FORM 10-Q


                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

[X]  Quarterly report pursuant to section 13 or 15 (d) of the
     Securities Exchange Act of 1934

     For the quarterly period ended SEPTEMBER 30, 1998
                              or

[ ]  Transition report pursuant to section 13 or 15 (d) of the
     Securities Exchange Act of 1934



                            Commission File Number
                                    1-6553

                              CARROLS CORPORATION
            (Exact name of registrant as specified in its charter)


       DELAWARE                                16-0958146
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                            Identification
Number)


   968 JAMES STREET
  SYRACUSE, NEW YORK                             13203
(Address of principal executive offices)                        (Zip Code)


Registrant's telephone number including area code (315) 424-0513

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


Common stock, par value $1.00, outstanding at November 13, 1998

                             10 SHARES

                                    1 of 19
<PAGE>
                       PART 1 - FINANCIAL INFORMATION

                    CARROLS CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS



<TABLE>
<CAPTION>
                         ASSETS                                 SEPTEMBER 30,              DECEMBER 31,
                                                                    1998                       1997
<S>                                                      <C>                        <C>
                                                                 (unaudited)
Current assets:
  Cash and cash equivalents                                            $  2,442,000 $  2,252,000
  Trade and other receivables                                               870,000
                                                                                    748,000
  Inventories                                                             2,973,000
                                                                                    3,355,000
  Prepaid real estate taxes                                               1,434,000
                                                                                    939,000
  Prepaid expenses and other current assets                               2,540,000
                                                                                    1,388,000
  Refundable income taxes                                                   869,000
                                                                                    2,141,000
  Deferred income taxes                                                   2,980,000
                                                                                    2,605,000
        Total current assets                                             14,108,000
                                                                                    13,428,000
Property and equipment, at cost:
  Land                                                                    9,026,000
                                                                                    7,280,000
  Buildings and improvements                                             24,639,000
                                                                                    12,487,000
  Leasehold improvements                                                 54,058,000
                                                                                    43,146,000
  Equipment                                                              75,114,000
                                                                                    61,331,000
  Capital leases                                                         14,548,000
                                                                                    14,548,000
                                                                        177,385,000
                                                                                    138,792,000
  Less accumulated depreciation
    and amortization                                                   (76,060,000)
                                                                                    (67,908,000)
      Net property and equipment                                        101,325,000
                                                                                    70,884,000
Franchise rights, at cost less accumulated
amortization of $27,974,000 and            $25,047,000,
respectively                                                            107,106,000
                                                                                    108,938,000
Intangible assets, at cost less accumulated
amortization of $9,229,000 and             $8,900,000,
respectively                                                             71,547,000
                                                                                    7,864,000
Other assets                                                              7,251,000    7,778,000
Deferred income taxes                                                    5,561,000
                                                                                    6,436,000
                                                                      $306,898,000
           $215,328,000
</TABLE>



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



                                      2
<PAGE>
                    CARROLS CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS (CONT'D)





<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY                            SEPTEMBER 30,              DECEMBER 31,
                                                                    1998                       1997
<S>                                                      <C>                        <C>
                                                                 (unaudited)
Current liabilities:
  Accounts payable                                       $ 14,091,000               $ 11,950,000
  Accrued interest                                          2,344,000                  4,770,000
  Accrued payroll, related taxes and
    benefits                                                8,040,000                  6,299,000
  Other liabilities                                         9,672,000                  5,104,000
  Current portion of long-term debt                         8,351,000                  3,137,000
  Current portion of capital lease
    obligations                                               302,000                    441,000
        Total current liabilities                          42,800,000                 31,701,000
Long-term debt, net of current portion                    231,125,000                154,649,000
Capital lease obligations, net of current   portion
                                                            1,835,000                  2,060,000
Deferred income - sale/leaseback of
 real estate                                                4,342,000                  4,555,000
Accrued postretirement benefits                             1,765,000                  1,627,000
Other liabilities                                           6,746,000                  3,289,000
        Total liabilities                                 288,613,000                197,881,000
Stockholder's equity:
  Common stock, par value $1; authorized
   1,000 shares, issued and outstanding -
   10 shares                                                       10                         10
  Additional paid-in capital
                                                         24,484,990                 28,362,990
  Accumulated deficit
                                                         (6,200,000)                (10,916,000)
   Total stockholder's equity
                                                         18,285,000                 17,447,000
                                                                                                      $306,898,000
$215,328,000
</TABLE>




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


                                      3
<PAGE>
                    CARROLS CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
               THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                 (unaudited)







<TABLE>
<CAPTION>
                                                                    1998                       1997
<S>                                                      <C>                         <C>
                                                                 (13 weeks)                 (13 weeks)
Revenues:
  Restaurant sales                                       $ 112,608,000               $ 76,589,000
  Franchise fees and royalties                                 161,000                       -
    Total revenues                                         112,769,000
                                                                                     76,589,000
Costs and expenses:
  Cost of sales                                             34,204,000
                                                                                     22,303,000
  Restaurant wages and related expenses                     32,259,000
                                                                                     23,283,000
  Advertising expense                                        5,049,000
                                                                                     3,302,000
  Other restaurant operating expenses                       21,982,000
                                                                                     15,965,000
  Administrative expenses                                    5,297,000
                                                                                     3,667,000
  Depreciation and amortization                              5,334,000
                                                                                     3,741,000
    Total operating expenses                               104,125,000
                                                                                     72,261,000
Operating income                                             8,644,000
                                                                                     4,328,000
  Refinancing expenses (Note 5)                              1,639,000                                    -
  Interest expense                                           5,819,000
                                                                                     3,978,000
    Income before income taxes                               1,186,000
                                                                                     350,000
Provision (benefit) for income taxes                           527,000                   (191,000)
    Net income                                           $     659,000                             $
                                                                                     541,000
</TABLE>













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


                                      4
<PAGE>
                    CARROLS CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                 (unaudited)







<TABLE>
<CAPTION>
                                                                    1998                       1997
<S>                                                      <C>                         <C>
                                                                 (40 weeks)                 (39 weeks)
Revenues:
  Restaurant sales                                       $305,866,000                $207,113,000
  Franchise fees and royalties                                161,000                        -  _
    Total revenues                                        306,027,000                 207,113,000
Costs and expenses:
  Cost of sales                                            89,829,000                  59,600,000
  Restaurant wages and related expenses                    89,014,000                  63,539,000
  Advertising expense                                      13,920,000                   9,093,000
  Other restaurant operating expenses                      60,685,000                  43,005,000
  Administrative expenses                                  13,364,000                   9,337,000
  Depreciation and amortization                            14,294,000                  10,578,000
    Total operating expenses                              281,106,000                 195,152,000
Operating income                                           24,921,000                  11,961,000
  Refinancing expenses (Note 5)                             1,639,000                        -
  Interest expense                                         14,716,000                  11,059,000
    Income before income taxes                              8,566,000                     902,000
Provision for income taxes                                  3,850,000                     181,000
    Net income                                           $  4,716,000                $    721,000
</TABLE>












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



                                      5
<PAGE>
                    CARROLS CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                                 (unaudited)

<TABLE>
<CAPTION>
                                                                       1998                     1997
<S>                                                          <C>                      <C>
                                                                    (40 weeks)               (39 weeks)
Cash flows from operating activities:
  Net income                                                 $ 4,716,000                                       $
                                                                                      721,000
  Adjustments to reconcile net income
    to cash provided by operating  activities:
      Depreciation and amortization                           14,294,000                10,578,000
      Deferred income taxes                                     (445,000)                     -
      Gain on sale of property and equipment                    (119,000)                 (344,000)
      Change in operating assets and
        liabilities                                            3,808,000                (3,904,000)
      Cash provided by operating activities                   22,254,000                 7,051,000
Cash flows from investing activities:
  Capital expenditures:
      Purchase of Pollo Tropical, Inc.,
        net of cash acquired                                 (96,632,000)                     -
      New restaurant development                              (7,595,000)               (6,391,000)
      Remodels and other capital expenditures                (14,368,000)               (4,561,000)
      Acquisitions of Burger King restaurants                   (629,000)              (78,056,000)
  Proceeds from sales of property and equipment                1,337,000                 1,092,000
      Net cash used for investing activities                (117,887,000)              (87,916,000)
Cash flows from financing activities:
  Proceeds from revolving loan facility, net                   8,800,000                3,600,000
  Proceeds from advance term loan facility                    75,000,000               62,700,000
  Principal payments on advance term loan
    facility                                                  (2,177,000)                (200,000)
  Principal payments on capital leases                          (364,000)                (444,000)
  Proceeds from issuing stock                                       -                  30,442,000
  Proceeds from sale-leaseback transactions                   18,536,000                     -
  Dividends paid                                              (3,878,000)              (2,349,000)
  Retirement of long-term debt                                      -                  (9,669,000)
  Financing costs associated with long-term debt                 (75,000)              (2,397,000)
  Other                                                          (19,000)                 (23,000)
      Net cash provided by financing activities               95,823,000               81,660,000
Increase in cash and cash equivalents                            190,000                  795,000
Cash and cash equivalents, beginning of period                 2,252,000                1,314,000
Cash and cash equivalents, end of period                    $  2,442,000              $ 2,109,000
</TABLE>


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

                                      6
<PAGE>
                    CARROLS CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS


1.  STATEMENT OF MANAGEMENT

     The  accompanying  unaudited consolidated financial statements have been
prepared  without  audit, pursuant  to  the  rules  and  regulations  of  the
Securities and Exchange  Commission and do not include all of the information
and the footnotes required  by  generally  accepted accounting principles for
complete statements.  In the opinion of management,  all normal and recurring
adjustments  necessary for a fair presentation of such  financial  statements
have been included.

     The Company  uses  a 52-53 week fiscal year ending on the Sunday closest
to December 31.  Fiscal 1998  will  contain  53  weeks  and  the  Company has
included  the  extra week in its second fiscal quarter of 1998.  Accordingly,
the nine months  results  of  operations  and cash flows ending September 30,
1998 and 1997 include 40 weeks and 39 weeks, respectively.

     The results of operations for the three  and nine months ended September
30, 1998, are not necessarily indicative of the  results  to  be expected for
the full year.

     The  preparation  of  financial statements in conformity with  generally
accepted accounting principles  requires  management  to  make  estimates and
assumptions  that  affect the reported amounts of assets and liabilities  and
disclosure of contingent  assets and liabilities at the date of the financial
statements and the reported  amounts  of  revenues  and  expenses  during the
reporting period.  Actual results could differ from those estimates.

     These  consolidated  financial  statements should be read in conjunction
with the consolidated financial statements  and  notes  thereto  for the year
ended December 31, 1997 contained in the Company's 1997 Annual Report on Form
10-K.  The December 31, 1997 balance sheet data is derived from these audited
financial statements.

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











                                      7
<PAGE>
                       CARROLS CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                 (continued)



2.   INVENTORIES

     Inventories at September 30, 1998 and December 31, 1997, consisted of:

<TABLE>
<CAPTION>
                                           September 30,          December 31,
<S>                                   <C>                    <C>
                                               1998                  1997
   Raw materials (food and
     paper products)                 $1,964,000             $2,111,000
   Supplies                             1,009,000               1,244,000
                                     $2,973,000                $3,355,000
</TABLE>

3.   INCOME TAXES

     The  income  tax  provision for the nine months ended September 30, 1998
     and 1997 was comprised of the following:

<TABLE>
<CAPTION>
                                              1998                    1997
<S>                                   <C>                    <C>
   Current                          $ 4,295,000              $ 181,000
   Deferred                           (445,000)                      -
                                    $ 3,850,000              $ 181,000
</TABLE>

     For  1998  and  1997  the  difference between the expected tax provision
     resulting from application of  the  federal statutory income tax rate to
     pre-tax income and the reported income  tax provision result principally
     from state taxes and non-deductible amortization  of  certain  franchise
     rights and other intangible assets.

4.   ACQUISITIONS

     On  March  28,  1997, the Company purchased certain assets and franchise
     rights of twenty-three  Burger  King  restaurants  in  North  and  South
     Carolina for a cash price of approximately $21.0 million.

     On  August  20, 1997, the Company purchased certain assets and franchise
     rights of sixty-three  Burger King restaurants, primarily in Western New
     York State, Indiana and  Kentucky  for a cash price of approximately $52
     million.

                                      8
<PAGE>
                       CARROLS CORPORATION AND SUBSIDIARIES
            NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                 (continued)



4.   ACQUISITIONS (continued)

     On July 9, 1998, the Company consummated  the purchase of Pollo Tropical
     Inc. ("Pollo Tropical") for an approximate  cash purchase price of $96.6
     million  and on July 20, 1998 merged Pollo Tropical  into  the  Company.
     The excess  purchase  price  over  net assets acquired, of approximately
     $64.0 million, is included in intangible  assets.   The Company used its
     existing   senior   credit  facility  to  finance  the  Pollo   Tropical
     acquisition.  This borrowing required the Company to amend this facility
     in July 1998 to modify,  among other things, certain financial covenants
     with respect to debt to cash flow ratios.

     The following proforma results  of  operations for the periods presented
     below assume these acquisitions occurred  as  of  the  beginning  of the
     respective periods:

                                NINE MONTHS ENDED SEPTEMBER 30,
                                      1998           1997
<TABLE>
<CAPTION>
Revenues                             $344,114,000             $302,648,000
<S>                                  <C>                      <C>
Operating income                     $ 30,519,000             $ 21,580,000
Net income                           $  5,441,000             $  1,083,000
</TABLE>


     The   preceding   proforma  financial  information  is  not  necessarily
     indicative of the operating  results that would have occurred had any of
     the acquisitions been consummated  as of the beginning of the respective
     periods,  nor  are  they  necessarily  indicative  of  future  operating
     results.


5.   LOSS ON REFINANCING EXPENSES

     The Company expensed all costs associated  with its efforts to refinance
     its existing debt in the third quarter of 1998  as  the  timing  of  any
     future   refinancing  is  uncertain  and  the  related  activities  have
     currently  ceased.  Approximately $1.2 million of these costs related to
     losses on interest  rate  hedge  transactions, which were settled in the
     third quarter.







                                      9
<PAGE>
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                    OF OPERATIONS AND FINANCIAL CONDITION
                          ________________________


OVERVIEW

     The Company is the largest Burger  King  franchisee in the United States
and has operated Burger King restaurants since  1976.   As  of  September 30,
1998,  the  Company  operated  338  Burger  King  restaurants  located in  13
Northeastern, Midwestern and Southeastern states.  Over the last  five years,
the  Company  has  selectively expanded its operation through the acquisition
and construction of  additional  Burger King restaurants while also enhancing
the quality of operations, the competitive position and financial performance
of its existing restaurants.  As a result of its growth strategy, the Company
has increased the total number of  restaurants  it  operates by over 70% from
1993  to  1997  ,  and  over  40% in 1997 alone.  In July 1998,  the  Company
completed  its  acquisition  of  Pollo  Tropical,  a  regional  quick-service
restaurant chain featuring grilled marinated chicken and authentic "made from
scratch" side dishes.  At September  30,  1998 the Company owned and operated
37  Pollo Tropical restaurants in Florida and  franchised  an  additional  20
restaurants in the Caribbean and South America.

RESULTS OF OPERATIONS

     THREE  MONTHS  ENDED  SEPTEMBER  30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997.

     The following table sets forth, for the three months ended September 30,
1998  and 1997, selected operating results  as  a  percentage  of  restaurant
sales,  except for administrative expenses, operating income and EBITDA which
are presented as a percentage of total revenues:

<TABLE>
<CAPTION>
                                                        1998                 1997
<S>                                             <C>                  <C>
Restaurant sales                                  100.0%               100.0%
Costs and expenses:
 Cost of sales                                     30.4%                29.1%
 Restaurant wages and related
  expenses                                         28.6%                30.4%
 Other restaurant expenses including
  advertising                                      24.0%                25.2%
 Administrative expenses                            4.7%                 4.8%
 Depreciation and amortization                      4.7%                 4.9%
Operating income                                    7.7%                 5.7%
EBITDA                                             12.4%                10.5%
</TABLE>


                                     10
<PAGE>
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                    OF OPERATIONS AND FINANCIAL CONDITION
                          ________________________


     RESTAURANT  SALES  Restaurant sales for the three months ended September
30, 1998, increased  47.0%  to $112.6 million from $76.6 million in the third
quarter of 1997.  The increase  in  sales  was  primarily  the  result of the
growth in the number of Burger King restaurants operated by the Company which
increased from 329 at the end of the third quarter of 1997 to 338  at the end
of  the  third  quarter  of  1998  and  the  acquisition of 36 Pollo Tropical
restaurants in July 1998. During the twelve months  ended September 30, 1998,
the  Company  opened  10  Burger King restaurants, opened  1  Pollo  Tropical
restaurant,   acquired   4  Burger   King   restaurants   and   closed   five
underperforming  Burger  King   restaurants.   Sales  at  the  Company's  258
comparable Burger King restaurants (those units operating for the entirety of
the compared periods) increased 7.9% for the third quarter of 1998.

     OPERATING COSTS AND EXPENSES  Cost of sales (food and paper costs), as a
percentage of sales, were 30.4% for the three months ended September 30, 1998
compared to 29.1% for the third quarter  of  1997.   The  increase in 1998 is
due,  in  part,  to  higher  food  cost relationships at the Company's  Pollo
Tropical restaurants, which accounted  for  15%  of total restaurant sales in
the  quarter.  Cost of sales, as a percentage of sales,  for  Pollo  Tropical
restaurants  was  34.5%  in the third quarter.  The increase in 1998 was also
due, in part, to higher food  commodity  costs  at  the Company's Burger King
restaurants associated with the introduction of a new  french  fry product in
January 1998, offset, in part, by lower beef costs.

     Restaurant wages and related expenses decreased as a percentage of sales
during the third quarter from 30.4% in 1997 to 28.6% in 1998 due, in part, to
lower  labor  costs as a percentage of sales at the Company's Pollo  Tropical
restaurants.  Pollo  Tropical  labor  costs  were  22.6%,  as a percentage of
sales,  in  the third quarter.  Additionally, these expenses decreased  as  a
percentage of  sales  for  the  Company's  Burger  King  restaurants  due  to
restaurant  labor  efficiencies,  the  effect  of  increased  sales  on fixed
restaurant  management  labor, and lower effective unemployment tax rates  in
New York State and Ohio.  These decreases were, in part, offset by the effect
of an increase in the Federal  minimum wage rate from $4.75 per hour to $5.15
per hour which took effect in September 1997.

     Other restaurant operating  expenses,  including  advertising, decreased
from  25.2%  of  sales  in the third quarter of 1997 to 24.0%  in  the  third
quarter of 1998.  This decrease was due to lower expense relationships of the
Company's Pollo Tropical restaurants, whose other operating costs were 16.0%,
as a percentage of restaurant  sales,  in the third quarter and the effect of
higher restaurant sales on the fixed components of the Company's costs.

                                     11
<PAGE>
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                    OF OPERATIONS AND FINANCIAL CONDITION
                          ________________________


     Administrative expenses, as a percentage  of  sales, decreased from 4.8%
in the third quarter of 1997 to 4.7% in 1998.  The approximate  $1.6  million
increase  in  the  third  quarter  of  1998  compared  to  1997 is due to the
acquisition  of  Pollo  Tropical  and  the addition of field supervision  and
corporate support as a result of the 1997  addition  of  over  93 Burger King
restaurants and to support the Company's plans for continued expansion.

     Earnings before interest, taxes, refinancing expenses, depreciation  and
amortization  ("EBITDA")  increased from $8.1 million in the third quarter of
1997 to $14.0 million in the third quarter of 1998.  As a percentage of total
revenues, EBITDA increased from 10.5% in 1997 to 12.4% in 1998 as a result of
the factors discussed above.   While  EBITDA  should  not  be  construed as a
substitute for operating income or a better indicator of liquidity  than cash
flow  from  operating  activities,  which  are  determined in accordance with
generally  accepted  accounting  principles, EBITDA  is  included  herein  to
provide additional information with  respect to the ability of the Company to
meet  its  future  debt service, capital  expenditures  and  working  capital
requirements.  In addition,  management  believes  that certain investors and
lenders  find EBITDA to be a useful tool for measuring  the  ability  of  the
Company to service its debt.

     Depreciation  and  amortization  increased  $1.6  million  in  the third
quarter of 1998 due primarily to the increase in amortization resulting  from
goodwill  and  purchased  intangibles  associated  with the purchase of Pollo
Tropical, Inc. on July 9, 1998 and the purchase of Burger King restaurants in
1997.

     Interest expense was $5.8 million in the third  quarter of 1998 compared
to $4.0 million in 1997.  The increase in 1998 was due to higher average debt
balances from funding the acquisition of Pollo Tropical  and the construction
of additional Burger King restaurants in 1997 and 1998.

     The provision for income taxes of $0.5 million in the  third  quarter of
1998  and  $3.9  million  for  the  first nine months of 1998 is based on  an
estimated annual effective income tax  rate  for  1998  of  45%. This rate is
higher than the Federal statutory tax rate due to state franchise  and income
taxes  and  non-deductible  amortization  of  certain  franchise  rights  and
intangible assets.






                                     12
<PAGE>
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                    OF OPERATIONS AND FINANCIAL CONDITION
                          ________________________


RESULTS OF OPERATIONS

NINE  MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1997.

     The  following table sets forth, for the nine months ended September 30,
1998 and 1997, selected operating results as a percentage of restaurant sales
except for  administrative  expenses,  operating income and EBITDA, which are
presented as a percentage of total revenues:

<TABLE>
<CAPTION>
                                                        1998                 1997
<S>                                             <C>                  <C>
Restaurant sales                                  100.0%               100.0%
Costs and expenses:
 Cost of sales                                     29.4                 28.8
 Restaurant wages and related
  expenses                                         29.1                 30.7
 Other restaurant expenses including
  advertising                                      24.4                 25.2
 Administrative expenses                            4.4                  4.5
 Depreciation and amortization                      4.7                  5.1
Operating income                                    8.1%                 5.8%
EBITDA                                             12.8%                10.9%
</TABLE>


     RESTAURANT SALES  Restaurant sales  for  the nine months ended September
30, 1998, increased 47.7% to $305.9 million from  $207.1  million in the nine
months  of  1997.   Sales at the Company's 224 comparable restaurants  (those
units operating for the entirety of the compared periods) increased 10.2% for
the  nine  months  of 1998.   Adjusted  for  the  additional  week  in  1998,
comparable restaurant sales increased 7.2%.

     OPERATING COSTS  AND  EXPENSES  Cost of sales, as a percentage of sales,
were 29.4% for the nine months ended September 30, 1998 compared to 28.8% for
the first nine months of 1997.   The  increase in 1998 was due to higher cost
relationships at the Company's Pollo Tropical  restaurants  and  higher  food
commodity  costs associated with the introduction of a new french fry product
in January 1998  offset,  in  part,  by  lower  beef costs.  In addition, the
Company's food and paper cost relationships have been somewhat higher for its
recently  acquired  Burger  King units prior to these  units  becoming  fully
integrated into the Company's operating systems.


                                     13
<PAGE>
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                  OF OPERATIONS AND FINANCIAL CONDITION
                        ________________________


     Restaurant wages and related  expenses,  as  a  percentage of sales,
during the nine months ended September 30, 1998 decreased  from  30.7% in
1997 to 29.1% in 1998 due to restaurant labor efficiencies, the effect of
increased   sales   on   fixed  management  labor,  and  lower  effective
unemployment tax rates in New York State and Ohio, offset, in part, by an
increase in the Federal minimum  wage  rate  from $4.75 per hour to $5.15
per hour which took effect in September 1997.

     Other restaurant operating expenses including  advertising decreased
from 25.2% of sales for the first nine months of 1997  to  24.4%  for the
first  nine  months  of  1998,  due  in  part  to  reduced  utility costs
associated with a milder winter in the Company's operating areas, as well
as  the  effect of higher sales on the fixed components of the  Company's
costs.

     Administrative  expenses,  as  a percentage of sales, decreased from
4.5% in the first nine months of 1997  to  4.4% for the first nine months
of 1998.  The approximate $4.8 million increase  in the first nine months
of 1998 compared to 1997 is due to the addition of  field supervision and
corporate support the 1997 acquisition of 93 Burger King restaurants, the
July  1998  acquisition  of Pollo Tropical and to support  the  Company's
plans for continued expansion.

     Earnings before interest,  taxes, refinancing expenses, depreciation
and amortization ("EBITDA") increased  from  $22.5  million for the first
nine months of 1997 to $39.2 million for the first nine  months  of 1998.
As a percentage of total revenues, EBITDA increased from 10.9% in 1997 to
12.8% in 1998 as a result of the factors discussed above.

     Depreciation  and  amortization  increased $3.7 million in the first
nine months of 1998 compared to 1997 due  primarily  to  the  increase in
goodwill and purchased intangibles associated with the purchase  of Pollo
Tropical,  Inc. in July, 1998 and the purchase of Burger King restaurants
in 1997.

     Interest expense was $14.7 million for the first nine months of 1998
compared to  $11.1  million  for  the  first  nine  months  of 1997.  The
increase in 1998 was due to higher average debt balances from funding the
acquisition  of  Pollo  Tropical  in  July, 1998 and the acquisition  and
construction of Burger King restaurants in 1997.





                                   14
<PAGE>
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
                  OF OPERATIONS AND FINANCIAL CONDITION
                        ________________________


LIQUIDITY AND CAPITAL RESOURCES

     The Company does not have significant  receivables  or inventory and
receives  trade  credit  based  upon negotiated terms in purchasing  food
products and other supplies.  The  Company  is  able  to  operate  with a
substantial working capital deficit because (i) restaurant operations are
conducted on a cash basis (ii) rapid turnover allows a limited investment
in  inventories,  and  (iii)  cash  from sales is usually received before
related  accounts  for  food,  supplies  and  payroll  become  due.   The
Company's cash requirements arise primarily  from the need to finance the
opening and equipping of new restaurants, ongoing capital reinvestment in
its  existing  restaurants,  the  acquisition  of  existing  Burger  King
restaurants, and debt service.

     The Company generated cash flow from operations  in  the  first nine
months of 1998 of approximately $22.3 million, compared with $7.1 million
for the first nine months of 1997.

     The  Company's  capital  expenditures include acquisitions of  $97.3
million and $78.1 million for the  nine  months  ended September 30, 1998
and 1997, respectively.  The Company acquired Pollo Tropical in July 1998
for  $96.6  million.   For the first nine months of 1998  and  1997,  the
Company acquired 2 and 91  Burger King restaurants, respectively, for $.6
million and $78.1 million, respectively.

     Capital expenditures, excluding  acquisitions,  for  the  first nine
months  of 1998 totaled $22.0 million, which included construction  costs
for twelve  new  Burger  King  restaurants,  six  of  which  were open at
September  30,  1998.  Capital expenditures, excluding acquisitions,  for
the  same  period  in   1997   totaled   $11.0  million,  which  included
construction costs for seven new Burger King  restaurants.  The Company's
capital   expenditures   also  include  remodeling  costs   and   capital
maintenance projects for the  ongoing reinvestment and enhancement of its
restaurants.  These expenditures  have increased in 1998 due to growth in
the  number of restaurants and investments  being  made  to  enhance  the
operations  of  the 95 Burger King restaurants the Company acquired since
the beginning of 1997.  Carrols also has projects underway to upgrade its
corporate  information  and  decision  support  systems  along  with  its
restaurant point-of-sale  and management systems.  These systems projects
have  resulted  in  incremental   capital   investments   which   totaled
approximately $2.9 million for the first nine months of 1998.





                                     15
<PAGE>
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
            OF OPERATIONS AND FINANCIAL CONDITION - continued
                        ________________________


LIQUIDITY AND CAPITAL RESOURCES  - continued

The  Company  generated $18.5 million from the sale and leaseback of  two
Burger  King restaurant  properties  and  12  Pollo  Tropical  restaurant
properties  during  the  first nine months of 1998, the proceeds of which
were used to reduce outstanding debt.  Carrols also
paid dividends to its parent  totaling  $3.9  million  for  its  parent's
payment  of dividends on its preferred stock and for the early redemption
of the remaining  $3.6 million in preferred stock which was scheduled for
mandatory redemption in December 1998 and December 1999.

     At September 30,  1998,  the  Company had $130.9 million outstanding
under its existing Senior Credit Facility.   The  Pollo  Acquisition  has
been funded using the Company's existing Senior Credit Facility which was
amended  on July 9, 1998 to modify, among other things, certain financial
covenants  with  respect  to debt to cash flow ratios.  The Company is in
compliance with its debt covenants at September 30, 1998.

     In   1998,   the  Company  anticipates   capital   expenditures   of
approximately $33 million,  excluding  the  cost  of acquisitions.  These
amounts include approximately $15 million for construction  of new Burger
King  restaurants  (including  certain  real  estate) and $8 million  for
ongoing  reinvestment  and  remodeling  of  its  existing   Burger   King
restaurants.   In  1998,  the Company has begun to upgrade its restaurant
point-of-sale and in-restaurant  support systems, and has also undertaken
an upgrade of its corporate information  and  decision  support  systems.
During  1998  and  1999  the  Company  estimates that it will incur total
expenditures for these systems projects  of  $11  to  $12  million.   The
Company  anticipates  total capital expenditures in 1998 of approximately
$5 million for Pollo Tropical,  consisting  primarily of costs related to
the construction of new restaurants.

INFLATION

     The  inflationary  factors  which  have  historically  affected  the
Company's  results  of operations include increases  in  food  and  paper
costs, labor and other  operating  expenses.  Wages paid in the Company's
restaurants are impacted by changes  in  the  Federal  or  state  minimum
hourly wage rates.  Accordingly, changes in the Federal or states minimum
hourly  wage  rate directly affect the Company's labor cost.  The Company
and the restaurant  industry  typically  attempt  to offset the effect of
inflation, at least in part, through periodic menu  price  increases  and
various cost reduction programs.  However, no assurance can be given that
the  Company  will  be able to offset such inflationary cost increases in
the future.

                                   16
<PAGE>
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
            OF OPERATIONS AND FINANCIAL CONDITION - continued
                        ________________________

YEAR 2000

     The Company recognizes the need to ensure its operations will not be
adversely impacted by Year 2000 software failures.  Carrols has addressed
this risk to the availability  and integrity of financial systems and the
reliability of operation systems.   Carrols has projects underway for the
installation of new point-of-sale systems  in its restaurants and for the
replacement  of  a  substantial portion of its  corporate  financial  and
decision support systems.

The primary purpose of  these  projects  is  to improve the efficiency of
Carrols'  restaurant  and  support operations, however,  they  will  also
provide the additional benefit of making its systems Year 2000 compliant.
The Company has purchased point-of-sale  hardware  and  software,  and  a
suite  of  corporate  financial  software  applications  all of which are
designed  and  warranted  to be Year 2000 compliant.  The total  cost  of
these capital projects is anticipated  to be approximately $12 million to
$13 million.  Through September 30, 1998  the  Company  has expended $3.2
million  associated  with  these projects. The majority of the  remaining
expenditures pertain to restaurant point-of-sale hardware.

As of November 13, 1998, the Company has successfully implemented certain
corporate  financial  applications  including  general  ledger,  accounts
payable  and asset management  as  well  as  a  portion  of  its  payroll
processing.   The  remaining  significant corporate support systems to be
implemented  are  restaurant  payroll   and  human  resources,  which  is
anticipated to be implemented by March 31,  1999, and sales and inventory
accounting systems which are anticipated to be  implemented in the second
quarter of 1999.

The Company believes that all of its computer systems  will  be Year 2000
compliant  by  the end of the second quarter of Fiscal 1999. The  Company
has not developed  a  detailed  contingency  plan  due to the anticipated
implementation  dates of the projects above.  The company  is  evaluating
its  implementation  progress  on  an  ongoing  basis  and  will  develop
contingency  plans as needed should its scheduled implementation dates be
modified.  This  is  a  forward looking statement and is subject to risks
and uncertainties, including  the  ability  of  third  party  vendors and
software   provided   by   third   parties  to  effectively  satisfy  the
requirements of being Year 2000 compliant.







                                   17
<PAGE>

                       PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

     There were no material legal proceedings  commenced  by or initiated
against the Company during the reported quarter, or material developments
in any previously reported litigation.

Item 2.  Changes in Securities

     None

Item 3.  Default Upon Senior Securities

     None

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

     None

Item 5.  Other Information

     None

Item 6.  Exhibits and Reports on Form 8K

     (a)  The following exhibit is filed as part of this report.

          EXHIBIT NO.
              27         Financial Data Schedule

     (b)   During  the  quarter  the Company filed the following  current
           reports on Form 8-K:

          .  The Company filed Form  8-K dated July 9, 1998 reporting the
             acquisition of Pollo Tropical,  Inc. under Item 2. Financial
             statements and proforma financial  information  required  by
             Item  7  was  filed  as part of the Company's quarterly 10-Q
             filing for the quarter ended June 30, 1998.











                                   18
<PAGE>




                                SIGNATURE




     Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this  report to be signed on its behalf by
the undersigned thereunto duly authorized.

                                        CARROLS CORPORATION
                                        968 James Street
                                        Syracuse, New York 13203
                                        (Registrant)


November 16, 1998                       /s/                     __
Date                                    (Signature)
                                        Alan Vituli
                                        Chairman and Chief Executive
                                        Officer




November 16, 1998                       /s/
Date                                    (Signature)
                                        Paul R. Flanders
                                        Vice President - Finance




















                                   19