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 27,1999

                                       OR

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

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

                           Commission File No. 0-23226

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

      Delaware                                            13-3319172
-------------------------------                   --------------------------
(State or other jurisdiction of                   (IRS Employer
 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
                                             ---   ---
     As of August 9, 1999,  4,003,888  shares of Common Stock of the issuer were
outstanding.


<PAGE>

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

                                      INDEX



                                                                         Page
                                                                        Number
                                                                        ------

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Condensed Balance Sheets -
June 27, 1999 and December 27, 1998........................................ 1

Consolidated Condensed Statements of Operations -
For the three months and six months ended June
27, 1999 and June 28, 1998................................................. 3

Consolidated Condensed Statements of Cash Flows -
For the six months ended June 27, 1999 and
June 28, 1998.............................................................. 4

Notes to Consolidated Condensed Financial Statements....................... 5

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations......................................    6

Item 3.  Quantitative and Qualitative Disclosures About Market Risk....... 12

PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders............   13

Item 5.  Other Information..............................................   13

Item 6.  Exhibits and Reports on Form 8-K...............................   13

SIGNATURES..............................................................   14






<PAGE>


                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                      GRILL CONCEPTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS


                                     ASSETS


                                                   June 27,         December 27,
                                                     1999              1998
                                                 ------------       ------------
                                                 (unaudited)
Current assets:
Cash and cash equivalents                         $ 533,257           $ 438,184
Inventories                                         462,432             385,131
Receivables                                         500,427             356,358
Prepaid expenses                                    894,829             884,602
                                                  ---------           ---------

Total current assets                              2,390,945           2,064,275
                                                  ---------           ---------

Property and equipment, at cost                  13,381,807          12,855,412
Less: accumulated depreciation                   (5,081,990)         (4,513,075)
                                                 ----------          ----------

Property and equipment, net                       8,299,817           8,342,337

Goodwill, net                                       225,441             229,441

Liquor licenses                                     641,603             641,603

Other assets                                         31,213             109,305
                                                 ----------          -----------
Total assets                                    $11,589,019          $11,386,961
                                                 ----------          -----------
                                                 ----------          -----------





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


                                        1

<PAGE>

                      GRILL CONCEPTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (Continued)

             LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY
<TABLE>

                                                              June 27,           December 27,
                                                                1999                1998
                                                            -------------       -------------
Current liabilities:                                         (unaudited)
<S>                                                          <C>                <C>

     Bank line of credit                                     $  600,000         $   590,026
     Accounts payable                                         1,626,433           1,648,465
     Accrued expenses                                         1,421,376           1,045,832
     Current portion of long term debt                          304,000             455,470
     Note payable - related party                               824,500             624,500
                                                             -----------        -----------
       Total current liabilities                              4,776,309           4,364,293

Long-term debt                                                1,945,023           2,001,760
Notes payable - related parties                                 372,556             926,038
                                                             ----------         -----------

       Total liabilities                                      7,093,888           7,292,091

Minority interest                                               256,146             227,957

Stockholders' equity:
  Series A, 10% Convertible Preferred Stock,
     $.001 par value; 1,000,000 shares authorized,
     none issued and outstanding in 1999 and 1998                    --                  --
  Series B, 8% Convertible Preferred Stock,
     $.001 par value; 1,000,000 shares authorized,
     none issued and outstanding in 1999 and 1998                    --                  --
  Series I, Convertible Preferred Stock, $.001 par
     value; 1,000,000 shares authorized, 1,000 shares
     issued and outstanding in 1999 and 1998                          1                   1
  Series II, 10% Convertible Preferred Stock, $.001 par
     value; 1,000,000 shares, authorized, 500 shares
     issued and outstanding in 1999 and 1998                          1                   1
  Common stock, $.00004 par value; 7,500,000 shares
     authorized, 4,003,883 shares issued and outstanding
     in 1999 and 1998                                               160                 160
Additional paid-in capital                                   11,071,062          11,071,062
Accumulated deficit                                          (6,832,239)         (7,204,311)
                                                             ----------         -----------

     Stockholders' equity                                     4,238,985           3,866,913
                                                             ----------         -----------

       Total liabilities, minority interest
          and stockholders' equity                          $11,589,019         $11,386,961
                                                             ----------         -----------
                                                             ----------         -----------
</TABLE>


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

                                        2

<PAGE>


                      GRILL CONCEPTS, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (Unaudited)
<TABLE>
<S>                                             <C>                                <C>
                                                       Three Months Ended                 Six Months Ended
                                                 ----------------------------     ---------------------------
<S>                                            <C>               <C>             <C>              <C>
                                               June 27, 1999     June 28, 1998   June 27, 1999    June 28, 1998
                                               -------------     -------------   -------------    -------------

Revenues:
     Sales                                       $9,455,959      $8,378,563        $19,619,154      $16,739,804
     Management and license fees                    111,464          71,715            236,311           71,715
                                                 ----------       ---------          ---------        ---------
       Total revenues                             9,567,423       8,450,278         19,855,465       16,811,519
Cost of sales                                     2,614,415       2,322,926          5,430,097        4,525,977
                                                 ----------       ---------          ---------        ---------
Gross profit                                      6,953,008       6,127,352         14,425,368       12,285,542

Costs and expenses:
     Restaurant operating expenses               5,639,126        5,167,635         11,641,226       10,213,003
     General and administrative                    797,473          620,005          1,601,902        1,242,599
     Depreciation and amortization                 283,045          277,370            570,865          520,640
     Preopening costs                                    -          417,232                  -          492,730
                                                 ---------        ---------           --------         --------
       Total operating expenses                  6,719,644        6,482,242         13,813,993       12,468,972
Income (loss) from operations                      233,364         (354,890)           611,375         (183,430)
Interest expense, net                              111,558          (45,642)           (207,114)         (84,760)
                                                 ---------        ---------           --------         --------
Income (loss) before provision  for
  income taxes and minority interest               121,806         (400,532)           404,261         (268,190)
Provision for income taxes                          (2,000)          (1,200)            (4,000)          (2,400)
Minority interest                                  (10,017)          32,003            (28,189)          32,003
                                                 ---------        ---------           --------         --------
Income (loss) before cumulative
   effect of change in accounting
   principle                                       109,789         (369,729)           372,072         (238,587)
Cumulative effect of change in
   accounting principle                                  -                -                  -           70,281
                                                 ---------        ---------           --------         --------
Net income (loss)                                 $109,789        ($369,729)          $372,072        ($308,868)
Preferred stock:
     Preferred dividends accrued or paid           (12,500)         (12,222)           (25,000)         (34,550)
     Accounting deemed dividends                         -          (40,744)                 -          (82,877)
                                                 ---------        ---------           --------         --------
                                                   (12,500)         (52,966)           (25,000)        (117,427)
                                                 ---------        ---------           --------         --------
Basic net income (loss) applicable to
 common stock                                      $97,289        ($422,695)          $347,072        ($426,295)
                                                 ---------        ---------           --------         --------
                                                 ---------        ---------           --------         --------
Net income (loss) per share
     Basic net income (loss)                        $ 0.02          ($ 0.10)            $ 0.09          ($ 0.08)
                                                 ---------        ---------           --------         --------
     Preferred stock
       Dividends                                   ($ 0.00)         ($ 0.00)           ($ 0.00)         ($ 0.01)
       Accounting deemed dividends                 ($   --)         ($ 0.01)           ($   --)         ($ 0.02)
                                                 ---------        ---------           --------         --------
                                                   ($ 0.00)         ($ 0.01)           ($ 0.00)         ($ 0.03)
                                                 ---------        ---------           --------         --------
Basic net income (loss) applicable to
 common stock                                       $ 0.02          ($ 0.11)            $ 0.09          ($ 0.11)
                                                 ---------        ---------           --------         --------
                                                 ---------        ---------           --------         --------
Average weighted shares outstanding              4,033,888        3,950,628          4,033,888        3,938,414
                                                 ---------        ---------           --------         --------
                                                 ---------        ---------           --------         --------
</TABLE>


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



                                        3

<PAGE>


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

                                                             Six Months Ended
                                                         -----------------------
                                                       June 27,         June 28,
                                                          1999            1998
                                                      ----------       ---------
Cash flows from operating activities:
 Net income (loss)                                    $ 372,072       ($308,868)
 Adjustments to reconcile net income to net cash
 provided by operating activities:
   Depreciation and amortization                        570,865         597,740
   Minority interest in net income                       28,189              --
   Cumulative effect of change in accounting principal       --          70,281
   Preopening costs                                          --         415,630
 Changes in operating assets and liabilities
   Inventories                                          (77,301)        (46,640)
   Receivables                                         (144,069)         34,790
   Prepaid expenses                                     (10,227)       (212,501)
   Other assets                                          78,092        (281,037)
   Accounts payable                                     (22,035)        (24,077)
   Accrued liabilities                                  375,545         123,397
                                                      ---------        ---------

 Net cash provided by operating activities            1,171,131         368,715
                                                      ---------        ---------
Cash flows from investing activities:
   Additions to furniture, equipment and improvements   524,346       1,911,599
                                                      ---------        ---------

 Net cash used in investing activities                  524,346       1,911,599
                                                      ---------        ---------

Cash flows from financing activities:
  Proceeds from note payable                                 --         800,000
  Proceeds from investment in L.L.C.                         --         299,700
  Proceeds from line of credit                            9,974         520,000
  Payments on long-term debt                           (561,686)       (176,189)
                                                      ---------        ---------

  Net cash provided by (used in) financial activities  (551,712)      1,443,511
                                                      ---------        ---------
Net increase (decrease) in cash and cash equivalents     95,073         (99,373)
Cash and cash equivalents, beginning of period          438,184         272,567
                                                      ---------        ---------
Cash and cash equivalents, end of period              $ 533,257        $173,194
                                                      ---------        ---------
                                                      ---------        ---------

Supplemental cash flow information:
  Cash paid during the period for:
     Interest                                         $ 157,151        $101,850
     Income taxes                                            --           3,400

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


                                        4

<PAGE>

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

1.       INTERIM FINANCIAL PRESENTATION

The interim  consolidated  financial  statements  are  prepared  pursuant to the
requirements  for reporting on Form 10-Q.  These  financial  statements have not
been audited by  independent  accountants.  The December 27, 1998 balance  sheet
data was derived  from  audited  financial  statements  but does not include all
disclosures  required by generally accepted accounting  principles.  The interim
financial  statements and notes thereto  should be read in conjunction  with the
financial  statements  and notes  included in the  Company's  Form 10-KSB  dated
December  27,  1998.  In the  opinion of  management,  these  interim  financial
statements  reflect all adjustments of a normal recurring nature necessary for a
fair  statement of the results for the interim  periods  presented.  The current
period  results of operations  are not  necessarily  indicative of results which
ultimately will be reported for the full year ending December 26, 1999.

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

2.       PREOPENING COSTS

During fiscal 1998,  the Company  elected early  adoption of AICPA  Statement of
Position (SOP) 98-5,  "Reporting on the Costs of Start-Up  Activities." This new
accounting   standard  requires  most  entities  to  expense  all  start-up  and
preopening  costs  as they  are  incurred.  Preopening  costs  for  all  periods
presented herein reflect costs that were expensed as incurred. In addition,  the
Consolidated  Statement of Operations for the six months ended June 28, 1998 has
been restated to reflect,  as a one-time  charge,  the cumulative  effect of the
change in accounting principle.

3.       FUTURE ACCOUNTING REQUIREMENTS

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

4.       SUBSEQUENT EVENT

On August 9, 1999,  the Company  effected a 1-for-4  reverse  stock split of the
Company's  common  stock.  All share and per share  data have been  restated  to
reflect the reverse stock split.




                                        5

<PAGE>

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

The following  discussion and analysis  should be read in  conjunction  with the
Company's financial statements and notes thereto included elsewhere in this Form
10-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  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-KSB for the year ended December 27, 1998.

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,   except  where  otherwise   noted.
Percentages may not add due to rounding.

                                     Three Months Ended       Six Months Ended
                                     --------------------   --------------------
                                     June 27,   June 28,     June 27,  June 28,
                                       1999       1998         1999      1998
                                     --------   ---------   ---------  ---------
Revenues:
    Company restaurant sales             98.8 %      99.2 %    98.8 %     99.6 %
    Management and license fees           1.2          .8       1.2         .4
                                        -----       -----     -----      -----
    Total operating revenues            100.0 %     100.0 %   100.0 %    100.0 %
Cost of sales                            27.3        27.5      27.3       26.9
                                        -----       -----     -----      -----
Gross profit                             72.7        72.5      72.7       73.1
                                        -----       -----     -----      -----
Restaurant operating expense             58.9        61.2      58.6       60.8
General and administrative expense        8.3         7.3       8.1        7.4
Depreciation and amortization             3.0         3.3       2.9        3.1
Preopening costs                          0.0         6.4       0.0        2.9
                                        -----       -----     -----      -----
Total operating expenses                 70.2        76.7      69.6       74.2
                                        -----       -----     -----      -----
Operating income (loss)                   2.4        (4.2)      3.1       (1.1)
Interest expense, net                    (1.2)       (0.5)     (1.0)      (0.5)
                                        -----       -----     -----      -----
Income (loss) before taxes                1.3        (4.7)      2.0       (1.6)
Provision for taxes                       0.0         0.0       0.0        0.0
Minority interest                        (0.1)        0.4      (0.1)       0.2
Cumulative effect of change in
  accounting principle                    0.0         0.0       0.0        0.4
                                        -----       -----     -----      -----
Net income (loss)                         1.1%       (4.4)%     1.9%      (1.8)%
                                        -----       -----     -----      -----
                                        -----       -----     -----      -----








                                        6

<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>
<S>                                <C>                 <C>                 <C>
                                   Second Quarter      Year-to-date       Total open at
                                      Openings            Openings        End of Quarter
                                   --------------      --------------      --------------
                                  FY 1999  FY 1998    FY 1999   FY 1998   FY 1999  FY 1998
                                  -------  ------     -------   -------   -------  -------

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

Daily Grill restaurants:
    Company owned                    --       --       --          --         9        8
    Managed and/or licensed           1       --        3          --         3       --
Grill on the Alley restaurants:
    Company owned                    --       --       --           1         2        2
Pizza restaurants                    --       --       --          --         3        3
Other restaurants
    Managed and/or licensed          --       --       --           1         2        3
                                  -----     ----     ----        ----      ----     ----
Total                                --       --        3           1        19       16
                                  -----     ----     ----        ----      ----     ----
                                  -----     ----     ----        ----      ----     ----

</TABLE>

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

                                       Three Months Ended               Six Months Ended
                                       ------------------               ----------------
<S>                                   <C>           <C>              <C>           <C>
                                     June 27,      June 28,         June 27,      June 28,
                                        1999          1998             1999          1998
                                      --------      --------         --------      --------



Weighted average weekly sales
   per company owned restaurant:
    Daily Grill                       $   54,960   $   55,030     $   57,004     $   56,845
    Grill on the Alley                    66,915       68,467         71,071         70,110
    Pizza restaurants                     32,644       32,985         32,971         33,364

Change in comparable restaurant
   sales (1):
    Daily Grill                             --  %       10.7 %           1.2 %          8.6 %
    Grill on the Alley                      4.2 %        9.3 %           2.8 %          5.5 %
    Pizza restaurants                      (1.0)%        0.0 %          (1.2)%         (0.1)%

Total system revenues:
    Daily Grill                        $6,443,071   $5,722,821     $13,351,688    $11,823,745
     Grill on the Alley                 1,739,782    1,369,339       3,695,705      2,313,645
    Pizza restaurants                   1,273,106    1,286,403       2,571,761      2,602,414
    Management and license fees           111,464       71,715         236,311         71,715
                                        ---------    ---------      ----------      ---------
      Total                            $9,567,423   $8,450,278     $19,855,465    $16,811,519
                                        ---------    ---------      ----------      ---------
                                        ---------    ---------      ----------      ---------
</TABLE>

-------------------
(1)  When computing comparable  restaurant sales,  restaurants open for at least
     18 months are compared from period to period.








                                        7

<PAGE>

Revenues

Revenues for the second quarter of fiscal 1999 increased to $9.6 million, 13.2 %
over the $8.5 million  generated  for the same quarter of fiscal 1998.  Revenues
for the six months  ended June 27,  1999 rose  18.1% to $19.8  million  from the
$16.8  million  generated  for the same period of fiscal  1998.  Total  revenues
included $9.5 million of sales revenues and $111,000 of management and licensing
fees for the 1999  quarter and $19.6  million of sales  revenues and $236,000 of
management and licensing fees for the first six months of 1999. This compares to
$8.4 million of sales  revenues and $72,000 of management and licensing fees for
the 1998 quarter and $16.7  million of sales  revenues and $72,000 of management
and  licensing  fees for the first six  months of 1998.  The  increase  in sales
revenues for both the quarter ($1.1 million,  or 12.9%) and the six months ($2.9
million,  or 17.2%)  was  primarily  attributable  to the San Jose Grill and the
Tyson's, Virginia, Daily Grill being open for the full quarter and six months in
1999.

Same store sales (for  restaurants  open at least 18 months)  increased 0.2% for
the quarter and 1.0% for the six month period.  The increase in  management  and
licensing  fees for  both  the  quarter  ($40,000,  or 55%)  and the six  months
($165,000,  or 130%) was primarily attributable to the managed restaurants being
open for the full  periods in 1999 while they were only  included for two months
of the second quarter in 1998.

Cost of Sales

Cost of sales  increased  by 12.5% for the  quarter and 20.0% for the six months
ended June 27, 1999 as compared to the same periods in 1998.  As a percentage of
sales  revenues,  cost of sales was 27.3% for the  quarter and 27.3% for the six
months as  compared  to 27.5% for the  second  quarter of 1998 and 27.0% for the
year-to-date  period in 1998.  The increase in cost of sales as a percentage  of
sales  during  the 1999 six  month  period  was  primarily  attributable  to the
inclusion  of the San  Jose  Grill  in 1999,  which  has a higher  cost of sales
percentage.

Restaurant Operating Expenses

Restaurant  operating  expenses  increased by 9.1% for the quarter and 14.0% for
the six  months  as  compared  to the same  periods  in 1998.  The  increase  in
restaurant operating expenses was primarily  attributable to the new restaurants
opened in the second and  fourth  quarters  of 1998.  As a  percentage  of total
revenues,  restaurant  operating expenses totaled 58.9% for the 1999 quarter and
58.6% for the six months as  compared to 61.2% for the quarter and 60.8% for the
six month period in 1998.  The decrease in  restaurant  operating  expenses as a
percentage of total revenues was attributable to improvement in payroll costs at
the Daily Grills and Pizzeria Uno restaurants plus the inclusion of the San Jose
Grill for the full 1999  periods;  Grill  restaurants  typically  having a lower
payroll percentage.  The increased  management fees also favorably affected this
expense percentage.

General and Administrative Expense

General and administrative expense increased 28.6% for the quarter and 28.9% for
the six month period as compared to the same periods in 1998. As a percentage of
total revenues,  general and administrative expense totaled 8.3% for the quarter
and 8.1% for the six month  period as  compared to 7.3% for the quarter and 7.4%
for  the  six  month  period  in  1998.   The  increase  in  total  general  and
administrative expense during 1999 was primarily attributable to added corporate
personnel, merit increases, related payroll costs and added recruiting costs for
the new managed restaurants.


                                        8

<PAGE>

Depreciation and Amortization

Depreciation and amortization expense increased by 2.0% for the quarter and 9.6%
for the six month period as compared to 1998. The small increase in depreciation
and  amortization  expense  was  primarily  attributable  to the  opening of two
restaurants  in 1998 offset by the write-off of fixed assets of two  restaurants
in the fourth quarter of 1998.

Unusual Charges and Cumulative Effect of Changes in Accounting Principle

During fiscal 1998, the Company elected early adoption of American  Institute of
Certified  Public  Accountants  ("AICPA")  Statement of Position  ("SOP")  98-5,
"Reporting on the Costs of Start-Up  Activities."  This new accounting  standard
requires entities to expense start-up and preopening costs as they are incurred.
Consistent  with the practice of most casual dining  restaurant  companies,  the
Company  previously  deferred  such  costs  and  then  wrote  them  off over the
twelve-month  period  following the opening of each  restaurant.  As a result of
this early adoption,  preopening costs for all periods  presented herein reflect
costs that were expensed as incurred.  The Company incurred  preopening costs of
$417,232  during the 1998  quarter  and  $492,730  during the 1998  year-to-date
period compared to none in the 1999 quarter and  year-to-date  period.  Although
the Company had three restaurant  openings during the 1999 six month period, all
preopening  costs  were  fully  funded  through  landlord  contributions,  joint
ventures, partnerships or a combination thereof.

Additionally,  the Company  reported a charge of $70,281 in the first quarter of
1998 and the 1998 year-to-date period attributable to the cumulative effect of a
change in accounting principle as a result of the early adoption of the SOP.

Interest Expense, Net

Interest expense,  net,  increased by 144% during both the quarter and six month
periods  compared to the same periods in 1998. The increase in interest  expense
was primarily attributable to increased borrowing during 1998 for the opening of
the San Jose Grill and the Tyson's, Virginia, Daily Grill.

Minority Interest

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

The change in minority  interest for both the quarter and six month  periods was
primarily attributable to the increase in revenues from the San Jose Grill which
was open for the full 1999 periods.









                                        9

<PAGE>

Preferred Stock Dividends

The Company  reported  accrued or paid  dividends on preferred  stock of $12,500
during the  quarter and  $25,000  for the six month  period  compared to $12,222
during  the  quarter  and  $34,550   during  the  six  month   period  in  1998.
Additionally,  in accordance  with the position of the  Securities  and Exchange
Commission  relating to accounting for Preferred Stock which is convertible into
common  stock at a discount  from the  market  price of the  common  stock,  the
Company  reported a "deemed  dividend"  of $40,744  during the 1998  quarter and
$82,877 during the 1998  year-to-date  period.  The Company  reported no similar
"deemed dividend" in 1999. The "deemed  dividend," which relates to the issuance
of  convertible  preferred  stock  during  1997,  is a  non-cash,  non-recurring
accounting entry which,  along with the accrued dividends on preferred stock, is
a deduction  from net income in calculating  income (loss)  applicable to common
stock.

Material Changes in Financial Condition, Liquidity and Capital Resources

At June 27, 1999 the Company had negative  working capital of $2.4 million and a
cash  balance of $0.5  million  compared  to  negative  working  capital of $2.3
million and a cash balance of $0.4 million at December 27, 1998.  The negligible
change in working capital was  attributable  to the operating  profit during the
period offset by a significant reduction in debt.

The  Company's  need  for  capital  resources  has  resulted  from,  and for the
foreseeable  future is  expected to relate  primarily  to, the  construction  of
restaurants.  Historically,  the  Company has funded its  day-to-day  operations
through its operating  cash flow,  while funding growth through a combination of
bank borrowing,  loans from  stockholders/officers,  the sale of Debentures, the
sale of Preferred Stock, the issuance of warrants,  loans and tenant  allowances
from certain of its  landlords  and,  beginning in 1998,  through  joint venture
arrangements.  At June 27, 1999, the Company had existing bank borrowing of $1.9
million, a loan from a San Jose Grill L.L.C. member of $0.6 million, an SBA loan
of $0.1 million,  loans from  stockholders/officers  of $0.6 million,  equipment
loans of $0.7 million and loans/advances from a landlord of $0.1 million.

As of June 27,  1999,  the Company had opened three Daily Grill  restaurants  in
1999, all of which are hotel-based managed facilities.  In addition, the Company
opened a non-hotel based Daily Grill  restaurant on July 9, 1999,  under a joint
venture  agreement.  Finally,  the  Company  expects  to open a  majority  owned
hotel-based Grill restaurant in early 2000. Management anticipates that new non-
hotel  based  restaurants  will cost  between  $1  million  and $2  million  per
restaurant to build and open  depending  upon the location and available  tenant
allowances.  Hotel based restaurants may involve remodeling existing facilities,
substantial  capital  contributions  from the hotel  operators and other factors
which will  cause the cost to the  Company of  opening  such  restaurants  to be
substantially  less than the Company's  cost to build and open  non-hotel  based
restaurants.

The Company may enter into  investment/loan  arrangements in the future on terms
similar to the San Jose Fairmont Grill and Chicago Westin Grill  arrangements to
provide for the funding of selected  restaurants.  Management  believes that the
Company  has  adequate  resources  on hand and  operating  cash flow to  sustain
operations for at least the following 12 months. In order to fund the opening of
additional  restaurants,  the  Company  will  require,  and  intends  to  raise,
additional capital through  additional bank borrowings,  the issuance of debt or
equity securities, or the formation of additional investment/loan  arrangements,
or a  combination  thereof.  The Company  presently has no  commitments  in that
regard.



                                       10

<PAGE>

Future Accounting Requirements

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

Certain Factors Affecting Future Operating Results

In addition to the opening of new restaurants  during 1999, as described  above,
and the various factors  described in the Company's Annual Report on Form 10-KSB
for the year ended  December 27, 1998,  the  following  developments  during the
first half of this year may impact future operating results.

The Company's  operations  during 1999 will reflect the opening  during the last
two quarters of a 50% owned  restaurant  in Universal  Studios,  California.  In
addition,  pursuant to the Company's hotel restaurant management agreement,  the
Company opened three  hotel-based  Daily Grill restaurants in the Spring of 1999
which had no material impact on operating results during the first quarter,  and
is scheduled to open a majority  owned  hotel-based  Grill  restaurant  in early
2000.

The Company has dropped its efforts to sell its Pizza Restaurants at the current
time.

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.

Year 2000 Issue

The Company recognizes the need to ensure that its operations,  as well as those
of third parties with whom the Company conducts business,  will not be adversely
impacted by Year 2000  software  failures.  Software  failures due to processing
errors  potentially  arising  from  calculations  using the year 2000 date are a
known  risk.  The  Company  is  addressing  this  risk to the  availability  and
integrity  of  financial  systems and the  reliability  of  operational  systems
through  a  combination  of  actions  including  the  implementation  of  a  new
financial, payroll, human resources software package that is Year 2000 compliant
and new hardware in both corporate headquarters and restaurants.

The corporate  network of the Company's  headquarters has been replaced with new
hardware  with  a  Windows  NT  software  package.  The  Company  ordered  a new
accounting  system  software  package  which  is Year  2000  compliant.  The new
accounting system was implemented in May of 1999.

Each new restaurant has had new year 2000  compliant  software  installed with a
new in restaurant point of sale and back office computer system.




                                       11

<PAGE>

The Company is evaluating the software  currently  being utilized in its 6 older
restaurants.  While we have received assurance from the software's supplier that
such software is year 2000 compliant,  we are  investigating  new more efficient
software to replace the older  software and expect a decision  before the end of
1999.

The Company has incurred  approximately  $40,000 for the new corporate  hardware
and $60,000 for new corporate software.

New  restaurant  computer  systems and software cost  approximately  $60,000 per
restaurant.  This is however a part of the initial capital  contribution for new
restaurants.

Regarding  the Year 2000  issue,  the  greatest  risk to the Company is that the
systems  placed in service by the Company  itself and/or its vendors will not be
fully  operational by the end of calendar year 1999. This could adversely impact
the day to day operations of the Company.  However,  it is the Company's  belief
that all of its systems will be in full operation in adequate time to ensure the
Company is fully operational in the third quarter of 1999. Beginning in calendar
year 1999, if any current vendors are not Year 2000 compliant,  the Company will
identify alternative vendors who are Year 2000 compliant.  As of August 1, 1999,
the Company had surveyed  more than half of its vendors and received  assurances
that they are currently,  or are taking the necessary steps to become, Year 2000
compliant. The Company presently expects to have completed its survey of vendors
by the end of the third quarter of 1999, or early in the fourth  quarter of 1999
at which time arrangements will be made to secure alternative  vendors which are
Year 2000  compliant  for current  vendors who are not, at that time,  Year 2000
compliant  Should any part of the  implementation  by the Company or its vendors
not  function as  anticipated,  the Company  believes  that it has ample time to
develop  contingency  plans to ensure Company  operations will not be materially
affected.

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 $2,100,000  revolving  credit and term loan
facility  (the  "Credit  Facility").  Borrowings  outstanding  under the  Credit
Facility  totaled  $1,875,000  at June 27,  1999.  Borrowings  under the  Credit
Facility bear interest at the lender's reference rate plus 0.25%. A hypothetical
1%  interest  rate  change  would not have a  material  impact on the  Company's
results of operations.


















                                       12

<PAGE>

                           PART II - OTHER INFORMATION

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

(a)  On June 17, 1999, an annual meeting of shareholders of Grill Concepts, Inc.
     was held.

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

Robert Wechsler     14,388,674     For  205,001   Against   14,091    Abstain
Michael Weinstock   14,593,675     For        0   Against   14,091    Abstain
Richard Shapiro     14,593,675     For        0   Against   14,091    Abstain
Charles Frank       14,357,675     For  200,000   Against   20,091    Abstain
Glenn Golenberg     14,592,325     For    1,350   Against   14,091    Abstain
Peter Balas         14,392,675     For  201,000   Against   14,091    Abstain
Robert Spivak       14,593,675     For        0   Against   14,091    Abstain

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

     (i)  Approval of a proposal to  authorize  the board of  directors to carry
          out a reverse stock split, if necessary to assure continued listing on
          Nasdaq (14,209,466 For, 377,761 Against, 20,539 Abstain)

     (ii) Ratification  of  appointment  of  PricewaterhouseCoopers  LLP  as the
          Company's independent certifying  accountants  (14,499,412 For, 17,598
          Against, 90,756 Abstain)

Item 5. Other Information

     On August 9, 1999, the Company effected a 1-for-4 reverse stock split.

Item 6. Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibits        Description
     --------        -----------

        3            Certificate of Amendment to Certificate of Incorporation
       27            Financial Data Schedule

(b)      Reports on Form 8-K

         None









                                       13

<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.


Dated: August 9, 1999                    By: /s/ Robert Spivak
                                            ----------------------------------
                                             Robert Spivak, President
                                             and Chief Executive Officer



Dated: August 9, 1999                    By: /s/ Lawrence Byer
                                            ----------------------------------
                                             Lawrence Byer, Controller and
                                             Principal Accounting Officer




                                       14

<PAGE>