<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-K/A

  (MARK ONE)

     [X]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934 
            For the fiscal year ended December 31, 1998

                                       OR

     [ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934
            [NO FEE REQUIRED]
            For the transition period from               to

                         Commission File Number 1-10576

                      SANTA BARBARA RESTAURANT GROUP, INC.
             (Exact name of registrant as specified in its charter)

             DELAWARE                                          33-0403086
   (State or other jurisdiction of                          (I.R.S. Employer 
   incorporation or organization)                          Identification No.)

      3916 State Street, Suite 300
        Santa Barbara, California                                 93105
   (Address of Principal Executive Office)                      (Zip Code)

        REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE: (714) 491-6400

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

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                       NAME OF EACH EXCHANGE
            TITLE OF EACH CLASS                        ON WHICH REGISTERED:

    Common Stock -- $.08 Par Value                     Boston Stock Exchange

           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      None

    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 by check mark if disclosure of delinquent filers in response to
Item 405 of Regulation S-K is not contained in this form, and will not be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]

    The aggregate market value of the common stock held by non-affiliates of the
registrant on March 16, 1999 was approximately $26.1 million based upon the
closing price of the common stock, as reported on the NASDAQ Small Cap Market.

    The number of shares of the common stock of the registrant outstanding on
April 23, 1999 was 16,246,293.

<PAGE>   2

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors

    The following sets forth certain information for each director of the
Company as of December 31, 1998.

<TABLE>
<CAPTION>
                                                     DIRECTOR                                       
            NAME OF DIRECTOR                 AGE      SINCE            POSITION WITH THE COMPANY
          ---------------------------        ---     --------   ------------------------------------
<S>                                          <C>     <C>        <C>
          William P. Foley, II               54       1997      Chairman and Director
          Andrew F. Puzder                   48       1997      Chief Executive Officer and Director
          Frank P. Willey                    45       1997      Director
          Bruce H. Haglund                   47       1989      Director
          T. Anthony Gregory                 60       1989      Director
          C. Thomas Thompson                 49       1998      Director
          Dermot F. Rowland                  61       1998      Director
          Charles Rolles                     64       1999      Director
          Burt Sugarman                      60       1999      Director
</TABLE>

    William P. Foley, II became Chairman of the Board and a Director of the
Company in July 1997. Mr. Foley is also Chairman of the Board and Chief
Executive Officer of Fidelity National Financial, Inc., a company engaged in
title insurance and related services. Mr. Foley is also the Chairman of the
Board and Chief Executive Officer of CKE Restaurants, Inc., a company engaged in
the quick service restaurant business. He is Chairman of the Board of American
National Financial, Inc., Checkers Drive-In Restaurants, Inc. and Rally's
Hamburgers, Inc. He is also a member of the Boards of Directors of Micro General
Corporation, Fresh Foods, Inc., and Miravant Medical Technologies, Inc.

    Andrew F. Puzder became a Director of the Company in July 1997 and was
appointed Chief Executive Officer in August 1997. Mr. Puzder also serves as an
Executive Vice President, General Counsel, and Secretary for CKE Restaurants,
Inc. Mr. Puzder is also an Executive Vice President for Fidelity National
Financial, Inc. Mr. Puzder has been with Fidelity National Financial, Inc. since
January 1995. From March 1994 to December 1994, he was a partner with the law
firm of Stradling, Yocca, Carlson & Rauth. Prior to that, he was a partner with
the law firm of Lewis, D'Amato, Brisbois & Bisgard, from September 1991 through
March 1994, and he was a partner of the Stolar Partnership from February 1984
through September 1991. Mr. Puzder is also a Director for Javelin Systems, Inc.,
Rally's Hamburgers, Inc. and Fresh Foods, Inc.

    Frank P. Willey became a Director in July 1997. He is also the President of
Fidelity National Financial, Inc. and has been a director since February 1984.
He was the General Counsel of Fidelity National Financial, Inc. from 1984 to
January 1995. Mr. Willey also serves on the Boards of Directors of CKE
Restaurants, Inc., Southern Pacific Funding Corporation, and Ugly Duckling
Holdings, Inc. Southern Pacific Funding Corporation filed a petition for
reorganization under Chapter 11 of the Bankruptcy Code on October 1, 1998.

    Bruce H. Haglund has served as a Director of the Company since 1989. Mr.
Haglund is an attorney in private practice in Orange County, California and has
been a principal in the law firm of Gibson, Haglund & Johnson since April 1994.
He was a principal in the law firm of Phillips, Haglund, Haddan & Jeffers from
February 1991 to April 1994. From 1984 to February 1991, he was a partner in the
law firm of Gibson & Haglund, and from 1980 to 1984 was an associate with the
firm. He is also a director of Aviation Distributors, Inc.

    T. Anthony Gregory has served as a Director of the Company since 1989. Since
1962, Mr. Gregory has owned and operated U.S. Customs Air Bonded Warehouse. In
June 1989, Mr. Gregory opened U.S. Customs Bonded Container and Freight Station,
and in August 1989 opened Custom Air Trucking Company. Mr. Gregory was Vice
President and Secretary of Equitable Savings & Loan Association, a holding
company for several savings and loan companies from 1963 to 1965.

    C. Thomas Thompson became a director in 1998. Mr. Thompson is also the
President and Chief Operating Officer of CKE Restaurants, Inc. Mr. Thompson has
been a Carl's Jr. franchisee since 1984, and currently operates 17 Carl's Jr.
restaurants in the San Francisco Bay Area. Mr. Thompson also serves as a member
of the Boards of Directors of Rally's Hamburgers, Inc. and Checkers Drive-In
Restaurants, Inc. Mr. Thompson has more than 20 years of experience in the
restaurant industry.



                                       2
<PAGE>   3

    Dermot F. Rowland has served as a Director since 1998. Mr. Rowland was the
founder of Timber Lodge Steakhouse, Inc. (acquired by the Company on September
1, 1998) and has served as Chairman of the Board, Chief Executive Officer,
Secretary and as a Director of Timber Lodge since 1989. Prior to establishing
Timber Lodge, Mr. Rowland was involved in the formation and management of
Homestyle Buffet, Inc., which subsequently changed its name to Staceys Buffet
Inc. ("Staceys"). Staceys, based in Largo, Florida, develops and operates buffet
restaurants. He co-founded Staceys in 1986 and served as its President and Chief
Executive Officer from 1986 to 1987. In 1987, he became its Chairman of the
Board and continued as a consultant and Director until 1991.

    Burt Sugarman, has served as a director of the Company since 1999. Mr.
Sugarman has been the Chairman of the Board, President and Chief Executive
Officer of GIANT Group, Ltd. for five years and served as the Chief Executive
Officer of Rally's Hamburgers, Inc. from 1990 and as the Chairman of the Board
of Directors of Rally's from 1991, resigning from these offices in February
1994. Mr. Sugarman resumed the position of Chairman of the Board of Directors of
Rally's Hamburgers, Inc. in November 1994 and resigned such office in October
1997. Mr. Sugarman is a Director of GIANT Group, Ltd., Rally's Hamburgers, Inc.
and Checkers Drive-In Restaurants, Inc.

    Charles Rolles, has served as a director of the company since 1999. Mr.
Rolles has been engaged in the business of real estate development for the past
30 years. In addition, Mr. Rolles was the founder of the 50 unit Chuck's
Steakhouse chain. Mr. Rolles also served as a director of Liberty Bank from 1978
to 1990.

Executive Officers

    E. Michael Murphy, 47, was appointed General Counsel in September 1998. Mr.
Murphy has also served as General Counsel of Hardee's Food Systems, Inc. and as
Assistant General Counsel of CKE Restaurants, Inc. since September 1998. From
1988 until September 1998, Mr. Murphy was a partner in The Stolar Partnership, a
law firm in St. Louis, Missouri.

    Nicholas J. Caddeo, 51 has been an Executive Vice President and Chief
Operating Officer of the Company since August 1992. Prior to joining the
Company, he was employed for more than 20 years by Foodmaker, Inc., the
corporate operator of Jack-in-the-Box restaurants, serving as a Regional Manager
for the Los Angeles area from January 1985 to July 1992.

    Theodore Abajian, 35 was appointed Executive Vice President, Chief Financial
Officer in May 1998. Prior to joining Santa Barbara Restaurant Group, Inc. Mr.
Abajian served as the Chief Financial Officer of Star Buffet, Inc, since its
formation in July 1997. Mr. Abajian also served as a director of Stacey's
Buffet, Inc. from October 31, 1997 to February 4, 1998. Mr. Abajian has been the
Vice President and Controller of Summit Family Restaurants Inc. (the predecessor
to JBRI) since 1994. From 1983 to 1994, he held several positions with Family
Restaurants, Inc., including Director of Financial Analysis, Planning and
Reporting for the family restaurant division, which included approximately 350
Carrows and Coco's restaurants.

    M'Liss Jones Kane, 46 was appointed Senior Vice President, Secretary in
August 1997. Mrs. Kane also serves as the Senior Vice President, Corporate
Counsel and Corporate Secretary for Fidelity National Financial, Inc. since
1995. Mrs. Kane also serves as Executive Vice President, General Counsel and
Secretary of American National Financial, Inc. and Corporate Counsel and
Assistant Secretary of CKE Restaurants, Inc. Mrs. Kane previously served as Vice
President, General Counsel and Secretary of ICN Biomedicals, Inc. and
subsequently in addition became Vice President, General Counsel of SPI
Pharmaceuticals, Inc.

    Carl A. Strunk, 61 was appointed Executive Vice President, Finance in
December 1997. Mr. Strunk also serves as Executive Vice President, Chief
Financial Officer for CKE Restaurants, Inc. and Executive Vice President and
Chief Financial Officer of American National Financial, Inc. Mr. Strunk also
serves as Executive Vice President, Finance for Fidelity National Financial,
Inc. and has been with Fidelity since 1992. Mr. Strunk previously served as
President of Land Resources Corporation from 1986 to 1991. Mr. Strunk is a
Certified Public Accountant and is also a member of the Board of Directors of
Micro General Corporation and American National Financial, Inc.

    Gary R. Nelson, 51 served as Chief Financial Officer of the Company from
August 1997 through May 1998 and continues to hold the position of treasurer.
Mr. Nelson also serves as the Senior Vice President of Mergers and Acquisitions
for Fidelity National Title Insurance Company since 1992. Mr. Nelson previously
served as the Senior Vice President, Chief Financial Officer and Treasurer of
Fidelity National Financial, Inc. from 1988 to 1991. Mr. Nelson is a Certified
Public Accountant.



                                       3
<PAGE>   4

             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
executive officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC. Executive officers, directors
and greater than 10% stockholders are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms they file. Based solely on its
review of the copies of such forms received by it or written representations
from certain reporting persons that no Forms 5 were required for those persons,
the Company believes that, during fiscal 1998, all filing requirements
applicable to its executive officers, directors and greater than 10%
stockholders were satisfied.


ITEM 11. EXECUTIVE COMPENSATION

    The following table sets forth certain information regarding the
compensation of Andrew F. Puzder, the Company's Chief Executive Officer and
Director for each of the three years in the period ended December 31, 1998.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                 LONG-TERM
                                                ANNUAL COMPENSATION             COMPENSATION
                                               ---------------------       -----------------------
NAME AND PRINCIPAL POSITION        YEAR         SALARY        OTHER         STOCK         OPTIONS
---------------------------       ------       --------      -------       -------       ---------
<S>                               <C>          <C>           <C>           <C>           <C>
Andrew F. Puzder(1) .........      1998          $  0             0             0             0
  Chief Executive Officer          1997          $  0             0             0             0
</TABLE>

(1) Became a Director in July 1997 and Chief Executive Officer in August 1997.

OPTIONS GRANTED IN FISCAL YEAR 1998

    During the fiscal year ended December 31, 1998, non-qualified stock options
representing 110,000 shares were granted to Andrew F. Puzder at an exercise
price of $4.88 per share. Said options vest at the end of one year from
issuance. In addition, on September 1, 1998, non-qualified stock options
representing a total of 200,000 shares were repriced at $4.88 per share (see
Ten-Year Options Repricings).

<TABLE>
<CAPTION>
                                     % OF TOTAL                                    POTENTIAL REALIZABLE VALUE AT
                       NUMBER OF       OPTIONS                                        ASSUMED ANNUAL RATES OF
                        SHARES       GRANTED TO                                      STOCK PRICE APPRECIATION
                      UNDERLYING      EMPLOYEES       EXERCISE                           FOR OPTION TERM
                        OPTIONS       IN FISCAL       PRICE PER     EXPIRATION     -----------------------------
                        GRANTED       YEAR 1998        SHARE           DATE            5%                10%
                      -----------   ------------     -----------   ------------    -----------       -----------
<S>                   <C>           <C>              <C>           <C>             <C>               <C>
Andrew F. Puzder....    100,000            5.0%        $  4.88        8/31/08       $306,586           $776,949
                         10,000            0.5%        $  4.88        8/31/08         30,659             77,695
                         20,000            1.0%        $  4.88        8/26/07         53,653            132,100
                         30,000            1.5%        $  4.88        8/26/07         80,480            198,150
                         50,000            2.5%        $  4.88        8/26/07        134,134            330,250
                        100,000            5.0%        $  4.88        2/26/08        287,086            717,004
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1998 AND FISCAL YEAR-END OPTION
VALUES

    The following table sets forth the number of options, both exercisable and
unexercisable, held by each of the executive officers of the Company as of
December 31, 1998. There were no in-the-money options.

<TABLE>
<CAPTION>
                                                              NUMBER OF SECURITIES
                                                             UNDERLYING UNEXERCISED              VALUE OF UNEXERCISED
                                                                   OPTIONS AT                   IN-THE-MONEY OPTIONS AT
                          SHARES                               DECEMBER 31, 1998                   DECEMBER 31, 1998
                        ACQUIRED ON         VALUE         -----------------------------     -----------------------------
                        EXERCISE(#)       REALIZED($)     EXERCISABLE     UNEXERCISABLE     EXERCISABLE     UNEXERCISABLE
                        -----------       -----------     -----------     -------------     -----------     -------------
<S>                     <C>               <C>             <C>             <C>               <C>             <C>    
Andrew F. Puzder ...            0                0          100,000          210,000          $     0          $     0
</TABLE>



                                       4
<PAGE>   5

                           TEN-YEAR OPTION REPRICINGS

<TABLE>
<CAPTION>
                                                                                                                LENGTH OF
                                                   NUMBER          MARKET                                       ORIGINAL
                                                     OF            PRICE        EXERCISE                       OPTION TERM
                                                 SECURITIES       OF STOCK        PRICE           NEW           REMAINING
                                                 UNDERLYING      AT TIME OF     AT TIME OF      EXERCISE       AT DATE OF
                                                  OPTIONS        REPRICING      REPRICING        PRICE          REPRICING
            NAME                      DATE        REPRICED          ($)            ($)            ($)              ($)
                                    -------     ------------    ------------   -----------     ----------      -----------
<S>                                 <C>         <C>             <C>            <C>             <C>             <C>
Nicholas Caddeo ............         9/1/98         25,000          4.875          8.625          4.875        9 yrs
   Chief Operating Officer           9/1/98          7,500          4.875          5.750          4.875        9 yrs

William P. Foley, II .......         9/1/98         80,000          4.875          8.625          4.875        9 yrs
    Chairman of the Board            9/1/98         50,000          4.875          8.625          4.875        9 yrs
                                     9/1/98         20,000          4.875          8.625          4.875        9 yrs
                                     9/1/98        200,000          4.875          8.250          4.875        9 yrs 6 mos

T. Anthony Gregory .........         9/1/98         50,000          4.875          7.000          4.875        6 yrs 8 mos
    Director                         9/1/98         20,000          4.875          8.625          4.875        9 yrs
                                     9/1/98         10,000          4.875          8.250          4.875        9 yrs 6 mos

Bruce H. Haglund ...........         9/1/98         50,000          4.875          7.000          4.875        6 yrs 8 mos
    Director                         9/1/98         10,000          4.875          5.750          4.875        6 yrs 5 mos
                                     9/1/98         20,000          4.875          8.625          4.875        9 yrs
                                     9/1/98         10,000          4.875          8.250          4.875        9 yrs 6 mos

M'Liss Jones Kane ..........         9/1/98         10,000          4.875          8.625          4.875        9 yrs
    Secretary                        9/1/98         25,000          4.875          8.250          4.875        9 yrs 6 mos

Gary R. Nelson .............         9/1/98         50,000          4.875          8.625          4.875        9 yrs
    Treasurer                        9/1/98         25,000          4.875          8.250          4.875        9 yrs 6 mos

Andrew F. Puzder ...........         9/1/98         20,000          4.875          8.625          4.875        9 yrs
    Chief Executive Officer          9/1/98         30,000          4.875          8.625          4.875        9 yrs
                                     9/1/98         50,000          4.875          8.625          4.875        9 yrs
                                     9/1/98        100,000          4.875          8.250          4.875        9 yrs 6 mos

Carl Strunk ................         9/1/98         50,000          4.875         10.375          4.875        9 yrs 4 mos
    Executive Vice President         9/1/98         25,000          4.875          8.250          4.875        9 yrs 6 mos

Frank P. Willey ............         9/1/98         20,000          4.875          8.625          4.875        9 yrs
    Director                         9/1/98         50,000          4.875          8.625          4.875        9 yrs
                                     9/1/98         10,000          4.875          8.250          4.875        9 yrs 6 mos
</TABLE>

COMPENSATION COMMITTEE REPORT ON OPTION REPRICING

    On September 1, 1998, the Compensation Committee approved the repricing of
1,017,500 options granted pursuant to the Company's existing stock option plans
for non-employee directors and executive officers. Such options had exercise
prices ranging from $5.75 to $10.375. The repricing was effected by exchanging
new options with an exercise price of $4.875 per share, and the same vesting
period as the original option, for the options then held by such optionees.

    The Compensation Committee approved the repricing because it believes that
equity interests are a significant factor in the company's ability to retain
directors, executive officers and employees, by providing an incentive to all
such personnel to devote their utmost effort and skill to the advancement and
betterment of the company by permitting them to participate in the success and
increased value of the Company. Following the grant of such options, however,
the price per share of the Company's Common Stock



                                       5
<PAGE>   6

declined to approximately $5.00 as a result of unforeseen market factors. The
Compensation Committee believed, that as a result of this relatively sudden
decline, the options so granted would not have the desired motivational effect
on the optionees. Accordingly, the Compensation Committee approved the repricing
as a means of ensuring that such optionees have a meaningful equity interest in
the Company.

COMPENSATION OF THE BOARD OF DIRECTORS

    The members of the Board of Directors who are not employees receive $1,000
for their attendance in person at Board meetings and $500 if they are present at
a Board meeting telephonically. Members of the Board of Directors received
nonstatutory stock options in the past in recognition of their service as
members of the Board of Directors.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    During fiscal 1998, the members of the Compensation Committee of the
Company's Board of Directors were Messrs. Willey (Chairman), Haglund and
Gregory. None of the Compensation Committee members were officers, former
officers or employees of the Company during fiscal 1997. Mr. Willey served as
President and a Director of Fidelity National Financial, Inc. and a Director of
CKE Restaurants, Inc.

COMPENSATION COMMITTEE REPORT

    The Committee, comprised of three non-employee directors, is responsible for
administering the executive compensation policies, administering the various
management incentive programs (including option plans), and making
recommendations to the Board of Directors with respect to these policies and
programs. In addition, the Committee makes annual recommendations to the Board
of Directors concerning the compensation paid to the Chief Executive Officer.
Set forth below is a report submitted by the Committee addressing compensation
policies for fiscal 1998 as they affected the Executive Officers.

    Compensation Policies Towards Executive Officers. The Committee believes
that the most effective executive compensation program is one that provides
incentives to achieve both current and long-term strategic management goals,
with the ultimate objective of enhancing stockholder value. With respect to
equity-based compensation, the Committee believes that an integral part of the
Company's compensation program is the ownership and retention of the Company's
Common Stock by its Executive Officers. By providing Executive Officers with a
meaningful stake in the Company, the value of which is dependent on the
Company's long-term success, a commonality of interests between the Company's
Executive Officers and its stockholders is fostered.

    Relationship of Performance to Compensation. Compensation that may be earned
by the Executive Officer under the current management team consists primarily of
stock options. The Committee, in its discretion, may apply different factors,
particularly different measures of company performance, in setting executive
compensation for future fiscal years, but all compensation decisions will be
designed to further the general compensation policies indicated above. With
regard to the Company's performance, the measures used for margin, quality of
service, meeting strategic goals within the current economic climate and
industry environment, scope of responsibilities, expansion by acquisition or
otherwise, profit retention, and profitability, all of which combine to enhance
stockholder value.

    Stock Options. Stock option grants motivate Executive Officers to manage the
business to improve long-term Company performance and align the interests of
Executive Officers with stockholder value. Customarily, option grants are made
with exercise prices equal to the fair market value of the shares on the grant
date and will be of no value unless the market price of the Company's shares of
Common Stock appreciates, thereby aligning a substantial part of the Executive
Officer's compensation package with the return realized by the stockholders.
Options generally vest in equal installments over a period of time, contingent
upon the Executive Officer's continued employment with the Company. Accordingly,
an option will provide a return to the Executive Officer only if the Executive
Officer remains employed by the Company and the market price of the underlying
shares appreciates over the option term. The size of an option grant is designed
to create a meaningful opportunity for stock ownership and is based upon the
individual's current position with the Company, internal comparability with
option grants made to other Company executives and the individual's potential
for future responsibility and promotion over the option term.

    Chief Executive Officer Compensation. Andrew F. Puzder became the Company's
Chief Executive Officer in August 1997. Mr. Puzder did not receive any cash
compensation during fiscal 1997 or fiscal 1998 for such position. Mr. Puzder

                                       6
<PAGE>   7

received 100,000 stock options in 1997 and an additional 210,000 stock options
in 1998 to reward him for the Company's performance in 1997 and 1998 and to
incentivize him to excel in 1999.

    Corporate Deduction for Compensation. Section 162(m) of the Internal Revenue
Code generally limits to $1.0 million the corporate deduction for compensation
paid to certain executive officers, unless certain requirements are met. At this
time, the Company's deduction for officer compensation is not limited by the
provisions of Section 162(m). The Committee intends to monitor regulations
issued pursuant to Section 162(m) and to take such actions with respect to the
executive compensation program as are reasonably necessary to preserve the
corporate tax deduction for executive compensation paid.

    The report of the Compensation Committee of the Board of Directors shall not
be deemed incorporated by reference into any previous filing by the Company
under the Securities Act of 1933 ("Securities Act") or under the Securities
Exchange Act of 1934 ("Exchange Act"), that incorporates future Securities Act
or Exchange Act filings in whole or in part by reference.

PERFORMANCE GRAPH

    Set forth below is a graph comparing cumulative total stockholder return on
the Company's common stock against the cumulative total return on the S & P 500
Index and against the cumulative total return of a peer group index, the
Restaurants 500 Index for the five-year period ending December 31, 1998. The
peer group comparison has been weighted based on the Company's stock market
capitalization. The graph assumes an initial investment of $100.00 on January 1,
1994, with dividends reinvested over the periods indicated.

                 COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
                   OF COMPANY, INDUSTRY INDEX AND BROAD MARKET

<TABLE>
<CAPTION>
                                    Dec 93      Dec 94      Dec 95      Dec 96      Dec 97      Dec 98
                                    ------      ------      ------      ------      ------      ------
<S>                                 <C>         <C>         <C>         <C>         <C>         <C>  
Santa Barbara Restaurant Group      100.00       93.94      118.18       89.39      131.82       46.21
S&P 500 Index                       100.00      101.32      139.40      171.40      228.59      293.91
Restaurants 500                     100.00       99.69      149.51      147.72      158.61      248.57
</TABLE>



COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS

    The Board of Directors has a standing Compensation Committee. The Board does
not have a nominating or audit committee or other committee performing similar
functions. The Compensation Committee, whose current members are Messrs. Willey
(Chairman), Haglund and Gregory, considers the hiring and election of corporate
officers, salary and incentive compensation policies for officers and directors,
and the granting of stock options to employees.

    During fiscal 1998, The Board of Directors held four meetings and the
Compensation Committee did not hold any meetings in 1998. During fiscal 1998, no
director attended fewer than 75% of the aggregate meetings of the Board of
Directors.



                                       7
<PAGE>   8

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth certain information as of December 31, 1998,
relating to the beneficial ownership of the Company's common stock by (i) all
persons known by the Company to beneficially own more than 5% of the outstanding
shares of the Company's common stock, (ii) each director, director nominee and
officer of the Company and, (iii) all officers and directors of the Company as a
group. Unless otherwise noted, each of the shareholders listed owns less than 1%
of the outstanding common stock of the Company. The Company had 16,246,293
shares outstanding as of April 23, 1999.


<TABLE>
<CAPTION>
                                                         NUMBER OF        PERCENTAGE 
                   NAME AND ADDRESS OF              SHARES BENEFICIALLY    OF SHARES
                 BENEFICIAL OWNER(1)(2)(3)                OWNED(1)       OUTSTANDING(4)
                 --------------------------------   -------------------  --------------
<S>                                                 <C>                  <C>
          Fidelity National Financial, Inc.(5) ..        7,187,765             36.5%
            17911 Von Karman Avenue, Suite 300
            Irvine, CA 92614
          CKE Restaurants, Inc. .................        1,656,453              8.4%
          T. Anthony Gregory(6) .................          157,661              0.8%
            25651 Paseo de la Paz
            San Juan Capistrano, CA 92675
          Bruce H. Haglund(7) ...................          199,261              1.0%
            2010 Main St., Suite 400
            Irvine, CA 92614
          William P. Foley, II(8) ...............        1,424,400              7.2%
          Andrew F. Puzder(9) ...................          204,000              1.0%
          Frank P. Willey(10) ...................           80,000              0.4%
          C. Thomas Thompson ....................               --               --%
          Charles Rolles ........................               --               --%
          Burt Sugarman .........................               --               --%
          Dermot F. Rowland(11) .................          590,189              3.0%
            4021 Vernon Avenue South
            St. Louis Park, MN 55416
          Nicholas J. Caddeo(12) ................           53,200              0.3%
          All officers and directors as a
          group (10 persons)(13) ................        2,893,711             14.7%
</TABLE>

----------

(1)   Unless otherwise noted, the Company believes that all shares are
      beneficially owned and that all persons named in the table have sole
      voting and investment power with respect to all shares of Company common
      stock owned by them.

(2)   A person is deemed to be the beneficial owner of securities that can be
      acquired by such person within 60 days from March 31, 1999 upon the
      exercise of warrants or options. Each beneficial owner's percentage
      ownership is determined by assuming that options or warrants that are held
      by such person (but not those held by any other person) and which are
      exercisable within 60 days from March 31, 1999 have been exercised.

(3)   Unless otherwise indicated, the address of each stockholder listed is 1200
      North Carl Karcher Way, Anaheim, California 92803.

(4)   Assumes 19,683,297 shares outstanding, including 16,246,293 shares
      currently outstanding and 3,437,004 shares issuable upon exercise of
      presently exercisable stock options and warrants held by the above-listed
      shareholders.

(5)   Includes 2,470,000 shares issuable upon the exercise of presently
      exercisable warrants.



                                       8
<PAGE>   9

(6)   Includes 104,194 shares issuable upon the exercise of presently
      exercisable nonstatutory stock options.

(7)   Includes 119,194 shares issuable upon the exercise of presently
      exercisable nonstatutory stock options.

(8)   Excludes the 7,187,765 beneficial shares held by Fidelity National
      Financial, Inc. and 1,656,453 beneficial shares held by CKE Restaurants,
      Inc., of which William P. Foley, II is the Chairman of the Board and Chief
      Executive Officer. Includes 350,000 shares issuable upon the exercise of
      presently excercisable nonstatutory stock options.

(9)   Includes 200,000 shares issuable upon the exercise of presently
      exercisable nonstatutory options.

(10)  Includes 80,000 shares issuable upon the exercise of presently exercisable
      nonstatutory options.

(11)  Includes 81,116 shares issuable upon the exercise of presently exercisable
      nonstatutory options.

(12)  Includes 32,500 shares issuable upon the exercise of presently exercisable
      incentive stock options.

(13)  Includes an aggregate of 1,152,004 shares issuable upon the exercise of
      presently exercisable stock options held by officers and directors of the
      Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

General

    The Company believes that the transactions hereunder were the result of
arm's-length negotiations, and the terms of each such transaction was no less
favorable to the Company as would have been available from an unaffiliated third
party. The transactions discussed below were negotiated either (i) before the
parties became affiliates; (ii) after the parties ceased to be affiliates; or
(iii) with a majority of a disinterested members of the Company's Board of
Directors. Furthermore, it is the policy of the Company that a majority of the
disinterested members of the Company's Board of Directors must approve
related-party transactions.


CKE Restaurants, Inc.

    The Company and CKE share certain officers and directors. In September 1998,
the Company purchased JBFRI and JBPC from CKE in exchange for approximately 1.7
million shares or 10.9% of the Company's outstanding common stock at December
31, 1998. In December 1998, the Company acquired 274,900 shares or less than 1%
of CKE's common stock from Fidelity.

    In conjunction with the acquisitions of Timber Lodge and JB's, the Company
entered into an agreement with CKE to receive certain general and administrative
support. As of December 31, 1998, the Company has accrued $173,000 for such
services provided during fiscal 1998. Such amount represents the cost to CKE of
providing such services.

    During May 1995, the Company reached an agreement with CKE pursuant to which
CKE agreed to convert a minimum of 40 CKE-owned Carl's Jr. restaurants per year
into Carl's Jr./Green Burrito dual-concept stores over a five-year period
commencing July 15, 1995. In February 1997, the Company and CKE modified the
agreement to provide for the conversion of a minimum of 60 Carl's Jr.
restaurants per year to Carl's Jr./Green Burrito dual-concept stores. CKE also
agreed to allow its franchisees to convert their restaurants into Carl's
Jr./Green Burrito dual-concept stores. In November 1998, the Company and CKE
modified the agreement as follows: CKE will convert 45 restaurants in both 1999
and 2000, 40 in 2001 and 36 in 2002 for a total of 328 Carl's Jr./Green Burrito
dual brand restaurants at the expiration of the agreement on December 31, 2002.
Additionally, the amended agreement expands the units available to satisfy CKE's
development obligations by removing limitations on the number of franchised
Carl's Jr. restaurants which can be converted and by including Hardee's
restaurants and Hardee's franchisees.

    The initial term of the franchise agreements for CKE-owned locations is 15
years with a 10-year renewal period. The franchise agreements also allow for an
early termination on a per-store basis if royalties payable to the Company for
such location are less than an average of $250 per month for any calendar year.
As of December 31, 1998, there were 176 Carl's Jr./Green Burrito restaurants in
operation in California, Arizona, Oregon, Nevada, Oklahoma and Kansas. For the
fiscal years ended December 31, 1998, 1997 and 1996, the Company recognized
franchise revenues generated from CKE dual-concept franchise stores of
approximately $990,000, $942,000 and $648,000, respectively. The Company had
receivable balances at December 31, 1998 and 1997 of $89,000 and $29,000,
respectively related to royalty and franchise fee payments due from CKE.



                                       9
<PAGE>   10

    The Company leases approximately 650 square feet of office space from CKE on
a month to month basis at the rate of approximately $2,500 per month.

Fidelity National Financial, Inc.

    The Company and Fidelity share certain officers and directors. In 1997,
Fidelity acquired 1,000,000 shares of the Company's common stock and 3,470,000
warrants to acquire the Company's common stock. In September 1998, Fidelity
exercised 1,000,000 of its $5.00 common stock purchase warrants resulting in net
proceeds to the Company of $5,000,000. In December 1998, the Company and
Fidelity completed a Share Exchange. As result of these transactions, Fidelity
owns approximately 4.7 million shares or 31% of the Company's common stock at
December 31, 1998, and holds warrants to acquire an additional 2,470,000 shares
of the Company's common stock.



Rally's Hamburgers, Inc.

    The Company and Rally's share certain officers and directors. The Company
presently owns 2,408,874 shares or 8.2% of Rally's common stock . On January 29,
1999, Rally's announced the signing of a merger agreement with Checkers Drive-In
Restaurants, Inc. ("Checkers"). The agreement provides that each share of
Rally's stock will be exchanged for 1.99 shares of Checkers stock. The Checkers
common stock that Rally's owns (approximately 26% of Checkers common stock as of
December 31, 1998) will be retired following this merger.

Payments to Director for Professional Services

    Bruce Haglund, a director of the Company, provided legal services to the
Company valued at $0, $55,261 and $48,467 during 1998, 1997 and 1996,
respectively.

SUPPLEMENTAL INFORMATION

    An annual report and an information statement shall be furnished to the
security holders of the Company subsequent to the filing of this Form 10-K. The
Company shall furnish copies of the annual report to security holders and the
proxy statement to the Securities and Exchange Commission when it is sent to the
security holders.



                                       10
<PAGE>   11

                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) 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.

                                        SANTA BARBARA RESTAURANT GROUP, INC.

                                        By:  /s/ Andrew F. Puzder
                                           -----------------------------------
                                           Andrew F. Puzder
                                           Chief Executive Officer

Date:  April 28, 1999

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURES                                     TITLE                                                DATE
----------                                     -----                                                ----
<S>                                            <C>                                                  <C>

/s/ William P. Foley, II
-----------------------------------            Chairman of the Board, Director                      April 28,1999
William P. Foley, II

/s/ Andrew F. Puzder
-----------------------------------            Chief Executive Officer, Director                    April 28, 1999
Andrew F. Puzder                               (Principal Executive Officer)

/s/ Theodore Abajian
-----------------------------------            Chief Financial Officer,                             April 28, 1999
Theodore Abajian                               (Principal Financial and Accounting Officer)

/s/ Frank P. Willey
-----------------------------------            Director                                             April 28, 1999
Frank P. Willey

/s/ Bruce H. Haglund
-----------------------------------            Director                                             April 28, 1999
Bruce H. Haglund

/s/ T. Anthony Gregory
-----------------------------------            Director                                             April 28, 1999
T. Anthony Gregory

/s/ C. Thomas Thompson
-----------------------------------            Director                                             April 28, 1999
C. Thomas Thompson

/s/ Dermot F. Rowland
-----------------------------------            Director                                             April 28, 1999
Dermot F. Rowland

/s/ Charles Rolles
-----------------------------------            Director                                             April 28, 1999
Charles Rolles

/s/ Burt Sugarman
-----------------------------------            Director                                             April 28, 1999
Burt Sugarman
</TABLE>




                                       11