SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark  One)

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

                For the quarterly period ended September 25, 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]

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

As  of  November  2,  2005,  5,726,495 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  -
       September  25,  2005  and  December  26,  2004  (unaudited)            2

     Condensed  Consolidated  Statements  of  Operations  -
       For  the  three  months  and  nine  months  ended  September
       25,  2005  and  September  26,  2004  (restated)  (unaudited)          4

     Condensed  Consolidated  Statements  of  Cash  Flows  -
       For  the  nine  months  ended  September  25,  2005  and
       September  26,  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         32

Item  4.  Controls  and  Procedures                                          32

PART  II  -  OTHER  INFORMATION

Item  5.  Other  Information                                                 33

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


                                           September 25, December 26,
                                               2005         2004
                                            -----------  -----------
<S>                                            <C>          <C>
Current assets:
Cash and cash equivalents                   $ 1,659,000  $ 1,407,000
Inventories                                     642,000      620,000
Receivables, net of reserve ($203,000 in
    2005 and $143,000 in 2004)                  771,000      836,000
Reimbursement receivables from
    managed outlets                             782,000      928,000
Prepaid expenses and other current assets       418,000    2,372,000
                                            -----------  -----------

  Total current assets                        4,272,000    6,163,000

Furniture, equipment, & improvements, net    13,992,000   11,864,000

Goodwill, net                                   205,000      205,000
Restricted cash                               1,042,000      882,000
Note receivable                                  90,000      101,000
Liquor licenses                                 421,000      350,000
Other assets                                    234,000      184,000
                                            -----------  -----------
  Total assets                              $20,256,000  $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

                                                        September 25,  December 26,
                                                             2005          2004
                                                          -----------  ------------
<S>                                                           <C>           <C>
Current liabilities:
   Accounts payable                                       $ 1,184,000   $ 1,988,000
   Accrued expenses                                         3,185,000     2,548,000
   Accrued managed outlet operating expenses                  782,000       928,000
   Current portion of long term debt                           63,000       196,000
   Current portion notes payable - related parties            308,000       294,000
                                                          ------------  ------------
     Total current liabilities                              5,522,000     5,954,000

Long-term debt                                                216,000       148,000
Notes payable - related parties                               711,000       829,000
Other long-term liabilities                                 7,681,000     8,054,000
                                                          ------------  ------------
     Total liabilities                                     14,130,000    14,985,000

Minority interest                                           1,644,000       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, 5,726,495 shares
     issued and outstanding in 2005, 5,650,146 shares
     issued and outstanding in 2004                                 -             -
Additional paid-in capital                                 13,682,000    13,649,000
Accumulated deficit                                        (9,200,000)   (9,819,000)
                                                          ------------  ------------
      Total stockholders' equity                            4,482,000     3,830,000
                                                          ------------  ------------
       Total liabilities, minority interest and
        stockholders' equity                              $20,256,000   $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                 Nine  Months  Ended
                                            ---------------------------         ---------------------------
                                          September  25,   September  26,     September  25,    September  26,
                                          --------------   --------------     --------------    --------------
                                              2005              2004               2005               2004
                                           ---------         ---------           ---------          ---------
                                                             (restated)                             (restated)
<S>                                           <C>               <C>                <C>                 <C>
Revenues:
  Sales                                     $13,298,000      $11,721,000         $40,102,000      $36,915,000
  Cost reimbursements                         1,710,000        2,615,000          10,264,000        8,708,000
  Management and license fees                   402,000          308,000           1,127,000          910,000
                                          --------------   --------------     --------------    --------------
    Total revenues                           15,410,000       14,644,000          51,493,000       46,533,000

Operating expenses:
  Cost of sales                               3,743,000        3,367,000          11,295,000       10,746,000
  Restaurant operating expenses               8,256,000        7,342,000          24,004,000       22,641,000
  Reimbursed costs                            1,710,000        2,615,000          10,264,000        8,708,000
  General and administrative                  1,147,000        1,081,000           3,417,000        3,302,000
  Depreciation and amortization                 660,000          484,000           1,603,000        1,448,000
  Pre-opening costs                              11,000                -             255,000          148,000
                                          --------------   --------------     --------------    --------------
  Total operating expenses                   15,527,000       14,889,000          50,838,000       46,993,000
                                          --------------   --------------     --------------    --------------

Income (loss) from operations                  (117,000)        (245,000)            655,000         (460,000)
Interest expense, net                           (43,000)         (59,000)           (123,000)        (191,000)
                                          --------------   --------------     --------------    --------------

Income (loss) before provision for
income taxes and minority interest             (160,000)        (304,000)            532,000         (651,000)

Provision for income taxes                      (68,000)          (6,000)           (277,000)         (34,000)
Minority interest in loss of subsidiaries        40,000          132,000             364,000          493,000
                                          --------------   --------------     --------------    --------------

Net income (loss)                              (188,000)        (178,000)            619,000         (192,000)
Preferred dividends accrued                     (13,000)         (13,000)            (38,000)         (38,000)
                                          --------------   --------------     --------------    --------------

Net income (loss) applicable to
  common stock                              $  (201,000)     $  (191,000)        $   581,000      $  (230,000)
                                          ==============   ==============     ===============   ==============

Net income (loss) per share applicable
  to common stock:
     Basic net income (loss)                $     (0.04)     $     (0.03)        $      0.10      $     (0.04)
                                          ==============   ==============     ===============   ==============

     Diluted net income (loss)              $     (0.04)     $     (0.03)        $      0.09      $     (0.04)
                                          ==============   ==============     ===============   ==============

Weighted average shares outstanding:
     Basic                                    5,652,230        5,647,707           5,679,752        5,594,672
                                          ==============   ==============     ===============   ==============
     Diluted                                  5,652,230        5,647,707           6,217,285        5,594,672
                                          ==============   ==============     ===============   ==============
</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)


                                                           Nine  Months  Ended
                                                          ----------------------
                                                       September 25,  September 26,
                                                            2005          2004
                                                        ------------  ------------
                                                                      (restated)
<S>                                                         <C>           <C>
Cash flows from operating activities:
  Net income (loss)                                     $   619,000   $  (192,000)
  Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                         1,603,000     1,448,000
    Stock based compensation                                      -       (84,000)
    Provision for doubtful accounts                          60,000         8,000
    Amortized deferred rent and lease incentives           (484,000)     (127,000)
    Gain on sale of assets                                   (5,000)       (3,000)
    Minority interest in loss of subsidiaries              (364,000)     (493,000)

Changes in operating assets and liabilities:
    Inventories                                             (22,000)       15,000
    Receivables                                               5,000        90,000
    Reimbursable costs receivable                           146,000        51,000
    Prepaid expenses and other current assets               103,000       (32,000)
    Tenant improvement allowances                         1,962,000     1,049,000
    Other assets                                            (65,000)       50,000
    Accounts payable                                       (804,000)      597,000
    Accrued expenses                                        619,000      (438,000)
    Reimburseable costs payable                            (146,000)      (51,000)
                                                        ------------  ------------
Net cash provided by operating activities                 3,227,000     1,888,000
                                                        ------------  ------------

Cash flows from investing activities:
    Proceeds from disposal of assets                          5,000         5,000
    Restricted cash                                        (160,000)      (60,000)
    Purchase of liquor license                              (71,000)       (5,000)
    Purchase of furniture, equipment and improvements    (3,716,000)   (1,774,000)
                                                        ------------  ------------
Net cash used in investing activities                    (3,942,000)   (1,834,000)
                                                        ------------  ------------

Cash flows from financing activities:
    Capital Contributions from minority interest
      members in LLCs                                     1,274,000        35,000
    Return of capital and profits to minority shareholder  (186,000)     (147,000)
    Collections on note receivable                           15,000        15,000
    Proceeds from equipment financing                       118,000             -
    Proceeds from exercise of stock options and warrants     33,000             -
    Payments on notes payable - related parties            (104,000)     (159,000)
    Payments on long-term debt                             (183,000)     (198,000)
                                                        ------------  ------------
Net cash provided by (used in) financing activities         967,000      (454,000)
                                                        ------------  ------------

Net increase (decrease) in cash and cash equivalents        252,000      (400,000)
Cash and cash equivalents, beginning of period            1,407,000     1,496.000
                                                        ------------  ------------
Cash and cash equivalents, end of period                $ 1,659,000   $ 1,096,000
                                                        ============  ============

Supplemental cash flow information:
  Cash paid during the period for:
    Interest                                            $   141,000   $   107,000
    Income taxes                                            263,000       119,000
</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 our 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

We  began  a  review of our 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, we revised our accounting for
leases  in 2004 and restated our historical financial statements as of September
26, 2004 to correct for these errors in our lease accounting.

                                        6
<PAGE>

Historically, we 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, we 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  we  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 $6,000 and $3,000 for the nine months
ended September 26, 2004.

In  closing  the  2004 books and records, we reviewed the estimated useful lives
that  we  were  using to amortize our leasehold improvements. In the case of six
restaurants,  it  was  found  that  the  incorrect  lives had been used. We have
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 $91,000 for the three and
nine months ended September 26, 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 for the year ended December 26, 2004, we allocate
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 $143,000, respectively for
the  three  and  nine  months  ended  September  26,  2004.

During  fourth  quarter  of 2004, we eliminated amounts that had previously been
recorded  as  restaurant  sales  revenue  arising  from  complimentary meals and
promotional  activities.  Our  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, we
have  eliminated all amounts for complimentary meals and promotional activities.
As  a  result  of  these adjustments, revenues were decreased by $448,000 in the
third  quarter  2004,  restaurant  operating  expenses decreased by $406,000 and
general  and  administrative expenses decreased by $42,000.  The adjustments for
the  full  nine month period ended September 26, 2004 was a decrease in revenues
of  $1,410,000,  a decrease in restaurant operating expenses of $1,281,000 and a
decrease  in general and administrative expenses of $129,000.  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 September 26, 2004 are summarized as
follows.

                                        7
<PAGE>

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

<TABLE>
<CAPTION>
                                                         SEPTEMBER 26, 2004
                                                THREE MONTHS              NINE MONTHS
                                       AS PREVIOUSLY   RESTATED   AS PREVIOUSLY   RESTATED
                                          REPORTED                  REPORTED
<S>                                         <C>          <C>          <C>           <C>
Sales                                    12,169,000   11,721,000   38,325,000   36,915,000
Total Revenue                            15,092,000   14,644,000   47,943,000   46,533,000
Restaurant operating expenses             7,752,000    7,344,000   23,928,000   22,641,000
General & administrative                  1,124,000    1,081,000    3,434,000    3,302,000
Depreciation & amortization                 454,000      484,000    1,357,000    1,448,000
Total operating expenses                 15,310,000(1)14,889,000   48,321,000   46,993,000
Loss from operations                       (218,000)    (245,000)    (378,000)    (460,000)
Loss before taxes                          (277,000)    (304,000)    (569,000)    (651,000)
Loss before minority interest              (283,000)    (310,000)    (603,000)    (685,000)
Minority interest                            84,000      132,000      350,000      493,000
Net loss                                   (199,000)    (178,000)    (253,000)    (192,000)
Net loss applicable to common stock        (212,000)    (191,000)    (291,000)    (230,000)
Net loss per share applicable to common
stock:
   Basic                                     ($0.04)      ($0.03)      ($0.05)      ($0.04)
   Diluted                                   ($0.04)      ($0.03)      ($0.05)      ($0.04)
</TABLE>

(1)  Includes  cost  of  sales  amounts  that  were  not  included in the "Total
     operating expenses" subtotal in prior financial statements.

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

<TABLE>
<CAPTION>
                                                                      SEPTEMBER 26, 2004
                                                          AS PREVIOUSLY REPORTED    RESTATED
<S>                                                    <C>                      <C>
Cash flows from operating activities
  Net loss                                                        (253,000)         (192,000)
  Depreciation and amortization                                  1,357,000         1,448,000
  Minority interest in net loss of subsidiaries                   (350,000)         (493,000)
  Tenant improvement allowances                                          -         1,049,000
  Other long term liabilities                                     (118,000)         (127,000)
  Net cash provided by operating activities                        839,000         1,888,000

  Tenant improvement allowances                                  1,049,000                 -
  Net cash provided by (used in) financing activities              595,000          (454,000)
</TABLE>


RECLASSIFICATIONS

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

                                        8
<PAGE>

2.     PRO-FORMA STOCK-BASED COMPENSATION

We account 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 comply 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 our 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 our 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.  We  account  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, our 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 our 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,  our Compensation Committee, as administrators of our stock
option  plan,  resolved  that  the cashless exercise feature in our stock option
plan  will  not  be  permitted, and a notification was subsequently given to all
employees  on  July  30,  2004.  Effective  with  this date, we reverted back to
accounting for our options under the fixed accounting treatment.

We  have  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
nine-month  period  ended September 25, 2005 there were 117,250 options granted,
11,200  options  exercised  and 64,050 options cancelled. Pro forma compensation
expense  for  our  stock  option plans determined based on the fair value at the
grant date for awards is as follows:

                                        9
<PAGE>

<TABLE> <CAPTION>
                                 Three Months               Nine Months
                                     2005         2004         2005        2004
                                     ----         ----         ----        ----
                                               (restated)               (restated)
<S>                                  <C>          <C>           <C>         <C>
Net income (loss), as reported    $ (188,000)  $ (178,000)  $ 619,000   $(192,000)
Add: stock compensation expense
   recorded, net of taxes                  -     (155,000)          -     (84,000)
Deduct: stock compensation
expense under fair value method,
net of taxes                        (125,000)     (71,000)   (201,000)   (144,000)
                                  -----------  -----------  ----------  ----------
Net income (loss), pro forma      $ (313,000)  $ (404,000)  $ 418,000   $(420,000)
                                  ===========  ===========  ==========  ==========
Net income (loss) per share, as
reported:
    Basic                         $    (0.04)  $    (0.03)  $    0.10   $   (0.04)
    Diluted                       $    (0.04)  $    (0.03)  $    0.09   $   (0.04)
Net income (loss) per share, pro
forma:
    Basic                         $    (0.06)  $    (0.07)  $    0.07   $   (0.08)
    Diluted                       $    (0.06)  $    (0.07)  $    0.06   $   (0.08)
</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  we  have  access  to  the  space and begin to make improvements in
preparation  for  intended  use. We expense 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.

Prepaid expenses and other current assets at September 25, 2005 and December 26,
2004 were comprised of:

<TABLE>
<CAPTION>
                                  2005       2004
                                --------  ----------
<S>                                <C>       <C>
Lease incentive receivables     $      -  $1,851,000
Prepaid expenses, other          418,000     521,000
                                --------  ----------
Total prepaid assets and other
current assets                  $418,000  $2,372,000
                                ========  ==========
</TABLE>

                                       10
<PAGE>

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%.

We are 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 portion of the credit facility has
been extended and has a termination date of August 2006.

6.     OTHER LONG-TERM LIABILITIES

In  connection  with  certain  of  our leases, the landlord has provided us 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,  we  recognize  a liability for deferred rent where lease payments
are lower than rental expense recognized on a straight-line basis.

Other  Long-Term  Liabilities  at  September 25, 2005 and December 26, 2004 were
comprised of:

<TABLE>
<CAPTION>
                                      2005        2004
                                   ----------  ----------
<S>                                    <C>         <C>
Lease Incentives                   $5,380,000  $5,653,000
Deferred Rent                       2,301,000   2,401,000
                                   ----------  ----------
Total Other Long-Term Liabilities  $7,681,000  $8,054,000
                                   ==========  ==========
</TABLE>

7.     RECENT  ACCOUNTING  PRONOUNCEMENTS

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.

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

                                       11
<PAGE>

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  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  we  serve  as  manager and own 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  nine  months  ended September 25, 2005, (2) the unreturned
balance  of  the  capital  contributions  of  the  Members and/or the Company at
September  25, 2005, and (3) the accrued but unpaid preferred returns due to the
Members  and/or  the  Company  at  September  25,  2005:

                                       12
<PAGE>

     SAN JOSE GRILL LLC

Distributions of capital, preferred
return and profit during the nine
months ended September 25, 2005:     Members       $     186,000
                                                   =============
                                     Company       $     187,000
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============


     CHICAGO - GRILL ON THE ALLEY LLC

Distributions of capital and note
repayments during the nine months
ended September 25, 2005:            Members (a)   $     189,000
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $     948,000
                                                   =============
                                     Company       $           -
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============

                                       13
<PAGE>

     THE GRILL ON HOLLYWOOD LLC

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $   1,200,000
                                                   =============
                                     Company       $     250,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members (b)   $           -
                                                   =============
                                     Company       $           -
                                                   =============


     SOUTH BAY DAILY GRILL (CONTINENTAL PARK LLC)

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial and Additional
Capital Contributions at September
25, 2005:                            Members       $   1,100,000
                                                   =============
                                     Company       $     450,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members (b)   $           -
                                                   =============
                                     Company       $           -
                                                   =============

                                       14
<PAGE>

     UNIVERSAL CITYWALK DAILY GRILL

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial and Additional
Capital Contributions at September
25, 2005:                            Members       $   1,346,000
                                                   =============
                                     Company       $     246,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members (b)   $           -
                                                   =============
                                     Company       $           -
                                                   =============



     DOWNTOWN DAILY GRILL (612 FLOWER DAILY GRILL, LLC)

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $   1,145,000
                                                   =============
                                     Company       $     248,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members       $      43,000
                                                   =============
                                     Company       $      11,000
                                                   =============

(a)  Distribution  of  capital  and  note  repayments  as  of September 25, 2005
     includes  $128,000  of  capital and note repayments and $61,000 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 $708,000 and
     the  Company  would  have  an  accrued  preferred  return  of  $148,000. If
     preferred  returns  were  accrued  for the South Bay Daily Grill the member
     would  have  an  accrued preferred return of $318,000 and the Company would
     have  an  accrued  preferred  return of $123,000. If preferred returns were
     accrued  for  the  CityWalk  Partnership  the  Member would have an accrued
     preferred return of $500,000.

                                       15
<PAGE>

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  nine  and  three-month  periods  ended  September 25, 2005 and
September 26, 2004 follow:

<TABLE>
<CAPTION>
                   Nine months              2005                   2004
                                   Earnings     Shares      Earnings    Shares
                                                           (restated)
                                   ---------  -----------  ----------  ---------
<S>                                  <C>            <C>        <C>       <C>
Net income (loss)                  $619,000               $ (192,000)
Less: preferred stock dividend      (38,000)                 (38,000)
                                   ---------               ----------
Earnings (deficit) available for
common stockholders                 581,000    5,679,752    (230,000)  5,594,672
Dilutive securities:
   Stock options                          -      126,111           -           -
   Warrants                               -      411,422           -           -
                                   ---------  -----------  ----------  ---------
Dilutive earnings (deficit)
available to common stockholders   $581,000    6,217,285   $(230,000)  5,594,672
                                   =========  ===========  ==========  =========
</TABLE>

For  the nine months ended September 25, 2005, 324,625 options, 203,645 warrants
and 500 shares of convertible preferred stock were excluded from the calculation
because  they were anti-dilutive.  For the nine months ended September 26, 2004,
632,425  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 loss                        $(188,000)              $ (178,000)
Less: preferred stock dividend    (13,000)                 (13,000)
                                ----------               -----------
Deficit available for common
stockholders                     (201,000)   5,726,003    (191,000)  5,647,707
Dilutive securities:
   Stock options                        -            -           -           -
   Warrants                             -            -           -           -
                                ----------  -----------  ----------  ---------
Dilutive deficit available to
common stockholders             $(201,000)   5,726,003   $(191,000)  5,647,707
                                ==========  ===========  ==========  =========
</TABLE>

                                       16
<PAGE>

For  the  three  months  ended  September  25,  2005, 726,675 options, 1,359,896
warrants  and  500  shares of convertible preferred stock were excluded from the
calculation  because  they  were  anti-dilutive.  For  the  three  months  ended
September  26,  2004,  632,425  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 is waiting until the State Supreme Court hears the
cases  currently before the Court of Appeals related to the meal and rest breaks
before  scheduling  any  further  action in our case. 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 a settlement while discovery continues. We
have  accrued  legal  costs  up  to  our insurance deductible of $50,000 in this
matter.


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 our
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 our 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.  Our  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 our Annual Report on Form 10-K for
the  year  ended  December  26,  2004.

                                       17
<PAGE>

2004  RESTATEMENT  OF  FINANCIAL  STATEMENTS

We  began  a  review of our 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, we revised our accounting for
leases  in  2004  and restated our 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
nine  months  ended  September 26, 2004 have been restated from those originally
issued to reflect the change in lease accounting.

Historically, we 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, we 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  we  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 $6,000 and $3,000 for the nine months
ended September 26, 2004.

In  closing  the  2004 books and records, we reviewed the estimated useful lives
that  we  were  using to amortize our leasehold improvements. In the case of six
restaurants,  it  was  found  that  the  incorrect  lives had been used. We have
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 $91,000 for the three and
nine months ended September 26, 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 for the
year  ended  December  26,  2004,  we allocate 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  $143,000  for  the three and nine months ended September 26, 2004.

During  fourth  quarter  of 2004, we eliminated amounts that had previously been
recorded  as  restaurant  sales  revenue  arising  from  complimentary meals and
promotional  activities.  Our  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,  we  have  eliminated  all  amounts  for
complimentary  meals  and  promotional  activities.  As  a  result  of  these

                                       18
<PAGE>

adjustments,  revenue  and  expenses  were  decreased  by $448,000 for the third
quarter  2004,  restaurant  operating expenses decreased by $406,000 and general
and  administrative  expenses decreased by $42,000. The adjustments for the full
nine  month  period  ended  September  26,  2004  was  a decrease in revenues of
$1,410,000,  a  decrease  in  restaurant  operating expenses of $1,281,000 and a
decrease  in  general and administrative expenses of $129,000. 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 September 26, 2004 are summarized as
follows.

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

<TABLE>
<CAPTION>
                                                         SEPTEMBER 26, 2004
                                              THREE MONTHS                 NINE MONTHS
                                       AS PREVIOUSLY   RESTATED   AS PREVIOUSLY     RESTATED
                                          REPORTED                   REPORTED
<S>                                         <C>          <C>            <C>           <C>
Sales                                    12,169,000   11,721,000   38,325,000   36,915,000
Total Revenue                            15,092,000   14,644,000   47,943,000   46,533,000
Restaurant operating expenses             7,752,000    7,344,000   23,928,000   22,641,000
General & administrative                  1,124,000    1,081,000    3,434,000    3,302,000
Depreciation & amortization                 454,000      484,000    1,357,000    1,448,000
Total operating expenses                 15,310,000(1)14,889,000   48,321,000   46,993,000
Loss from operations                       (218,000)    (245,000)    (378,000)    (460,000)
Loss before taxes                          (277,000)    (304,000)    (569,000)    (651,000)
Loss before minority interest              (283,000)    (310,000)    (603,000)    (685,000)
Minority interest                            84,000      132,000      350,000      493,000
Net loss                                   (199,000)    (178,000)    (253,000)    (192,000)
Net loss applicable to common stock        (212,000)    (191,000)    (291,000)    (230,000)
Net loss per share applicable to common
stock:
   Basic                                     ($0.04)      ($0.03)      ($0.05)      ($0.04)
   Diluted                                   ($0.04)      ($0.03)      ($0.05)      ($0.04)

</TABLE>

(1)  Includes  cost  of  sales  amounts  that  were  not  included in the "Total
     operating expenses" subtotal in prior financial statements.

                                       19
<PAGE>

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

<TABLE>
<CAPTION>
                                                                    SEPTEMBER 26, 2004
                                                       AS PREVIOUSLY REPORTED    RESTATED
<S>                                                    <C>                      <C>
Cash flows from operating activities
  Net loss                                                     (253,000)        (192,000)
  Depreciation and amortization                               1,357,000        1,448,000
  Minority interest in net loss of subsidiaries                (350,000)        (493,000)
  Tenant improvement allowances                                       -        1,049,000
  Other long term liabilities                                  (118,000)        (127,000)
  Net cash provided by operating activities                     839,000        1,888,000

  Tenant improvement allowances                               1,049,000                -
  Net cash provided by (used in) financing activities           595,000         (454,000)
</TABLE>

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                     Three  Months  Ended              Nine  Months  Ended
                                                    ----------------------            -----------------------
                                                 September  25,  September 26,     September 25,  September  26,
                                                    2005            2004               2005            2004
                                                    ----            ----               ----            ----
                                                                  (restated)                        (restated)
<S>                                                 <C>             <C>                 <C>             <C>
Revenues:                                            %                %                  %               %
  Company restaurant sales                         86.3             80.0               77.9            79.3
  Reimbursed managed outlet
    operating expenses                             11.1             17.9               20.0            18.7
  Management and license fees                       2.6              2.1                2.1             2.0
                                                 --------        ---------          ---------         -------
     Total operating revenues                     100.0             100.0             100.0           100.0

  Cost of sales                                    24.3              23.0              22.0            23.1
  Restaurant operating expense                     53.6              50.2              46.6            48.7
  Reimbursed managed outlet
    operating expenses                             11.1              17.9              20.0            18.7
  General and administrative expense                7.4               7.4               6.6             7.1
  Depreciation and amortization                     4.3               3.3               3.1             3.1
  Pre-opening expenses                              0.1                 -               0.4             0.3
                                                 --------        ---------          ---------         -------
     Total operating expenses                     100.8             101.7              98.7           101.0
                                                 --------        ---------          ---------         -------

     Operating income (loss)                       (0.8)             (1.7)              1.3            (1.0)

Interest expense, net                              (0.2)             (0.4)             (0.3)           (0.4)
                                                 --------        ---------          ---------         -------

Income (loss) before provision for income
taxes, minority interest and equity in loss of
joint venture                                      (1.0)             (2.1)              1.0            (1.4)
Provision for income taxes                         (0.5)             (0.0)             (0.5)           (0.1)
Minority interest in net loss of subsidiaries       0.3               0.9               0.7             1.1
                                                 --------        ---------          ---------         -------

Net income (loss)                                  (1.2)             (1.2)              1.2            (0.4)
                                                 ========        =========          =========         ========
</TABLE>

                                       20
<PAGE>

The  following  table sets forth, for the periods indicated, information derived
from  our  consolidated  financial  statements  of  operations  expressed  as  a
percentage  of  total  restaurant  sales.

<TABLE>
<CAPTION>
                                                     Three  Months  Ended              Nine  Months  Ended
                                                    ----------------------            -----------------------
                                                 September  25,  September 26,     September 25,  September  26,
                                                    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                                      28.1           28.7                28.2           29.1
  Restaurant operating expenses                      62.1           62.6                59.9           61.3
</TABLE>

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>
                                                      Third Quarter      Year-to-date      Total open at
                                                        Openings           Openings        End of Quarter
                                                    ----------------    ---------------   ----------------
                                                    FY 2005  FY 2004   FY 2005   FY 2004  FY 2005   FY 2004
                                                   --------  --------  --------  -------  --------  -------
<S>                                                  <C>       <C>       <C>      <C>       <C>      <C>
Daily Grill restaurants:
    Company owned                                      (1)         -         1         1        12       11
    Managed and/or licensed                             -          -         -         -         8        7
Grill on the Alley restaurants:
    Company owned                                       -          -         -         -         4        4
Other restaurants
    Managed and/or licensed                             -         (1)        -        (1)        -        -
                                                   --------  --------  --------  -------  --------  -------
Total                                                  (1)        (1)        1         -        24       22
                                                   ========  ========  ========  =======  ========  =======
</TABLE>

                                       21
<PAGE>

<TABLE>
<CAPTION>
                                         Three Months Ended           Nine Months Ended
                                        ---------------------         -----------------
                                      September 25, September26,  September 25,  September 26,
                                          2005          2004          2005          2004
                                      ------------  ------------  ------------  ------------
<S>                                       <C>           <C>           <C>           <C>
Weighted average weekly sales
   per company owned restaurant:
     Daily Grill                      $    55,344   $    55,569   $    58,735   $    59,768
     Grill on the Alley                    81,969        72,571        81,207        73,389

Change in comparable restaurant (1):
     Daily Grill                              1.1%          3.7%          0.0%          5.1%
     Grill on the Alley                      13.0%          1.3%         10.7%          0.4%

Total sales:
     Daily Grill                      $ 9,036,000   $ 7,947,000   $27,434,000   $25,466,000
     Grill on the Alley                 4,262,000     3,774,000    12,668,000    11,449,000
                                      ------------  ------------  ------------  ------------

Total consolidated sales              $13,298,000   $11,721,000   $40,102,000   $36,915,000
                                      ============  ============  ============  ============
</TABLE>

(1)  When  computing  comparable  restaurant  sales,  restaurants  open  for  at
     least 12 months are compared from period to period.

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.

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

<TABLE>
<CAPTION>
                                         Three Months Ended           Nine Months Ended
                                        ---------------------         -----------------
                                      September 25, September26,  September 25,  September 26,
                                          2005          2004          2005          2004
                                      ------------  ------------  ------------  ------------
<S>                                       <C>           <C>           <C>           <C>
Managed Daily Grills                  $ 4,926,000   $  4,115,000  $ 14,039,000  $ 11,880,000
Licensed Daily Grills                   2,173,000      1,861,000     5,943,000     6,130,000
                                      ------------  ------------  ------------  ------------
                                      $ 7,099,000   $  5,976,000  $ 19,982,000  $ 18,010,000
                                      ============  ============  ============  ============
Management and license fees
      Percent of gross sales                 5.7%          5.2%          5.6%          5.1%
</TABLE>

                                       22
<PAGE>

MATERIAL  CHANGES  IN  RESULTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER  25, 2005 AS COMPARED TO THE THREE AND NINE MONTHS ENDED SEPTEMBER 26,
2004

Revenues.  For  the  2005  third  quarter total revenues increased 5.2% to $15.4
million  from  $14.6  million  for the 2004 third quarter and increased 10.7% to
$51.5  million  for the 2005 year-to-date period from $46.5 million for the 2004
year-to-date  period.  For  the  quarter,  total  revenues  consisted  of  sales
revenues  of  $13.3  million,  up  13.5% from $11.7 million in the 2004 quarter,
management  and  license  fee  of  $402,000,  up 30.5% from $308,000 in the 2004
quarter, and reimbursed managed outlet expenses of $1.7 million, down 34.6% from
$2.6  million  in the 2004 quarter.  For the year-to-date period, total revenues
consisted  of sales revenues of $40.1 million, up 8.6% from $36.9 million in the
2004  year-to-date  period,  management and license fees of $1,127,000, up 23.9%
from,  $910,000  in  the 2004 year-to-date period, and reimbursed managed outlet
expenses  of  $10.3 million, up 17.9% from $8.7 million in the 2004 year-to-date
period.

Sales  for  Daily  Grill restaurants increased by 13.7% from $7.9 million in the
2004 quarter to $9.0 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  ($0.9 million) and an increase in same store sales of 1.1% ($0.1 million)
for  restaurants  open  for  the entire 13 weeks in both 2004 and 2005 partially
offset  by  a  $0.5  million decrease due to the closure of the La Cienega Daily
Grill.

Sales  for  Daily Grill restaurants increased by 7.7% from $25.5 million for the
nine  months  in  2004 to $27.4 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 ($1.3 million) and the Downtown Daily
Grill  ($1.1  million)  partially  offset by the closure of the La Cienega Daily
Grill  ($0.5  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  1.7%  from $59,768 in 2004 to $58,735 in 2005.  Comparable restaurant
sales  at  the  Daily  Grill  restaurants  in 2005 reflected improved sales at a
number of restaurants offset by a decline in guests at two restaurants adversely
impacted  by  external  factors and renovation issues.  Our intent is to address
the  renovation issues in early 2006.  Same store sales were flat year over year
and  the decrease in average weekly sales was principally attributable to the La
Cienega  Daily  Grill  where  average  weekly  sales decreased 8.8% for the nine
months of 2005 compared to 2004 due to a decrease in guest counts leading up to,
and  resulting  from,  closure  of  the  restaurant  following expiration of the
restaurant's  lease.

Sales  for  Grill  restaurants  increased by 13.0% from $3.8 million in the 2004
quarter  to  $4.3  million in 2005.  Approximately two-thirds of the increase in
sales  revenues  for the Grill restaurants from 2004 to 2005 was attributable to
increased  guest  counts  and  one-third  to  improved  check  averages.

Sales  for Grill restaurants increased 10.7% from $11.4 million to $12.7 million
for  the  nine  month  period.  The  increase  in  sales  revenues for the Grill
restaurants  from  2004  to 2005 was attributable to improved guest counts (60%)
and check averages (40%). Weighted average weekly sales at the Grill restaurants
increased  10.7%  from  $73,389  in  2004  to  $81,207  in  2005.

                                       23
<PAGE>

Management  and  license  fee  revenues  were  attributable  to hotel restaurant
management  services  which accounted for $348,000 of management fees during the
2005  quarter as compared to $250,000 during the 2004 quarter and licensing fees
of  $54,000 during the 2005 quarter compared to $58,000 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  and  San  Francisco  Daily  Grills.

For  the  year-to-date  period,  management  and  license  fee  revenues  were
attributable  to  hotel  restaurant  management  services  which  accounted  for
$954,000  of  management  fees  during  the  2005 period as compared to $738,000
during  the 2004 period and licensing fees of $173,000 during the 2005 period as
compared  to  $172,000  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 the year-to-date period was attributable to the opening of the Long
Beach  Daily  Grill  in  November  2004  and  increased cost of goods at the San
Francisco  Daily  Grill  and  increased restaurant operating expenses at the San
Francisco,  Georgetown  and  Burbank  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  4.3%  to  $15.5  million  in the 2005 quarter (representing 100.8% of
revenues)  from $14.9 million in 2004 (representing 101.7% of revenues). For the
nine  months,  total  operating  expenses  increased  8.2%  to  $50.8  million
(representing 98.7% of revenues) from $47.0 million in 2004 (representing 101.0%
of revenues).

Cost  of Sales. While sales revenues increased by 13.5% ($1,577,000) in the 2005
quarter  and  8.6%  ($3,187,000)  for the nine months as compared to 2004, total
cost  of  sales  increased  by  11.2%,  or $376,000, for the quarter and 5.1% or
$549,000,  for  the nine months ended September 25, 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 ($410,000 for the quarter
and  $684,000  for the nine months). Cost of sales as a percentage of restaurant
sales  was  28.1%  for the quarter and 28.2% for the nine months ended September
25,  2005  as  compared  to  28.7%  for  the  third  quarter  and  29.1% 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 third quarter and nine
months of 2005.

Restaurant  operating  expenses.  Restaurant  operating  expenses  increased  by
$917,000, or 12.5%, for the quarter and $1,365,000, or 6.0%, for the nine months
as  compared  to  the  same  periods  in 2004. The dollar increase in restaurant
operating  expenses  for  the  quarter was primarily attributable to restaurants
opening in 2005 - the Santa Monica Daily Grill ($359,000) and the Downtown Daily
Grill  ($548,000). The dollar increase in operating expenses for the nine months
was  primarily  attributable  to  the  opening  of  the Santa Monica Daily Grill
($779,000)  and  the  Downtown  Daily  Grill  ($725,000).  Restaurant  operating
expenses,  as  a  percentage of restaurant sales, decreased in the third quarter
from  62.6%  in 2004 to 62.1% in 2005. For the nine months, the percentages were
61.3% in 2004 and 59.9% in 2005.

                                       24
<PAGE>

Reimbursed  Costs.  Reimbursed  costs  decreased 34.6% from $2.6 million to $1.7
million  for  the  quarter  and  increased  by  17.9% from $8.7 million to $10.3
million  in  2005  for  the  nine 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 sales at the San Francisco
Daily  Grill  and  increased restaurant operating expenses at the San Francisco,
Georgetown and Burbank Daily Grills due to improved sales.

General  and  Administrative.  General and administrative expense increased 6.1%
for  the quarter and 3.5% for the nine months as compared to the same periods in
2004.  As  a  percentage of revenues, general and administrative expense totaled
7.4%  for  the  quarter and 6.6% for the nine months as compared to 7.4% for the
quarter  and 7.1% for the nine months in 2004. The increase in total general and
administrative  expense  of  $66,000  for  the  2005  quarter  was  primarily
attributable  to accruing a management bonus, increases in professional services
and  provision  for  bad  debts  related to Portland management fees offset by a
decrease  in  office  expenses. The increase in total general and administrative
expense of $115,000 for the 2005 nine month period is attributable to accruing a
management team bonus, increases in wages and related benefits and provision for
bad debts related to Portland management fees offset by reduced travel costs and
office expenses.

Depreciation  and  Amortization. Depreciation and amortization expense increased
by  36.4%  for  the  quarter  and  10.7%  for  the nine months compared to 2004,
representing  4.0%  of  restaurant sales for the nine months of 2005 and 3.9% of
sales  in  2004.  The  increase in depreciation and amortization expense for the
nine  months  was  primarily  due to the abandonment of assets at the La Cienega
restaurant  which  closed  July 31, 2005 and the opening of the Santa Monica and
Downtown Daily Grills in 2005.

Pre-opening  Costs.  Pre-opening  costs  totaled  $11,000 in the 2005 quarter as
compared  to zero in the 2004 quarter and $255,000 in the 2005 nine 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 $16,000, or 27.1%,
during the quarter and $68,000, or 35.6%, during the nine months compared to the
same  periods  in  2004.  The  decrease  in  interest  expense  was  primarily
attributable  to  substantially  reduced  warrant  amortization  in  2005.

Minority  Interest.  We reported a minority interest in the loss of our majority
owned  subsidiaries  of  $40,000  during  the  2005 third quarter as compared to
$132,000  during  the 2004 quarter.  For the nine months, we reported a minority
interest  in the loss of majority owned subsidiaries of $364,000 during 2005 and
$493,000 during 2004.  The decrease in minority interest in loss for the quarter
and  nine  months was primarily attributable to having more of the losses of the
Hollywood  Grill  allocated to us offset by improved operations at the South Bay
Daily  Grill.

                                       25
<PAGE>

Provision  for  Income  Taxes.  The  income  tax  provision  for  2005 is due to
alternative  minimum tax and state taxes with only minor NOLs and large business
credits  to  offset  the  federal  tax.  In  2004 there were larger federal NOLs
resulting  in  a  tax  provision  which  consisted  of  state income taxes only.

Net  Income.  We  reported  net  loss  of $188,000 for the third quarter and net
income  of  $619,000  for  the  nine months of 2005 as compared to a net loss of
$178,000 for the third quarter and a net loss of $192,000 for the nine months in
2004.

MATERIAL  CHANGES  IN  FINANCIAL  CONDITION,  LIQUIDITY  AND  CAPITAL RESOURCES.

At September 25, 2005 we had negative working capital of $1.3 million and a cash
balance of $1.7 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 nine months ended September 25, 2005
totaled $3,227,000 compared to $1,888,000 during the nine months ended September
26,  2004.  The  increase in cash provided by operations primarily resulted from
increased  profitability  of  $811,000,  increased tenant improvement allowances
received  of  $913,000  and  by  changes  in  operating  assets and liabilities.

Net cash used in investing activities during the nine months ended September 25,
2005  totaled  $3,942,000  compared  to  $1,834,000 during the nine months ended
September  26,  2004. Cash used in investing activities related primarily to the
purchases  of furniture, fixtures and equipment for the Santa Monica Daily Grill
($1,275,000)  and  the  Downtown  Daily  Grill  ($2,060,000).

Net cash provided by financing activities during the nine months ended September
25,  2005  totaled  $967,000  compared  to $454,000 used in financing activities
during  the  nine  months  ended September 26, 2004.  Cash provided by financing
activities  during  the  current  year related to capital contributions from LLC
minority  members  ($1,274,000), equipment financing ($118,000), and exercise of
stock  option ($33,000) offset by reductions in debt ($287,000) and distribution
of  profits  to  the  minority  investor  in  San  Jose  Grill,  LLC ($186,000).

Financing  Facilities.  At  September  25,  2005, the Company had $150,000 owing
under  equipment lease financing transactions, a loan from a member of Chicago -
The  Grill  on the Alley, LLC of $0.9 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 $1,517,000 was received
during  the first nine months of 2005.  Construction of the Downtown Daily Grill
was  funded  through  a  $600,000  tenant improvement allowance, minority member
capital  contribution  of  $1,250,000  and the Company's capital contribution of
$251,000.  As  of  September  25,  2005,  $600,000  of  the  tenant  improvement
allowance  on  the  Downtown  Daily  Grill  has  been  received.  These  tenant
improvement 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 September 25, 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.

                                       26
<PAGE>

Operating Leases and Contractual Obligations. In September 2005, we entered into
a  lease  relating  to  a  restaurant  scheduled  to open in the summer of 2006.
Including  that  lease,  at September 25, 2005, we were obligated under eighteen
leases  covering the premises in which our Daily Grill and Grill Restaurants are
located,  or  will be 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 during the quarter
ended  September  25,  2005 as compared to those described in the Company's Form
10-K  for  the  year  ended  December  26,  2004.

On  August  8,  2005 the Compensation Committee of our Board approved entry into
change  of  control agreements with four executives.  Pursuant to the agreements
each  of  the executives would be entitled to payments in an amount equal to 1.5
times  their  annual  salary  in  the  event  of termination of their employment
following  a change in control of the Company.   The agreements were approved by
the  full  Board  at  their  September  21,  2005  meeting.

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 our 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  September  25, 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 nine
months  ended  September  25,  2005,  (2)  the unreturned balance of the capital
contributions  of  the Members and/or the Company at September 25, 2005, and the
accrued  but  unpaid  preferred returns due to the Members and/or the Company at
September  25,  2005:

                                       27
<PAGE>

     SAN JOSE GRILL LLC

Distributions of capital, preferred
return and profit during the nine
months ended September 25, 2005:     Members       $     186,000
                                                   =============
                                     Company       $     187,000
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============


     CHICAGO - GRILL ON THE ALLEY LLC

Distributions of capital and note
repayments during the nine months
ended September 25, 2005:            Members (a)   $     189,000
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $     948,000
                                                   =============
                                     Company       $           -
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============

                                       28
<PAGE>

     THE GRILL ON HOLLYWOOD LLC

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $   1,200,000
                                                   =============
                                     Company       $     250,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members (b)   $           -
                                                   =============
                                     Company       $           -
                                                   =============


     SOUTH BAY DAILY GRILL (CONTINENTAL PARK LLC)

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial and Additional
Capital Contributions at September
25, 2005:                            Members       $   1,100,000
                                                   =============
                                     Company       $     450,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members (b)   $           -
                                                   =============
                                     Company       $           -
                                                   =============

                                       29
<PAGE>

     UNIVERSAL CITYWALK DAILY GRILL

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial and Additional
Capital Contributions at September
25, 2005:                            Members       $   1,346,000
                                                   =============
                                     Company       $     246,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members (b)   $           -
                                                   =============
                                     Company       $           -
                                                   =============



     DOWNTOWN DAILY GRILL (612 FLOWER DAILY GRILL, LLC)

Distributions of capital during the
nine months ended September 25,
2005:                                Members       $           -
                                                   =============
                                     Company       $           -
                                                   =============
Unreturned Initial Capital
Contributions at September 25,
2005:                                Members       $   1,145,000
                                                   =============
                                     Company       $     248,000
                                                   =============
Accrued but unpaid Preferred
Returns at September 25, 2005:       Members       $      43,000
                                                   =============
                                     Company       $      11,000
                                                   =============

a)   Distribution  of  capital  and  note  repayments  as  of September 25, 2005
     includes  $128,000  of  capital and note repayments and $61,000 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 $708,000 and
     the  Company  would  have  an  accrued  preferred  return  of  $148,000. If
     preferred  returns  were  accrued  for the South Bay Daily Grill the Member
     would  have  an  accrued preferred return of $318,000 and the Company would
     have  a preferred return of $123,000. If preferred returns were accrued for
     the  CityWalk Partnership the Member would have an accrued preferred return
     of $500,000.

                                       30
<PAGE>

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations
are  based upon our financial statements, which have been prepared in accordance
with  accounting  principles generally accepted in the United States of America.
We  believe  certain  critical  accounting  policies affect our more significant
judgments  and estimates used in the preparation of our financial statements.  A
description  of  our  critical accounting policies is set forth in our Form 10-K
for  the  year  ended  December  26,  2004.  As  of,  and for the quarter ended,
September  25,  2005,  there  have  been  no  material changes or updates to our
critical  accounting  policies.


RECENTLY  ISSUED  ACCOUNTING  PRONOUNCEMENTS

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.

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 our  Annual Report on Form 10-K for the year ended December
26,  2004,  the  following  developments may impact future operating results and
financial  results.

In  September  2005, we signed a lease to open a wholly owned Grill on the Alley
restaurant  in  the  Galleria  shopping  center in Dallas, Texas.  We anticipate
beginning  the  build-out  in  January  of 2006 with completion by the summer of
2006.  Construction  of  the  restaurant  will  be  financed primarily through a
tenant  improvement  allowance  of  $1,965,700.

                                       31
<PAGE>

There  can be no assurance that we will be successful in opening new restaurants
in  accordance  with  our  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 our
hotel  restaurant  management  services.

ITEM  3.       QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

We  are  exposed  to  market risk from changes in interest rates on funded debt.
This  exposure  relates  to  our  non-revolving  credit  facility  (the  "Credit
Facility").  There  was  $150,000  of borrowings outstanding under the equipment
financing  portion  of  the Credit Facility at September 25, 2005. There were no
borrowings  under  the  line  of  credit  portion  of the Credit Facility, which
terminates  in  August 2006 and bears 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

We  maintain 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 our 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 our management, including our 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.

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.

                                       32
<PAGE>

                          PART II - OTHER INFORMATION

ITEM  5.  OTHER  INFORMATION

On  September  21,  2005,  the Company entered into Change of Control Agreements
with  four  executives,  Michael  Weinstock,  Philip  Gay,  John  Sola and Louie
Feinstein.  Pursuant  to the agreements each of the executives would be entitled
to  payments in an amount equal to 1.5 times their annual salary in the event of
termination  of  their  employment following a change in control of the Company.

ITEM 6.  EXHIBITS

     Exhibit No.                    Description
     -----------                    -----------

10.1               Change of Control Severence Agreement Form
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           November  8,  2005
-----------------        Executive  Officer
Robert  Spivak


/s/ Philip Gay           Executive Vice President and    November  8,  2005
-----------------        Chief Financial  Officer
Philip  Gay

                                       34
<PAGE>