UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                            -------------------------


                                    FORM 10-Q


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


For the quarterly period ended                          Commission file number
      SEPTEMBER 8, 1998                                      000-22753
      -----------------                                      ---------


                      TOTAL ENTERTAINMENT RESTAURANT CORP.
             (Exact name of registrant as specified in its charter)



             DELAWARE                                          52-2016614
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                           Identification Number)

                               300 CRESCENT COURT
                             BUILDING 300, SUITE 850
                               DALLAS, TEXAS 75201
               (Address of principal executive offices) (Zip code)

                                 (214) 754-0414
              (Registrant's telephone number, including area code)

               Indicate by check mark whether the  registrant  (1) has filed all
documents  and  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.
                                                                /X/ YES  / / NO


               Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

          CLASS                               Outstanding at October 23, 1998
          -----                                    10,415,000 SHARES
COMMON STOCK, $.01 PAR VALUE                  


<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.

                                      INDEX

                                                                           PAGE
                                                                          NUMBER
                                                                          ------
PART I.   FINANCIAL INFORMATION
-------------------------------

ITEM 1.  FINANCIAL STATEMENTS

        CONDENSED CONSOLIDATED BALANCE SHEETS AT
        SEPTEMBER 8, 1998 AND DECEMBER 30, 1997                               2

        CONDENSED CONSOLIDATED STATEMENTS OF
        INCOME FOR THE TWELVE WEEKS ENDED
        SEPTEMBER 8, 1998 AND SEPTEMBER 9, 1997                               3

        CONDENSED CONSOLIDATED STATEMENTS OF
        INCOME FOR THE THIRTY-SIX WEEKS ENDED
        SEPTEMBER 8, 1998 AND PRO FORMA FOR THE
        THIRTY-SIX WEEKS ENDED SEPTEMBER 9, 1997                              4

        CONDENSED CONSOLIDATED STATEMENT OF
        CASH FLOWS FOR THE THIRTY-SIX WEEKS ENDED
        SEPTEMBER 8, 1998 AND FOR THE PERIOD FROM
        FEBRUARY 7, 1997 (INCEPTION) THROUGH
        SEPTEMBER 9, 1997                                                     5

        NOTES TO CONDENSED CONSOLIDATED
        FINANCIAL STATEMENTS                                                  6

ITEM 2.  MANAGEMENT'S DISCUSSION AND
        ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS                                                 7

PART II.  OTHER INFORMATION
---------------------------

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS                           13

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                    14

                                      - 1 -
<PAGE>
                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             September 8, 1998    December 30, 1997
                                                                             -----------------    -----------------
                                             ASSETS

<S>                                                                            <C>                 <C>        
Current assets:
    Cash and cash equivalents                                                  $   100,881         $ 1,220,598
    Marketable securities, available for sale                                         --             3,315,056
    Inventories                                                                    590,376             396,758
    Pre-opening costs - net                                                        873,850             386,402
    Deferred income taxes                                                          199,754             156,571
    Other current assets                                                           505,933             350,324
                                                                               -----------         -----------
          Total current assets                                                   2,270,794           5,825,709
                                                                                                
Property and equipment, net                                                     20,706,246          12,582,081
Intangible and other assets, net (principally goodwill)                          4,991,191           4,816,479
                                                                               -----------         -----------
               Total assets                                                    $27,968,231         $23,224,269
                                                                               ===========         ===========
                              LIABILITIES AND STOCKHOLDERS' EQUITY                              
                                                                                                
Current liabilities:                                                                            
    Notes payable                                                              $ 2,455,000         $      --
    Accounts payable                                                             1,293,625             823,765
    Other current liabilities                                                      908,393             422,983
                                                                               -----------         -----------
               Total current liabilities                                         4,657,018           1,246,748
                                                                                                
                                                                                                
Deferred income taxes                                                              415,670             312,450
Stockholders' Equity:                                                                           
    Preferred stock                                                                   --                  --
    Common stock                                                                   104,150             104,150
    Additional paid-in capital                                                  20,580,764          20,580,764
    Retained earnings                                                            2,210,629             980,157
                                                                               -----------         -----------
               Total stockholders' equity                                       22,895,543          21,665,071
                                                                               -----------         -----------
               Total liabilities and stockholders' equity                      $27,968,231         $23,224,269
                                                                               ===========         ===========
</TABLE>


                             See accompanying notes

                                      - 2 -

<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                           Twelve weeks ended
                                                                                    Sept. 8, 1998             Sept. 9, 1997
                                                                                 -----------------        -------------------

<S>                                                                                  <C>                         <C>      
Net sales:
    Food and beverage                                                               $ 6,042,657                $ 3,028,242
    Entertainment and other                                                             879,239                    650,461
                                                                                    -----------                -----------
          Total net sales                                                             6,921,896                  3,678,703
Costs and expenses:
    Costs of sales                                                                    1,922,163                    967,522
    Restaurant operating expenses                                                     3,415,245                  1,648,225
    Depreciation and amortization                                                       607,743                    242,919
                                                                                    -----------                -----------
Entertainment and restaurant costs and expenses                                       5,945,151                  2,858,666
                                                                                    -----------                -----------
Entertainment and restaurant operating income                                           976,745                    820,037
General and administrative expenses                                                     560,007                    411,175
Goodwill amortization                                                                    56,346                     54,684
                                                                                    -----------                -----------
Income from operations                                                                  360,392                    354,178

Other income (expense):
    Other income, principally interest                                                    5,360                     41,017
    Interest expense                                                                     (9,285)                   (91,778)
                                                                                    -----------                -----------
Income before income taxes                                                              356,467                    303,417
Provision for income taxes                                                              131,874                    113,781
                                                                                    -----------                -----------
Net income                                                                          $   224,593                $   189,636
                                                                                    ===========                ===========

Basic and diluted earnings per share                                                $      0.02                $      0.02
                                                                                    ===========                ===========
Average shares outstanding                                                           10,415,000                  9,610,000
                                                                                    ===========                ===========
</TABLE>



                             See accompanying notes

                                      - 3 -

<PAGE>
                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                              Company
                                                                                                             Pro Forma
                                                                                                          ----------------
                                                                              Thirty-six                    Thirty-six
                                                                             weeks ended                    weeks ended
                                                                            Sept. 8, 1998                  Sept. 9, 1997
                                                                          ----------------                ----------------

<S>                                                                       <C>                            <C>            
Net sales:
    Food and beverage                                                     $   16,667,860                 $     9,686,806
    Entertainment and other                                                    2,732,364                       2,069,488
                                                                            ------------                    ------------
          Total net sales                                                     19,400,224                      11,756,294
Costs and expenses:                                                                                    
    Costs of sales                                                             5,232,219                       3,097,698
    Restaurant operating expenses                                              8,864,729                       5,304,745
    Depreciation and amortization                                              1,562,352                         707,507
                                                                            ------------                    ------------
Entertainment and restaurant costs and expenses                               15,659,300                       9,109,951
                                                                            ------------                    ------------
Entertainment and restaurant operating income                                  3,740,924                       2,646,344
General and administrative expenses                                            1,680,452                       1,346,135
Goodwill amortization                                                            169,036                         163,144
                                                                            ------------                    ------------
Income from operations                                                         1,891,436                       1,137,065
                                                                                                       
Other income (expense):                                                                                
    Other income, principally interest                                            70,793                          41,165
    Interest expense                                                              (9,463)                       (499,035)
                                                                            ------------                    ------------
Income before income taxes                                                     1,952,766                         679,195
Provision for income taxes                                                       722,294                         254,698
                                                                            ------------                    ------------
Net income                                                                $    1,230,472                 $       424,497
                                                                            ============                    ============
                                                                                                       
Basic and diluted earnings per share                                      $         0.12                 $          0.05
                                                                            ============                    ============
Average shares outstanding                                                    10,415,000                       8,536,667
                                                                            ============                    ============
</TABLE>
                             See accompanying notes.

                                      - 4 -

<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                  For the thirty-six       Period from February 
                                                                                  weeks ended Sept. 8,     7, 1997 (inception) 
                                                                                          1998            through Sept. 9, 1997
                                                                                 ---------------------    --------------------------
<S>                                                                             <C>                          <C>         
 Cash flows from operating activities:
    Net income                                                                  $     1,230,472              $    323,461
    Adjustments to reconcile net income to net cash                                                    
       provided by operating activities:                                                               
          Depreciation and amortization                                               1,731,388                   732,095
          Net change in operating assets and liabilities:                                              
            Change in operating assets                                               (1,695,920)                 (460,936)
            Change in operating liabilities                                           1,058,490                   976,981
                                                                                   ------------               -----------
              Net cash provided by operating activities                               2,324,430                 1,571,601
                                                                                                       
 Cash flows from investing activities:                                                                 
    Purchases of property and equipment                                              (9,214,203)               (2,074,963)
    Proceeds from sale of marketable securities                                       3,315,056                         -
    Cash of companies acquired in Exchange                                                    -                   733,804
                                                                                   ------------               -----------
              Net cash used in investing activities                                  (5,899,147)               (1,341,159)
                                                                                                       
 Cash flows from financing activities:                                                                 
    Net proceeds from sale of stock                                                           -                19,127,532
    Proceeds from note payable to bank                                                2,455,000                10,835,695
    Payment of dividends to certain stockholders                                              -                (1,675,332)
    Payment of notes payable to stockholders                                                  -                (4,530,071)
    Payment of notes payable to affiliates                                                    -                  (233,000)
    Payment of notes payable to banks                                                         -                (4,366,933)
    Payment of revolving notes payable to bank                                                -               (10,835,695)
                                                                                   ------------               -----------
              Net cash provided by financing activities                               2,455,000                 8,322,196
                                                                                   ------------               -----------
                                                                                                       
              Net (decrease) increase in cash and cash equivalents                   (1,119,717)                8,552,639
                                                                                                       
 Cash and cash equivalents at beginning of period                                     1,220,598                     1,000
                                                                                   ------------               -----------
 Cash and cash equivalents at end of period                                     $       100,881              $  8,553,639
                                                                                   ============               ===========
                                                                                                       
 Supplemental disclosure of cash flow information:                                                     
    Cash paid for interest                                                      $         5,327              $    425,527
    Cash paid for income taxes                                                          589,008                   189,790
</TABLE>

                             See accompanying notes.

                                      - 5 -
<PAGE>
                      TOTAL ENTERTAINMENT RESTAURANT CORP.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.      BASIS OF PRESENTATION AND DESCRIPTION OF BUSINESS

        Total Entertainment  Restaurant Corp. (the "Company") was organized as a
Delaware  corporation  on  February  7,  1997,  for the  purpose  of  developing
entertainment  restaurant  locations.  Effective  February 20, 1997, the Company
entered into simultaneous securities exchange transactions pursuant to which the
Company issued an aggregate 8,000,000 shares of its common stock, $.01 par value
per share (the "Common  Stock"),  in exchange for all of the outstanding  common
stock of each of Bailey's  Sports  Grille,  Inc., F&H  Restaurant  Corp.,  Fox &
Hound,  Inc. and Fox & Hound II, Inc. and the remaining 25% minority interest in
each of 505 Entertainment,  Ltd., F&H Dallas, L.P., Midway  Entertainment,  Ltd.
and N. Collins  Entertainment,  Ltd. (the "Exchange").  For further  information
regarding  the Exchange,  reference is made to the  Company's  Form 10-K for the
fiscal year ended  December  30,  1997.  The  unaudited  pro forma  consolidated
statements  of income for the  thirty-six  weeks  ended  September  9, 1997 give
effect to the Exchange as if such transactions occurred on January 1, 1997.

        The unaudited  condensed  consolidated  financial  statements  have been
prepared by the Company, pursuant to the rules and regulations of the Securities
and  Exchange  Commission.   The  information   furnished  herein  reflects  all
adjustments (consisting of normal recurring accruals and adjustments) which are,
in the opinion of management,  necessary to fairly present the operating results
for  the  respective  periods.  Certain  information  and  footnote  disclosures
normally  presented in annual financial  statements  prepared in accordance with
generally  accepted  accounting  principles  have been omitted  pursuant to such
rules and regulations.  These financial statements should be read in conjunction
with the Company's audited  consolidated  financial  statements in its 1997 Form
10-K.  The  results of the  thirty-six  weeks  ended  September  8, 1998 are not
necessarily  indicative  of the results to be expected  for the full year ending
December 29, 1998.

2.      STOCK OPTIONS

        During the thirty-six  week period ended  September 8, 1998, the Company
granted to certain key  employees  stock  options  for 118,579  shares of Common
Stock at exercise  prices  ranging from $3.00 to $7.00 per share pursuant to its
1997 Incentive and Nonqualified Stock Option Plan.

3.       RECENTLY ISSUED ACCOUNTING STANDARDS

        As of December 31, 1997, the Company  adopted  Statement 130,  Reporting
Comprehensive Income.  Statement 130 establishes new rules for the reporting and
display of  comprehensive  income and its components;  however,  the adoption of
this  Statement  had no  impact on the  Company's  net  income or  stockholders'
equity.  The  Company has no items of other  comprehensive  income in any period
presented.

        The Accounting  Standards  Executive Committee recently issued Statement
of Position 98-5, Reporting on Costs of Start-Up Activities,  which will require
the Company to expense  preopening  costs,  including  organizational  costs, as
incurred and to report the initial  adoption as a cumulative  effect of a change
in accounting principle as described in APBO No. 20, Accounting Changes,  during
the first quarter of its fiscal year 1999. The  cumulative  effect upon adoption
would  result in a one-time  charge to income in an amount equal to the net book
value of the Company's  preopening  costs. A resulting benefit of this change is
the discontinuance of amortization expense in subsequent periods.

                                      - 6 -
<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

        The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto included elsewhere in this Form 10-Q.

        The Company  began  operations  February 20, 1997 with three Fox & Hound
and eight Bailey's entertainment  restaurant locations. The Company opened three
Fox & Hound and two Bailey's  locations during the period from February 20, 1997
to December 29, 1997 and seven Fox & Hound locations during the thirty-six weeks
ended September 8, 1998, and currently  operates ten Bailey's units and 13 Fox &
Hound units located in Alabama,  Arkansas,  Illinois,  Indiana,  Iowa, Missouri,
Nebraska,  North Carolina,  Ohio,  Pennsylvania,  South Carolina,  Tennessee and
Texas.

        The  components of the  Company's  net sales are food and  non-alcoholic
beverages,  alcoholic beverages, and entertainment and other. For the thirty-six
weeks ended  September 8, 1998, food and  non-alcoholic  beverages were 30.5% of
total sales, alcoholic beverages were 55.4% of total sales and entertainment and
other were 14.1% of total sales.

        Components of restaurant  operating  expenses include  operating payroll
and fringe  benefits,  occupancy,  advertising  and  promotion.  These costs are
generally  variable  and will  fluctuate  with changes in sales volume and sales
mix. All but one of the Company's locations are leased and provide for a minimum
annual rent,  with some leases calling for additional rent based on sales volume
at the particular location of specified minimum levels.

        Pre-opening  costs  include  labor  costs,  costs of hiring and training
personnel and certain other costs relating to opening new  restaurants,  and are
capitalized  and amortized  over a twelve month period,  beginning in the period
the restaurants open.

        General  and   administrative   expenses   include  all   corporate  and
administrative  functions  that  support  existing  operations  and  provide  an
infrastructure  to support  future  growth.  In  addition,  certain  expenses of
recruiting and training unit management personnel are also included. Management,
supervisory and staff salaries,  employee benefits, travel, information systems,
training, rent and office supplies as well as accounting services fees are major
items of costs in this category.

                                      - 7 -
<PAGE>
                      TOTAL ENTERTAINMENT RESTAURANT CORP.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

        The  following  table  sets  forth  for the  periods  indicated  (i) the
percentages which certain items included in the Condensed Consolidated Statement
of Income bear to net sales, and (ii) other selected operating data:

<TABLE>
<CAPTION>
                                                                        HISTORICAL                HISTORICAL  PRO FORMA (2)
                                                                ------------------------          ----------  -------------
                                                                TWELVE WEEKS ENDED(1)             THIRTY-SIX WEEKS ENDED(1)
                                                                ---------------------             -------------------------
                                                                SEPT. 8,         SEPT. 9,         SEPT. 8,        SEPT. 9,
                                                                  1998             1997             1998            1997
                                                                --------         --------         --------        --------


<S>                                                             <C>             <C>             <C>             <C>    
INCOME STATEMENT DATA:
        Net sales ...........................................     100.0%          100.0%          100.0%          100.0%

        Costs and expenses:
               Costs of sales ...............................      27.8            26.3            27.0            26.4
               Restaurant operating expenses ................      49.3            44.8            45.6            45.1
               Depreciation and amortization ................       8.8             6.6             8.1             6.0
                                                               --------        --------        --------        --------

                    Restaurant costs and expenses ...........      85.9            77.7            80.7            77.5
                                                               --------        --------        --------        --------

        Restaurant operating income .........................      14.1            22.3            19.3            22.5
        General and administrative expenses .................       8.1            11.2             8.7            11.5
        Goodwill amortization ...............................       0.8             1.5             0.9             1.4
                                                               --------        --------        --------        --------
        Income from operations ..............................       5.2             9.6             9.7             9.6
        Other income, principally interest ..................       --              1.1             0.4             0.4
        Interest expense ....................................       0.1             2.5             --              4.2
                                                               --------        --------        --------        --------

        Income before provision for income taxes ............       5.1             8.2            10.1             5.8
        Provision for income taxes ..........................       1.9             3.1             3.8             2.2
                                                               --------        --------        --------        --------

        Net income ..........................................       3.2%            5.1%            6.3%            3.6%


RESTAURANT OPERATING DATA (DOLLARS IN THOUSANDS):
        Annualized average weekly sales per location (3) ....   $ 1,460         $ 1,319         $ 1,543         $ 1,437

        Number of restaurants at end of the period ..........        23              13              23              13

</TABLE>


(1)     The  Company  operates on a fifty-two  or  fifty-three  week fiscal year
        ending the last Tuesday in December. The fiscal quarters for the Company
        consist of accounting periods of twelve,  twelve,  twelve and sixteen or
        seventeen weeks, respectively.

(2)     The pro forma data gives  effect to the  Exchange  as if it  occurred on
        January 1, 1997.

(3)     Annualized  average  weekly  sales per location are computed by dividing
        net sales for full  weeks  open  during the period by the number of full
        weeks open and multiplying the result by fifty-two.

                                     - 8 -

<PAGE>
                      TOTAL ENTERTAINMENT RESTAURANT CORP.


TWELVE WEEKS ENDED SEPTEMBER 8, 1998 COMPARED TO TWELVE WEEKS ENDED 
SEPTEMBER 9, 1997

        Net sales  increased  $3,243,000  (88.2%)  for the  twelve  weeks  ended
September  8, 1998 to  $6,922,000  from  $3,679,000  for the twelve  weeks ended
September 9, 1997,  which is principally  attributable to sales from the ten new
locations  opened since  September  1997. Same store sales increased 1.4% in the
twelve  weeks  ended  September  8, 1998  compared  to the  twelve  weeks  ended
September 9, 1997.

        Costs of sales,  primarily food and beverages increased $955,000 (98.7%)
for the twelve weeks ended  September 8, 1998 to $1,922,000 from $967,000 in the
twelve weeks ended  September 9, 1997,  and  increased as a percentage  of sales
from 26.3% to 27.8%.  This increase is  attributable  to an increase in the food
sales  mix,  which  has a  higher  cost  of  sales  compared  to  beverages  and
entertainment.

        Restaurant  operating  expenses  increased  $1,767,000  (107.2%) for the
twelve weeks ended September 8, 1998 to $3,415,000 from $1,648,000 in the twelve
weeks ended  September 9, 1997,  and increased as a percentage of net sales from
44.8% to 49.3%.  Most of this  increase is  attributable  to higher  labor costs
resulting  from the  increase in food sales mix,  which has a higher  labor cost
compared  to  beverages  and  entertainment,  incremental  labor in the five new
locations opened during the twelve weeks ended September 8, 1998, increased cost
of live entertainment, higher utility costs due to the unseasonably warm weather
and higher maintenance costs.

        Depreciation and amortization increased $365,000 (150.2%) for the twelve
weeks ended  September  8, 1998 to $608,000  from  $243,000 in the twelve  weeks
ended  September 9, 1997,  and  increased as a percentage  of sales from 6.6% to
8.8%.  This increase is due  principally to the  depreciation  and  amortization
relating to the opening of ten new restaurants since September 1997.

        General and  administrative  expenses increased $149,000 (36.2%) for the
twelve  weeks ended  September 8, 1998 to $560,000  from  $411,000 in the twelve
weeks ended September 9, 1997, and decreased as a percentage of sales from 11.2%
to 8.1%. This increase reflects the additional corporate infrastructure added to
enable the Company to rapidly develop  additional  units and operate as a public
company.  Certain  accounting and  administrative  services are contracted  from
Coulter Enterprises, Inc., a restaurant management services company owned by the
Company's  Chairman of the Board. The service  agreement  provides for specified
accounting  and  administrative  services to be provided on a cost  pass-through
basis.  For  fiscal  1998,  the fixed  annual  charge is  $194,500,  plus and an
additional fee of $466 per restaurant per 28-day accounting period.

        On October 19, 1998, Lone Star Steakhouse & Saloon,  Inc. ("Lone Star"),
a restaurant company of which Mr. Coulter is chairman and CEO, purchased certain
assets and assumed certain  liabilities of CEI,  including the current  services
agreement with the Company.  Subsequent to October 19, 1998,  such services will
be provided by Lone Star.

        Other income,  principally  interest,  decreased $36,000 (86.9%) for the
twelve weeks ended  September 8, 1998 to $5,000 from $41,000 in the twelve weeks
ended  September 9, 1997. The interest was earned from the investment of the net
proceeds of the initial public offering of the Company,  which commenced on July
17, 1997 (the  "Initial  Public  Offering").  The  decrease  in interest  earned
resulted from the utilization of the proceeds to develop additional locations.

                                      - 9 -
<PAGE>

        Interest  expense  decreased  $83,000 (89.9%) for the twelve weeks ended
September 8, 1998 to $9,000 from $92,000 in the twelve weeks ended  September 9,
1997. This decrease  reflects the repayment of all debt outstanding  immediately
following the Initial Public Offering.

        The  effective  income tax rate for the twelve weeks ended  September 8,
1998 was 37.0% and the  effective  income  tax rate for the twelve  weeks  ended
September 9, 1997 was 37.5%.  This  decrease was  primarily due to the impact of
tax exempt  interest  income earned  during the twelve weeks ended  September 8,
1998.


THIRTY-SIX WEEKS ENDED  SEPTEMBER 8, 1998 COMPARED TO PRO FORMA  INFORMATION FOR
THE THIRTY-SIX WEEKS ENDED SEPTEMBER 9, 1997

        Net sales increased  $7,644,000  (65.0%) for the thirty-six  weeks ended
September 8, 1998 to $19,400,000 from $11,756,000 for the thirty-six weeks ended
September 9, 1997,  which is principally  attributable to sales from the ten new
locations  opened since  September  1997. Same store sales decreased 0.2% in the
thirty-six  weeks ended September 8, 1998 compared to the thirty-six weeks ended
September 9, 1997.

        Costs of  sales,  primarily  food  and  beverages  increased  $2,134,000
(68.9%) for the  thirty-six  weeks ended  September 8, 1998 to  $5,232,000  from
$3,098,000 in the thirty-six  weeks ended  September 9, 1997, and increased as a
percentage  of sales from 26.4% to 27.0%.  This increase is  attributable  to an
increase  in the food sales mix,  which has a higher  cost of sales  compared to
beverages and entertainment.

        Restaurant  operating  expenses  increased  $3,560,000  (67.1%)  for the
thirty-six  weeks ended  September 8, 1998 to $8,865,000  from $5,305,000 in the
thirty-six  weeks ended  September 9, 1997, and increased as a percentage of net
sales from 45.1% to 45.6%. Most of this increase is attributable to higher labor
costs  resulting  from the increase in food sales mix,  which has a higher labor
cost  compared to beverages  and  entertainment,  and  incremental  labor in the
initial weeks of the new locations.

        Depreciation  and  amortization  increased  $855,000  (120.8%)  for  the
thirty-six  weeks ended  September 8, 1998 to  $1,562,000  from  $707,000 in the
thirty-six weeks ended September 9, 1997, and increased as a percentage of sales
from 6.0% to 8.1%.  This increase is due  principally  to the  depreciation  and
amortization  relating to the  opening of ten new  restaurants  since  September
1997.

        General and  administrative  expenses increased $334,000 (24.8%) for the
thirty-six  weeks ended  September 8, 1998 to $1,680,000  from $1,346,000 in the
thirty-six weeks ended September 9, 1997, and decreased as a percentage of sales
from  11.5%  to  8.7%.   This  increase   reflects  the   additional   corporate
infrastructure  added to enable the Company to rapidly develop  additional units
and operate as a public company.  

        Other income,  principally  interest,  increased $30,000 (72.0%) for the
thirty-six  weeks  ended  September  8,  1998 to  $71,000  from  $41,000  in the
thirty-six  weeks ended  September  9, 1997.  The  interest  was earned from the
investment of the net proceeds of the Initial Public Offering.

        Interest  expense  decreased  $490,000  (98.1%) for the thirty-six weeks
ended  September 8, 1998 to $9,000 from $499,000 in the  thirty-six  weeks ended
September 9, 1997. This decrease  reflects the repayment of all debt outstanding
immediately following the Initial Public Offering.

        The effective  income tax rate for the thirty-six  weeks ended September
8, 1998 was 37.0% and the  effective  income tax rate for the  thirty-six  weeks
ended September 9, 1997 was 37.5%. This decrease was primarily due to the impact
of tax exempt interest income earned during the thirty-six weeks ended September
8, 1998.

                                     - 10 -
<PAGE>


IMPACT OF INFLATION

        The primary  inflationary  factors  affecting the  Company's  operations
include food,  liquor and labor costs.  Although a large number of the Company's
restaurant personnel are paid at the federal minimum wage level, the majority of
personnel are tipped employees, and therefore,  recent as well as future minimum
wage changes will have very little  effect on labor costs.  As costs of food and
labor have  increased,  the Company has  historically  been able to offset these
increases through economies of scale and improved operating procedures. To date,
inflation has not had a material impact on operating margins.

LIQUIDITY AND CAPITAL RESOURCES

        Cash flows from operations were $2,324,000 and purchases of property and
equipment were  $9,214,000 for the  thirty-six  week period ending  September 8,
1998.
        At  September  8,  1998,  the  Company  had  $101,000  in cash  and cash
equivalents.  The Company intends to open fifteen to seventeen locations in 1998
(seven of which were opened during the thirty-six  week period ending  September
8, 1998 and two of which have been opened since September 8, 1998).  Eight units
are currently under construction, and leases have been signed on four additional
sites. The Company  anticipates opening units on four to six leased sites in the
first quarter of fiscal 1999. The Company's development plans beyond these units
will be contingent  upon  maintaining  certain debt to equity levels approved by
the Company's  Board of Directors and no  commitments  for  additional  units in
fiscal 1999 have been made. The Company  expects to expend  approximately  $10.0
million to open the eight new units  through the  remainder of fiscal  1998.  In
order to fund new unit  development,  the Company has entered into a $20 million
line of credit with Intrust Bank, N.A. (the "Intrust Line").

        The Company  believes its cash flow from  operations and funds available
from the Intrust  Line will be  sufficient  to satisfy  its working  capital and
capital expenditure  requirements for at least the next twelve months. There can
be no assurance,  however,  that changes in the Company's  operating  plans, the
acceleration or modification of the Company's expansion plans as outlined above,
lower than anticipated revenues,  increased expenses,  potential acquisitions or
other events will not cause the Company to seek additional financing sooner than
anticipated. There can be no assurance additional financing will be available on
terms acceptable to the Company or at all.

FORWARD LOOKING STATEMENTS

        This  report  contains  certain  forward-looking  statements  within the
meaning of Section 27A of the  Securities  Act of 1933, as amended,  and Section
21E of the  Securities  Exchange  Act of  1934,  as  amended.  Stockholders  are
cautioned that all  forward-looking  statements  involve risks and  uncertainty,
including  without   limitation,   the  ability  of  the  Company  to  open  new
restaurants,  general market conditions,  competition and pricing.  Although the
Company  believes the  assumptions  underlying  the  forward-looking  statements
contained  herein are reasonable,  any of the  assumptions  could be inaccurate,
and,  therefore,  there  can  be no  assurance  the  forward-looking  statements
contained in the report will prove to be accurate.


                                     - 11 -
<PAGE>


RECENTLY ISSUED ACCOUNTING STANDARDS

        In June 1997, the FASB issued SFAS No. 131  "Disclosures  about Segments
of an Enterprise and Related  Information." SFAS No. 131 requires disclosures of
certain  information  about operating  segments and about products and services,
geographic areas in which the Company operates, and their major customers.  This
Statement is effective  for Financial  Statements  for periods  beginning  after
December 15, 1997. In the initial year of application,  comparative  information
for earlier  years is to be  presented.  This  Statement  need not be applied to
interim  periods  in the  initial  year  of  its  application,  but  comparative
information  for interim  periods in the initial  year of  application  is to be
reported  in  Financial  Statements  for  interim  periods in the second year of
application.

        In June 1998,  the FASB issued SFAS No. 133  "Accounting  for Derivative
Instruments and Hedging Activities." SFAS No. 133 defines derivative instruments
and requires  that these items be  recognized  as assets or  liabilities  in the
statement of financial  position.  This  Statement is effective for fiscal years
beginning after June 15, 1999. As of September 8, 1998 the Company does not have
any derivative instruments.


YEAR 2000 COMPLIANCE

        Many software  applications and operational programs written in the past
were not designed to recognize  calendar  dates  beginning in the Year 2000. The
failure  of such  applications  or  systems  to  properly  recognize  the  dates
beginning in the Year 2000 could result in  miscalculations  or system  failures
which could result in an adverse effect on the Company's operations.

        The Company has  instituted  a Year 2000 project to prepare its computer
systems  and  communication  systems  for the Year 2000.  The  project  includes
identification and assessment of all software, hardware and equipment that could
potentially  be affected by the Year 2000 issue and remedial  action and further
testing,  if  necessary.  The Company  believes  that the  majority of its major
systems are Year 2000 compliant and costs to transition the remaining systems to
Year  2000  compliance  are not  anticipated  to have a  material  effect on the
Company's  financial  position  or results of  operations.  

        The  Company is also  contacting  critical  suppliers  of  products  and
services to determine  the extent to which the Company may be vulnerable to such
parties failure to resolve their own Year 2000 issues.  Where  practicable,  the
Company  will  assess and  attempt  to  mitigate  its risks with  respect to the
failure of these  entities  to be Year 2000 ready.  The  effect,  if any, on the
Company's results of operations from the failure of such parties to be Year 2000
ready is not reasonably estimable.



                                     - 12 -

<PAGE>

PART II.  OTHER INFORMATION
--------  -----------------

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
        -----------------------------------------

SECURITIES SOLD

(c) The following unregistered  securities were issued by the Company during the
    twelve weeks ended September 8, 1998:

<TABLE>
<CAPTION>
                                                                           Number of Shares
                                                 Description of           Sold/Issued/Subject        Offering/Exercise
             Date of Sale/Issuance             Securities Issued        to Options or Warrants        Price Per Share
             ---------------------             -----------------        ----------------------        ---------------
<S>              <C>                          <C>                                <C>                       <C>   
                 June 22, 1998                Common Stock Options               13,334                    $ 3.75
                 June 24, 1998                Common Stock Options               11,765                    $ 4.25
                 June 24, 1998                Common Stock Options               11,765                    $ 4.25
                 July 1, 1998                 Common Stock Options               11,765                    $ 4.25
                 July 2, 1998                 Common Stock Options               11,112                    $ 4.50
                 July 17, 1998                Common Stock Options               12,000                    $ 4.00
                 August 10, 1998              Common Stock Options               14,286                    $ 3.50
                 August 12, 1998              Common Stock Options               12,500                    $ 4.00
                 August 24, 1998              Common Stock Options               15,385                    $ 3.25
                 September 3, 1998            Common Stock Options               16,667                    $ 3.00
</TABLE>

           All of the above  options  were  granted  to  certain  key  employees
           pursuant to the 1997 Incentive and Nonqualified  Stock Option Plan or
           to  non-employee  directors  pursuant to the  Directors  Stock Option
           Plan. These options have a vesting period of five years and a life of
           ten  years or a  vesting  period  of three  years  and a life of five
           years, respectively.

           The  issuance  of these  securities  is  claimed  to be  exempt  from
           registration  pursuant to Section 4(2) of the Securities Act of 1933,
           as  amended,  as  transactions  by an issuer not  involving  a public
           offering. There were no underwriting discounts or commissions paid in
           connection with the issuance of any of these securities.

           USE OF PROCEEDS OF INITIAL PUBLIC OFFERING
           ------------------------------------------

           (4)  (vii)   Estimated purchases and installation of
                        furniture, fixtures and equipment             8,259,876


                                     - 13 -


<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
         --------------------------------

Exhibits

The following exhibits are filed as part of this report:
   Exhibit No.
      10.1...................Loan Agreement with Intrust Bank, N.A.
                             dated September 1, 1998.
      10.2...................Promissory Note to Intrust Bank, N.A. issued by the
                             Company, dated September 1, 1998.
      27.....................Financial Data Schedule

Reports on Form 8-K
      None



<PAGE>

                      TOTAL ENTERTAINMENT RESTAURANT CORP.

                                   SIGNATURES

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

                                         TOTAL ENTERTAINMENT RESTAURANT CORP.
                                            (Registrant)

        Date   OCTOBER 23, 1998           /s/ James K. Zielke
               ----------------          -----------------------------------
                                         James K. Zielke
                                         Chief Financial Officer,
                                         Secretary and Treasurer
                                         (Duly Authorized Officer)

                                     - 15 -