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 26,1999

                                       OR

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

               For the transition period from _______ to _______.

                           Commission File No. 0-23226

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

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

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

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


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

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

     As of November 5, 1999, 4,003,888 shares of Common Stock of the issuer were
outstanding.
<PAGE>

                              GRILL CONCEPTS, INC.

                                      INDEX



                                                                           Page
                                                                          Number
                                                                         -------

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Condensed Balance Sheets -
           September 26, 1999 and December 27, 1998.........................  1

         Consolidated Condensed Statements of Operations -
           For the three months and nine months ended September
           26, 1999 and September 27, 1998..................................  3

         Consolidated Condensed Statements of Cash Flows -
           For the nine months ended September 26, 1999 and
           September 27, 1998...............................................  4

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

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk......... 13

PART II - OTHER INFORMATION

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

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

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS


                      GRILL CONCEPTS, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS


                                     ASSETS


                                                 September 26,      December 27,
                                                     1999               1998
                                                  -----------       -----------
                                                  (unaudited)
Current assets:
     Cash and cash equivalents                    $ 249,215         $ 438,184
     Inventories                                     476,634          385,131
     Receivables                                     893,545          356,358
     Prepaid expenses                                876,515          884,602
                                                 -----------      ------------
       Total current assets                        2,495,909        2,064,275
                                                 -----------      ------------
Property and equipment, at cost                   13,623,892       12,855,412
     Less:  accumulated depreciation              (5,422,313)      (4,513,075)
                                                 -----------      ------------
       Property and equipment, net                 8,201,579        8,342,337

Goodwill, net                                        223,295          229,441

Liquor licenses                                      645,539          641,603

Other assets                                          54,970          109,305
                                                 -----------      ------------
       Total assets                            $  11,621,292      $11,386,961
                                                 ===========      ============

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


                                       1
<PAGE>


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

             LIABILITIES, MINORITY INTEREST AND STOCKHOLDERS' EQUITY

<TABLE>

                                                                   September 26,     December 27,
                                                                       1999             1998
                                                                   -----------      ------------
<S>                                                               <C>               <C>

Current liabilities:                                               (unaudited)
     Bank line of credit                                        $    825,000        $   590,026
     Accounts payable                                              1,855,868          1,648,465
     Accrued expenses                                              1,440,406          1,045,832
     Current portion of long term debt                               511,672            455,470
     Note payable - related party                                    594,500            624,500
       Total current liabilities                                   5,227,446          4,364,293

Long-term debt                                                     1,789,226          2,001,760
Notes payable - related parties                                      352,529            926,038
                                                                  -----------      ------------
       Total liabilities                                           7,369,201          7,292,091

Minority interest                                                    224,574            227,957

Stockholders' equity:
  Series A, 10% Convertible Preferred Stock,
     $.001 par value; 1,000,000 shares authorized,
     none issued and outstanding in 1999 and 1998                         --                 --
  Series B, 8% Convertible Preferred Stock,
     $.001 par value; 1,000,000 shares authorized,
     none issued and outstanding in 1999 and 1998                         --                 --
  Series I, Convertible Preferred Stock, $.001 par
     value; 1,000,000 shares authorized, 1,000 shares
     issued and outstanding in 1999 and 1998                               1                  1
  Series II, 10% Convertible Preferred Stock, $.001 par
     value; 1,000,000 shares, authorized, 500 shares
     issued and outstanding in 1999 and 1998                               1                  1
  Common stock, $.00004 par value; 7,500,000 shares
     authorized, 4,003,888 shares issued and outstanding
     in 1999 and 1998                                                    160                160
Additional paid-in capital                                        11,071,062         11,071,062
Accumulated deficit                                               (7,043,707)        (7,204,311)
                                                                  -----------      ------------
     Stockholders' equity                                          4,027,517          3,866,913
                                                                  -----------      ------------
       Total liabilities, minority interest
          and stockholders' equity                               $11,621,292        $11,386,961
                                                                  ===========      ============
</TABLE>

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

                                       2
<PAGE>

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

<TABLE>

                                                     Three Months Ended                Nine Months Ended
                                              September 26,   September 27,    September 26,  September 27,
                                                 1999                 1998             1999            1998
                                              --------------  --------------   -------------   -------------
<S>                                             <C>            <C>              <C>             <C>

Revenues:
     Sales                                      $8,962,886       $8,354,440      $28,582,040      $25,094,244
     Management and license fees                   138,811          287,000          375,122          358,715
                                                ----------       ----------      -----------      -----------
        Total revenues                           9,101,697        8,641,440       28,957,162       25,452,959
Cost of sales                                    2,551,057        2,424,390        7,981,154        6,950,367
                                                ----------       ----------      -----------      -----------
Gross profit                                     6,550,640        6,217,050       20,976,008       18,502,592
                                                ----------       ----------      -----------      -----------

Costs and expenses:
     Restaurant operating expenses               5,431,627        5,302,029       17,072,853       15,515,032
     General and administrative                    762,552          654,037        2,364,454        1,896,636
     Depreciation and amortization                 348,251          272,545          919,116          793,185
     Preopening costs                                   -           185,245                -          677,975
                                                ----------       ----------      -----------      -----------
       Total operating expenses                  6,542,430        6,413,856       20,356,423       18,882,828
                                                ----------       ----------      -----------      -----------

Income (loss) from operations                        8,210       (  196,806)         619,585         (380,236)
Interest expense, net                             (169,871)         (53,255)        (376,985)        (138,015)
                                                ----------       ----------      -----------      -----------
Income (loss) before provision for
  income taxes, equity in loss
  of joint venture and minority interest          (161,661)        (250,061)         242,600         (518,251)
Provision for income taxes                          (2,000)          (1,200)          (6,000)          (3,600)
Equity in (loss) of joint venture                  (80,379)               -          (80,379)              -
Minority interest                                   32,572           49,381            4,383           81,384
                                                ----------       ----------      -----------      -----------
Income (loss) before cumulative effect
   of change in accounting principle              (211,468)        (201,880)         160,604         (440,467)
Cumulative effect of change in
   accounting principle                                  -                -                -          (70,281)
                                                ----------       ----------      -----------      -----------
Net income (loss)                                $(211,468)       $(201,880)        $160,604        $(510,748)
                                                ----------       ----------      -----------      -----------
Preferred stock:
     Preferred dividends accrued or paid           (12,500)              (-)         (37,500)         (34,550)
     Accounting deemed dividends                       -                  -                -          (82,877)
                                                ----------       ----------      -----------      -----------
                                                   (12,500)              (-)         (37,500)        (117,427)
                                                ----------       ----------      -----------      -----------
Basic net income (loss) applicable to
 common stock                                    $(223,968)       $(201,880)        $123,104        $(628,175)
                                                ==========       ==========      ===========      ===========
Net income (loss) per share
     Basic net income (loss)                       $ (0.05)          $(0.05)        $   0.04          $ (0.13)
                                                ----------       ----------      -----------      -----------
     Preferred stock
       Dividends                                   $ (0.01)             ($-)          ($0.01)         ($ 0.01)
       Accounting deemed dividends                 $    (-)             ($-)       $      (-)         ($ 0.02)
                                                ----------       ----------      -----------      -----------
                                                   $ (0.01)             ($-)          ($0.01)         ($ 0.03)
                                                ----------       ----------      -----------      -----------
Basic net income (loss) applicable to
 common stock                                      ($ 0.06)         ($ 0.05)          $ 0.03          ($ 0.16)
                                                ==========       ==========      ===========      ===========
Average weighted shares outstanding              4,003,888        4,003,888        4,003,888        3,960,239
                                                ==========       ==========      ===========      ===========
</TABLE>

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


                                       3
<PAGE>

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

                                                                              Nine Months Ended
                                                                       September 26,     September 27,
                                                                           1999              1998
                                                                       --------------   ---------------
<S>                                                                     <C>               <C>

Cash flows from operating activities:
     Net income (loss)                                                    $160,604         $ (510,748)
     Adjustments to reconcile net income to net cash
     provided by operating activities:
         Depreciation and amortization                                     919,116            793,185
         Equity in (loss) of joint venture                                  80,379                 -
         Minority interest in net (loss)                                    (4,383)          ( 81,384)
         Cumulative effect of change in accounting principal                    -              70,281
     Changes in operating assets and liabilities
         Inventories                                                       (91,503)          ( 54,113)
         Receivables                                                      (537,187)          ( 79,694)
         Prepaid expenses                                                    8,087           (265,253)
         Other assets                                                       49,894             (5,403)
         Accounts payable                                                  207,403            382,257
         Accrued liabilities                                               394,574            516,372
                                                                         -----------      ------------
     Net cash provided by operating activities                           1,186,984            765,500
                                                                         -----------      ------------
Cash flows from investing activities:
     Investment in joint venture                                           (83,606)                -
     Additions to furniture, equipment and improvements                   (768,480)       ( 2,244,530)
                                                                         -----------      ------------
     Net cash (used) in investing activities                              (852,086)       ( 2,244,530)
                                                                         -----------      ------------
Cash flows from financing activities:
     Proceeds from note payable                                                 -             800,000
     Proceeds from investment in L.L.C.                                    210,052            349,650
     Proceeds from line of credit                                          234,974            120,000
     Increase in bank term loan                                                 -             580,000
     Payments on bank loans                                               (365,384)                -
     Payments on related party debt                                       (603,509)          (195,176)
                                                                         -----------      ------------
     Net cash provided by (used in) financial activities                  (523,867)         1,654,474
                                                                         -----------      ------------
Net increase (decrease) in cash and cash equivalents                      (188,969)           175,444
Cash and cash equivalents, beginning of period                             438,184            272,567
                                                                         -----------      ------------
Cash and cash equivalents, end of period                                 $ 249,215          $ 448,011
                                                                         ===========      ============
Supplemental cash flow information:
     Cash paid during the period for:
         Interest                                                        $ 316,293          $ 101,850
         Income taxes                                                    $       -          $   3,400

</TABLE>

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



                                       4
<PAGE>

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

1.   INTERIM FINANCIAL PRESENTATION

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

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

2.   PREOPENING COSTS

     During fiscal 1998, the Company  elected early adoption of AICPA  Statement
     of Position  (SOP) 98-5,  "Reporting on the Costs of Start-Up  Activities."
     This new accounting standard requires most entities to expense all start-up
     and preopening costs as they are incurred. Preopening costs for all periods
     presented herein reflect costs that were expensed as incurred. In addition,
     the  Consolidated  Statement  of  Operations  for  the  nine  months  ended
     September 27, 1998 has been restated to reflect,  as a one-time charge, the
     cumulative effect of the change in accounting principle.

3.   FUTURE ACCOUNTING REQUIREMENTS

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities".  This  Statement  requires  that all
     derivative  instruments  be  recorded  on the  balance  sheet at their fair
     value.  Changes  in the fair value of  derivatives  will be  recorded  each
     period in current  earnings or other  comprehensive  income,  depending  on
     whether a derivative is designated as part of a hedge  transaction  and, if
     it is, the type of hedge  transaction.  The new rules will be effective the
     first quarter of 2001, as amended by SFAS No.137 in June 1999.  The Company
     does not believe that the new standard  will have a material  impact on the
     Company's financial statements.

4.   REVERSE STOCK SPLIT

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


                                       5
<PAGE>

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

The following  discussion and analysis  should be read in  conjunction  with the
Company's financial statements and notes thereto included elsewhere in this Form
10-Q. Except for the historical  information contained herein, the discussion in
this Form 10-Q contains  certain forward  looking  statements that involve risks
and  uncertainties,  such as  statements  of the  Company's  plans,  objectives,
expectations  and intentions.  The cautionary  statements made in this Form 10-Q
should be read as being  applicable to all related forward  statements  wherever
they  appear in this Form  10-Q.  The  Company's  actual  results  could  differ
materially  from those  discussed here. For a discussion of certain factors that
could cause actual  results to be materially  different,  refer to the Company's
Annual Report on Form 10-KSB for the year ended December 27, 1998.

Results of Operations

The following table sets forth, for the periods indicated,  information  derived
from  the  Company's  consolidated  statements  of  operations  expressed  as  a
percentage  of  total  operating   revenues,   except  where  otherwise   noted.
Percentages may not add due to rounding.

<TABLE>

                                       Three Months Ended            Nine Months Ended
                                     September     September       September      September
                                     26, 1999       27, 1998        26, 1999       27, 1998
<S>                                  <C>            <C>            <C>            <C>

Revenues:
    Company restaurant sales          98.5%           96.7%           98.7%          98.6%
    Management and license fees        1.5             3.3             1.3            1.4
    Total operating revenues         100.0%          100.0%          100.0%         100.0%
Cost of sales                         28.0            28.1             27.6          27.3
Gross profit                          72.0            71.9             72.4          72.7
Restaurant operating expense          59.7            61.4             59.7          61.0
General and administrative expense     8.4             7.6              7.4           7.5
Depreciation and amortization          3.8             3.2              3.2           3.1
Preopening costs                       0.0             2.1              0.0           2.7
    Total operating expenses          71.9            74.2             70.3          74.2
Operating income (loss)                0.1            (2.3)             2.1          (1.5)
Interest expense, net                 (1.9)           (0.6)            (1.3)         (0.5)
Income (loss) before taxes            (2.3)           (2.9)             0.6          (2.0)
Provision for taxes                    0.0             0.0              0.0           0.0
Equity in loss of joint venture        0.9             0.0              0.3           0.0
Minority interest                      0.4             0.6              0.0           0.3
Cumulative effect of change in
  accounting principle                 0.0             0.0              0.0          (0.3)
Net income (loss)                     (2.3)%          (2.3)%            0.6%         (2.0)%

</TABLE>

                                       6
<PAGE>

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

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

Daily Grill restaurants:
    Company owned                           1           -         1          -       10           8
    Managed and/or licensed                 -           -         3          -        3           -
Grill on the Alley restaurants:             -           -         -          1        2           2
    Company owned
Pizza restaurants                           -           -         -          -        3           3
Other restaurants
    Managed and/or licensed                 -           -         -          1        2           2
                                        -------      --------   -------   -------  ------      -------
Total                                       1           -         4          2       20          15
                                        =======      ========   =======   =======  ======      =======
</TABLE>

<TABLE>

                                                    Three Months Ended             Nine Months Ended
                                                 September     September        September    September
                                                  26, 1999      27, 1998        26, 1999     27, 1998
<S>                                              <C>           <C>              <C>          <C>

Weighted average weekly sales
   per company owned restaurant:
    Daily Grill                                 $ 52,655         $ 51,768      $ 55,466         $ 55,153
    Grill on the Alley                          $ 63,484         $ 64,531      $ 68,542         $ 67,652
    Pizza restaurants                           $ 32,261         $ 33,150      $ 32,735         $ 33,293

Change in comparable restaurant
   sales (1):
    Daily Grill                                   (1.0) %            4.7 %         0.5  %            7.4 %
    Grill on the Alley                            (1.6) %            5.8 %         3.2  %            5.6 %
    Pizza restaurants                             (1.7) %            0.7 %        (2.7) %            2.2 %

Total system revenues:
    Daily Grill                               $ 6,052,856      $ 5,383,857    $19,404,544     $ 17,207,602
    Grill on the Alley                          1,651,844        1,677,722      5,347,549        3,991,367
Pizza restaurants                               1,258,186        1,292,861      3,829,947        3,895,275
Management and license fees                       138,811          287,000        375,122          358,715

Total                                         $ 9,101,697      $ 8,641,440   $ 28,957,162     $ 25,452,959
</TABLE>

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

                                       7
<PAGE>


Revenues

Revenues for the third quarter of fiscal 1999  increased to $9.1  million,  5.3%
over the $8.6 million  generated  for the same quarter of fiscal 1998.  Revenues
for the nine months ended  September  26, 1999 rose 13.8% to $29.0  million from
the $25.5 million  generated for the same period of fiscal 1998.  Total revenues
included  $9.0  million of sales  revenues and $0.1  million of  management  and
licensing fees for the 1999 quarter and $28.6 million of sales revenues and $0.4
million of management and licensing fees for the first nine months of 1999. This
compares to $8.3 million of sales  revenues and $0.3 million of  management  and
licensing fees for the 1998 quarter and $25.1 million of sales revenues and $0.4
million of management  and licensing fees for the first nine months of 1998. The
increase in sales revenues for both the quarter ($0.6 million,  or 7.3%) and the
nine months ($3.5 million,  or 13.9%) was primarily  attributable to the Tyson's
Daily Grill  being open for the full  quarter and nine months in 1999 and to the
San Jose Grill  being  open the full nine month  period in 1999 while in 1998 it
was open only five of the nine months.

Same store sales (for  restaurants  open at least 12 months)  decreased 1.4% for
the quarter and increased  0.5% for the nine month period.  Excluding a one time
gain  ($206,000)  from the sale of the LAX Daily  Grill in the third  quarter of
1998,  management and licensing fees increased for both the quarter ($68,000, or
96%) and the nine months ($222,000, or 145%). For the quarter, fees from managed
restaurants  were higher due to higher sales at restaurants  and the addition of
management  fees from the Universal  Citywalk  Daily Grill which opened in July,
1999.  Managed  restaurants,  other than  Citywalk,  were open for the full nine
month  period in 1999 while they were only open for five months  during the nine
month period in 1998.

Cost of Sales

Cost of sales  increased  by 5.2% for the  quarter and 14.8% for the nine months
ended  September  26,  1999 as  compared  to the  same  periods  in  1998.  As a
percentage  of total  revenues cost of sales was 28.0% for the quarter and 27.6%
for the nine months as compared to 28.1% for the third quarter of 1998 and 27.3%
for the nine month period in 1998. The increase in cost of sales as a percentage
of sales  during the nine month 1999 period was  primarily  attributable  to the
inclusion  of the San  Jose  Grill  in 1999,  which  has a higher  cost of sales
percentage. For the quarter the cost of sales percentage compares favorably.

Restaurant Operating Expenses

Restaurant  operating  expenses  increased by 2.4% for the quarter and 11.5% for
the nine  months as  compared  to the same  periods  in 1998.  The  increase  in
restaurant operating expenses was primarily  attributable to the new restaurants
opened in the second and  fourth  quarters  of 1998.  As a  percentage  of total
revenues,  restaurant operating expenses totaled 59.7% for both the 1999 quarter
and nine  months as  compared  to 61.4% for the  quarter  and 61.0% for the nine
month  period in 1998.  The  decrease  in  restaurant  operating  expenses  as a
percentage of total revenues was attributable to improvement in payroll costs at
the Daily Grills and Pizzeria Uno restaurants plus the inclusion of the San Jose
Grill for the full nine months in 1999  compared  with only five months of 1998;
Grill  restaurants  typically having a lower payroll  percentage.  The increased
management  fees also favorably  affected this expense  percentage.  General and
Administrative Expense

                                       8
<PAGE>

General and Administrative Expense

General and administrative expense increased 16.6% for the quarter and 13.1% for
the nine month period as compared to the same  periods in 1998.  As a percentage
of total  revenues,  general and  administrative  expense  totaled  8.4% for the
quarter  and 7.4% for the nine month  period as compared to 7.6% for the quarter
and 7.5% for the nine month period in 1998.  The  increase in total  general and
administrative expense during 1999 was primarily attributable to added corporate
personnel, merit increases, related payroll costs and added recruiting costs for
new restaurants.

Depreciation and Amortization

Depreciation  and  amortization  expense  increased by 16.6% for the quarter and
13.1%  for  the  nine  month  period  as  compared  to  1998.  The  increase  in
depreciation and amortization expense was primarily  attributable to the opening
of two restaurants in 1998 and  depreciation  of the Burbank managed  restaurant
which was remodeled into a Daily Grill in late 1998.

Unusual Charges and Cumulative Effect of Changes in Accounting Principle

During fiscal 1998, the Company elected early adoption of American  Institute of
Certified  Public  Accountants  ("AICPA")  Statement of Position  ("SOP")  98-5,
"Reporting on the Costs of Start-Up  Activities."  This new accounting  standard
requires entities to expense start-up and preopening costs as they are incurred.
Consistent  with the practice of most casual dining  restaurant  companies,  the
Company  previously  deferred  such  costs  and  then  wrote  them  off over the
twelve-month  period  following the opening of each  restaurant.  As a result of
this early adoption,  preopening costs for all periods  presented herein reflect
costs that were expensed as incurred.  The Company incurred  preopening costs of
$185,245  during the 1998 quarter and $677,975 during the 1998 nine month period
compared to none in the 1999 quarter and nine month period. Although the Company
had four restaurant  openings during the 1999 nine month period,  all preopening
costs  were  fully  funded  through  landlord  contributions,   joint  ventures,
partnerships or a combination thereof.

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

Interest Expense, Net

Interest expense,  net, increased by 219% during the quarter and 173% during the
nine month  periods  compared  to the same  periods  in 1998.  The  increase  in
interest expense was primarily  attributable to increased  borrowing during 1998
for the opening of the San Jose Grill and the Tyson's Daily Grill. Interest also
includes a charge for interest in connection with the construction of a Grill on
the Alley in Chicago which is scheduled for opening in mid-2000.

                                       9
<PAGE>

Equity in loss of Joint Venture

The equity in loss of the joint venture relates to the Company's investment in a
joint venture which operates the Daily Grill at the Universal  Studios CityWalk.
The loss is attributable to preopening  expenses incurred to open the restaurant
in July 1999.

Minority Interest

The change in minority  interest for both the quarter and six month  periods was
primarily attributable to the increase in revenues from the San Jose Grill which
was open for the full 1999 periods offset by a minority  interest credit for the
activity of the Chicago Grill on the Alley joint venture.

Preferred Stock Dividends

The Company  reported  accrued or paid  dividends on preferred  stock of $12,500
during the quarter and $37,500 for the nine month  period  compared to $0 during
the quarter and $34,550 during the nine month period in 1998.  Additionally,  in
accordance with the position of the Securities and Exchange  Commission relating
to accounting for Preferred  Stock which is  convertible  into common stock at a
discount  from the market  price of the common  stock,  the  Company  reported a
"deemed  dividend"  of $0 during the 1998  quarter and  $82,877  during the 1998
year-to-date  period. The Company reported no similar "deemed dividend" in 1999.
The "deemed  dividend,"  which relates to the issuance of convertible  preferred
stock during 1997, is a non-cash,  non-recurring  accounting entry which,  along
with the accrued dividends on preferred stock, is a deduction from net income in
calculating income (loss) applicable to common stock.

Material Changes in Financial Condition, Liquidity and Capital Resources

At September 26, 1999 the Company had negative  working  capital of $2.6 million
and a cash balance of $0.2 million  compared to negative working capital of $2.3
million and a cash balance of $0.4  million at December 27, 1998.  The change in
working  capital was primarily  attributable to the repayment of debt during the
nine months ended September 29, 1999.

The  Company's  need  for  capital  resources  has  resulted  from,  and for the
foreseeable  future is  expected to relate  primarily  to, the  construction  of
restaurants.  Historically,  the  Company has funded its  day-to-day  operations
through its operating  cash flow,  while funding growth through a combination of
bank borrowing,  loans from  stockholders/officers,  the sale of Debentures, the
sale of Preferred Stock, the issuance of warrants,  loans and tenant  allowances
from certain of its  landlords  and,  beginning in 1998,  through  joint venture
arrangements.  At September 26, 1999, the Company had existing bank borrowing of
$2.0 million, a loan from a San Jose Grill L.L.C. member of $0.5 million, an SBA
loan  of  $0.1  million,  loans  from  stockholders/officers  of  $0.2  million,
equipment loans of $1.0 million,  a loan from the Chicago Grill partners of $0.2
million and loans/advances from a landlord of $0.1 million.

As of September 26, 1999, the Company had opened three hotel-based managed Daily
Grill  restaurants in 1999. In addition,  the Company  opened a non-hotel  based
Daily  Grill  restaurant  on July 9,  1999,  under  a joint  venture  agreement.
Finally,  the  Company  expects  to  open a  majority  owned  hotel-based  Grill
restaurant  in early  2000.  Management  anticipates  that new  non-hotel  based
restaurants  will cost between $1 million and $2 million per restaurant to build
and open  depending  upon the location and available  tenant  allowances.  Hotel
based  restaurants  may  involve  remodeling  existing  facilities,  substantial
capital  contributions  from the hotel  operators  and other  factors which will
cause the cost to the Company of opening such  restaurants  to be  substantially
less than the Company's cost to build and open non-hotel based restaurants.

                                       10
<PAGE>

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

Future Accounting Requirements

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities". This Statement requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of  derivatives  will be recorded each period in current  earnings or
other comprehensive  income,  depending on whether a derivative is designated as
part of a hedge  transaction and, if it is, the type of hedge  transaction.  The
new rules will be effective  the first  quarter of 2001,  as amended by SFAS No.
137 in June 1999. The Company does not believe that the new standard will have a
material impact on the Company's financial statements.

Certain Factors Affecting Future Operating Results

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

On  November 8, 1999 the  Company  entered  into a  preliminary  agreement  with
Sunstone Hotel Properties,  the owner of the Salt Lake City Hilton, to close the
Daily Grill Salt Lake City. Effective Monday, November 16, 1999 the Company will
cease to operate the restaurant. In connection with the closing of the Salt Lake
City Daily Grill, it was mutually agreed between Sunstone Hotel Properties,  the
owner of The Kahler  Hotel,  and the Company to not proceed  with the opening of
Daily Grill in The Kahler Hotel, Rochester, Minnesota.

The Company's  operations  during the last two quarters of 1999 will reflect the
addition  of a 50%  owned  non-consolidated  restaurant  in  Universal  Studios,
California.  In addition,  pursuant to the Company's hotel restaurant management
agreement,  the Company opened three  hotel-based Daily Grill restaurants in the
Spring of 1999 and is  scheduled  to open a  majority  owned  hotel-based  Grill
restaurant in early 2000.


                                       11
<PAGE>

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

There can be no  assurance  that the Company will be  successful  in opening new
restaurants in accordance with its anticipated opening schedule; that sufficient
capital  resources will be available to fund scheduled  restaurant  openings and
start-up  costs;  that new restaurants  can be operated  profitably;  that hotel
restaurant management services will produce satisfactory cash flow and operating
results to support  such  operations;  or that  additional  hotels will elect to
retain the Company's hotel restaurant management services.

Year 2000 Issue

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

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

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

The Company has evaluated the software  currently  being utilized in its 6 older
restaurants.  While we have received assurance from the software's supplier that
such software is year 2000 compliant,  we expect to incur approximately $250,000
during  the  fourth  quarter  of 1999 for the  purchase  of new  more  efficient
software and hardware.  The purchase is expected to be financed over a five year
period.

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

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

Regarding  the Year 2000  issue,  the  greatest  risk to the Company is that the
systems  placed in service by the Company  itself and/or its vendors will not be
fully  operational by the end of calendar year 1999. This could adversely impact
the day to day operations of the Company.  However, all of the Company's systems
were fully  operational in the third quarter of 1999.  The Company  continues to
assess the Y2K readiness of its key suppliers and business partners in an effort
to ensure the  adequacy of product,  supplies  and  resources.  This  includes a
review of and direct  communication with the majority of its product vendors and
key suppliers.  Based on the responses received from our product vendors and key
suppliers,  the Company is taking the steps necessary to minimize the effect, if
any, on its operations.

                                       12
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from  changes in interest  rates on funded
debt.  This exposure  relates to its $2,100,000  revolving  credit and term loan
facility  (the  "Credit  Facility").  Borrowings  outstanding  under the  Credit
Facility totaled  $1,975,000 at September 26, 1999.  Borrowings under the Credit
Facility bear interest at the lender's reference rate plus 0.25%. A hypothetical
1%  interest  rate  change  would not have a  material  impact on the  Company's
results of operations.


                           PART II - OTHER INFORMATION


Item 6. Exhibits and Reports on Form 8-K

     (a)  Exhibits

          Exhibit No.         Description

              27          Financial Data Schedule

     (b)  Reports on Form 8-K

           None


                                       13
<PAGE>

                                   SIGNATURES

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

                                                     GRILL CONCEPTS, INC.


Dated: November 10, 1999                    By:  /s/ Robert Spivak
                                                 Robert Spivak, President
                                                 and Chief Executive Officer

Dated: November 10, 1999                    By:  /s/ Lawrence Byer
                                                 Lawrence Byer, Controller and
                                                 Principal Accounting Officer