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                                                                   EXHIBIT 10(b)

                          Foothill Capital Corporation
                     2450 Colorado Avenue, Suite 3000 West
                         Santa Monica, California 90404

                               As of May 15, 2001

FRI-MRD CORPORATION
Attn: Mr. Robert D. Gonda
18831 Von Karman Avenue
Irvine, California 92612

               Re:  Foothill Capital Corporation; Chi-Chi's, Inc., as Borrower,
                    FRI-MRD Corporation, as a Guarantor, Prandium, Inc., as a
                    Guarantor, and each of their Subsidiaries, as Guarantors
                               ---------------------------------------------

Ladies and Gentlemen:

          Reference hereby is made to that certain Amended and Restated Loan and
Security Agreement, dated as of July 19, 2000 (as amended, restated,
supplemented, or otherwise modified from time to time, the "Loan Agreement"), by
and among, on the one hand, FRI-MRD CORPORATION, a Delaware corporation ("FRI-
MRD"), CHI-CHI'S, INC., a Delaware corporation ("Borrower"), and in addition,
for purposes of acknowledging and agreeing to Section 15.11 of the Loan
                                              -------------
Agreement, by PRANDIUM, INC., a Delaware corporation, formerly known as Family
Restaurants, Inc., and each of the Subsidiaries that are signatories thereto,
and, on the other hand, FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill").  Capitalized terms used but not otherwise defined herein shall
have the meanings ascribed to them in the Loan Agreement.

          Borrower and FRI-MRD each acknowledge and agree that unwaived Events
of Default have occurred.  The Events of Default currently known by Foothill
include the following Events of Default (the "Present Events of Default"):

          1.  In violation of the financial covenant contained in Section
                                                                  -------
7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period
-------
of four consecutive fiscal quarters ending December 31, 2000 was $557,000, which
fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for
such period;

          2.  In violation of the financial covenant contained in Section
                                                                  -------
7.20(a) of the Loan Agreement, the actual EBITDA of the Borrower for the period
-------
of four consecutive fiscal quarters ending April 1, 2001 was ($1,500,000), which
fails to satisfy the required minimum EBITDA for the Borrower of $4,500,000 for
such period;

          3.  In violation of the financial covenant contained in Section
                                                                  -------
7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and
-------
FRI-Admin, on a combined basis for the period of four consecutive fiscal
quarters ending December 31, 2000 was $1,970,000, which fails to satisfy the
required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined
basis, of $6,000,000 for such period;
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          4.  In violation of the financial covenant contained in Section
                                                                  -------
7.20(b) of the Loan Agreement, the actual EBITDA of the Borrower, HGI, KKR and
-------
FRI-Admin, on a combined basis for the period of four consecutive fiscal
quarters ending April 1, 2001 was ($1,825,000), which fails to satisfy the
required minimum EBITDA for the Borrower, HGI, KKR and FRI-Admin, on a combined
basis, of $6,000,000 for such period;

          5.  In violation of the financial covenant contained in Section
                                                                  -------
7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four
-------
consecutive fiscal quarters ending December 31, 2000 was ($675,000), which fails
to satisfy the required minimum required EBITDA for KKR of $0 for such period;

          6.  In violation of the financial covenant contained in Section
                                                                  -------
7.20(c) of the Loan Agreement, the actual EBITDA of KKR for the period of four
-------
consecutive fiscal quarters ending April 1, 2001 was ($1,162,000), which fails
to satisfy the required minimum required EBITDA for KKR of $500,000 for such
period;

          7.  In violation of the financial covenant contained in Section
                                                                  -------
7.20(d) of the Loan Agreement, the actual EBITDA of KKR and HGI on a combined
-------
basis for the period of four consecutive fiscal quarters ending April 1, 2001
was $2,559,000, which fails to satisfy the required minimum required EBITDA for
KKR and HGI on a combined basis of $3,000,000 for such period;

          8.  FRI-MRD is in default with respect to its payment obligations
under the Senior Discount Notes and the Senior Secured Discount Notes.

          As a result of the Present Events of Default, Borrower and FRI-MRD
each acknowledge and agree that Foothill has no further obligation to make
Advances or otherwise extend credit to Borrower under the Loan Agreement.

          To provide FRI-MRD with additional time to negotiate a restructuring
of its Indebtedness under the Senior Secured Discount Notes and the Senior
Discount Notes, among other Indebtedness, Foothill agrees to forbear from
exercising its remedies relative to the Present Events of Default during the
Forbearance Period, subject to the satisfaction of each of the following
conditions precedent:

          1.  Concurrently with the execution hereof, Foothill shall have
received a forbearance fee in the amount of $100,000, which forbearance fee
shall be charged to Borrower's Loan Account; and

          2.  Foothill shall have received $4,000,000 (the "Cash Collateral"),
in full in cash, or by wire transfer of immediately available funds, on or
before May 15, 2001, from Borrower to be held by Foothill as cash collateral and
as additional security for the Obligations.

          During the period that the Cash Collateral is held by Foothill as cash
collateral and as additional security for the Obligations, such Cash Collateral
will bear interest at the per annum rate applicable from time to time with
respect to ninety (90) day certificates of deposit offered by Wells Fargo Bank,
National Association, a national banking association.

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          As used herein, Forbearance Period shall mean the period commencing on
the date when each of the above referenced conditions precedent have been
satisfied and continuing through the earliest to occur of: (i) June 15, 2001 (or
such later date as Foothill may designate in writing in its sole discretion);
and (ii) the occurrence of any Event of Default other than a Present Event of
Default.

          The forbearance referenced herein is limited to the specifics hereof,
shall not apply with respect to any facts or occurrences other than those on
which the same are based, shall not excuse future non-compliance with the Loan
Agreement (as it may from time to time be amended), and, except as expressly set
forth herein, shall not operate as a waiver or an amendment of any right, power
or remedy of Foothill, nor as a consent to any further or other matter, under
the Loan Documents.

          This letter agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument and any
of the parties hereto may execute this letter agreement by signing any such
counterpart.  Delivery of an executed counterpart of this letter agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this letter agreement.  Any party delivering an executed
counterpart of this letter agreement by telefacsimile also shall deliver an
original executed counterpart of this letter agreement but the failure to
deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this letter agreement.

          This letter agreement is a Loan Document.

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          Please indicate your agreement with the foregoing by signing in the
space provided below and returning to the undersigned.

                                    FOOTHILL CAPITAL CORPORATION


                                    By  /s/ Teresa Bolick
                                        ----------------------------------

                                    Title  Vice President
                                           -------------------------------

     Acknowledged and Agreed:

     FRI-MRD CORPORATION,
     a Delaware corporation


     By  /s/ Robert D. Gonda
         --------------------------

     Title  Vice President
            -----------------------


     CHI-CHI'S, INC.,
     a Delaware corporation



     By  /s/ Robert D. Gonda
         --------------------------

     Title  Vice President
           ------------------------






     cc:  David Reamer, Esq.
          John Francis Hilson, Esq.


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