<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
(Mark One)
[X]   Annual report under Section 13 or 15(d) of the Securities Exchange Act of 
      1934

                    FOR THE FISCAL YEAR ENDED JANUARY 2, 1999
                                       or
[ ]   Transition report under Section 13 or 15(d) of the Securities Exchange Act
      of 1934
                         Commission file number 1-12104

                             BACK YARD BURGERS, INC.
                 (Name of small business issuer in its charter)

                  DELAWARE                                    64-0737163
       (State or other jurisdiction of                     (I.R.S. employer
        incorporation or organization)                    identification no.)

            2768 COLONY PARK DRIVE
              MEMPHIS, TENNESSEE                                38118
   (Address of principal executive offices)                   (Zip code)

                                 (901) 367-0888
                           (Issuer's telephone number)

   SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934:

                                                        Name of Each Exchange
            Title of Each Class                          on Which Registered 
            -------------------                         ---------------------

                   None                                          None


   SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE SECURITIES EXCHANGE
                                  ACT OF 1934:

                                                         Name of Each Market
            Title of Each Class                            on Which Listed   
            -------------------                          -------------------

        Common Stock, $.01 par value                    Nasdaq SmallCap Market

         Check whether the issuer (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 X
                     ---    ---

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained herein, and no disclosure will be
contained, to the best of registrant's knowledge in definitive proxy or in
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

         The issuer's revenues for its most recent fiscal year were $27,364,000.

         The aggregate market value of voting common stock held by
non-affiliates on March 1, 1999 was approximately $5,468,926.

         The number of shares outstanding of the issuer's common stock as of
March 1, 1999 was 4,600,397.

================================================================================

         CERTAIN PORTIONS OF PART II ARE INCORPORATED BY REFERENCE FROM THE
ISSUER'S ANNUAL REPORT TO STOCKHOLDERS FOR THE YEAR ENDED JANUARY 2, 1999 AND
CERTAIN PORTIONS OF PART III ARE INCORPORATED BY REFERENCE FROM THE ISSUER'S
PROXY STATEMENT RELATING TO THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY
20, 1999. Transitional Small Business Disclosure Format Yes     No X
                                                           ---    ---

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<PAGE>   2

                                     PART I

ITEM 1.           BUSINESS

GENERAL

         Back Yard Burgers operates and franchises quick-service and fast-casual
restaurants in Memphis, Little Rock, Nashville and other markets across 15
states. Our restaurants specialize in charbroiled, freshly prepared,
great-tasting food. As our name implies, we strive to offer the same
high-quality ingredients and special care typified by outdoor grilling in your
own back yard. Our menu features made-to-order gourmet hamburgers and chicken
sandwiches, charbroiled over an open flame, fresh salads, chili and other
special entrees as well as hand-dipped milkshakes, fresh-made lemonade and
fresh-baked cobblers. As of January 2, 1999, our operations included 33
company-operated restaurants and 48 franchised restaurants.

CORPORATE HISTORY

         The company was incorporated in December, 1986 as Back Yard Burgers,
Inc., a Mississippi corporation, and opened its first restaurant in Cleveland,
Mississippi in March 1987. The company was reorganized under the laws of the
State of Delaware in January 1991. The company consummated its initial public
offering on July 2, 1993 and its common stock has traded on the Nasdaq SmallCap
Market since that time. Unless the context requires otherwise, references in
this annual report to the "company" and its operations mean Back Yard Burgers,
Inc., a Delaware corporation and its subsidiaries.

OPERATING STRATEGY

         Our restaurants are designed to project a backyard theme that
emphasizes charbroiled, freshly prepared, great tasting food, including gourmet
hamburgers, chicken sandwiches and other gourmet sandwich items as customers
would prepare in their own backyard. Our operating strategy includes:

         -        offering a diverse menu of freshly prepared food items that
                  are competitive with the everyday prices of the three largest
                  hamburger chains;

         -        utilizing restaurant designs featuring a single drive-thru
                  concept integrated with an inviting indoor dining area, which
                  projects a uniform image and creates pleasing curb appeal;

         -        serving high quality, great tasting food comparable to that of
                  the best full-service casual restaurants;

         -        providing fast and friendly service with emphasis on a
                  positive customer experience; and

         -        actively training, supervising and supporting franchised and
                  company-operated restaurants.

GROWTH STRATEGY

         During 1999, we will continue to focus on increasing same-store sales
by emphasizing quality food and service. Our growth strategy is to continue to:

         -        set our restaurants apart from the fast-food competition by
                  evolving into a "fast-casual" concept by adding dining rooms
                  to existing locations where possible and enhancing dine-in
                  facilities, so the design and feel of the facilities will
                  match the standards set by the quality of the food;

         -        open additional company-operated restaurants with the
                  "fast-casual" design in selective locations in our existing
                  markets; and

         -        develop additional franchised restaurants with a committed and
                  enthusiastic group of franchisees.

          

<PAGE>   3

RESTAURANT OPERATIONS

         RESTAURANT LOCATIONS. The following tables set forth the number of
restaurants located in each market of the company's system at January 2, 1999.

<TABLE>
<CAPTION>
                         COMPANY-OPERATED:                                               FRANCHISED: 
                         -----------------                                               -----------

              Core Markets           Number of Restaurants                    Core Markets          Number of Restaurants 
              ------------           ---------------------                    ------------          ---------------------

         <S>                         <C>                                 <C>                        <C> 
         Memphis, TN Area                      18                        Kansas City, KS Area                  5            
         Little Rock, AR Area                   9                        Fayetteville, NC Area                 3            
         Nashville, TN Area                     6                        Knoxville, TN Area                    3            
                                               --                        Chattanooga, TN Area                  2 
             Total                             33                        Jackson, MS Area                      2
                                               ==                        Marietta, GA Area                     2

<CAPTION>
                                                                              Other Markets (a)     Number of Restaurants  
                                                                              -------------         ---------------------

                                                                         <S>                        <C>  
                                                                         Mississippi                           6            
                                                                         Arkansas                              4            
                                                                         North Carolina                        4            
                                                                         Alabama                               2            
                                                                         Florida                               2            
                                                                         Kentucky                              2            
                                                                         Missouri                              2            
                                                                         South Carolina                        2            
                                                                         Tennessee                             2            
                                                                         Texas                                 2            
                                                                         Louisiana                             1            
                                                                         Ohio                                  1            
                                                                         Oklahoma                              1 
                                                                                                              --           
                                                                             Total                            48            
                                                                                                              ==            
</TABLE>
                                                                         
         


-----------------------

         (a)      The "Other Markets" portion of the table reflects the total 
number of restaurants located in such markets by state. Other markets for the
restaurants range from small towns to large cities where franchisees have only
one restaurant.



                                        2

<PAGE>   4

         The following table sets forth information as to the sales of both
company-operated and franchised restaurants in operation for the periods
indicated.

<TABLE>
<CAPTION>
                               53-Week Period Ended        52-Week Period Ended
                               --------------------        --------------------
                                January 3, 1998 (a)          January 2, 1999
                                -------------------          ---------------

<S>                            <C>                         <C>  
Company-operated                    $24,150,000                $25,082,000 
Franchised                           31,648,000                 34,482,000 
                                    -----------                ----------- 
System-wide                         $55,798,000                $59,564,000 
                                    ===========                =========== 
</TABLE>


         RESTAURANT OPENINGS AND CLOSINGS. The following table presents an
activity summary of the company-operated and franchised restaurants during the
periods presented.

<TABLE>
<CAPTION>
                                                                     Year Ended                    
                                                     -------------------------------------------   
                                                     12/30        12/28        1/3          1/2    
                                                     1995         1996         1998         1999   
                                                     ----         ----         ----         ----   
                                                                                                   
                  <S>                                <C>          <C>          <C>          <C>    
                  Restaurants (b)                                                                  
                  Company-operated                                                                 
                    Open beginning of period          26           32           34           32    
                    Opened during period               7            3            1            3    
                    Closed during period              (1)          (1)          (3)          (2)   
                                                     ---          ---          ---          ---    
                    Open at end of period             32           34           32           33    
                                                     ---          ---          ---          ---    
                                                                                                   
                  Franchised                                                                       
                    Open beginning of period          39           36           47           45    
                    Opened during period               7           12            5            8    
                    Closed during period             (10)          (1)          (7)          (5)   
                                                     ---          ---          ---          ---    
                    Open at end of period             36           47           45           48    
                                                     ---          ---          ---          ---    
                      Total Restaurants               68           81           77           81    
                                                     ===          ===          ===          ===   
</TABLE>
 
                  
--------------------

         (a)      As a result of the company's fiscal year ending on the 
Saturday closest to December 31, fiscal 1997 contains 53 weeks versus 52 weeks
for fiscal 1998. As a result, sales for fiscal 1997 are not directly comparable
to those of fiscal 1998.

         (b)      Subsequent to January 2, 1999, (1) one franchised restaurant 
closed in Knoxville, Tennessee, (2) one company-operated restaurant opened in a
convenience store in Bartlett, Tennessee, (3) one franchised restaurant opened
in each of Clinton, Mississippi and Maryville, Tennessee and (4) one franchised
restaurant converted to a dining room with a single drive-thru in each of
Anniston, Alabama and Cleveland, Mississippi.



                                        3


<PAGE>   5

         SITE SELECTION. The company believes that the location of a restaurant
is critical to its success. Management inspects each potential restaurant site
prior to final selection of the site. In evaluating particular sites, the
company considers various criteria including traffic count, speed of traffic,
convenient access, size and configuration, demographics and density of
population, visibility and cost. The company also reviews potential competition
and the sales and traffic counts of national and regional chain restaurants
operating in the area. A majority of both company-operated and franchised
restaurants are located on leased land and the company intends to continue to
use leased sites where possible.

         RESTAURANT DESIGN AND SERVICE. The restaurants are built to
company-approved specifications in configurations including:

         -        single drive-thru with indoor dining; and

         -        double drive-thru without indoor dining.

         In limited circumstances, restaurants may be constructed via the
conversion of buildings used previously by other concepts, including other
restaurants. The restaurant size ranges from 820 square feet to 3,400 square
feet. The restaurants also include company-approved interior and exterior decor,
equipment, fixtures, furnishings, signs, parking and site improvements. The
restaurants have a highly visible, distinctive and uniform look that is intended
to appeal to customers of all ages.

         Prior to 1994, the company operated and franchised predominately double
drive-thru restaurants without indoor dining. Since that time, the company has
added a number of indoor dining facilities to its operations, including the
retrofitting of many existing double drive-thru restaurants to include indoor
dining. At January 2, 1999, the number of restaurants with indoor dining was 23
for company-operated facilities and 31 for franchised facilities.

          It is the company's objective to serve customers within 60 seconds of
their arrival at the drive-thru window. Each restaurant has a computerized
point-of-sale system which displays each individual item ordered on a monitor in
front of the food and drink preparers. This enables the preparers to begin
filling an order before the order is completed and totaled and thereby increases
the speed of service to the customer and the number of sales per hour. The
restaurants are generally open from 12 to 15 hours per day, seven days a week,
for lunch, dinner and late-night snacks and meals.

         SUPPLIES. The company and its franchisees purchase their food,
beverages and supplies from company-approved suppliers. All products must meet
standards and specifications set by the company. Management constantly monitors
the quality of the food, beverages and supplies provided to the restaurants. The
company has been successful in negotiating price concessions from suppliers for
bulk purchases of food and paper supplies used by the restaurants. The company
believes that these arrangements have achieved cost savings, improved food
quality and consistency and helped decrease volatility of food and supply costs
for the restaurants. All essential food and beverage products are available or,
upon short notice, could be made available from alternate qualified suppliers.

         MANAGEMENT AND EMPLOYEES. Each company-operated restaurant employs an
average of approximately 25 hourly employees, many of whom work part-time. The
management staff of a typical restaurant operated by the company consists of a
unit supervisor and two co-unit supervisors. Each company-operated restaurant
unit supervisor reports directly to a district manager. The district managers
are able to provide close, hands-on management of each company-operated
restaurant since they have responsibility for only five to eight restaurants.
Each district manager reports directly to a director of operations.



                                        4

<PAGE>   6

         SUPERVISION AND TRAINING. The company believes that training and
personnel development is crucial for the success of the company. The company's
training program is an intensive four week program consisting of both in-store
and classroom training. The in-store training stresses food quality, fast,
friendly customer service, restaurant cleanliness, and proper management
operations of a quick service restaurant. The classroom training consists of
such topics as food safety and sanitation, employment laws and regulations,
interviewing and hiring of employees, and systems to control both food and labor
costs. Prior to opening, each restaurant must have a minimum of three trained
and certified managers that have successfully completed the company training
program.

         For new store openings, the company sends a store opening team for each
new restaurant opening. The team arrives prior to the opening and stays during
the first several days of operation. The primary function of the store opening
team is to ensure a smooth and successful new store opening by assisting the
franchisee's management staff in the training and development of their
employees.

         The company has a staff of three franchise district managers that visit
each restaurant in their territory every eight to ten weeks. Franchise district
managers act as business consultants to franchisees to ensure that each
restaurant is providing quality products and fast, friendly service. The
franchise district manager acts as the communication link between the company
and each franchisee. In addition, the district manager assists in developing
business and marketing plans, as well as assisting in the training and
development of the franchisee's staff. Presently, the company has one franchise
district manager for each 15 restaurants. That ratio will increase as existing
franchisees develop new stores within existing territories. Franchise district
managers are compensated on a fixed salary basis.

         ADVERTISING AND PROMOTION. Marketing promotions are planned by the
company's national marketing committee made up of four company employees and
four franchisees, two chosen by the company's franchise association and two
chosen by the company and certain of its executive officers. Production of some
marketing materials is paid for through a national advertising fund which
collects 1% of taxable sales from each franchisee and company-operated
restaurant. Of that 1%, 50% goes toward the creation of marketing tools such as
advertising copy for use on local radio and television, ad slicks, four-color
art, design and other collateral pieces and marketing expenses and 50% goes
toward testing new products and systems, market research, improvements in
operation methods and techniques or for other such purposes that the company
shall deem to be in the interest of improving operations and earnings of
restaurants.

         Franchisees are required to participate in the seasonal promotions
which are supported by television, radio, newspaper, banners, point-of-purchase
materials and other local store marketing activities. The company's marketing
manual outlines advertising and public relations promotions as well as new store
opening information, grand opening information, trade area surveys and describes
how to write a marketing plan and budget for the franchisee's area. Marketing is
supported by a staff consisting of a marketing director and marketing managers
who coordinate plans and implementation with a national advertising agency.
Approved suppliers are set up to facilitate such things as uniforms and
collateral materials.

         RESTAURANT REPORTING. Each restaurant has a computerized point-of-sale
system monitored by the management of the restaurant. With this system, managers
are able to monitor sales, labor and food costs, customer counts and other
pertinent information every 30 minutes that the restaurant is open. This
information allows a manager to better control labor utilization, inventories
and operating costs. For company-operated restaurants, management monitors
sales, food and labor costs, product mix, inventories and customer counts on a
weekly basis and profit and loss statements and balance sheets on a monthly
basis.



                                        5

<PAGE>   7

FRANCHISE OPERATIONS

         STRATEGY. In addition to the development of company-operated
restaurants, the company will continue to emphasize the development of
additional franchised restaurants expected to be opened pursuant to existing
area development agreements and franchise agreements as well as the pursuit of
additional franchised restaurants pursuant to new area development agreements
and franchise agreements. The company believes that it has attracted a committed
and enthusiastic group of franchisees as a result of the strength of its
concepts and operating strategies.

         FRANCHISEE SUPPORT SERVICES. The company maintains a staff of
well-trained and experienced restaurant operations personnel whose only
responsibilities are to help train and assist franchisees in opening new
restaurants and to monitor the operations of existing restaurants. These
services are provided as part of the company's franchise program. Upon the
opening of a new franchised restaurant, the company sends an opening team to the
restaurant to assist the franchisee during the first several days that the
restaurant is open. This management team works in the restaurant to monitor
compliance with the company's standards as to quality of product and service.
The company employs three franchise district managers, each of whom supervises
franchised restaurants in defined geographic areas. Each franchise district
manager has been fully trained by the company to assist franchisees in
implementing the operating procedures and policies of the company once a
restaurant is open. As part of these services, the franchise service
representative rates the restaurant's hospitality, food quality, speed of
service and cleanliness and maintenance of facilities. The franchisees receive a
written report of the findings and, if any deficiencies are noted, recommended
procedures to be followed to correct such deficiencies.

         The company also provides construction support services to its
franchisees. All site plans must be approved by the company before construction
or site improvements begin. These plans include information detailing building
location, internal traffic patterns and curb cuts, location of utilities,
walkways, driveways, signs and parking lots and a complete landscape plan. The
company also approves all plans and specifications for the restaurant building
to ensure uniformity of design of the building and the site improvements. The
company's personnel also visit the site during construction, to meet with the
franchisees and verify that all standards are met.

         AREA DEVELOPMENT AND FRANCHISE AGREEMENTS. Except in those instances
where a franchisee operates a single restaurant under a single franchise
agreement, each franchisee also is required to execute an area development
agreement. The area development agreement grants to the franchisee the right to
develop and open a specified number of restaurants within a limited period of
time and in a defined geographic territory and thereafter to operate each
restaurant in accordance with the terms and conditions of the franchise
agreement. The franchise agreement grants an exclusive license at a specified
location to operate a restaurant in accordance with the Back Yard Burgers system
and to utilize the company's trademarks, service marks and other rights of the
company relating to the sale of its menu items. The term of a franchise
agreement is 10 years, renewable for successive five year periods, if certain
conditions pertaining to such renewal are met, including the payment of a $500
renewal fee.

         Each area development agreement establishes the number of restaurants
the franchisee is to construct and open in the Territory during the term of the
area development agreement after considering many factors, including the
residential, commercial and industrial characteristics of the area, geographic
factors, population of the area and the previous experience of the franchisee.
The franchisee's development schedule for the restaurants is set forth in the
area development agreement. As of January 2, 1999, the company had entered into
franchise agreements and area development agreements with certain franchisees
which require them to open or have under construction a minimum of 25
restaurants by the end of December 31, 2003. Of the 48 franchised restaurants as
of January 2, 1999, 28 were being operated under area development agreements by
multiple unit franchisees and 20 were being operated under single franchise
agreements by single unit franchisees. The company may revoke an area
development agreement of any franchisee who is unsuccessful in meeting its
projected development schedule. During the past three years, the company has
exercised its right to terminate 9 area development agreements, three during
1998, for lack of performance by multiple unit franchisees with respect to their
projected development schedules. Additionally, during the past three years,
three franchise agreements were terminated because of a lack of performance by
single unit franchisees with respect to certain franchise agreement
requirements. The company



                                        6

<PAGE>   8

believes that its overall experience with franchisees who commit to develop
restaurants under franchise agreements and area development agreements has been
favorable, although there can be no assurance that future performance by
franchisees under these agreements will be successful.

         The franchise agreement and area development agreement require that the
franchisee submit information regarding proposed restaurant sites to the company
for its review. The company does not arrange or make any provisions for
financing the development of restaurants by its franchisees. Each franchisee is
required to purchase all fixtures, equipment, inventory, products, ingredients,
materials and other supplies used in the operation of its restaurants from
approved suppliers, all in accordance with the company's specifications. The
company provides a training program for management personnel of its franchisees.
Under the terms of the franchise agreement, the company has adopted standards of
quality, service and food preparation for franchised restaurants. Each
franchisee is required to comply with all of the standards for restaurant
operations as published from time to time in the company's operations manual.

         The company may terminate a franchise agreement for several reasons,
including among others, the franchisee's bankruptcy or insolvency, default in
the payment of royalties or advertising fees to the company, failure to maintain
standards set forth in the franchise agreement or operations manual, material
violation of any law, ordinance or governmental rule or regulation or cessation
of business. In such event, the company may also elect to terminate a multiple
unit franchisee's area development agreement.

         FRANCHISE FEES AND ROYALTIES. Under the current franchise agreement,
each franchisee is generally required to pay a franchise fee of $25,000. If a
franchisee purchases an area pursuant to an area development agreement, the
franchisee must pay $25,000 for the first restaurant and agree to pay a
franchise fee of $22,000 for each additional restaurant covered under the
agreement. With respect to the area development agreement, the amount of the fee
varies depending upon the number of restaurants the company estimates can be
developed within the territory. Upon signing the area development agreement, the
franchisee will pay to the company a franchise fee of $25,000 for the first
restaurant, plus a $5,000 (per restaurant) area development fee (to be credited
toward any subsequent $22,000 franchise fee) for subsequent restaurants covered
under the area development agreement. For example, for a franchisee whose area
development agreement requires the development of five restaurants, the
franchise fee will be $25,000 for the first restaurant, and $17,000 ($22,000
less $5,000) for each of the next four restaurants for an aggregate total of
$113,000. Each franchisee is also generally required to pay the company a weekly
royalty of 4% of the restaurant's taxable sales and to pay 1% of the
restaurant's weekly taxable sales to the company's national advertising fund.
Each restaurant is required to spend 2% of the restaurant's taxable sales on
local store marketing.

COMPETITION

         RESTAURANT OPERATIONS. The restaurant industry, particularly the fast
food segment, is highly competitive with respect to price, service, food quality
and location and there are numerous well-established competitors possessing
substantially greater financial, marketing, personnel and other resources than
the company. The company believes that its primary direct competitors consist of
McDonald's, Burger King and Wendy's. In addition, there are other national,
regional and local fast food chains, many of which specialize in or offer
hamburger products. The company can also be expected to face competition from a
broad range of other restaurants and food service establishments. Many of the
company's competitors have achieved significant national, regional and local
brand name and product recognition and engage in extensive advertising and
promotional programs, both generally and in response to efforts by additional
competitors to enter new markets or introduce new products. In addition, the
fast food industry is characterized by the frequent introduction of new
products, accompanied by substantial promotional campaigns. In recent years,
numerous companies in the fast food industry have introduced products positioned
to capitalize on growing consumer preference for food products which are, or are
perceived to be, healthful, nutritious, low in calories and low in fat content.
It can be expected that the company will be subject to competition from
companies whose products or marketing strategies address these consumer
preferences. In



                                        7

<PAGE>   9

addition, the market for suitable restaurant locations is highly competitive in
that fast food companies, major restaurant companies and non-food companies
compete for prime real estate sites.

         CERTAIN FACTORS AFFECTING THE FAST FOOD RESTAURANT INDUSTRY. The
company is constantly required to respond to various factors affecting the
restaurant industry, including changes in consumer preferences, tastes and
eating habits, demographic trends and traffic patterns, increases in food and
labor costs and national, regional and local economic conditions. A number of
fast food restaurant companies have recently been experiencing flattening growth
rates and declines in average sales per restaurant, in response to which certain
of such companies have adopted "value pricing" strategies. Such strategies could
have the effect of drawing customers away from companies which do not engage in
discount pricing and could also negatively impact the operating margins of
competitors, including the company, which attempt to match competitors' price
reductions.

         FRANCHISE OPERATIONS. In addition to its restaurant operations, the
company competes with fast food chains, major restaurant chains and other
franchisors for franchisees. Many franchisors, including those in the restaurant
industry have greater market recognition and greater financial, marketing and
human resources.

TRADEMARKS AND SERVICE MARKS

         The company believes its trademarks and service marks have significant
value and are important to its marketing efforts. The company has registered
certain trademarks and service marks (including the name "Great Little Burger")
with the United States Patent and Trademark Office. The company has also
registered the name "Back Yard Burgers" and the kettle and flame design as
service marks. The company's policy is to pursue registration of its marks
whenever possible and to oppose vigorously any infringement of its marks.

GOVERNMENT REGULATIONS

         The company is subject to Federal Trade Commission regulation and
several state laws which regulate the offer and sale of franchises. The company
is also subject to state laws that regulate substantive aspects of the
franchisor -- franchisee relationship. The FTC's Trade Regulation Rule on
Franchising requires the company to furnish to prospective franchisees a
franchise offering circular containing information prescribed by this rule.

         State laws that regulate the offer and sale of franchises and the
franchisor -- franchisee relationship presently exist in a substantial number of
states. Such laws generally require registration of the franchise offering with
state authorities and regulate the franchise relationship by, for example,
requiring the franchisor to deal with its franchisees in good faith, prohibiting
interference with the right of free association among franchisees, limiting the
imposition of standards of performance on a franchisee and regulating
discrimination against franchisees in charges, royalties or fees. Although such
laws may restrict a franchisor in the termination of a franchise agreement by,
for example, requiring "good cause" to exist as a basis for the termination,
advance notice to the franchisee of the termination, an opportunity to cure a
default and a repurchase of inventory or other compensation, these provisions
have not had a significant effect on the company's franchise operations. The
company is not aware of any pending franchise legislation which in its view is
likely to affect significantly the operations of the company. The company
believes that its operations comply in all material respects with rules and the
applicable state franchise laws.

         Each company-operated and franchised restaurant is subject to licensing
and regulation by a number of governmental authorities, which may include
health, sanitation, safety, fire, building and other agencies in the state or
municipality in which the restaurant is located. Difficulties in obtaining or
failure to obtain the required licenses or approvals could delay or prevent the
development of a new restaurant in a particular area. The company is subject to
federal and state environmental regulations, but these have not had a material
effect on the company's operations. More stringent and varied requirements of
local governmental bodies with respect to zoning, land use and environmental
factors could delay or prevent the development of a new restaurant in a
particular area.



                                        8

<PAGE>   10

         The company is also subject to state and federal labor laws that govern
its relationship with its employees, such as minimum wage requirements, overtime
and working conditions and citizenship requirements. Significant numbers of the
company's food service and preparation personnel are paid at rates governed by
the federal minimum wage. Accordingly, further increases in the minimum wage
would increase the company's labor costs and may have an adverse effect on the
company's operating margins.

EMPLOYEES

         As of March 1, 1999, the company employed approximately 1,000 persons
in its restaurant operations, 17 of whom are corporate personnel, 106 of whom
are restaurant management and supervisory personnel and the remainder of whom
are hourly restaurant personnel. Of the 17 corporate employees, 6 are in
management positions and 11 are administrative or office employees.

ITEM 2.           PROPERTIES

         Of the 33 company-operated restaurants as of January 2, 1999, the
company has entered into ground leases, as lessee, for 19 restaurants. The
company owns the real property for six restaurants. The company's leases are
generally written for a term of five to 15 years with one or more five-year
renewal options. The company's average monthly lease cost for the 19
company-operated restaurants located on leased sites is approximately $3,070 per
month. For the eight restaurants where the company leases the building as well
as the site, the average monthly cost is approximately $4,820 per month. Most
leases are treated as operating leases. Leasehold improvements made by the
company generally become the property of the landlord upon expiration or earlier
termination of the lease; however, in most instances, if the company is not in
default under the lease, modular buildings remain the property of the company
and can be removed from the site upon expiration of the ground lease. With
respect to the buildings and equipment relating to the 33 company-operated
restaurants, management believes that its commercial insurance coverage is
adequate. Also see "Business-Restaurant Operations."

         The company's executive offices are located in approximately 4,800
square feet of leased space at 2768 Colony Park Drive, Memphis, Tennessee 38118.
The company's lease provides for a minimum annual rent of $44,500. The company
is currently leasing these offices on a month-to-month basis and is considering
moving to a larger space to accommodate its current and foreseeable needs. Also,
BYB Properties, Inc., a wholly-owned subsidiary of the company, leases nominal
office space at 103 Faulk Road, Suite 200, Wilmington, Delaware 19803. This
lease expires on August 31, 2003, and provides for annual rent of $3,850.

ITEM 3.           LITIGATION

         The company is involved in certain litigation matters incidental to its
business, including, but not necessarily limited to, claims alleging violations
of the Civil Rights Act of 1964 and/or violations of federal and state
discrimination laws. Aside from the cost of defense, such litigation is not
presently considered by management to be material to the financial condition of
the company.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

         No items are reportable hereunder.



                                        9

<PAGE>   11

                                     PART II

ITEM 5.           MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
                  MATTERS

         The company's common stock is traded and quoted on The Nasdaq SmallCap
Market under the symbol "BYBI." The following table sets forth, for all periods
indicated, the high and low bid prices for the common stock as reported by
Nasdaq. Such price information contains inter-dealer prices, without retail
mark-up, mark-down or commissions paid, and may not necessarily reflect actual
transactions.

<TABLE>
<CAPTION>
                  Quarter Ended                          High              Low  
                  -------------                          -----            -----

                  <S>                                    <C>              <C>
                  March 29, 1997.....................    $2.25            $1.75
                  June 28, 1997......................    $2.00            $1.63
                  September 27, 1997.................    $2.00            $1.75
                  January 3, 1998....................    $3.63            $1.94

                  April 4, 1998......................    $3.63            $2.25
                  July 4, 1998.......................    $3.63            $2.63
                  October 3, 1998....................    $2.81            $2.25
                  January 2, 1999....................    $2.38            $1.88

                  Through March 26, 1999.............    $2.13            $1.50
</TABLE>

         At March 26, 1999, the common stock was held of record by approximately
520 record stockholders. On March 26, 1999, the last sale price for the common
stock as reported by Nasdaq was $1.81 per share.

         The company has not paid or declared cash distributions or dividends
and does not intend to pay cash dividends on the common stock or its preferred
stock in the foreseeable future. Future cash dividends, if any, will be
determined by the board of directors based on the company's earnings, financial
condition, capital requirements and other relevant factors.

ITEM 6.           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
                  AND RESULTS OF OPERATIONS

         Incorporated herein by reference from the company's annual report to
the stockholders for the year ended January 2, 1999, filed as Exhibit 13 to this
Form 10-KSB.

ITEM 7.           FINANCIAL STATEMENTS

         Incorporated herein by reference from the company's annual report to
the stockholders for the year ended January 2, 1999, filed as Exhibit 13 to this
Form 10-KSB.

ITEM 8.           CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                  AND FINANCIAL DISCLOSURE

         No items are reportable hereunder.



                                       10

<PAGE>   12

                                    PART III

ITEM 9.           DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         Certain information required herein is incorporated by reference from
the company's definitive proxy statement for the annual meeting of stockholders
to be held May 20, 1999, to be filed pursuant to Regulation 14A. Set forth below
is certain information regarding the company's directors and executive officers.

<TABLE>
<CAPTION>
      NAME                                        AGE                 POSITION
      ----                                        ---                 --------

<S>                                               <C>     <C>  
Lattimore M. Michael                               55     Chairman, Chief Executive Officer and Director

Joseph L. Weiss                                    39     President, Chief Operating Officer and Director

William N. Griffith                                36     Executive Vice President, Sec./Treasurer and Director

Michael C. McDermott                               52     Executive Vice President - Company Operations

Michael G. Webb                                    30     Chief Financial Officer

Stephen C. Reid                                    40     Vice President-Research and Development

W. Kurt Henke                                      40     Director

Stephen J. King                                    47     Director

William B. Raiford, III                            38     Director
</TABLE>

         Mr. Michael has been chairman and chief executive officer of the
company since 1993. From 1987 to 1992, he was the company's president and chief
executive officer. He has been a director since 1987.

         Mr. Weiss has been president and chief operating officer of the company
since 1993. From 1989 to 1993, he was the company's secretary/treasurer. He has
been a director since 1989.

         Mr. Griffith has been executive vice president and secretary/treasurer
of the company since 1993. From 1989 to 1992, he was the company's senior vice
president of operations. He has been a director since 1989.

         Mr. McDermott has been executive vice president - company operations
since September 1996. From April 1996 to September 1996, he was an operating
partner for Wyatt's Cafeterias. From August 1995 to November 1995, he was an
owner/operator of Hudson's Grills. From 1992 to 1995, he was a regional manager
for Country Harvest Buffet, Inc.

         Mr. Webb has been chief financial officer since March 1999. From 1995
to 1999, he was the controller for Shepherd Tissue, Inc. From 1993 to 1995 he
was a senior financial analyst for The Promus Companies. Prior to 1993, Mr. Webb
was an auditor for KPMG Peat Marwick.

         Mr. Reid has been vice president-research and development since 1988.

         Mr. Henke has been a director since 1993. He has been an attorney with
Henke, Heaton & Bufkin since 1992.

         Mr. King has been a director since 1995 and served as chief financial
officer of the company from 1993 until his resignation as of March 19, 1999.
Such resignation was on good terms. Mr. King is a CPA and continues to serve the
company as an outside consultant and director.

         Mr. Raiford has been a director since 1993. He has been an attorney
with, Merkel & Cocke, P.A. since 1989.



                                       11

<PAGE>   13

ITEM 10.          EXECUTIVE COMPENSATION

         Incorporated herein by reference from the company's definitive proxy
statement for the annual meeting of stockholders to be held May 20, 1999, to be
filed pursuant to Regulation 14A.

ITEM 11.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Incorporated herein by reference from the company's definitive proxy
statement for the annual meeting of stockholders to be held May 20, 1999, to be
filed pursuant to Regulation 14A.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated herein by reference from the company's definitive proxy
statement for the annual meeting of stockholders to be held May 20, 1999, to be
filed pursuant to Regulation 14A.

ITEM 13.          EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

<TABLE>
<CAPTION>
 Exhibit
  Number                   Description
  ------                   -----------

 <S>                       <C>  
    3.1                    Restated Certificate of Incorporation.(5)

    3.2                    Amended and Restated By-Laws.(2)

    4.1                    Specimen Common Stock Certificate.(2)

   10.1                    Employment Agreement, dated April 15, 1993, between the Registrant
                           and Lattimore M. Michael.(1)

   10.2                    Form of Employment Agreement executed as of June 6, 1993, between
                           the Registrant and Joseph L. Weiss.(2)

   10.3                    Form of Employment Agreement executed as of June 6, 1993, between
                           the Registrant and William N. Griffith.(2)

   10.4                    Form of Incentive Stock Option Plan of 1993.(1)

   10.5                    Lease, dated February 1, 1990, between Trezevant Properties and the
                           Registrant.(1)

   10.6                    Joint Venture Agreement of Lester's Back Yard Burgers Joint Venture I
                           by and among William L. Lester, Pattie F. Lester, Patricia B. Litow,
                           Elizabeth B. Fox and Back Yard Burgers, Inc., dated November 15,
                           1994.(4)
</TABLE>



                                       12

<PAGE>   14

<TABLE>
   <S>                     <C> 
   10.7                    Joint Venture Agreement of Lester's Back Yard Burgers Joint Venture II
                           by and among William L. Lester, Pattie F. Lester, Patricia B. Litow,
                           Elizabeth B. Fox, Charles B. Fox, David P. Fox and Back Yard Burgers,
                           Inc., dated November 15, 1994.(4)

   10.8                    1995 Employee Stock Purchase Plan of Back Yard Burgers, Inc.(5)

   10.9                    The 1995 Incentive Award Plan of Back Yard Burgers, Inc.(5)

   10.10                   Joint Venture Agreement of Lester's Back Yard Burgers Joint Venture III
                           by and among Pattie F. Lester, Patricia B. Litow, Elizabeth B. Fox,
                           Charles B. Fox, David P. Fox, Alexandra B. Litow, Andrew R. Litow and
                           Back Yard Burgers, Inc., dated September 12, 1995.(5)

   10.11                   Line of Credit Commitment by and between Trust One Bank and Back
                           Yard Burgers, Inc. dated December 20, 1995.(6)

   10.12                   Loan commitment by and between Phoenix Leasing Incorporated and
                           Back Yard Burgers, Inc. dated October 4, 1996. (7)

   10.13                   Loan commitment by and between Trust One Bank and Back Yard
                           Burgers, Inc. dated January 23, 1997. (7)

   10.14                   Capital Contribution Agreement between Back Yard Burgers, Inc. and
                           BYB Properties, Inc. dated October 10, 1997. (8)

   10.15                   Trademark Assignment by Back Yard Burgers, Inc. to BYB Properties,
                           Inc. dated October 10, 1997. (8)

   10.16                   Trademark License Agreement between BYB Properties, Inc. and Back
                           Yard Burgers, Inc. dated October 10, 1997. (8)

   10.17                   Revolving Loan Agreement regarding Uncommitted Line of Credit
                           Agreement from BYB Properties, Inc. to Back Yard Burgers, Inc. dated
                           October 10, 1997. (8)

   10.18                   Promissory Note by and between BYB Properties, Inc. and Back Yard
                           Burgers, Inc. dated October 10, 1997. (8)

   10.19                   Tax Sharing Agreement between BYB Properties, Inc. and Back Yard    
                           Burgers, Inc. dated October 10, 1997. (8)                           
                                                                                               
   10.20                   Loan Agreement by and between Trust One Bank and Back Yard                    
                           Burgers, Inc. dated December 15, 1997. (8)                 
                           
   10.21                   Promissory Note by and between Trust One Bank and Back Yard    
                           Burgers, Inc. dated December 15, 1997. (8)  
</TABLE>



                                       13

<PAGE>   15

<TABLE>
   <S>                     <C> 
   10.22                   Business Loan Agreement by and between Cavalry Banking and Back  
                           Yard Burgers, Inc., dated January 26, 1998. (9)                  
                           
   10.23                   Promissory Note by and between Cavalry Banking and Back Yard                      
                           Burgers, Inc., dated January 26, 1998. (9)                                        
                                                                                                             
   10.24                   Loan Agreement by and between Trust One Bank and Back Yard                        
                           Burgers, Inc., dated February 4, 1998. (9)                                        
                                                                                                             
   10.25                   Promissory Note by and between Trust One Bank and Back Yard                       
                           Burgers, Inc., dated February 4, 1998. (9)                                        
                                                                                                             
   10.26                   Promissory Note by and between Trust One Bank and Back Yard                       
                           Burgers, Inc., dated February 4, 1998. (9)                                        
                                                                                                             
   10.27                   Promissory Note by and between Eagle Bank & Trust Company and                     
                           Back Yard Burgers, Inc., dated March 18, 1998. (9)                                
                                                                                                             
   10.28                   Promissory Note by and between Bank of Mississippi and Back Yard                  
                           Burgers, Inc., dated April 20, 1998. (10)                                         
                                                                                                             
   10.29                   Form of Joint Venture Agreement of Lester's Back Yard Burgers Joint               
                           Venture IV by and among William L. Lester, Pattie F. Lester, Alexandra            
                           B. Litow, Andrew R. Litow and Back Yard Burgers, Inc., dated August               
                           28, 1998.  (11)                                                                   
                                                                                                             
   10.30*                  Promissory Note by and between the Bank of Mississippi and Back Yard              
                           Burgers, Inc. dated October 27, 1998.                                             
                                                                                                             
   10.31*                  Promissory Note by and between the Bank of Mississippi and Back Yard              
                           Burgers, Inc. dated November 10, 1998.                                            
                                                                                                             
   11*                     Statement re: Computation of Net Income per Share.                                
                           

   13*                     Registrant's annual report to stockholders for the 52-week period ended January   
                           2, 1999. Portions of the annual report not specifically incorporated by           
                           reference herein are not deemed to be filed herewith.                             
                           

   21*                     Subsidiaries of the Registrant.
                           
   27*                     Financial Data Schedule (12)


(b)      Reports on Form 8-K

         None
</TABLE>

--------------

* Filed herewith.



                                       14

<PAGE>   16

(1)      Previously filed with the Securities and Exchange Commission (the
         "Commission") as an Exhibit to the Registrant's Form SB-2 on April 20,
         1993 (File No. 33-61356).

(2)      Previously filed with the Commission as an Exhibit to the Registrant's
         Amendment No. 2 to Form SB-2 on June 25, 1993 (File No. 33-61356).

(3)      Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-KSB, dated January 1, 1994 and filed on March 30, 1994.

(4)      Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-KSB, dated December 31, 1994 and filed on March 31, 1995.

(5)      Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-QSB, dated September 30, 1995 and filed on November 14, 1995.

(6)      Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-KSB, dated December 30, 1995 and filed on March 29, 1996.

(7)      Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-KSB, dated December 28, 1996 and filed on March 28, 1997.

(8)      Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-KSB dated January 3, 1998 and filed on April 3, 1998.

(9)      Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-QSB dated April 4, 1998 and filed on May 19, 1998.

(10)     Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-QSB dated July 4, 1998 and filed on August 14, 1998.

(11)     Previously filed with the Commission as an Exhibit to the Registrant's
         Form 10-QSB dated October 3, 1998 and filed on November 17, 1998.

(12)     Submitted electronically to the Securities and Exchange Commission for
         information only.



                                       15

<PAGE>   17


                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                        BACK YARD BURGERS, INC.



                                        By:    /s/ Lattimore M. Michael 
                                               ---------------------------------
                                               Lattimore M. Michael, Chairman
                                               and Chief Executive Officer

                                        Date:  March 31, 1999 
                                               ---------------------------------

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities
indicated on the dates indicated.

<TABLE>
<CAPTION>
Signature                                            Title                                     Date
---------                                            -----                                     ----

<S>                                                  <C>                                       <C> 
/s/ Lattimore M. Michael                             Chairman, Chief Executive Officer         March 31, 1999
--------------------------------------------         and Director
Lattimore M. Michael                                  


/s/ Joseph L. Weiss                                  President, Chief Operating Officer        March 31, 1999
--------------------------------------------         and Director 
Joseph L. Weiss                                       


/s/ William N. Griffith                              Executive Vice President and Director     March 31, 1999
--------------------------------------------
William N. Griffith


/s/ Michael G. Webb                                  Chief Financial Officer and               March 31, 1999
--------------------------------------------         Principal Accounting Officer  
Michael G. Webb                                      


/s/ W. Kurt Henke                                    Director                                  March 31, 1999
--------------------------------------------
W. Kurt Henke


/s/ Stephen J. King                                  Director                                  March 31, 1999
--------------------------------------------
Stephen J. King


/s/ William B. Raiford, III                          Director                                  March 31, 1999
--------------------------------------------
William B. Raiford, III
</TABLE>



                                       16