UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                                Washington, D. C.
                                        
                                    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 March 29, 1998

                                       OR

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


                        Commission File Number:  0-20716


                                TACO CABANA, INC.

             (Exact name of registrant as specified in its charter)

            DELAWARE                       74-2201241
(State or other jurisdiction of         (I.R.S. Employer
 incorporation or organization)      Identification Number)

                          8918 Tesoro Drive, Suite 200
                           San Antonio, Texas   78217
                    (Address of principal executive offices)
                                        
                         Telephone Number (210) 804-0990
              (Registrant's telephone number, including area code)

     
     
     
          Indicate by check mark whether the registrant (1) has filed all
     reports required to be filed by Section 13 or 15(d) of the Securities
     Exchange Act of 1934 during the preceding 12 months (or for such
     shorter period that the registrant was required to file such reports),
     and (2) has been subject to such filing requirements for the past 90
     days:
     
           Yes   X                         No
     
          Indicate the number of shares of each of the issuer's classes of
     common stock as of the latest practicable date:

                 Class          Outstanding at May 1, 1998
             Common Stock           14,855,600 shares
  

                              TACO CABANA, INC.
                                      INDEX


                                                          Page
                                                         Number

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements  (Unaudited)

Condensed Consolidated Balance Sheets at March 29, 1998        3
and December 28, 1997
                                                             
Condensed Consolidated Statements of Income for the            4
Thirteen Weeks Ended March 29, 1998 and March 30, 1997
                                                            
Condensed Consolidated Statements of Cash Flows for the        5
Thirteen Weeks Ended March 29, 1998 and March 30, 1997
                                                            
Notes to Condensed Consolidated Financial Statements           6
                                                             
                                                             
Item 2.  Management's Discussion and Analysis of Financial     8
Condition and Results of Operations


PART II.  OTHER INFORMATION

Items 1 through 5 have been omitted since the registrant has no reportable
events in relation to the items

Item 6.  Exhibits and Reports on Form 8-K                     14
                                                           
Signature                                                     15
                                                           

















                                TACO CABANA, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

                                          December 28, March 29,
                                              1997        1998
                                         ------------- ----------      
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                  $ 339,000   $ 359,000
Receivables, net                             502,000     469,000
Inventory                                  2,105,000   2,082,000
Prepaid expenses                           1,704,000   1,803,000
Federal income taxes receivable              200,000     199,000
                                          ------------ ----------
Total current assets                       4,850,000   4,912,000
PROPERTY AND EQUIPMENT, net               59,540,000  61,807,000
NOTES RECEIVABLE, net                        344,000     308,000
INTANGIBLE ASSETS, net                    11,293,000  11,156,000
OTHER ASSETS                                 233,000     225,000
                                          ------------ -----------
TOTAL                                      $76,260,000 $78,408,000
                                          ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                           $4,430,000  $3,451,000
Accrued liabilities                         6,266,000   6,759,000
Current maturities of 
long-term debt and capital leases           1,573,000   1,633,000
Line of credit                              4,223,000   1,834,000
                                          ------------ ----------     
Total current liabilities                  16,492,000  13,677,000

LONG-TERM OBLIGATIONS, 
net of current maturities:
Capital leases                              2,357,000   2,303,000
Long-term debt                             11,170,000  15,481,000
                                          ----------- -----------
Total long-term obligations                13,527,000  17,784,000

ACQUISITION AND 
CLOSED RESTAURANT LIABILITIES              9,126,000    7,843,000
DEFERRED LEASE PAYMENTS                      702,000      725,000

STOCKHOLDERS' EQUITY:
Common stock                                 157,000      157,000
Additional paid-in capital                97,095,000   97,248,000
Retained deficit                         (57,278,000) (55,421,000)
Treasury stock, at cost (881,937 shares)  (3,561,000)  (3,605,000)
                                         ------------ -----------
Total stockholders' equity                36,413,000   38,379,000
                                         ------------ -----------
TOTAL                                    $76,260,000  $78,408,000
                                        ============= ===========
                                        
            See Notes to Condensed Consolidated Financial Statements.
                                TACO CABANA, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)


                                        For the Thirteen Weeks Ended
                                        ----------------------------
                                           March 30,   March 29,
                                              1997        1998
                                           ---------   ---------
REVENUES:
Restaurant sales                          $30,100,000  $32,322,000
Franchise fees and royalty income              86,000       85,000
                                          -----------  -----------
  Total revenues                           30,186,000   32,407,000
                                          -----------  -----------
COSTS AND EXPENSES:
Restaurant cost of sales                    9,162,000    9,792,000
Labor                                       8,086,000    8,672,000
Occupancy                                   2,047,000    1,907,000
Other restaurant operating costs            5,476,000    6,002,000
General and administrative                  1,792,000    1,912,000
Depreciation, amortization 
and restaurant opening costs                2,490,000    1,868,000
                                          -----------  -----------
  Total costs and expenses                 29,053,000   30,153,000
                                          -----------  -----------
INCOME FROM OPERATIONS                      1,133,000    2,254,000
                                          -----------  -----------
INTEREST EXPENSE, NET                        (250,000)    (397,000)
                                          -----------  -----------
INCOME BEFORE PROVISION FOR INCOME TAXES      883,000    1,857,000
                                          -----------  -----------
PROVISION FOR INCOME TAXES                   (327,000)           -
                                          -----------  -----------
NET INCOME                                  $ 556,000   $1,857,000
                                          ===========  ===========
BASIC EARNINGS PER SHARE                    $    0.04   $     0.13
                                          ===========  ===========
BASIC WEIGHTED SHARES OUTSTANDING          15,706,537   14,826,138
                                          ===========  ===========
DILUTED EARNINGS PER SHARE                  $    0.04   $     0.12
                                          ===========  ===========
DILUTED WEIGHTED SHARES OUTSTANDING        15,840,405   15,028,731
                                          ===========  ===========


                                        
            See Notes to Condensed Consolidated Financial Statements.

                                TACO CABANA, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                                        For the Thirteen Weeks Ended
                                        ----------------------------
                                           March 30,   March 29,
                                              1997        1998
                                           ---------   ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                  $556,000    $1,857,000
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization           2,490,000   1,668,000
    Deferred income taxes                     348,000           -
    Capitalized interest                      (21,000)    (52,000)
    Changes in operating working
    capital items                          (1,521,000) (1,666,000)
                                           ----------  ----------
Net cash provided by operating activities   1,852,000   1,807,000
                                           ----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment          (2,562,000) (5,075,000)
Proceeds from sales of
  property and equipment                             -   1,251,000
                                           -----------  ----------
Net cash used for investing activities      (2,562,000) (3,824,000)
                                           -----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable
  and draws on line of credit                2,949,000   2,611,000
Principal payments under long-term debt       (911,000)   (639,000)
Principal payments under capital leases        (48,000)    (44,000)
Purchase of treasury stock                           -     (44,000)
Exercise of stock options                            -     153,000
                                            ----------  ----------  
Net cash provided by financing activities    1,990,000   2,037,000
                                            ----------  ----------
NET INCREASE IN CASH                         1,280,000      20,000

CASH AND CASH EQUIVALENTS, 
  beginning of period                          748,000     339,000
                                            ----------  ----------
CASH AND CASH EQUIVALENTS, end of period    $2,028,000    $359,000
                                            ==========  ==========

            See Notes to Condensed Consolidated Financial Statements.

                                TACO CABANA, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                        
                                        
1.  Basis of Presentation

Principles  of Consolidation - The consolidated financial statements  include
all  accounts  of  Taco Cabana, Inc. and its wholly-owned  subsidiaries  (the
Company).   All significant intercompany balances and transactions have  been
eliminated.

The   unaudited  Condensed  Consolidated  Financial  Statements  include  all
adjustments, consisting of normal, recurring adjustments and accruals,  which
the  Company considers necessary for fair presentation of financial  position
and  the results of operations for the periods presented. Certain information
and  footnote disclosures normally included in financial statements  prepared
in  accordance  with  generally  accepted  accounting  principles  have  been
condensed  or  omitted. The interim financial statements should  be  read  in
conjunction with the Company's Annual Report on Form 10-K for the year  ended
December 28, 1997.

Recently  Issued  Accounting Pronouncements: In April  1998,  the  Accounting
Standards  Executive Committee of the American Institute of Certified  Public
Accountants  (AICPA)  issued Statement of Position 98-5,  "Reporting  on  the
Costs  of  Start-Up Activities".  The accounting standard requires entities  to
expense  as incurred all start-up and preopening costs that are not otherwise
capitalizable as long-lived assets. The accounting standard is effective  for
fiscal  years  beginning  after December 15, 1998, with  earlier  application
encouraged.   The  Company adopted the accounting standard during  the  first
quarter  of  1998.  The  cumulative effect of the change  in  the  accounting
principle is not material to the results of operations or financial  position
of the Company.


2.  Earnings per Share

Basic  earnings per share was computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding  for
the  reporting  period.   Diluted earnings per share reflects  the  potential
dilution  that could occur if securities or other contracts to  issue  common
stock  were  exercised  or  converted into common stock.   Outstanding  stock
options issued by the Company represent the only dilutive effect reflected in
diluted  weighted  average shares.  All earnings per share  amounts  for  all
periods have been presented, and where necessary, restated to conform to  the
Statement of Financial Accounting Standards No. 128, Earnings per Share.

The  following table sets forth the computation of basic and diluted earnings
per share:

                                          Thirteen Weeks Ended
                                          --------------------
                                     March 30, 1997   March 29,1998
                                     -------------    -------------  
                                       (Unaudited)     (Unaudited)
                                   
    Numerator for basic and diluted
    earnings per share - net income         $556,000   $1,857,000
    Denominator:
      Denominator for basic earnings
      per share - weighted-average shares 15,706,537   14,826,138
      Effect of dilutive securities -
         Employee stock options              133,868      202,593
                                          ----------   ----------
    Denominator for diluted earnings per share -
      adjusted weighted-average and assumed
      conversions                         15,840,405   15,028,731
                                          ==========   ==========
    Basic earnings per share                $   0.04      $  0.13
                                          ==========   ==========
    Diluted earnings per share              $   0.04      $  0.12
                                          ==========   ==========

3.   Supplemental Disclosure of Cash Flow Information


                                       Thirteen Weeks Ended
                                       --------------------
                                       March 30,   March 29,
                                         1997        1998
                                       ---------   ---------
                                      (Unaudited) (Unaudited)
                                                       
    Cash paid for interest             $ 211,000    $ 385,000   
    Interest capitalized on                     
    construction costs                    21,000       52,000
                                        
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                        
                                        
Introduction

The  Company  commenced operations in 1978 with the opening of  the  first  Taco
Cabana restaurant in San Antonio, Texas.  As of May 1, 1998, the Company had 100
Company-owned restaurants and 11 franchised restaurants.  The Company's revenues
are  derived  primarily from sales by Company-owned restaurants, with  franchise
fees and royalty income currently contributing less than 1% of total revenues.

The  Company opened three, and closed two Company-owned restaurants  during  the
first  quarter  of  1998  for  a  total of 99 company-owned  and  11  franchised
restaurants,  including one joint venture owned, at March 29, 1998.   Subsequent
to  March  29,  1998,  one Company-owned restaurant was  opened  for  a  current
systemwide total of 111 restaurants.
The  following  table  sets  forth  for the  periods  indicated  the  percentage
relationship  to total revenues, unless otherwise indicated, of  certain  income
statement  data.   The  table also sets forth certain restaurant  data  for  the
periods indicated.


                                 Thirteen Weeks Ended
                                ----------------------
                                 March 30,    March 29,
                                   1997         1998
                                -----------  ----------
Income Statement Data:
REVENUES:
     Restaurant sales               99.7%        99.7%
    Franchise fees and
      royalty income                0.3          0.3
                                  ------       ------   
    Total revenues                100.0%       100.0%
                                  ======       ======
COSTS AND EXPENSES:
    Restaurant cost of sales (1)   30.4         30.3
    Labor (1)                      26.9         26.8
    Occupancy (1)                   6.8          5.9
    Other restaurant
      operating costs (1)          18.2         18.6
    General and administrative
      costs                         5.9          5.9
    Depreciation, amortization 
      and restaurant opening costs  8.2          5.8
                                   -----        -----
INCOME FROM OPERATIONS              3.8          7.0
                                   -----        -----
INTEREST EXPENSE                   (0.8)        (1.2)
                                   -----        -----
INCOME  BEFORE INCOME TAXES         2.9          5.7
PROVISION FOR INCOME TAXES         (1.1)           -
                                   -----        -----
NET INCOME                          1.8%         5.7%
                                   =====        =====
Restaurant Data:

COMPANY OWNED RESTAURANTS:
    Beginning of period            104          98
    Opened                           2           3
    Closed                           -          (2)
                                   ---         ---  
    End of period                  106          99
FRANCHISED RESTAURANTS (2):         14          11
                                   ---         ---   
TOTAL RESTAURANTS:                 120         110
                                   ===         ===

(1) Percentage is calculated based upon restaurant sales.
(2) Excludes Two Pesos licensed restaurants.

The Thirteen Weeks Ended March 29, 1998 Compared to the Thirteen Weeks Ended
March 30, 1997

Restaurant Sales.  Restaurant sales increased by $2.2 million, or 7.4%, to $32.3
million  for the first quarter of 1998 from $30.1 million for the first  quarter
in  1997.   The  increase is due primarily to an increase in sales  at  existing
restaurants.   Comparable store sales, defined as Taco Cabana  restaurants  that
have  been  open  18  months or more at the beginning of the quarter,  increased
6.7%.   Management attributes the increase to several factors including  a  more
consistent  marketing program featuring a value meal message,  a  commitment  to
increased staffing levels at existing restaurants, the ongoing reimage  program,
favorable  weather  compared to the first quarter of 1997, and  the  closing  of
underperforming restaurants.  Sales from restaurants opened after March 30, 1997
accounted  for  an increase of $2.5 million. This increase was offset  by  sales
from restaurants which were closed after March 30, 1997 of $1.9 million.

Restaurant  Cost of Sales.  Restaurant cost of sales, calculated as a percentage
of  restaurant sales, decreased to 30.3% in the first quarter of 1998 from 30.4%
for  the  first  quarter  of 1997. The decrease was due primarily  to  continued
improvements  in  the  management  of  food costs  through  utilizing  increased
controls  and improved purchasing programs, including the continued  negotiation
of  favorable  commodity pricing.  In addition, food costs as  a  percentage  of
restaurant   sales  were  favorably  impacted  by  a  menu  price  increase   of
approximately  2%  which  was  implemented during the  first  quarter  of  1998.
Management expects the favorable cost of sales trends to continue during 1998.

Labor.  Labor costs calculated as a percentage of restaurant sales decreased  to
26.8%  during the first quarter of 1998 from 26.9% for the same period in  1997.
Adjusting  for restaurants closed after March 30, 1997, comparable  labor  as  a
percentage  of  restaurant sales in the first quarter of 1997  was  25.2%.   The
increase in comparable labor costs is due to an increase in the minimum wage  in
September 1997, management's continued commitment to increase staffing levels at
the  restaurant level in order to provide a consistent guest experience as  well
as  higher  than  normal  labor  costs at newer  restaurants.   New  restaurants
generally  have higher than normal labor costs for the first four to six  months
of  operations.  Management expects the trend in increased labor as a percentage
of revenues to continue during the remainder of 1998.

Occupancy.   Occupancy costs decreased by $140,000 during the first  quarter  of
1998  compared to the first quarter of 1997.  The decrease is primarily  due  to
the  closure  of  underperforming restaurants during 1997. As  a  percentage  of
restaurant sales, occupancy costs decreased to 5.9% in the first quarter of 1998
compared  to  6.8% in the first quarter of 1997, due to increased sales  at  the
restaurant level.

Other Restaurant Operating Costs.  Other restaurant operating costs increased to
$6.0  million in the first quarter of 1998 compared to $5.5 million in the first
quarter of 1997. As a percentage of restaurant sales, other restaurant operating
costs increased to 18.6% for the first quarter of 1998 compared to 18.2% for the
first  quarter  of  1997.   The  increase is  due  to  increased  marketing  and
promotional  activities as well as increased bonuses at  the  restaurant  level,
offset by a decrease in utilities.  Management expects favorable comparisons  as
a percentage of sales beginning in the second quarter of 1998.

General  and  Administrative.  General and administrative expenses increased  to
$1.9  million for the first quarter of 1998 from $1.8 million in the  comparable
period  of  1997. As a percentage of sales, general and administrative  expenses
remained  constant at 5.9% for the first quarter of 1998 and for the  comparable
period  in  1997.   Management expects this amount to increase  slightly,  as  a
dollar  amount, throughout the remainder of 1998.  The expected increase is  due
primarily to the expected filling of positions which are currently open.

Depreciation,   Amortization  and  Restaurant  Opening   Costs.    Depreciation,
amortization and restaurant opening costs consisted of the following:

                                       Thirteen Weeks Ended
                                      ----------------------
                                      March 30,    March 29,
                                         1997        1998
                                      ---------   ----------
                                     (Unaudited) (Unaudited)
                                                       
    Depreciation of property and 
      equipment                     $ 2,035,000  $ 1,531,000
    Amortization of intangible  
      assets                            416,000      137,000
    Restaurant opening costs             39,000      200,000


Depreciation  expense decreased by approximately $504,000 for the quarter  ended
March  29, 1998 compared to the quarter ended March 30, 1997.  The decrease  was
primarily  due  the  closure  of restaurants and  the  writedown  of  assets  in
conjunction  with  the  special charge recorded in the fourth  quarter  of  1997
offset  by  new  restaurants opened since March 30, 1997, as well  as  continued
capital improvements to existing restaurants.  Amortization of intangible assets
decreased  by  $279,000 for the quarter ended March 29,  1998  compared  to  the
quarter  ended March 30, 1997.  The decrease was primarily due to the  writedown
of  intangible  assets in conjunction with the special charge  recorded  in  the
fourth  quarter of 1997.  Restaurant opening costs increased by $161,000  during
the first quarter of 1998 compared to the same period in 1997, primarily due  to
the opening of three Company owned restaurants during the first quarter of 1998.
See  footnote  1  to Condensed Consolidated Financial Statements  regarding  the
treatment of restaurant opening costs.

Interest  Expense,  net.   Interest expense,  net  of  interest  capitalized  on
construction  costs,  increased to $397,000 in the first quarter  of  1998  from
$250,000  in  the  first quarter of 1997, primarily as a  result  of  additional
borrowings  under  the  Company's  debt facilities.  In  addition,  the  Company
capitalized  $52,000 of interest related to new restaurant construction  in  the
most recent quarter compared to $21,000 during the first quarter of 1997.

Income  Taxes.   Provision for income taxes decreased  to  zero  for  the  first
quarter  of  1998 compared to $327,000, or 37% of income before taxes,  for  the
first quarter of 1997. The decrease in income taxes is due to the recognition of
previously reserved deferred tax assets.

Net Income and Earnings Per Share.  Net income increased to $1.9 million for the
first quarter of 1998 from $556,000 for the same period in 1997.  Net income was
5.7%  of  total revenues for the first quarter in 1998 compared to 1.8%  in  the
first  quarter  of  1997.  Diluted earnings per share was $0.12  for  the  first
quarter  of 1998 compared to $0.04 in the same period of 1997.  The increase  in
net income recorded during the first quarter of fiscal 1998 compared to the same
quarter last year is due to higher sales at existing restaurants, the opening of
six new restaurants during 1997, continued strong cost controls, the closing  of
underperforming  restaurants,  a  reduction  in  depreciation  and  amortization
expense and the lack of a provision for income taxes in the current quarter.


Liquidity and Capital Resources

Historically,  the  Company has financed business and  expansion  activities  by
using  funds  generated from operating activities, build-to-suit leases,  equity
financing,  short  and long-term debt and capital leases. The Company  maintains
credit  facilities  totaling $30.0 million, including a $5.0  million  unsecured
revolving  line of credit. As of May 1, 1998, $16.8 million had been used  under
these commitments.

Net  cash  provided by operating activities was $1.8 million  for  the  thirteen
weeks  ended March 29, 1998, and $1.9 million for the thirteen weeks ended March
30, 1997.

Net  cash  used in investing activities was $3.8 million for the thirteen  weeks
ended  March  29,  1998,  representing primarily capital  expenditures  of  $5.1
million  for  the construction of new restaurants and improvements  to  existing
restaurants.  This was offset by the sale of assets generating $1.3  million  in
proceeds. This compares to $2.6 million in net cash used in investing activities
for  the  thirteen  weeks ended March 30, 1997, representing  primarily  capital
expenditures  for  the  construction  of new  restaurants  and  improvements  to
existing restaurants.

On  April  16,  1997,  the  Company's Board of  Directors  approved  a  plan  to
repurchase up to 1,500,000 shares of the Company's Common Stock. As of March 29,
1998 the Company had repurchased 881,937 shares at an average cost of $4.09  per
share.   The timing, price, quantity and manner of remaining purchases, if  any,
will  be made at the discretion of management and will be dependent upon  market
conditions. The Company has funded the repurchases through available bank credit
facilities,  as  well as the liquidation of the Company's short term  investment
portfolio. Remaining purchases, if any, will be funded through a combination  of
cash provided by operations and available bank credit facilities.

The special charges recorded in 1997 and 1995 included accruals of approximately
$10.2  million to record the estimated monthly lease payments, net  of  expected
sublease  receipts, associated with certain restaurants which have been  closed.
Cash  requirements for this accrual were approximately $713,000 during the first
quarter  of 1998.  During the first quarter of 1998, the Company sold properties
relating  to  the  special charges which resulted in proceeds of  $1.3  million,
which  approximated the carrying value of the assets sold. Subsequent  to  March
29,  1998,  the  company sold properties relating to the special  charges  which
resulted in proceeds of $700,000, which approximated the carrying value  of  the
assets sold.  The Company currently has several closed restaurant properties for
sale  which  were  covered by the special charges.  Although  there  can  be  no
assurance  of  the particular price at which  such property will  be  sold,  the
Company  expects  to receive funds equal to or in excess of the  carrying  value
upon  the actual disposition of this property.  In addition, certain acquisition
and  accrued  liabilities related to the Two Pesos acquisition were  reduced  by
payments of approximately $71,000 during the first quarter of 1998.

     The  Company  believes that existing cash balances,  funds  generated  from
operations, its ability to borrow, and the possible use of lease financing  will
be sufficient to meet the Company's capital requirements through 1998, including
the  planned opening of eight to ten restaurants and the reimaging of 20  to  25
restaurants.   Total  capital  expenditures  related  to  new  restaurants   are
estimated  to  be  $12.0  to  $15.0  million.   The  total  for  other   capital
expenditures, including the cost of the reimagings, is estimated to be  $7.5  to
$8.5  million.  Total capital expenditures for 1998 are expected to  approximate
$19.5 to $23.5 million.


Impact of Inflation

Although  increases  in  labor, food or other operating  costs  could  adversely
affect the Company's operations, management does not believe that inflation  has
had a material adverse effect on the Company's operations to date.

Seasonality and Quarterly Results

The  Company's sales fluctuate seasonally.  Historically, the Company's  highest
sales  and  earnings  occur  in  the second and third  quarters.   In  addition,
quarterly  results  are  affected by the timing of the opening  and  closing  of
stores. Therefore, quarterly results cannot be used to indicate the results  for
the entire year.

Forward-Looking Statements

Statements in this quarterly report, including those contained in the  foregoing
discussion  and  other  items  herein  concerning  the  Company  which  are  (a)
projections  of revenues, costs, capital expenditures or other financial  items,
(b) statements of plans and objectives for future operations, (c) statements  of
future  economic  performance, or (d) statements  of  assumptions  or  estimates
underlying or supporting the foregoing are forward-looking statements within the
meaning  of  Section 27A of the Securities Act of 1933 and Section  21E  of  the
Securities Act of 1934.  The ultimate accuracy of forward-looking statements  is
subject  to  a  wide  range of business risks and changes in circumstances,  and
actual  results  and  outcomes often differ from expectations.   Any  number  of
important factors could cause actual results to differ materially from those  in
the  forward-looking statements herein, including the following:  the timing and
extent of changes in prices; actions of our customers and competitors; state and
federal environmental, economic, safety and other policies and regulations,  any
changes therein, and any legal or regulatory delays or other factors beyond  the
Company's  control;  execution of planned capital projects;  weather  conditions
affecting the Company's operations or the areas in which the Company's  products
are  marketed;  natural  disasters affecting operations;  and  adverse  rulings,
judgments,  or settlements in litigations or other legal matters.   The  Company
undertakes no obligation to publicly release the result of any revisions to  any
such  forward-looking  statements  that  may  be  made  to  reflect  events   or
circumstances   after  the  date  hereof  or  to  reflect  the   occurrence   of
unanticipated events.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The Company has filed the following exhibits with this report:

    10.17 Third amended loan agreement with International Bank of Commerce.
    27.   Financial Data Schedules

No reports on Form 8-K were filed during the period covered by this report.
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.


Dated:  May 11, 1998      Taco Cabana, Inc.
                         
                         
                         
                         
                         
                         David G. Lloyd
                         Senior Vice President, Chief
                         Financial Officer,
                         Secretary and Treasurer
                         
                         
                         
                         
                         Signing on behalf of the registrant
                         and as the principal financial and
                         accounting officer