UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q
          (Mark  One)
          [  X  ]          QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(D)
               OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934

               For  the  quarterly  period  ended

                              FEBRUARY  28,  1998
                              -------------------

                                   OR
          [      ]          TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(D)
               OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934

          For  the  transition  period  from  to

          Commission  file  number                  0-19623
                                  -------------------------

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

     Florida                                                        65-0249329
     -------                                                        ----------
(State  or  other  jurisdiction  of                                    (I.R.S.
Employer
incorporation  or  organization)
Identification  No.)

            6300 N.W. 31st Avenue, Fort Lauderdale, Florida  33309
            ------------------------------------------------------
                   (Address of principal executive offices)
                                  (Zip Code)

                                (954) 973-0000
                                --------------
             (Registrant's telephone number, including area code)

     Indicate  by  check mark whether the registrant (1) has filed all reports
required  to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or for such shorter period that the
registrant  was  required  to  file such reports), and (2) has been subject to
such  filing  requirements  for  the  past  90  days.

                                Yes    X     No
                                    ----

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


         Class                                    Outstanding at April 6, 1998
                                                  ----------------------------
Common  Stock,  $.01  par  value                                    28,244,340





PART  I.    FINANCIAL  INFORMATION
ITEM  1.  FINANCIAL  STATEMENTS.
<TABLE>
<CAPTION>

                                                MIAMI SUBS CORPORATION
                                              CONSOLIDATED BALANCE SHEETS
                                                      (UNAUDITED)



                                                                                           February 28,     May 31,
ASSETS                                                                                         1998           1997
----------------------------------------------------------------------------------------  --------------  ------------
<S>                                                                                       <C>             <C>
CURRENT ASSETS
Cash and cash equivalents (including unexpended marketing fund contributions of. . . . .  $   3,092,000   $ 2,940,000 
 $1,040,000 and $683,000, respectively)
Notes and accounts receivable (net of allowances for uncollectible accounts of $188,000.      1,755,000     2,000,000 
 and $289,000, respectively)
Food and supplies inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        172,000       192,000 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        179,000       191,000 
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      5,198,000     5,323,000 

Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      7,665,000     8,073,000 
Property and equipment - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     11,012,000    11,500,000 
Intangible assets - net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      6,821,000     7,128,000 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        416,000       457,000 

TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  31,112,000   $32,481,000 

LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------------------------------------------                              
CURRENT LIABILITIES
Accounts payable and accrued liabilities . . . . . . . . . . . . . . . . . . . . . . . .  $   4,254,000   $ 4,737,000 
Current portion of notes payable and capitalized lease obligations . . . . . . . . . . .      1,242,000     1,706,000 
Total Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      5,496,000     6,443,000 

Long-term portion of notes payable and capitalized lease obligations . . . . . . . . . .      5,776,000     6,288,000 
Deferred franchise fees and other deferred income. . . . . . . . . . . . . . . . . . . .      1,733,000     2,088,000 
Accrued liabilities and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      2,210,000     2,154,000 

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized 50,000,000 shares; 28,244,340
 shares outstanding. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        283,000       283,000 
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     24,565,000    24,565,000 
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (7,344,000)   (7,733,000)
                                                                                             17,504,000    17,115,000 
Note receivable from sale of stock . . . . . . . . . . . . . . . . . . . . . . . . . . .       (563,000)     (563,000)
Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     (1,044,000)   (1,044,000)
Total Shareholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     15,897,000    15,508,000 

TOTAL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $  31,112,000   $32,481,000 
----------------------------------------------------------------------------------------  --------------  ------------

See accompanying notes to consolidated financial statements.
</TABLE>



<TABLE>
<CAPTION>

                                                  MIAMI SUBS CORPORATION
                                            CONSOLIDATED STATEMENTS OF INCOME
                                                       (UNAUDITED)






                                                                            Three Months Ended February 28,
                                                                            --------------------------------       
REVENUES                                                                                  1998                   1997
--------------------------------------------------------------------------  --------------------------------  -----------
<S>                                                                         <C>                               <C>
Restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                      4,209,000  $ 6,397,000
Revenues from franchised restaurants . . . . . . . . . . . . . . . . . . .                           907,000    1,116,000
Net gain from sales of restaurants . . . . . . . . . . . . . . . . . . . .                             1,000      227,000
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           159,000      139,000
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           103,000      116,000
                                                                            --------------------------------  -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         5,379,000    7,995,000
                                                                                                 -----------  -----------

EXPENSES
--------------------------------------------------------------------------                                               
Restaurant operating costs (including lease costs paid to Kavala, Inc. of
 $41,000 and $39,000, respectively). . . . . . . . . . . . . . . . . . . .                         3,948,000    6,041,000
General, administrative and franchise costs. . . . . . . . . . . . . . . .                           688,000    1,225,000
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . .                           357,000      446,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                           194,000      221,000
                                                                            --------------------------------  -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         5,187,000    7,933,000
                                                                                                 -----------  -----------

Income before provision for income taxes . . . . . . . . . . . . . . . . .                           192,000       62,000
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . .                            71,000            -
                                                                            --------------------------------  -----------

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                        121,000  $    62,000
                                                                                                ===========   ===========

Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                            .00  $       .00
                                                                            ================================  ===========

Weighted average shares outstanding. . . . . . . . . . . . . . . . . . . .                        27,119,000   28,244,000
==========================================================================  ================================  ===========






See accompanying notes to consolidated financial statements.
</TABLE>




<TABLE>
<CAPTION>


                                                 MIAMI SUBS CORPORATION
                                            CONSOLIDATED STATEMENTS OF INCOME
                                                       (UNAUDITED)






                                                                            Nine Months Ended February 28,
                                                                            -------------------------------       
REVENUES                                                                                 1998                   1997
--------------------------------------------------------------------------  -------------------------------  -----------
<S>                                                                         <C>                              <C>
Restaurant sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                    13,341,000  $22,818,000
Revenues from franchised restaurants . . . . . . . . . . . . . . . . . . .                        3,262,000    3,337,000
Net gain from sales of restaurants . . . . . . . . . . . . . . . . . . . .                           17,000      884,000
Interest income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          546,000      395,000
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          278,000      215,000
                                                                                                -----------  -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       17,444,000   27,649,000
                                                                                                -----------  -----------

EXPENSES
--------------------------------------------------------------------------                                              
Restaurant operating costs (including lease costs paid to Kavala, Inc. of
 $124,000 and $137,000, respectively). . . . . . . . . . . . . . . . . . .                       12,749,000   21,186,000
General, administrative and franchise costs. . . . . . . . . . . . . . . .                        2,406,000    4,043,000
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . .                        1,086,000    1,440,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          600,000      694,000
                                                                            -------------------------------  -----------
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       16,841,000   27,363,000
                                                                                               ------------  -----------

Income before provision for income taxes . . . . . . . . . . . . . . . . .                          603,000      286,000
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . .                          214,000
                                                                            -------------------------------   ----------

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                       389,000  $   286,000
                                                                                                ===========  ===========

Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                           .01  $       .01
                                                                            ===============================  ===========

Weighted average shares outstanding. . . . . . . . . . . . . . . . . . . .                       27,119,000   28,244,000
==========================================================================  ===============================  ===========





See accompanying notes to consolidated financial statements.
</TABLE>




<TABLE>
<CAPTION>


                                                    MIAMI SUBS CORPORATION
                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (UNAUDITED)


                                                                                Nine Months Ended February 28,
                                                                               --------------------------------        
OPERATING ACTIVITIES:                                                                        1998                    1997
                                                                               --------------------------------  ------------
<S>                                                                            <C>                               <C>
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                       389,000   $   286,000 
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . .                          760,000     1,095,000 
Amortization of intangible assets . . . . . . . . . . . . . . . . . . . . . .                          326,000       345,000 
Net gain from sales of restaurants. . . . . . . . . . . . . . . . . . . . . .                          (17,000)     (884,000)
Changes in assets and liabilities:
(Increase) in accounts receivable . . . . . . . . . . . . . . . . . . . . . .                         (153,000)      (68,000)
Decrease in food and supplies inventories . . . . . . . . . . . . . . . . . .                           20,000       137,000 
Decrease (increase) in other current assets . . . . . . . . . . . . . . . . .                           12,000       (60,000)
Decrease (increase) in other assets . . . . . . . . . . . . . . . . . . . . .                           22,000        76,000 
(Decrease) in accounts payable and accrued liabilities. . . . . . . . . . . .                         (483,000)   (1,874,000)
Decrease (increase) in deferred fees and accrued liabilities. . . . . . . . .                         (272,000)      263,000 
                                                                                                    -----------  ------------
Net Cash Provided By (Used For) Operating Activities. . . . . . . . . . . . .                          604,000      (684,000)
                                                                                                    -----------  ------------

INVESTMENT ACTIVITIES:
Capital expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         (215,000)     (534,000)
Proceeds from sales of restaurants. . . . . . . . . . . . . . . . . . . . . .                           20,000       807,000 
Payments received on notes receivable . . . . . . . . . . . . . . . . . . . .                          719,000       830,000 
                                                                               --------------------------------  ------------
Cash Provided By Business Investment Activities . . . . . . . . . . . . . . .                          524,000     1,103,000 
                                                                                                    ----------   ------------

FINANCING ACTIVITIES:
Repayment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                       (1,400,000)   (1,183,000)
New borrowings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                          424,000 
Cash (Used For) Financing Activities. . . . . . . . . . . . . . . . . . . . .                         (976,000)   (1,183,000)
                                                                                                   ------------  ------------

INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . . . . . . .                          152,000      (764,000)

CASH AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . .                        2,940,000     3,103,000 
                                                                                                   -----------   ------------

CASH AT END OF PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                     3,092,000   $ 2,339,000 
                                                                                                   ===========   ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $                       604,000   $   696,000 
                                                                               ================================  ============
Loans to franchisees in connection with sales of restaurants. . . . . . . . .  $                       345,000   $ 3,270,000 
=============================================================================  ================================  ============
Acquisition of restaurants in exchange for notes receivable . . . . . . . . .  $                       432,000 
=============================================================================  ================================  ============

See accompanying notes to consolidated financial statements.
</TABLE>




                            MIAMI SUBS CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.          BASIS  OF  PRESENTATION

In  the  opinion  of  management,  the  accompanying  unaudited  consolidated
financial  statements contain all adjustments, which are of a normal recurring
nature,  necessary for a fair presentation of the Company's financial position
and results of operations for the periods presented.  The financial statements
have been prepared by the Company pursuant to the rules and regulations of the
Securities  and Exchange Commission.  Accordingly, they do not include all the
information  and  footnotes  required  for  annual  financial statements.  The
financial  statements  included  herein should be read in conjunction with the
financial statements presented in the Company's Annual Report on Form 10-K for
the  year  ended  May  31,  1997.

Results  of  operations  reported  for  interim  periods  are  not necessarily
indicative  of  results  for  the  entire  fiscal  year.

2.          REVENUES  FROM  FRANCHISED  RESTAURANTS

     Revenues  from  franchised  restaurants  consist  of  the  following:
<TABLE>
<CAPTION>



                                        THREE MONTHS ENDED FEBRUARY 28,
                                        -------------------------------                    
                                                                            1998         1997
                                                                         -----------  ----------
<S>                                     <C>                              <C>          <C>
Royalties                                                                $  930,000   $  896,000
Franchise and development fees                                               51,000      220,000
Sublease rental income (expense) - net                                      (74,000)           -
                                                                         -----------  ----------
Total                                                                    $  907,000   $1,116,000
                                                                         ===========  ==========

                                        Nine Months Ended February 28,
                                        -------------------------------                         
                                                                               1998         1997
                                                                         -----------  ----------
Royalties                                                                $2,738,000   $2,796,000
Franchise and development fees                                              296,000      474,000
Sublease rental income - net                                                 38,000       67,000
Cancellation of development agreements                                      190,000            -
                                                                         -----------  ----------
Total                                                                    $3,262,000   $3,337,000
                                                                         ===========  ==========


</TABLE>



3.                    NOTES  AND  ACCOUNTS  RECEIVABLE

          Notes  and  accounts  receivable  consist  of  the  following:
<TABLE>
<CAPTION>



                                                       February 28,     May 31,
                                                           1998           1997
                                                      --------------  ------------
<S>                                                   <C>             <C>
Notes receivable . . . . . . . . . . . . . . . . . .  $   8,684,000   $ 9,437,000 
Royalties and other receivables due from franchisees        817,000       867,000 
Other. . . . . . . . . . . . . . . . . . . . . . . .        107,000        58,000 
                                                      --------------  ------------
Total. . . . . . . . . . . . . . . . . . . . . . . .      9,608,000    10,362,000 
Less allowance for doubtful accounts . . . . . . . .       (188,000)     (289,000)
                                                      --------------  ------------
                                                          9,420,000    10,073,000 
Less notes receivable due after one year . . . . . .     (7,665,000)   (8,073,000)
                                                      --------------  ------------
Notes and accounts receivable-current portion. . . .  $   1,755,000   $ 2,000,000 
====================================================  ==============  ============
</TABLE>



Notes  receivable  principally  result  from sales of restaurant businesses to
franchisees  and  are generally guaranteed by the purchaser and collateralized
by  the restaurant businesses and assets sold.  The notes are generally due in
monthly  installments  of  principal and interest, with interest rates ranging
principally  between  8%  and  11%.

     4.          INCOME  TAXES

The  Company's  federal income tax returns for fiscal years 1991 through 1996,
inclusive,  have been examined by the Internal Revenue Service and the IRS has
issued reports for such years reflecting substantial adjustments to previously
filed  tax  returns.    The Company, through its outside counsel, has appealed
many  of  the  proposed  adjustments.  If the Company is not successful in its
appeal,  the  Company's  net  operating loss carryovers would be substantially
absorbed  by  the  proposed  adjustments and significant amounts of additional
taxes  and  penalties  would  be  due.   The Company is unable at this time to
determine  the  ultimate  potential  impact of the proposed adjustments on the
carryovers  and  on  its  overall  tax  liability.

5.          STOCK  OPTIONS  AND  WARRANTS

At  May  31,  1997,  there  were 4,416,700 stock options outstanding under the
Company's  stock  option plan, of which 2,457,500 of such options subsequently
expired or were terminated.  There are currently 2,543,200 options outstanding
under  the  plan.    As  a result of a repricing of certain options to current
market  value  and grants of 584,000 new options during June 1997, 2.1 million
of  the currently outstanding options are principally exercisable at $ .75 per
share, and the remaining options outstanding under the plan are exercisable at
prices  between $2.00 and $2.69 per share (average exercise price of $2.32 per
share).   In addition to options outstanding under the plan, there are 509,600
additional  warrants  and  options outstanding which are exercisable at prices
between  $2.00  and  $6.00 per share (average exercise price $2.91 per share).

6.          EARNINGS  PER  SHARE

In the third quarter of the current fiscal year, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128), for
all  periods  presented.    Under  FAS  128, earnings per share is computed by
dividing  net  income available to common shareholders by the weighted average
number  of  common shares outstanding during the period.  Diluted earnings per
share  reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
Earnings  per share under FAS 128 for all prior periods presented was the same
as  the  previously reported amounts.  Diluted earnings per share was the same
as  earnings  per  share for all periods presented since the exercise price of
outstanding  options  and  warrants to purchase common shares was greater than
the  average  market  price  of  the  common  shares.

7.          RELATED  PARTY  TRANSACTIONS

In February 1998, the Company entered into a management agreement with Mr. Gus
Boulis,  chairman  of  the  board  and chief executive officer of the Company,
whereby  the Company will manage an existing Miami Subs Grill restaurant owned
by  Mr.  Boulis  for a fee of 5.0% of the restaurant's gross restaurant sales.
The  agreement  can  be  cancelled  by  either  party  upon  notice.

In  November  1997,  an  existing  Miami  Subs Grill restaurant which had been
closed  by  the  Company,  was  reopened as a co-branded test unit with Arthur
Treacher's,  Inc.  ("Treacher's").    Treacher's is operating and managing the
restaurant,  and  the Company and Treacher's will share in the net profits (if
any)  from operation of the restaurant based on the percentage relationship of
each  concept's  sales  in  the  unit to total unit sales.  Treacher's and the
Company  have  also agreed to expand the co-branding test to an additional six
to nine restaurants.  Mr. Bruce Galloway, who is a director of the Company, is
also  chairman  of  the  board  and  a  director  of  Treacher's.

8.          SUBSEQUENT  EVENT

On March 3, 1998, the Company reported that it had received a letter of intent
containing  an  offer to be acquired by Arthur Treacher's, Inc. in a stock for
stock  merger.    In order to fully consider the offer, the Company's board of
directors  has engaged Raymond James & Associates, Inc. to advise the board on
the  financial  aspects  of  the  offer.



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

INTRODUCTION
------------

The  Company's  revenues  are derived principally from operating, franchising,
and  financing Miami Subs restaurants.  Franchise revenues consist principally
of  initial  franchise  fees  and  area  development  fees,  royalty fees, and
sublease  rental  income which is presented in the financial statements net of
direct lease expenses.  In the normal course of its business, the Company also
derives  income  from  the  sale  of  restaurants to franchisees, and interest
income  from  financing  the  sale  of  restaurants  to  franchisees.

Restaurant  operating  costs  include  food and paper costs, direct restaurant
labor  and  benefits,  marketing  fees  and  costs, and all other direct costs
associated  with operating the Company's restaurants.  General, administrative
and  franchise  costs  relate  both  to  Company  operated restaurants and the
Company's  franchising  operations.

The Company's revenues and expenses are directly affected by the number, sales
volumes, and profitability of its Company operated restaurants.  Revenues, and
to a lesser extent expenses, are also affected by the number and sales volumes
of  franchised  restaurants.   Initial franchise fees and any gain on sales of
restaurants  are  directly  affected  by  the  number of restaurants opened by
franchisees,  and  the  number,  price and cost of Company restaurants sold to
franchisees  during  the  period.

Since  the  first  quarter  of the prior year, the Company has embarked upon a
strategy  aimed at expanding its franchise system, which has included the sale
to  franchisees  of  many  Company-operated  restaurants.  As a result of this
strategy,  the  Company has reduced the number of Company operated restaurants
from 25 at February 28, 1997, to 15 at February 28, 1998.  As a result of this
conversion  from  Company  to  franchise  operations, the Company's restaurant
sales  and  total  revenues  have  declined  significantly from prior periods.

In  order  to  supplement its growth of traditional free-standing restaurants,
the  Company  has  continued  to  focus  growth on franchising non-traditional
restaurants.    Such  restaurants  are  typically  smaller  and less costly to
develop  and operate then the traditional free-standing restaurants, and sales
at  these  non-traditional restaurants, and resulting royalties payable to the
Company, are typically less than those of traditional restaurants.  During the
nine  months  ended February 28, 1998, 10 new non-traditional restaurants were
opened by franchisees, and at February 28, 1998, there were 30 non-traditional
restaurants  in  the  system.

Although  the  Company  has  recently  achieved  a level of profitability, the
Company's  ability  to  sustain  profitability in the future will, among other
factors,  be  dependent  on  improvement  of  sales  and  operating margins in
existing  Company  and  franchised  restaurants,  sustaining and improving the
collection  of  royalty  fees, note payments, and lease obligations due to the
Company  from  franchisees,  successful  expansion  of its franchise base, its
ability  to  control  future  operating costs, and the successful operation of
existing  and  new  restaurants  on  a  profitable  basis.

The  Company's  fiscal year ends on May 31.  The results of operations for the
three  and  nine months ended February 28, 1998 are not necessarily indicative
of  the  results  that  may  be  expected  for  the  Company's  fiscal  year.

During  the  nine  months  ended  February 28, 1998, 14 franchised restaurants
opened  (of  which ten were non-traditional restaurants), and eight franchised
restaurants  and  one  Company  restaurant  closed.   In addition, the Company
sold/transferred  three  Company-operated  restaurants  to  franchisees,  and
reacquired two restaurants from former franchisees in exchange for outstanding
notes  payable  to  the  Company.    At  February  28,  1998,  there  were 192
restaurants  in  the system, consisting of 15 Company operated restaurants and
177  franchised restaurants.  At February 28, 1997, there were 185 restaurants
in  the  system,  consisting  of  25  Company  operated  restaurants  and  160
franchised  restaurants.

COMPARISON  OF  THREE  MONTHS  ENDED  FEBRUARY  28,  1998 TO FEBRUARY 28, 1997
------------------------------------------------------------------------------

Total  Revenues
---------------

Principally as a result of the conversion from Company to franchise operations
and  resulting  sales  of  Company  restaurants  to franchisees, total Company
revenues  declined  32.7%  to $5.4 million in the third quarter of the current
year,  as  compared  to  $8.0  million in the third quarter of the prior year.

Restaurant  Sales
-----------------

The  Company's  total  restaurant  sales decreased approximately 34.2% to $4.2
million  in the current quarter, as compared to $6.4 million in the prior year
quarter.   The decrease in sales resulted principally from the sale of Company
operated restaurants to franchisees, resulting in a reduction in the number of
Company  operated  restaurants from 25 at February 28, 1997, to 15 at February
28,  1998.

"Same-store-sales"  in  Company  operated  restaurants  (computed  for  those
restaurants  which  have  been  open 18 months or more at the beginning of the
quarter) declined by approximately 0.9% in the current quarter (an improvement
from  (6.4)%  in  the  first  quarter  and (4.6)% in the second quarter of the
current  year).    Since  March  1997,  the  Company has implemented strategic
changes  to  its  operating  and  marketing  programs,  provided  alternative
lower-priced  menu items, and focused on improving the level of service in its
restaurants.    Principally  as  a result of these changes, the Company's core
Florida restaurants have experienced weekly comparable increases in unit guest
counts  throughout  the  current  quarter,  and  improved  unit  volumes  and
comparable sales levels as compared to earlier periods.  Although there can be
no  assurances  that these efforts will continue to be successful, the Company
intends  to  continue  these  strategies  and efforts in order to improve unit
sales  volumes  and  profitability.

At  February  28,  1998,  Company operated restaurants were located in Florida
(8),  Texas  (6),  and New York (1).  Five of the Company operated restaurants
located  in  Texas are currently under contract to be sold, however, there can
be  no  assurance  that  the  sale  of  these restaurants will be consummated.

Revenues  From  Franchised  Restaurants
---------------------------------------

Revenues  from  franchised  restaurants  amounted  to  $907,000 in the current
quarter,  as  compared  to  $1,116,000  in  the  prior  year  quarter.

In the current year's third quarter, one non-traditional franchised restaurant
opened  and three franchised restaurants closed.  In the year earlier quarter,
seven  new  franchised  restaurants  opened,  and  four restaurants previously
operated  by  the  Company were franchised.  Total initial franchise fees from
the  opening/sale  of  franchised  restaurants  were  $51,000  in  the current
quarter, as compared to $220,000 in the prior year quarter.  Royalty income in
the current quarter amounted to $930,000, as compared to $896,000 in the prior
year  quarter.    Although  royalty income increased in the current quarter, a
decrease of approximately 5.8% in "same-store-sales" at franchised restaurants
(computed for franchised restaurants which have been open 18 months or more at
the  beginning  of the quarter), lower average unit sales, and the non-payment
and  non-accrual  of  royalty  fees  due  from  franchisees adversely affected
royalty  income  in  the current quarter.  At February 28, 1998, approximately
22% of franchised units have been granted a temporary reduction or waiver from
paying  royalty  fees,  and  royalty  fees  were not paid or accrued on 18% of
certain  other franchised units due to delinquency in the payment of royalties
to  the  Company.

By  the end of the first quarter of the current year the Company had initiated
throughout  the  franchise  system  significant  and  strategic changes to its
marketing  strategy,  pricing  structure  and  menu, in order to improve guest
counts  and unit sales in the restaurants and become more competitive on price
points  with  other  fast-food  operators.    Principally as a result of these
efforts,  same store sales at franchised restaurants improved to (5.8)% in the
current  quarter,  as  compared  to (10.4)% and (8.0)% in the first and second
quarters,  respectively,  of  the current year.  Although recent sales results
have  shown  improvement,  overall  franchised sales continue to be lower than
comparable  sales  in the year earlier period.  There can be no assurance that
these  efforts will ultimately be successful in reversing the same store sales
trends,  increasing  unit  volumes,  or  improving  restaurant  profitability.

At  February  28,  1998,  the  Company  subleased/leased  18  properties  to
franchisees  which were delinquent in their lease payments to the Company, and
the  Company  leased two properties from landlords which are currently vacant,
resulting  in  net  rental  expense  in  the  current  quarter.   Eight of the
delinquent  leases  are  in  formal  default and the Company is pursuing lease
termination and eviction of the tenants.  Subsequent to February 28, 1998, the
Company  terminated  five  of  the  leases that were in default and reacquired
possession  of  the  restaurants.    The  Company  is currently evaluating the
reacquired  restaurants  and  plans  to  sell the restaurants and re-lease the
properties  to  new  franchisees.  However, there can be no assurance that the
restaurants  will  be  sold  or  leased  on  terms  acceptable to the Company.

System-Wide  Sales
------------------

System-wide  sales,  which includes sales from Company operated and franchised
restaurants,  amounted  to approximately $36.1 million in the current quarter,
as  compared  to  $36.5  million  in  the prior year quarter.  The decrease in
system-wide  sale  reflects  a  decline in "same store sales" for both Company
operated  and  franchised  restaurants  of  approximately  5.6% in the current
quarter  (an  improvement  from (10.1)% in the first quarter and (7.3)% in the
second  quarter  of the current year), the increased number of non-traditional
restaurants  in  the  system  which  typically  have  lower sales volumes than
traditional restaurants, and continuation of intense industry-wide competition
and  aggressive  price  discounting  and  marketing  by large national chains.

Net  Gain  From  Sales  of  Restaurants
---------------------------------------

Although  no  Company  operated  restaurants were sold in the current quarter,
five  Company  operated

restaurants  are  under  contract  to  be  sold.    As a part of the Company's
strategy  to focus growth and operations in franchising, the Company sold four
Company  restaurants  to franchisees in the year earlier quarter, resulting in
net  gains  recognized  by  the  Company  of  $227,000.   Gains on the sale of
restaurants  are  dependent  on  the  Company's  basis  in  and  the  overall
performance  of  such  units.   Gains realized are recorded as income when the
sales  are consummated and other conditions are met, including the adequacy of
the  down  payment  and the completion by the Company of its obligations under
the  contracts.   Losses on the sale of restaurants are recognized at the time
of  sale.    At  February  28,  1998,  total  deferred gains from the sales of
restaurants  amounted  to  $847,000,  and  notes  receivable  from the sale of
restaurants  totaled  approximately  $8.6  million.    Five  Company  operated
restaurants  are currently under contract to be sold, however, there can be no
assurance  that  the  sale  of  these  restaurants  will  be  consummated.

Interest  Income
----------------

In  connection  with  its  strategy  of  focusing  growth  and  operations  in
franchising,  the  Company  has  sold  restaurants to franchisees and provided
financing  for  such  sales.  Principally as a result of the increase in notes
receivable  from  such  sales,  interest  income  increased to $159,000 in the
current  quarter,  as  compared  to  $139,000 in the year earlier quarter.  At
February  28,  1998  fifteen  notes receivable were delinquent, of which eight
notes  were formally in default.  Subsequent to February 28, 1998, the Company
reacquired  five  restaurants  from  franchisees  whose  notes  payable to the
Company  were  in default.  The Company is currently evaluating the reacquired
restaurants  and  plans  to sell the restaurants to new franchisees.  However,
there can be no assurance that the restaurants will be sold or leased on terms
acceptable  to  the  Company.    The  Company  is  pursuing  collection of the
remaining  notes  which  are in default or delinquent, which may result in the
reacquisition of additional restaurants by the Company.  The Company currently
plans  to  sell additional restaurants to franchisees, and it is expected that
such  sales,  when  and  if consummated, will also be financed by the Company.

Restaurant  Operating  Costs
----------------------------

Restaurant  operating  costs  in Company operated restaurants amounted to $3.9
million  or 93.8% of sales in the current quarter, as compared to $6.0 million
or  94.4%  of  sales  in  the  prior  year quarter.  The modest improvement in
restaurant  operating  costs  as  a percent of sales in the current quarter is
principally the result of a change in the mix of Company restaurants resulting
from  sales of restaurants.  Company restaurant margins in the current quarter
have been affected by higher food and paper costs as a result of certain lower
prices  currently  being offered in the restaurants, and higher labor costs as
the  Company  has  increased  staffing  in  order to improve customer service.

General,  Administrative  and  Franchise  Costs
-----------------------------------------------

General,  administrative  and franchise costs amounted to $688,000 or 12.8% of
total  revenue  in  the  current  quarter,  as  compared to approximately $1.2
million  or 15.3% of total revenue in the prior year quarter.  As discussed in
Item 1. Legal Proceedings, in connection with the court's ruling on the appeal
of  a  pending legal matter, the Company reduced its legal accrual by $159,000
in  the  current quarter, which reduced general and administrative expenses in
the  current  quarter.

Effective  in  the  third  quarter  of  the prior year, the Company eliminated
certain  administrative  and  support  positions,  implemented  a reduction in
office/administration  facilities,  and  took  other  cost  control  measures
resulting  in  a decrease in recurring operating costs as compared to the year
earlier  level.   The Company is maintaining strict cost controls in all areas
of  its  business,  and does not currently expect any significant increases to
current  levels.

Depreciation  and  Amortization
-------------------------------

Depreciation  and  amortization  decreased  in  the current quarter due to the
reduction  in the number of restaurants operated by the Company in the current
quarter  as  compared  to  the year earlier period.  At February 28, 1998, the
Company  operated 15 restaurants as compared to 25 restaurants at February 28,
1997.

Interest  Expense
-----------------

Interest  expense decreased to $194,000 in the current quarter, as compared to
$221,000  in the prior year quarter, principally reflecting lower average debt
levels  outstanding  in  the  current  quarter.

Provision  for  Income  Taxes
-----------------------------

The  Company's  federal income tax returns for fiscal years 1991 through 1996,
inclusive,  have been examined by the Internal Revenue Service and the IRS has
issued reports for such years reflecting substantial adjustments to previously
filed  tax  returns.    The Company, through its outside counsel, has appealed
many  of  the  proposed  adjustments.  If the Company is not successful in its
appeal,  the  Company's  net  operating loss carryovers would be substantially
absorbed  by  the  proposed  adjustments and significant amounts of additional
taxes  and  penalties would be due.  Due to the possible loss of net operating
loss  carryovers,  the  Company is providing for estimated income taxes on its
current  operating  results.

COMPARISON  OF  NINE  MONTHS  ENDED  FEBRUARY  28,  1998  TO FEBRUARY 28, 1997
------------------------------------------------------------------------------

Total  Revenues
---------------

Principally as a result of the conversion from Company to franchise operations
and  resulting  sales  of  Company  restaurants  to franchisees, total Company
revenues  declined  approximately  36.9% to $17.4 million for the current nine
month  period,  as  compared  to  $27.6 million for the nine month period last
year.

Restaurant  Sales
-----------------

The  Company's  total  restaurant sales decreased approximately 41.5% to $13.3
million  in the current nine month period, as compared to $22.8 million in the
prior year nine month period.  The decrease in sales resulted principally from
the  sale  of  Company  operated  restaurants  to  franchisees, resulting in a
reduction  in  the  number of Company operated restaurants from 25 at February
28,  1997,  to  15  at  February  28,  1998.

"Same-store-sales"  in  Company  operated  restaurants  (computed  for  those
restaurants  which  have  been  open 18 months or more at the beginning of the
year) declined by approximately 4.0% in the current period.  Since March 1997,
the  Company  has implemented strategic changes to its operating and marketing
programs,  provided  alternative  lower-priced  menu  items,  and  focused  on
improving the level of service in its restaurants.  Principally as a result of
these  changes, the Company's core Florida restaurants have experienced weekly
comparable increases in unit guest counts since August 1997, and improved unit
volumes  and  comparable  sales  levels  as compared to earlier periods.  Same
store  sales  in  Company  operated  restaurants  has improved from (6.4)% and
(4.6)%  in  the  current  year's  first  and second quarters, respectively, to
(0.9)%  in the third quarter of this year.  Although there can be no assurance
that  these  efforts  will  continue  to be successful, the Company intends to
continue  these  strategies and efforts in order to improve unit sales volumes
and  profitability.

At  February  28,  1998,  Company operated restaurants were located in Florida
(8),  Texas  (6),  and New York (1).  Five of the Company operated restaurants
located  in  Texas are currently under contract to be sold, however, there can
be  no  assurance  that  the  sale  of  these restaurants will be consummated.

Revenues  From  Franchised  Restaurants
---------------------------------------

Revenues  from  franchised  restaurants  amounted to $3,262,000 in the current
nine  month  period,  as  compared  to  $3,337,000  in  the prior year period.

In  the  current nine month period, 14 franchised restaurants opened (of which
10 were non-traditional restaurants), two franchised restaurants were acquired
by  the  Company,  three Company operated restaurants were sold/transferred to
franchisees,  and  nine franchised restaurants closed.  In the prior year nine
month period, 14 franchised restaurants opened, and 12 restaurants operated by
the  Company  were  franchised.    Total  initial  franchise  fees  from  the
opening/transfer  of  franchised  restaurants  were  $296,000  in  the current
period, as compared to $474,000 in the year earlier period.  Royalty income in
the  current  period  amounted to $2,738,000, as compared to $2,796,000 in the
prior  year period.  A decrease of approximately 8.3% in "same-store-sales" at
franchised  restaurants  (computed  for franchised restaurants which have been
open 18 months or more at the beginning of the year), lower average unit sales
at franchised restaurants, and the non-payment and non-accrual of royalty fees
due from franchisees has adversely affected royalty income in the current nine
month  period.    At  February  28,  1998,  approximately  22%  of  franchised
restaurants  have  been  granted  a  temporary reduction or waiver from paying
royalty  fees,  and  royalty  fees  were not paid or accrued on 18% of certain
other franchised restaurants due to delinquency in the payment of royalties to
the  Company.

By  the end of the first quarter of the current year the Company had initiated
throughout  the  system  significant  and  strategic  changes to its marketing
strategy,  pricing  structure  and  menu, in order to improve guest counts and
unit sales in the restaurants and become more competitive on price points with
other  fast-food  operators.    Principally as a result of these efforts, same
store  sales  at  franchised  restaurants  improved  to  (5.8)% in the current
quarter,  as  compared to (10.4)% and (8.0)% in the first and second quarters,
respectively,  of  the current year.  Although recent sales results have shown
improvement,  overall  franchised  sales  continue to be lower than comparable
sales in the year earlier period.  There can be no assurance that these recent
efforts  will  ultimately  be  successful  in  reversing  the same store sales
trends,  increasing  unit  volumes,  or  improving  restaurant  profitability.

At  February  28,  1998,  the  Company  subleased/leased  18  properties  to
franchisees  which were delinquent in their lease payments to the Company, and
the  Company  leased two properties from landlords which are currently vacant,
resulting in a reduction in net rental income in the current period.  Eight of
the  delinquent leases are in formal default and the Company is pursuing lease
termination and eviction of the tenants.  Subsequent to February 28, 1998, the
Company  terminated  five  of  the  leases that were in default and reacquired
possession  of  the  restaurants.    The  Company is  currently  evaluating the 
reacquired  restaurants  and plans to sell the restaurants  and  re-lease  the 
properties to new franchisees.  However, there can  be  no  assurance  that  the
restaurants will be sold or leased on terms acceptable  to  the  Company.

Included in franchise fee income in the current nine month period was $190,000
resulting  from  the  termination  of  an area development agreement.  No such
income  was  recognized  in  the  year  earlier  period.

System-Wide  Sales
------------------

System-wide  sales,  which includes sales from Company operated and franchised
restaurants,  amounted  to  approximately  $109.7  million in the current nine
month  period,  as  compared  to $112.8 million in the prior year period.  The
decrease in system-wide sale reflects a decline in "same store sales" for both
Company  operated  and  franchised  units of approximately 7.8% in the current
nine  month period, the increased number of non-traditional restaurants in the
system  which typically have lower sales volumes than traditional restaurants,
and  continuation  of  intense  industry-wide competition and aggressive price
discounting  and  marketing  by  large  national  chains.

Net  Gain  From  Sales  of  Restaurants
---------------------------------------

As  a  part of the Company's strategy to focus future growth and operations in
franchising,  the  Company  sold/transferred  three restaurants to franchisees
during the current nine month period.  Twelve Company restaurants were sold to
franchisees in the year earlier period.  Total net gains recognized from sales
of  Company restaurants in the current period amounted to $17,000, as compared
to  $884,000 in the year earlier period.  Gains on the sale of restaurants are
dependent on the Company's basis in and the overall performance of such units.
Gains realized are recorded as income when the sales are consummated and other
conditions  are  met,  including  the  adequacy  of  the  down payment and the
completion  by  the Company of its obligations under the contracts.  Losses on
the  sale  of restaurants are recognized at the time of sale.  At February 28,
1998, total deferred gains from the sales of restaurants amounted to $847,000,
and  notes  receivable from the sale of restaurants totaled approximately $8.6
million.  Five Company operated restaurants are currently under contract to be
sold,  however,  there  can be no assurance that the sale of these restaurants
will  be  consummated.

Interest  Income
----------------

In  connection  with  its  strategy  of  focusing  growth  and  operations  in
franchising,  the  Company  has  sold  restaurants to franchisees and provided
financing  for  such  sales.  Principally as a result of the increase in notes
receivable  from  such  sales,  interest  income  increased to $546,000 in the
current nine month period, as compared to $395,000 in the year earlier period.
At  February 28, 1998 fifteen notes receivable were delinquent, of which eight
notes  were formally in default.  Subsequent to February 28, 1998, the Company
reacquired  five  restaurants  from  franchisees  whose  notes  payable to the
Company  were  in default.  The Company is currently evaluating the reacquired
restaurants  and  plans  to sell the restaurants to new franchisees.  However,
there  can  be  no  assurance  that  the  sale  of  these  restaurants will be
consummated.   The Company is pursuing collection of the remaining notes which
are  in  default  or  delinquent,  which  may  result  in the reacquisition of
additional  restaurants  by  the Company.  The Company currently plans to sell
additional  restaurants  to  franchisees,  and it is expected that such sales,
when  and  if  consummated,  will  also  be  financed  by  the  Company.

Restaurant  Operating  Costs
----------------------------

Restaurant  operating  costs in Company operated restaurants amounted to $12.7
million  or  95.6%  of  sales in the current nine month period, as compared to
$21.2  million  or  92.8%  of sales in the prior year period.  The increase in
restaurant  operating  costs  as  a  percent  of  sales  in the current period
reflects higher food and paper costs as a result of the lower prices currently
being  offered  in  the  restaurants,  higher  labor  costs as the Company has
increased staffing in order to improve customer service, and also reflects the
impact  of  lower  average  unit  volumes.

General,  Administrative  and  Franchise  Costs
-----------------------------------------------

General,  administrative and franchise costs amounted to $2.4 million or 13.8%
of total revenue in the current nine month period, as compared to $4.0 million
or  14.6%  of  total  revenue  in  the  prior  year  period.

During  the  second  half  of  the  prior year, the Company eliminated certain
administrative  and  support  positions,  implemented  a  reduction  in
office/administration  facilities,  and  took  other  cost  control  measures
resulting  in  a decrease in recurring operating costs as compared to the year
earlier level.  Costs in the current period also reflect certain non-recurring
reductions  to  expenses  totaling  approximately $125,000, and a reduction of
$159,000  in  the  accrual  for  a  pending  legal  matter  (see Item 1. Legal
Proceedings).  The Company is maintaining strict cost controls in all areas of
its  business,  and  does  not  currently  expect any significant increases to
current  levels.

Depreciation  and  Amortization
-------------------------------

Depreciation  and  amortization decreased in the current nine month period due
to  the  reduction in the number of restaurants operated by the Company in the
current  period as compared to the year earlier period.  At February 28, 1998,
the  Company operated 15 restaurants as compared to 25 restaurants at February
28,  1997.

Interest  Expense
-----------------

Interest  expense  decreased  to $600,000 in the current nine month period, as
compared  to  $694,000  in the prior year period, principally reflecting lower
average  debt  levels  outstanding  in  the  current  period.

Provision  for  Income  Taxes
-----------------------------

The  Company's  federal income tax returns for fiscal years 1991 through 1996,
inclusive,  have been examined by the Internal Revenue Service and the IRS has
issued reports for such years reflecting substantial adjustments to previously
filed  tax  returns.    The Company, through its outside counsel, has appealed
many  of  the  proposed  adjustments.  If the Company is not successful in its
appeal,  the  Company's  net  operating loss carryovers would be substantially
absorbed  by  the  proposed  adjustments and significant amounts of additional
taxes  and  penalties would be due.  Due to the possible loss of net operating
loss  carryovers,  the  Company is providing for estimated income taxes on its
current  operating  results.



LIQUIDITY  AND  CAPITAL  RESOURCES

During  the current nine month period, the Company's principal sources of cash
were  from  principal  payments  received on notes receivable of $719,000, net
cash  provided  by  operating  activities  of  $604,000, and new borrowings of
$424,000.    The  Company's  principal  uses of cash in the current nine month
period  were  for  scheduled  debt  repayments  and payoffs of $1,400,000, and
capital  expenditures  of $215,000.  Cash and cash equivalents at February 28,
1998,  amounted  to  $3,092,000  (which  includes  unexpended  marketing  fund
contributions of $1,040,000), as compared to $2,940,000 (including $683,000 in
unexpended  marketing  fund  contributions)  at  May  31, 1997, and $2,339,000
(including  $651,000  in  unexpended marketing fund contributions) at February
28,  1997.    At  February  28, 1998, the Company's working capital deficiency
improved  to  $298,000,  as  compared  to  $1,120,000  at  May  31,  1997, and
$1,706,000  one year ago.  The Company has been able to operate with a working
capital  deficiency because restaurant sales are conducted primarily on a cash
basis,  rapid  turnover  and frequent deliveries allow a limited investment in
inventories,  and  food,  beverages  and  supplies  are  purchased  on credit.

Due  to  the  high  cost  of  suitable  real  estate  and  sites,  the intense
competition  in  the  industry,  and  the  Company's  strategy  of focusing on
franchising,  the  Company  does  not  currently  plan  to develop new Company
restaurants.  Accordingly, in addition to scheduled debt maturities/repayments
for the remainder of fiscal year 1998 of approximately $398,000, the Company's
capital  requirements  for  the  balance  of  the  current  fiscal year relate
primarily  to  necessary  or  required capital improvements to restaurants and
certain  enhancements  to  corporate  and  restaurant  management  information
systems.    Such  capital expenditures will be made as required, and will take
into  consideration  the  Company's  current  liquidity  and  working  capital
positions,  as well as anticipated future cash flows from operations and other
sources.

In  connection  with  its  strategy  of  focusing future growth in franchising
restaurants,  the  Company  has  sold  restaurants to franchisees and provided
financing  for  such  sales.    Total notes receivable, which amounted to $8.7
million  at  February  28, 1998 (of which approximately $780,000 is due within
one  year),  principally consist of notes arising from sales of restaurants to
franchisees.    Fifteen notes receivable at February 28, 1998 were delinquent,
of  which  eight  notes  were formally in default.  Subsequent to February 28,
1998,  the  Company  reacquired  five restaurants from franchisees whose notes
payable to the Company were in default.  The Company is pursuing collection of
the  remaining  notes  which are in default or delinquent, which may result in
the  reacquisition  of additional restaurants by the Company.  At February 28,
1998,  the Company plans to sell additional restaurants to franchisees, and it
is expected that such sales, when and if consummated, will also be financed by
the  Company.

As  a  result  of  fewer  restaurants operated by the Company and a decline in
same-store-sales,  the Company's total revenues declined by 32.7% and 36.9% in
the  current  quarter and nine month periods, respectively, as compared to the
year  earlier  periods.    At  February 28, 1998, the Company had five Company
operated  restaurants  under  contract to be sold.  If the Company consummates
the  sale  of  these  restaurants,  the  Company's future total revenues would
decline.

The  Company expects that competition in the quick-service restaurant industry
will  continue  to  be  intense  and will remain so in the foreseeable future,
resulting  in  continued  pressure  on  sales and restaurant operating profit.
Accordingly,  continued emphasis will be placed on franchising non-traditional
restaurants  and  certain of the Company's existing restaurants, improving the
performance  of  Company  and franchised restaurants, developing new products,
enhancing the effectiveness of marketing programs, and overall improvement and
possible  refinements  to  the  entire  system.  Additionally, the Company has
co-branded a Miami Subs Grill restaurant with Arthur Treacher's, Inc., and has
agreed  to  expand  the  co-branding  test  to  an  additional  six  to  nine
restaurants.

The  Company's  ability  to  sustain  profitability  and improve cash flow and
liquidity, will, among other factors, be dependent on improvement of sales and
operating  margins  in existing Company and franchised restaurants, sustaining
and  improving  the  collection  of  royalty  fees,  note  payments, and lease
obligations  due  to the Company from franchisees, successful expansion of its
franchise  base,  its  ability  to  control  future  operating  costs, and the
successful  operation  of  existing and new restaurants on a profitable basis.

Seasonality
-----------

The  Company  does  not  expect  seasonality  to  affect  its  operations in a
materially adverse manner.  However, the Company's restaurant sales during its
first and fourth fiscal quarters have historically been higher that its second
and  third  quarters.

PART  II.    OTHER  INFORMATION

ITEM  L.    LEGAL  PROCEEDINGS

Reference  is  made  to  Part  I,  Item 3, Legal Proceedings, in the Company's
Annual  Report  on  Form
10-K  for  the  fiscal  year  ended  May 31, 1997 for a description of certain
pending  legal  matters involving the Company.  Other than as described below,
there  have  been no material developments in such legal matters since May 31,
1997.

In  November  1996,  an  appeal  was  argued  before  the Supreme Court of New
Hampshire following a bench trial and ruling in July 1995 that the Company had
breached its fiduciary duty to a partnership resulting in the award of damages
to  the  partnership  in  the  amount of $241,000 plus costs and attorney fees
(case  number  91-E1077  filed  in  the  Superior  Court  Northern District of
Hillsborough  County, New Hampshire).  On December 30, 1997, the Supreme Court
issued  its opinion on the appeal ruling in favor of the Company, vacating the
damage  award  against  the  Company,  and  remanding  to  a trial court for a
determination  of damages, if any, for the alleged breach of fiduciary duty to
the  partnership.    The  Supreme  Court  also reversed the award of costs and
attorney  fees.

ITEM  5.    OTHER  INFORMATION

On  February  27,  1998,  the  Company received a letter from the NASDAQ Stock
Market,  Inc. ("NASDAQ") notifying the company that its common stock is not in
compliance  with  the  new bid price requirement, pursuant to NASD Marketplace
Rule  4450(a)(5),  which  became  effective  February  23,  1998.   The letter
provides the Company 90 calendar days, which expires May 28, 1998, in order to
regain  compliance  with  this standard.  The Company may regain compliance if
its common stock trades at or above the minimum requirement of $1.00 per share
for  at  least  10  consecutive  trade  days.    If  the stock does not regain
compliance  within  90  days, NASDAQ will issue a de-listing letter which will
identify  the review procedures available to the Company.  The Company's board
of  directors  is  considering  available  alternatives  in order to come into
compliance  with  this  new  requirement.


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

(a)        Exhibits.
           --------

          NONE

(b)        Reports  on  Form  8-K
           ----------------------
     NONE
                                  SIGNATURES
                                  ----------


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

                                                     MIAMI  SUBS  CORPORATION


Date:  April 6, 1998                                 By:  /s/  Jerry W. Woda
                                                         -----------------------
                                                            JERRY  W.  WODA
                                                     Senior  Vice  President,
                                                     Chief Financial Officer,
                                                     and Principal Accounting
                                                     Officer