. EITF 03-06 is effective for
fiscal periods beginning after March 31, 2004 and earnings per share reported in
prior  periods  presented must be retroactively adjusted in order to comply with
EITF  03-06. The Company adopted EITF 03-06 for the quarter ended June 27, 2004,
however  there  has  been no impact on the Company's financial statements as the
preferred  shares  are  not  participating  securities.

On  December  16,  2004,  the Financial Accounting Standards Board (FASB) issued
FASB  Statement No. 123 (revised 2004), Share-Based Payment, which is a revision
of  FASB  Statement  No. 123, Accounting for Stock-Based Compensation. Statement
123(R)  supersedes  APB  No.  25, and amends FASB Statement No. 95, Statement of
Cash  Flows.  Generally,  the  approach  in  Statement  123(R) is similar to the
approach  described  in  Statement  123.  However, Statement 123(R) requires all
share-based  payments  to employees, including grants of employee stock options,
to  be  recognized in the income statement based on their fair values. Pro forma
disclosure  is  no  longer  an  alternative.

                                       29
<PAGE>

As  permitted by Statement 123, we currently account for share-based payments to
employees  using  APB  No.  25's  intrinsic value method and, as such, generally
recognize  no  compensation  cost  for  employee stock options. Accordingly, the
adoption  of  Statement 123(R)'s fair value method may have a significant impact
on  our  result  of  operations,  although it will have no impact on our overall
financial  position.  The  impact  of  adoption  of  Statement  123(R) cannot be
predicted  at this time because it will depend on levels of share-based payments
granted  in  the  future.  However,  had  we  adopted  Statement 123(R) in prior
periods,  the  impact  of  that  standard  would have approximated the impact of
Statement  123  as  described  in  the  disclosure  of  pro forma net income and
earnings  per  share  in  note  2  to  the  financial  statements.

We  expect  to  adopt  Statement  123(R)  in  the  first  quarter  of  2006.

CERTAIN  FACTORS  AFFECTING  FUTURE  OPERATING  RESULTS

In  addition  to  the  opening  of  the new restaurants during 2005, the various
factors described in the Company's Annual Report on Form 10-K for the year ended
December  26,  2004,  the  following  developments  may  impact future operating
results  and  financial  results.

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;  or that additional hotels will elect to
retain  the  Company's  hotel  restaurant  management  services.

ITEM  3. QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company  is exposed to market risk from changes in interest rates on funded
debt.  This  exposure  relates to its non-revolving credit facility (the "Credit
Facility").  There  were  $156,000  of  borrowings  outstanding under the Credit
Facility  at  June  26,  2005.  Borrowings  under  the  Credit  Facility,  which
terminates  in  August  2006,  bear  interest  at prime rate.  A hypothetical 1%
interest  rate  change would not have a material impact on the Company's results
of  operations.

ITEM 4.  CONTROLS AND PROCEDURES

The Company maintains disclosure controls and procedures (as defined in Exchange
Act  Rule  13a-15(e) and 15d-15(e)) that are designed to ensure that information
required  to  be  disclosed  in  the Company's Exchange Act reports is recorded,
processed,  summarized  and  reported  within  the time periods specified in the
Securities  and Exchange Commission's rules and forms, and that such information
is accumulated and communicated to the Company's management, including its Chief
Executive  Officer  and Chief Financial Officer, as appropriate, to allow timely
decisions  regarding  the  required  disclosure.
In  designing  and evaluating the disclosure controls and procedures, management
recognizes  that  any  controls  and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives,  and  management  necessarily  is  required to apply its judgment in
evaluating  the  cost-benefit  relationship of possible controls and procedures.

                                       30
<PAGE>

An evaluation as of the end of the period covered by this report was carried out
under  the  supervision  and with the participation of our management, including
our  principal  executive  officer  and  principal  financial  officer,  of  the
effectiveness of our disclosure controls and procedures, as such term is defined
under  Rule  13a-15(e)  and  Rule  15d  -15(e)  promulgated under the Securities
Exchange  Act  of  1934,  as  amended  (the  "Exchange  Act").  Based  on  their
evaluation, our certifying officers concluded that these disclosure controls and
procedures  are effective in providing reasonable assurance that the information
required to be disclosed by us in our periodic reports filed with the Securities
and  Exchange Commission ("SEC") is recorded, processed, summarized and reported
within  the  time  periods  specified  by  the  SEC's  rules  and  SEC  reports.

There have been no changes in our internal control over financial reporting that
occurred during the period covered by this report that have materially affected,
or  are  reasonably  likely  to  materially  affect,  our  internal control over
financial  reporting.


                          PART II - OTHER INFORMATION

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In  June  2005, the Company issued 25,709 shares of common stock to Lewis Wolff,
Trustee  for  the  Wolff  Revocable  Trust  of 1993, pursuant to the exercise of
75,000 warrants held by the Wolff Trust. Mr. Wolff is a director of the Company.
The  exercise  price  of  the  warrant,  $2.12 per share, was paid by means of a
cashless  exercise.  The  warrants were originally issued to the Wolff Revocable
Trust  of  1993  pursuant to an agreement by Mr. Wolff to guarantee certain bank
indebtedness  of  the  Company.

In  June  2005, the Company issued 3,077 shares of common stock to Stephen Ross,
Co-Trustee  for  the  Ross  Family  Trust,  pursuant  to  the exercise of 16,029
warrants  held  by the Ross Family Trust. Mr. Ross is a director of the Company.
The  exercise  price  of  the  warrant,  $2.77 per share, was paid by means of a
cashless exercise.  The warrants were originally issued to the Trust pursuant to
a  loan  given  by  the  Trust  to  the  Company.

                                       31
<PAGE>

In  June  2005, the Company issued 3,077 shares of common stock to Stephen Ross,
Co-Trustee  for  the  Mazel  Family  Trust,  pursuant  to the exercise of 16,029
warrants  held  by the Mazel Trust. Mr. Ross is a Director with the Company. The
exercise  price of the warrant, $2.77 per share, was paid by means of a cashless
exercise.  The  warrants  were originally issued to the Trust pursuant to a loan
given  by  the  Trust  to  the  Company.

In  June  2005,  the  Company  issued  31,486  shares of common stock to Michael
Weinstock  pursuant to the exercise of 75,000 warrants held by Michael Weinstock
Family  Trust.  Mr. Weinstock is Chairman of the Company.  The exercise price of
the  warrants,  $2.12  per share, was paid by means of a cashless exercise.  The
warrants  were  originally  issued  to the Trust pursuant to an agreement by Mr.
Weinstock  to  guarantee  certain  bank  indebtedness  of  the  Company.

The  issuance  of the shares of our common stock described above was pursuant to
the  exemption  from registration provided by Section 4(2) of the Securities Act
of  1933,  as  amended  and  related  state  private  offering  exemptions.  The
purchasers  were  accredited investors as defined in the Securities Act who took
the shares for investment purposes without a view to distribution and had access
to information concerning the Company and its business prospects, as required by
the  Securities  Act.

In addition, there was no general solicitation or advertising in connection with
the issuance of the shares.

No commissions were paid in connection with the issuance described above.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The  annual meeting of shareholders of Grill Concepts, Inc. was held on July 27,
2005,  the  stockholders  voted  on two proposals: the election of directors and
ratification  of  the  appointment of MossAdams LLP as the Company's independent
registered  public  accounting  firm.

The  first  matter  voted  on  was  a  proposal  to elect Robert Spivak, Michael
Weinstock,  Glenn  Golenberg,  Lewis  Wolff,  Stephen  Ross,  Bruce Schwartz and
Richard Dantas, as directors of the Company. All director nominees were elected.
The  following  table  sets  forth  the  votes  in  such  election:

<TABLE>
<CAPTION>
                       Votes For    Votes Against
                       ---------    ------------
<S>                       <C>            <C>
Robert Spivak          3,433,648      23,106
Michael Weinstock      3,433,028      23,726
Glenn Golenberg        3,448,273       8,481
Lewis Wolff            3,433,648      23,106
Stephen Ross           3,448,273       8,481
Bruce Schwartz         3,447,648       9,106
Richard Dantas         3,448,273       8,481
</TABLE>

In  addition  to  the election of directors as noted above, the following matter
was  voted  upon  at  such  meeting:

                                       32
<PAGE>

Proposal  2,  to  ratify  the  appointment  of  MossAdams  LLP  as the Company's
independent  registered public accounting firm was approved with 3,444,946 votes
cast  for,  5,463  votes  cast  against,  and  8,630  votes  abstained.

ITEM 6.  EXHIBITS

(a)     Exhibits

        Exhibit No.                    Description
        -----------                    -----------
          31.1     Section 302 Certification of CEO
          31.2     Section 302 Certification of CFO
          32.1     Certification of CEO Pursuant to 18.U.S.C. Section 1350,
                   as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
                   of 2002.
          32.2     Certification of CFO Pursuant to 18.U.S.C. Section 1350, as
                   Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
                   of 2002.


                                       33
<PAGE>

                                   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.


Signature                   Title                           Date

/s/ Robert Spivak           President  and  Chief           August 11, 2005
-----------------           Executive  Officer
Robert  Spivak




/s/ Philip Gay              Executive Vice President and    August 11, 2005
------------------          Chief  Financial  Officer
Philip  Gay

                                       34
<PAGE>