SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K
                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the Fiscal Year Ended December 28, 1998      Commission File Number: 0-18668
                          -----------------                             --------

                       MAIN STREET AND MAIN INCORPORATED
             ----------------------------------------------------
            (Exact name of registrant as specified in its charter)

                 DELAWARE                                        11-2948370
------------------------------------------------             -------------------
(State or other jurisdiction of incorporation or              (I.R.S. Employer
               organization)                                 Identification No.)


      5050 NORTH 40TH STREET
     SUITE 200, PHOENIX, ARIZONA                                  85018
 ----------------------------------------                      ----------
 (Address of principal executive offices)                      (Zip Code)


                                 (602) 852-9000
               ------------------------------------------------
               Registrant's telephone number, including area code

          Securities registered pursuant to Section 12(b) of the Act:
                                      None

          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $.001 par value

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 pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  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. [ ]

At  March 23, 1999, there were outstanding 10,011,052 shares of the registrant's
Common  Stock,  $.001 par value. The aggregate market value of Common Stock held
by  nonaffiliates  of  the  registrant  based  on  the closing sale price of the
Common  Stock  as  reported on the Nasdaq National Market on March 23, 1999, was
$22,636,000.  For purposes of this computation, all officers, directors, and 10%
beneficial   owners  of  the  registrant  are  deemed  to  be  affiliates.  Such
determination  should  not be deemed an admission that such officers, directors,
or 10% beneficial owners are, in fact, affiliates of the registrant.

Documents   incorporated  by  reference:  Portions  of  the  Registrant's  Proxy
Statement  for  the  1999  Annual  Meeting  of  Stockholders are incorporated by
reference into Part III.
<PAGE>
                       MAIN STREET AND MAIN INCORPORATED
                          ANNUAL REPORT ON FORM 10-K
                      FISCAL YEAR ENDED DECEMBER 28, 1998
                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I                                                                      
   ITEM 1.    BUSINESS                                                       1
   ITEM 2.    PROPERTIES                                                     11
   ITEM 3.    LEGAL PROCEEDINGS                                              11
   ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS            11
PART II
   ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
              RELATED STOCKHOLDER MATTERS                                    12
   ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA                           13
   ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS                            14
   ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
              MARKET RISK                                                    17
   ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                    18
   ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE                            18
PART III
   ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT             18
   ITEM 11.   EXECUTIVE COMPENSATION                                         18
   ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT                                                     18
   ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                 18
PART IV
   ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
              ON FORM 8-K                                                    19
SIGNATURES                                                                   21

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

                 STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

THE  STATEMENTS  CONTAINED  IN  THIS  REPORT  ON  FORM  10-K THAT ARE NOT PURELY
HISTORICAL  ARE  FORWARD-LOOKING  STATEMENTS  WITHIN  THE  MEANING OF APPLICABLE
SECURITIES  LAWS.  FORWARD-LOOKING  STATEMENTS  INCLUDE STATEMENTS REGARDING THE
COMPANY'S   "EXPECTATIONS,"   "ANTICIPATION,"   "INTENTIONS,"   "BELIEFS,"   OR
"STRATEGIES"  REGARDING  THE  FUTURE.  FORWARD-LOOKING  STATEMENTS  ALSO INCLUDE
STATEMENTS  REGARDING  REVENUE,  MARGINS,  EXPENSES,  AND  EARNINGS ANALYSIS FOR
FISCAL  1999  AND  THEREAFTER;  FUTURE  RESTAURANT OPERATIONS AND NEW RESTAURANT
ACQUISITIONS  OR  DEVELOPMENT; THE RESTAURANT INDUSTRY IN GENERAL; AND LIQUIDITY
AND  ANTICIPATED  CASH  NEEDS  AND  AVAILABILITY. ALL FORWARD-LOOKING STATEMENTS
INCLUDED  IN THIS REPORT ARE BASED ON INFORMATION AVAILABLE TO THE COMPANY AS OF
THE  FILING DATE OF THIS REPORT, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE
ANY  SUCH  FORWARD-LOOKING STATEMENTS. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS.

                                       i
<PAGE>
                                     PART I

ITEM 1. BUSINESS

GENERAL

     The  Company  is  the  world's  largest   franchisee  of  T.G.I.   Friday's
restaurants, currently owning 40 and managing 10 T.G.I. Friday's restaurants and
owning one Redfish restaurant.  The Company owns the exclusive rights to develop
additional T.G.I.  Friday's restaurants in territories  encompassing most of the
states of Arizona,  Nevada, and New Mexico and the Kansas City,  Kansas,  Kansas
City,  Missouri and El Paso, Texas metropolitan  areas. The Company also has the
exclusive right,  together with TGI Friday's Inc., to develop  additional T.G.I.
Friday's  restaurants in the Northern and Southern California  territories.  The
Company plans to develop additional T.G.I.  Friday's restaurants in its existing
development  territories,  in  which  it  is  required  to  open  44  additional
restaurants  by December 31, 2003. In addition,  the Company has a 52% ownership
interest in Redfish  America,  LLC, a  cajun-themed  restaurant and bar concept,
which currently owns and operates an additional four Redfish Looziana  Roadhouse
& Seafood Kitchen restaurants.

     The  Company's  strategy is to (i) capitalize on the brand-name recognition
and  goodwill  associated  with  T.G.I.  Friday's  restaurants;  (ii) expand the
Company's  restaurant  operations  through  the development of additional T.G.I.
Friday's  restaurants  in  its  existing development territories and through the
development  of  new restaurant concepts, including Redfish, and the acquisition
of  restaurants  operating  under  other restaurant concepts; and (iii) increase
its  profitability  by continuing to enhance the dining experience of its guests
and improving operating efficiency.

     The  Company  was  incorporated in December 1988. The Company maintains its
principal  executive  offices  at  5050  North  40th Street, Suite 200, Phoenix,
Arizona  85018,  and  its  telephone  number  is (602) 852-9000. As used in this
Report,  the  term "Company" refers to Main Street and Main Incorporated and its
subsidiaries.

TGI FRIDAY'S INC.

     TGI  Friday's  Inc.  is  a wholly owned subsidiary of the Carlson Companies
Inc.,  a  diversified  company  with  business  interests  in the restaurant and
hospitality  industries. The first T.G.I. Friday's restaurant was opened in 1965
in  New York City. TGI Friday's Inc. has conducted a business since 1972 that is
substantially  similar  to  the business currently conducted by its franchisees.
As  of  March  1,  1999,  TGI  Friday's Inc. had 192 franchisor-operated and 357
franchised restaurants operating worldwide. System-wide   sales   exceeded  $1.4
billion  in  1998.  TGI  Friday's  Inc. currently owns approximately 2.6% of the
Company's  outstanding  Common  Stock.  Holders of the Company's Common Stock do
not  have any financial interest in TGI Friday's Inc., and TGI Friday's Inc. has
no responsibility for the contents of this Report.

CONCEPT

     T.G.I.  Friday's restaurants are full-service, casual dining establishments
featuring  a  wide selection of high quality, freshly prepared popular foods and
beverages,  including  a  number  of  innovative and distinctive menu items. The
restaurants  feature  quick,  efficient,  and friendly table service designed to
minimize  customer waiting time and facilitate table turnover. Service personnel
are  dressed  in traditional red-and-white striped knit shirts and casual slacks
and  are  encouraged  to  individualize  their  outfits with decorative pins and
headwear,  which  enhance  the  T.G.I.  Friday's  theme  and entertaining dining
atmosphere.  The  Company's  restaurants  generally  are  open seven days a week
between  the  hours  of  approximately  11:00  a.m.  and  1:00  a.m. The Company
believes  that  the  design  and  operational consistency of all T.G.I. Friday's
restaurants   enable   the  Company  to  benefit  significantly  from  the  name
recognition and goodwill associated with T.G.I. Friday's restaurants.

MENU

     The Company  attempts to capitalize on the innovative and distinctive  menu
items that have been an important attribute of T.G.I. Friday's restaurants.  The
menu  consists  of more  than 90  food  items,  including  appetizers  (such  as
mushrooms,  jalapeno poppers, buffalo wings, stuffed potato skins,  quesadillas,
fried onion rings, and pot stickers);  a variety of soups,  salads,  sandwiches,
wrappers, burgers,

                                       1
<PAGE>
     pizzadillas,  and pasta;  southwestern,  oriental,  and American  specialty
items; beef, seafood, and chicken entrees; a kids' menu; and desserts. Beverages
include a full bar featuring wines,  beers,  classic and specialty cocktails and
after dinner  drinks,  soft drinks,  milk,  milk shakes,  malts,  hot chocolate,
coffee, tea, frozen fruit drinks known as Friday's  Smoothies,(TM) and sparkling
fruit juice combinations known as Friday's Flings(R).

     Menu  prices  range  from $6 to $17 for beef, chicken, and seafood entrees;
$6  to  $10  for  pizzadillas,  pasta,  wrappers,  and oriental and southwestern
specialty  items;  $4  to  $9 for salads, sandwiches, and burgers; and $3 to $10
for  appetizers  and  soups.  Each  restaurant offers a separate children's menu
with  food  entrees  ranging  from  $2 to $3. Alcoholic beverage sales currently
account for approximately 23.3% of total revenue.

RESTAURANT LAYOUT

     Each  of  the  Company's  restaurants  is  similar in terms of exterior and
interior  design.  Each  restaurant  features  a  distinctive  decor accented by
red-and-white  striped  awnings,  brass  railings,  stained  glass, and eclectic
memorabilia. Each restaurant has interior dining areas and bar seating.

     Most  of  the  restaurants  are  located  in  free-standing  buildings. The
restaurants  contain  an  average of 60 dining tables, seating an average of 210
guests,  and  a  bar  area  seating  an  average  of approximately 30 additional
guests.

     The  restaurants  normally  contain  between 5,500 and 9,000 square feet of
space  and  average  approximately  7,500  square  feet.  Most  of the Company's
recently  developed  restaurants, however, contain 5,800 to 6,500 square feet of
space.

UNIT ECONOMICS

     The  Company estimates that its total cost of opening a new T.G.I. Friday's
restaurant  currently  ranges from $1,900,000 to $2,200,000, exclusive of annual
operating  expenses  and  assuming  that  the underlying real estate is obtained
under  a  lease arrangement. These costs include approximately (i) $1,150,000 to
$1,450,000  for  building, improvements, and permits, including liquor licenses,
(ii)  $550,000  for  furniture,  fixtures,  and  equipment,  (iii)  $150,000  in
pre-opening  expenses,  including hiring expenses, wages for managers and hourly
employees,  and supplies, and (iv) $50,000 for the initial franchise fee. Actual
costs,  however,  may  vary  significantly  depending upon a variety of factors,
including  the  site and size of the restaurant and conditions in the local real
estate  and  employment  markets. The Company's T.G.I. Friday's restaurants open
during  all  of  fiscal 1998 generated an average of approximately $3,079,000 in
annual revenue.

SITE SELECTION

     When  evaluating  whether  and  where  to  seek  expansion of the Company's
restaurant  operations,  the  Company  analyzes a restaurant's profit potential.
The  Company  considers  the  location  of  a  restaurant  to be one of the most
critical  elements  of  the  restaurant's  long-term  success.  Accordingly, the
Company  expends significant time and effort in the investigation and evaluation
of  potential  restaurant  sites.  In conducting the site selection process, the
Company   obtains   and  examines  detailed  demographic  information  (such  as
population  characteristics,  density,  and  household income levels), evaluates
site  characteristics  (such  as visibility, accessibility, and traffic volume),
considers  the  restaurant's  proximity  to  demand generators (such as shopping
malls,  lodging,  and  office  complexes),  and  analyzes potential competition.
Senior  corporate  management  evaluates and approves each restaurant site prior
to  its  acquisition  after  extensive  consultation  with  all  levels  of  the
operations  group.  TGI  Friday's  Inc.  provides  site selection guidelines and
criteria  as  well as site selection counseling and assistance. The selection of
a restaurant site by the Company requires the consent of TGI Friday's Inc.

                                       2
<PAGE>
CURRENT RESTAURANTS

     The  following  table  sets  forth  certain information relating to each of
restaurants owned or managed by the Company as of March 23, 1999.
<TABLE>
<CAPTION>
                                                                                    Owned or
                                              Square    Seating   In Operation   Managed by the
          Location                            Footage   Capacity     Since        Company Since
          --------                            -------   --------     -----        -------------
<S>                                           <C>       <C>       <C>            <C>
ACQUIRED T.G.I. FRIDAY'S RESTAURANTS (OWNED)
 Phoenix, Arizona ...........................  9,396      298         1985            1990
 Mesa, Arizona    ...........................  9,396      298         1985            1990
 Tucson, Arizona  ...........................  7,798      290         1982            1990
 Las Vegas, Nevada   ........................  9,194      298         1982            1990
 Kansas City, Missouri  .....................  8,500      270         1983            1993
 Overland Park, Kansas  .....................  6,000      220         1992            1993
 San Diego, California  .....................  8,002      234         1979            1993
 Costa Mesa, California    ..................  8,345      232         1980            1993
 Woodland Hills, California   ...............  8,358      283         1980            1993
 Valencia, California   .....................  6,500      232         1993            1993
 Torrance, California   .....................  8,923      237         1982            1993
 La Jolla, California   .....................  9,396      225         1984            1993
 Palm Desert, California   ..................  9,194      235         1983            1993
 West Covina, California   ..................  9,396      232         1984            1993
 North Orange, California  ..................  9,194      213         1983            1993
 Ontario, California    .....................  5,700      190         1993            1993
 Laguna Niguel, California    ...............  6,730      205         1990            1993
 San Bernardino, California   ...............  9,396      236         1986            1993
 Brea, California    ........................  6,500      195         1991            1993
 Riverside, California  .....................  6,500      172         1991            1993
 Pleasanton, California .....................  8,000      255         1995            1998
 Salinas, California ........................  6,500      240         1994            1998
 Oakland, California ........................  5,966      230         1994            1998
 Sacramento, California .....................  6,200      230         1979            1998
 Citrus Heights, California   ...............  8,500      270         1982            1998
 Fresno, California  ........................  5,950      230         1978            1998
DEVELOPED T.G.I. FRIDAY'S RESTAURANTS (OWNED)
 Scottsdale, Arizona    .....................  8,507      281         1991            1991
 Glendale, Arizona   ........................  5,200      230         1993            1993
 Albuquerque, New Mexico   ..................  5,975      270         1993            1993
 Reno, Nevada  ..............................  6,500      263         1994            1994
 Oxnard, California  ........................  6,500      252         1994            1994
 Carmel Mountain, California  ...............  6,500      252         1995            1995
 Rancho Santa Margarita, California .........  6,548      252         1995            1995
 Cerritos, California   .....................  6,250      223         1996            1996
 Las Vegas, Nevada   ........................  6,700      251         1997            1997
 San Francisco, California ..................  6,700      251         1998            1998
 El Paso, Texas #2   ........................  5,491      206         1998            1998
 Superstition Springs (Mesa), Arizona  ......  6,250      240         1998            1998
 Puente Hills, California  ..................  5,800      272         1999            1999
 San Diego, California  .....................  6,800      277         1999            1999
</TABLE>
                                                  (Table continued on next page)

                                       3
<PAGE>
(Table continued from previous page)
<TABLE>
<CAPTION>
                                                                           Owned or
                                     Square   Seating    In Operation   Managed by the
        Location                    Footage   Capacity      Since        Company Since
        --------                    -------   --------      -----        -------------
<S>                                 <C>       <C>        <C>            <C>
MANAGED T.G.I. FRIDAY'S RESTAURANTS
 San Bruno, California    .........  8,345      200          1980            1993
 San Francisco, California   ......  4,748      161          1989            1993
 San Jose, California  ............  8,002      228          1977            1993
 San Mateo, California    .........  9,396      252          1984            1993
 San Ramon, California    .........  6,000      182          1990            1993
 Lafayette, Louisana   ............  6,800      277          1993            1996
 Metairie, Louisiana   ............  9,000      290          1978            1996
 New Orleans, Louisiana   .........  7,100      258          1994            1996
 El Paso, Texas #1  ...............  4,800      198          1997            1997
 Monterey, California  ............  6,800      250          1997            1998
REDFISH RESTAURANTS
 Chicago, Illinois  ...............  6,200      214          1996            1997
 Wheaton, Illinois  ...............  7,133      210          1997            1997
 Denver, Colorado   ...............  7,925      321          1997            1997
 Cincinnati, Ohio   ...............  7,133      239          1997            1997
 San Diego, California ............ 11,994      347          1999            1999
</TABLE>

     The  average  size  of  the Company's acquired restaurants is approximately
8,000  square  feet,  and  the  average  size  of the Company's developed T.G.I.
Friday's restaurants is approximately 6,300 square feet.

RESTAURANT OPERATIONS

THE T.G.I. FRIDAY'S SYSTEM

     T.G.I.  Friday's  restaurants  are  developed  and  operated  pursuant to a
specified  system  (the  "T.G.I. Friday's System" or the "System"). TGI Friday's
Inc.  maintains  detailed  standards,  specifications, procedures, and operating
policies  to  facilitate  the  success  and  consistency  of all T.G.I. Friday's
restaurants.  To  ensure  that  the  highest  degree  of  quality and service is
maintained,  each  franchisee  of TGI Friday's Inc. (including the Company) must
operate  each  T.G.I.  Friday's  restaurant  in  strict  conformity  with  these
methods, standards, and specifications. The T.G.I. Friday's System includes

     * distinctive  exterior  and  interior  design,  decor,  color  scheme, and
       furnishings;
     * uniform specifications and procedures for operations;
     * standardized menus featuring special recipes and menu items;
     * procedures for inventory and management control;
     * formal training and assistance programs;
     * advertising and promotional programs;
     * requirements   for  quality  and  uniformity  of  products  and  services
       offered;
     * requirements  for the purchase or lease and use of  equipment,  fixtures,
       furnishings,  signs, inventory,  recorded music,  ingredients,  and other
       products and  materials  required for the  development  and  operation of
       restaurants  conforming  with the  standards  and  specifications  of TGI
       Friday's Inc. from approved suppliers; and
     * standards   for  the   maintenance,  improvement,  and  modernization  of
       restaurants, equipment, furnishings, and decor.

     TGI Friday's Inc. has committed to its  franchisees  to continue to improve
and  further  develop  the  T.G.I.  Friday's  System  and to  provide  such  new
information and techniques to the franchisees by means of confidential franchise
operating manuals. The T.G.I.  Friday's System is identified by means of certain
trade names, service marks, trademarks,  logos, and emblems, including the marks
T.G.I. Friday's(R) and Friday's(R).  The Company believes the support as well as
the standards, specifications, and operating

                                       4
<PAGE>
procedures  of  TGI  Friday's  Inc.  are  important  elements  in its restaurant
operations.   The   Company's   policy   is  to  execute  these  specifications,
procedures,  and  policies to the highest level of the standards of TGI Friday's
Inc.

     Once  a restaurant is integrated into the Company's operations, the Company
provides  a  variety of corporate services to assure the proper execution of the
T.G.I.  Friday's  System  and  the  operational  success  of the restaurant. The
Company's executive management

    * continually monitors restaurant operations;
    * maintains management controls;
    * inspects  individual  restaurants  to  assure  the quality of products and
      services and the maintenance of facilities;
    * develops   employee   programs   for   efficient   staffing,   motivation,
      compensation, and career advancement;
    * institutes procedures to enhance efficiency and reduce costs; and
    * provides centralized support systems.

     The  Company also maintains quality assurance procedures designed to assure
compliance  with  the  high  quality  of  products  and services mandated by the
Company  and  TGI  Friday's  Inc.  The  Company  responds  to  and  investigates
inquiries  and  complaints,  initiates  on-site  resolution of deficiencies, and
consults  with  each restaurant's staff to assure that proper action is taken to
correct  any  deficiency.  Company  personnel and contracted third-party quality
assurance  professionals  make unannounced visits to restaurants to evaluate the
facilities,  products,  and  services.  The  Company  believes  that its quality
review  program  and  executive  oversight enhance restaurant operations, reduce
operating  costs,  improve  customer  satisfaction,  and  facilitate the highest
level of compliance with the T.G.I. Friday's System.

RESTAURANT MANAGEMENT

     The  Company's regional and restaurant management personnel are responsible
for  complying  with  the  operational standards of the Company and TGI Friday's
Inc.  The Company's eight regional managers are responsible for between five and
eleven  of  the  Company's  restaurants within their region and report to one of
the  Company's  two  Directors of Operations who in turn report to the Company's
Vice  President  of  Restaurant  Operations.  The  Vice  President of Restaurant
Operations  reports  to  the  Executive  Vice  President of Operations and Chief
Operating  Officer,  who  has  complete responsibility for the operations of the
Company.   Restaurant   managers   are  responsible  for  day-to-day  restaurant
operations,  including  customer  relations,  food preparation and service, cost
control,  restaurant maintenance, and personnel relations. The Company typically
staffs  its  restaurants with an on-site general manager, two or three assistant
managers, a kitchen manager, and approximately 90 hourly employees.

RECRUITMENT AND TRAINING

     The  Company  attempts to hire employees who are committed to the standards
maintained  by  the Company and TGI Friday's Inc. The Company also believes that
its  high  unit  sales  volume,  the image and atmosphere of the T.G.I. Friday's
restaurant  concept,  and  its  career advancement and employee benefit programs
enable  it  to  attract  high quality management and restaurant personnel and to
enjoy a low level of employee turnover relative to the industry.

     The  Company  emphasizes  participation  in  continuing  training  programs
maintained  by  TGI  Friday's  Inc.  and  supplements those programs through the
employment  of  personnel  devoted  solely to employee training. Each restaurant
general  and  assistant manager completes a formal training program conducted by
the  Company  and  TGI  Friday's  Inc.,  receiving  between  10  and 15 weeks of
training  depending  on  the  prior  experience  and ability of the trainee. The
training  covers  all  aspects  of  management philosophy and overall restaurant
operations,  including  supervisory skills, operating and performance standards,
accounting  procedures,  and  employee  selection  and  training  necessary  for
restaurant operations.

                                       5
<PAGE>
     Management  believes that the Company's incentive, motivation, and training
programs  enhance  employee  performance, result in better customer service, and
increase  restaurant  efficiency. The Company has implemented incentive programs
that  reward restaurant managers when the restaurant's operating results surpass
designated   goals   and  a  reward  and  recognition  program  for  outstanding
achievements by employees.

MAINTENANCE AND IMPROVEMENT OF RESTAURANTS

     The   Company  maintains  its  restaurants  and  all  associated  fixtures,
furnishings,  and  equipment  in conformity with the T.G.I. Friday's System. The
Company  also  makes necessary additions, alterations, repairs, and replacements
to  its  restaurants  as  required  by  TGI  Friday's  Inc.,  including periodic
repainting  or replacement of obsolete signs, furnishings, equipment, and decor.
The  Company  may  be required, subject to certain limitations, to modernize its
restaurants  to  the  then-current  standards and specifications of TGI Friday's
Inc.

MANAGEMENT INFORMATION SYSTEMS

     The  Company  has  devoted  considerable resources to develop and implement
management  information  systems  that  complement proprietary systems developed
and   maintained   by  TGI  Friday's  Inc.  Inventory  control  and  transaction
processing  are  effected  by  means  of  a  computerized sales system, which is
integrated  into  data processing systems the Company utilizes for financial and
management  control, centralized accounting, and management information systems.

     The  Company  uses  five  to  six  touchscreen  computer  registers located
conveniently  throughout  each of its restaurants. Servers enter guest orders by
touching  the  appropriate  sections  of  the  register's computer screen, which
transfers   the   information   electronically   to  the  kitchen  and  bar  for
preparation.  These  registers  also are connected to a personal computer in the
restaurant  office  and to the Company's corporate information system via modem.
Management  receives detailed comparative reports on each restaurant's sales and
expense performance daily, weekly, and monthly.

     The  Company  believes that its management information systems enable it to
increase  the  speed  and accuracy of order taking and pricing, to better assess
guest  preferences,  to  efficiently  schedule  labor to better serve guests, to
quickly  and  accurately  monitor  food  and  labor  costs,  to  promptly access
financial  and  operating  data,  and  to improve the accuracy and efficiency of
store-level information and reporting.

EQUIPMENT, FOOD PRODUCTS, AND OTHER SUPPLIES

     The  Company  leases  or  purchases  all  fixtures, furnishings, equipment,
signs,  recorded  music,  food products, supplies, inventory, and other products
and  materials required for the development and operation of its T.G.I. Friday's
restaurants  from  suppliers  approved  by  TGI  Friday's  Inc.  In  order to be
approved  as  a  supplier,  a  prospective  supplier  must  demonstrate  to  the
reasonable   satisfaction   of  TGI  Friday's  Inc.  its  ability  to  meet  the
then-current  standards  and specifications of TGI Friday's Inc. for such items,
possess  adequate  quality  controls,  and have the capacity to provide supplies
promptly  and  reliably.  The  Company is not required to purchase supplies from
any  specified  suppliers,  but  the  purchase  or  lease  of  any items from an
unapproved supplier requires the prior approval of TGI Friday's Inc.

     TGI  Friday's  Inc. maintains a list of approved suppliers and a set of the
T.G.I.  Friday's System standards and specifications. TGI Friday's Inc. receives
no  commissions  on direct sales to its franchisees, but may receive rebates and
promotional  discounts  from  manufacturers  and  suppliers, which are generally
passed  on  proportionately  to  the  Company.  TGI Friday's Inc. is an approved
supplier   of   various   kitchen   equipment  and  store  fixtures,  decorative
memorabilia,  and  various  paper  goods, such as menus and in-store advertising
materials  and  items.  However,  the  Company  is not required to purchase such
items  from  TGI Friday's Inc. If the Company elects to purchase such items from
TGI  Friday's  Inc.,  TGI  Friday's  Inc.  derives  revenue  as a result of such
purchases.

     Although  not  required  to  do  so,  the  Company  purchases from a single
national  food  supplier  most  of  the  Company's  key  food products (with the
exception  of  produce,  dairy  products,  and  bread,  which  it purchases from
approved  local suppliers) as well as many of its other restaurant supplies. TGI
Friday's  Inc.  and  many  of  its  other  franchisees  also  purchase from this
supplier, which is not affiliated with the

                                       6
<PAGE>
Company  or  TGI  Friday's  Inc. The Company does not have a supply agreement or
other  contractual  arrangement  with the supplier and effects purchases through
purchase orders.

     The  Company's  restaurants  utilize  a  simple  bar  code system for daily
ordering   of  their  primary  food  and  merchandise  items.  Orders  are  sent
electronically  to  the supplier. The supplier guarantees 100% product delivery,
either  overnight  or same day, and has comprehensive warehouse/delivery outlets
servicing each of the Company's markets.

     The  Company  believes  that  its  purchases  from  the supplier enable the
Company  to  maintain  a  high  level of quality consistent with T.G.I. Friday's
restaurants;  to  realize  convenience  and  dependability in the receipt of its
supplies;  to  avoid  the  costs  of  maintaining a large purchasing department,
large  inventories, and product warehouses; and to attain cost advantages as the
result  of  volume  purchases. The Company believes, however, that all essential
products  are  available  from  other  national  suppliers as well as from local
suppliers  in  the  cities in which the Company's restaurants are located in the
event the Company determines to purchase its supplies from other suppliers.

ADVERTISING AND MARKETING

     The   Company  participates  in  the  national  marketing  and  advertising
programs  conducted  by  TGI  Friday's  Inc.  See Item 1, "Business -- Franchise
Agreements."  The  programs  primarily  utilize  network television and national
publications  and  feature  new menu innovations and various promotion programs.
In  addition,  the  Company  from  time  to  time  supplements the marketing and
advertising  programs  conducted  by  TGI  Friday's  Inc.  through  local radio,
newspaper,  and  magazine advertising media and sponsorship of community events.
In  conjunction  with  TGI Friday's Inc., the Company maintains a frequent diner
program  that  includes  awards  of  food,  merchandise,  and travel to frequent
diners based upon points accumulated through purchases.

     As a franchisee  of TGI Friday's  Inc.,  the Company is able to utilize the
trade names,  service marks,  trademarks,  emblems, and indicia of origin of TGI
Friday's  Inc.,  including the marks T.G.I.  Friday's(R)  and  Friday's(R).  The
Company  advertises  in various  media  utilizing  these  marks to  attract  new
customers to its restaurants.

EXPANSION OF OPERATIONS

     Since   1990,   the  Company  has  acquired  36  existing  T.G.I.  Friday's
restaurants  as well as the exclusive rights to develop restaurants in specified
territories.  The  acquisitions  include  26 restaurants in California, three in
Arizona,  and  one  in  each  of  Colorado,  Kansas, Missouri, Nebraska, Nevada,
Oregon,  and  Washington.  The Company also has developed 19 new T.G.I. Friday's
restaurants.  These include seven in California, three in each of Washington and
Arizona,  two  in  each of Nevada and Texas, and one in each of Colorado and New
Mexico.  See Item 1, "Business -- Current Restaurants." The Company subsequently
sold  five  of  the restaurants it acquired in California, which it continues to
manage,   and   sold  eight  restaurants  in  Colorado,  Nebraska,  Oregon,  and
Washington.  In  addition,  the  Company developed one Friday's Front Row Sports
Grill  in Portland, Oregon (which it closed in June 1998) and in 1997 acquired a
52%  ownership  interest  in  Redfish  America,  LLC,  which  currently owns and
operates  four  Redfish Looziana Roadhouse & Seafood Kitchen restaurants. In May
1998,   the  Company  acquired  six  T.G.I.  Friday's  restaurants  in  northern
California  along  with  the  related  T.G.I. Friday's development agreement. As
part  of  this  acquisition, the Company agreed to manage an additional location
in Monterey, California through April 1999.

     The   Company  plans  to  expand  its  restaurant  operations  through  the
development  of  additional  restaurants  in  the Company's existing development
territories.  The  Company  opened a T.G.I. Friday's restaurant in Puente Hills,
California  on  February  15,  1999, a T.G.I. Friday's restaurant in the Gaslamp
district  of  San  Diego, California on March 22, 1999, and a Redfish restaurant
in  the Gaslamp district of San Diego, California on March 23, 1999. The Company
plans  to open 12 to 13 additional restaurants over the next year and to meet or
exceed  its  development  requirements thereafter. The Company has signed leases
or  purchased  building  pads  for  13  additional  restaurants  scheduled to be
developed  during  1999.  The  Company  has  identified two additional sites for
development  in  1999  and  currently is negotiating site acquisitions for these
restaurants.  The  Company  currently  is considering other sites for additional
restaurants,  but  has  not  entered into leases or purchase agreements for such
sites.

                                       7
<PAGE>
   The opening of new restaurants will depend on the Company's ability to

     * locate suitable sites in terms of favorable  population  characteristics,
       density and household income levels, visibility,  accessibility,  traffic
       volume,  and proximity to demand  generators  (including  shopping malls,
       lodging, and office complexes) and potential competition;
     * obtain  financing  for  construction,  tenant  improvements,   furniture,
       fixtures, equipment, and other expenditures;
     * negotiate acceptable leases or terms of purchase;
     * secure zoning, environmental, health and similar regulatory approvals and
       liquor licenses;
     * recruit and train qualified personnel; and
     * manage successfully the rate of expansion and expanded operations.

     The   opening  of  new  restaurants  also  may  be  affected  by  increased
construction  costs and delays resulting from governmental regulatory approvals,
strikes  or work stoppages, adverse weather conditions, and various acts of God.
Newly  opened  restaurants  may  operate  at a loss for a period following their
opening.  The  length  of  this  period  will  depend  upon a number of factors,
including  the  time  of  year  the  restaurant  is  opened,  sales  volume, and
operating costs.

     The  acquisition  of  existing  restaurants  will depend upon the Company's
ability  to  identify  and  purchase  restaurants  that  meet  its  criteria  on
satisfactory  terms  and  conditions. There can be no assurance that the Company
will  be  successful in achieving its expansion goals through the development or
acquisition  of  additional  restaurants or that any additional restaurants that
are  developed  or  acquired  will  be  profitable.  In addition, the opening of
additional  restaurants  in  an  existing  market may have the effect of drawing
customers from and reducing the sales volume of existing restaurants.

DEVELOPMENT AGREEMENTS

     The  Company  is  a  party to four development agreements with TGI Friday's
Inc.  Each  development  agreement  grants  the  Company  the exclusive right to
develop  additional  T.G.I.  Friday's  restaurants  in a specified territory and
obligates  the Company to develop additional T.G.I. Friday's restaurants in that
territory in accordance with a specified development schedule.

     The  Company  owns  the  exclusive  rights  to  develop  additional  T.G.I.
Friday's  restaurants in territories encompassing most of the states of Arizona,
Nevada,  and  New  Mexico and the Kansas City, Kansas, Kansas City, Missouri and
El  Paso,  Texas  metropolitan  areas. The Company also has the exclusive right,
together   with  TGI  Friday's  Inc.,  to  develop  additional  T.G.I.  Friday's
restaurants in the Northern and Southern California territories.

     The  following table sets forth information regarding the Company's minimum
requirements   to  open  new  T.G.I.  Friday's  restaurants  under  its  current
development  agreements as well as the number of existing restaurants in each of
the Company's development territories.

                        Southern     Northern
                       California   California   Southwest     Midwest
Year                  Territory(1) Territory(1) Territory(2) Territory(3) Total
----                  ------------ ------------ ------------ ------------ -----
1999 .................     3            4             1           1         9
2000 .................     4            5             1           1        11
2001 .................     4            4             1           1        10
2002 .................     4            4             1           1        10
2003 .................     3            3          (TBD)       (TBD)        6
                         ---          ---          ----        ----       ---
                          18           20             4           4        46
Existing Restaurants..    21            7 (4)        11 (5)       2        41
------------
(1)   TGI Friday's Inc. also will develop restaurants in these regions.
(2)   Includes  the states of Arizona,  Nevada,  and New Mexico and the El Paso,
      Texas metropolitan area.
(3)   Includes metropolitan Kansas City, Kansas and Kansas City, Missouri.
(4)   Does  not  include  six restaurants  managed  in the  Northern  California
      Territory.
(5)   Does not include one restaurant managed in the Southwest  Territory.  
(TBD) To be  determined  by  negotiation  between  T.G.I.  Friday's Inc. and the
      Company during 2002.

                                       8
<PAGE>
     Each  development agreement gives TGI Friday's Inc. certain remedies in the
event  that the Company fails to comply in a timely manner with its schedule for
restaurant  development, if the Company otherwise defaults under the development
agreement  or  any  franchise  agreement  relating  to  a restaurant within that
development  territory  as  described  below,  or  if  the Company's officers or
directors   breach   the   confidentiality   or  noncompete  provisions  of  the
development  agreement.  The remedies available to TGI Friday's Inc. include (i)
the  termination  of the Company's exclusive right to develop restaurants in the
related  territory;  (ii)  a  reduction in the number of restaurants the Company
may  develop  in the related territory; (iii) the termination of the development
agreement;  and  (iv)  an  acceleration  of  the  schedule  for  development  of
restaurants in the related territory pursuant to the development agreement.

FRANCHISE AGREEMENTS

     The  Company  enters  into  or  assumes a separate franchise agreement with
respect  to  each  T.G.I.  Friday's  restaurant  that  it develops pursuant to a
development  agreement  or acquires. Each franchise agreement grants the Company
an   exclusive  license  to  operate  a  T.G.I.  Friday's  restaurant  within  a
designated  geographic  area (generally a three-mile limit from each restaurant)
and  obligates  the  Company  to  operate such restaurant in accordance with the
requirements  and  specifications  established  by TGI Friday's Inc. relating to
the  preparation  of  food  products  and  quality of service as well as general
operating  procedures,  advertising,  maintenance  of records, and protection of
trademarks.  The  franchise  agreements  restrict  the ability of the Company to
transfer  its interest in its T.G.I. Friday's restaurants without the consent of
TGI Friday's Inc.

     Each  franchise  agreement requires the Company to pay to TGI Friday's Inc.
an  initial  franchise fee, generally in the amount of $50,000. In addition, the
Company  is  obligated to pay TGI Friday's Inc. a royalty in the amount of 4% of
the  gross  revenue  as  defined in the franchise agreement for each restaurant.
Royalty  payments  under  these  agreements  totaled $4,850,000, $4,120,000, and
$3,929,000  during  fiscal  1996,  1997,  and 1998, respectively. Each franchise
agreement  also  requires  the  Company  to  spend at least 2% of gross sales as
defined  in  the  franchise agreement on local marketing and to contribute up to
4%  of  gross  sales  to  a  national marketing pool that is administered by TGI
Friday's  Inc. During fiscal 1998, however, TGI Friday's Inc. generally required
the  Company  as well as all other franchisees to contribute up to 1.9% of gross
sales  to  the  national  marketing pool. Marketing expenses totaled $1,554,000,
$1,919,000,  and  $1,805,000,  during fiscal 1996, 1997, and 1998, respectively.
All  funds  contributed  in  excess  of  2%  of  gross  sales  to  the  national
advertising fund may be credited against the local advertising requirement.

     A  default  under  any  franchise  agreement  will not constitute a default
under  any  other  franchise  agreement. A default under the franchise agreement
for  a  restaurant in a development territory may constitute a default under the
development agreement for that development territory.

GOVERNMENT REGULATION

     Each  of  the  Company's restaurants is subject to licensing and regulation
by  state  and  local  departments  and  bureaus  of  alcohol  control,  health,
sanitation,  and  fire  and  to  periodic  review  by  the  state  and municipal
authorities  for  areas  in  which the restaurants are located. In addition, the
Company  is  subject  to local land use, zoning, building, planning, and traffic
ordinances  and  regulations  in the selection and acquisition of suitable sites
for  constructing  new  restaurants.  Delays  in  obtaining,  or  denials of, or
revocation  or  temporary  suspension  of, necessary licenses or approvals could
have a material adverse impact upon the Company's development of restaurants.

     The  Company  also  is subject to regulation under the Fair Labor Standards
Act,  which  governs  such  matters  as working conditions and minimum wages. An
increase  in the minimum wage rate or changes in tip-credit provisions, employee
benefit  costs  (including  costs  associated  with  mandated  health  insurance
coverage)  or  other  costs associated with employees could adversely affect the
Company.

     In  addition, the Company is subject to the Americans with Disabilities Act
of  1990  that  among  other  things,  may  require certain installations in new
restaurants  or  renovations  to existing restaurants to meet federally mandated
requirements.  To  the  Company's knowledge, the Company is in compliance in all
material  respects  with all applicable federal, state, and local laws affecting
its business.

                                       9
<PAGE>
COMPETITION

     The  restaurant  business  is  highly  competitive  with  respect to price,
service,  food  type  and  quality.  In  addition,  restaurants  compete for the
availability  of  restaurant  personnel  and managers. The Company's restaurants
compete  with  a  large  number  of  other  restaurants,  including national and
regional  restaurant  chains  and  franchised  restaurant systems, many of which
have   greater  financial  resources,  more  experience,  and  longer  operating
histories  than  the  Company,  as  well  as  with  locally  owned,  independent
restaurants.

     The  Company's  casual  dining business also competes with various types of
food  businesses,  as  well  as  other businesses, for restaurant locations. The
Company  believes  that  site  selection  is  one  of the most crucial decisions
required  in  connection  with  the development of restaurants. As the result of
the  presence of competing restaurants in the Company's development territories,
management  devotes  great  attention  to  obtaining  what  it  believes will be
premium  locations  for new restaurants, although the Company cannot provide any
assurance that it will be successful in this regard.

EMPLOYEES

     The  Company  employs  approximately 1,863 persons on a full-time basis, of
whom  52  are  corporate management and staff personnel and 1,811 are restaurant
personnel.  The  Company  also  employs approximately 3,364 part-time employees.
Except  for  corporate and management personnel, employees generally are paid on
an  hourly  basis.  The Company employs at each of its restaurants an average of
approximately   90  full-time  and  part-time  hourly  employees.  None  of  the
Company's  employees  are  covered by a collective bargaining agreement with the
Company.  The  Company  never  has experienced a major work stoppage, strike, or
labor  dispute.  The  Company  considers  its relations with its employees to be
good.

EXECUTIVE OFFICERS

     The  following table sets forth certain information regarding the Company's
executive officers:

NAME                      AGE                          POSITION
----                      ---                          --------
Bart A. Brown, Jr.......  67  President, Chief Executive Officer, and Director
William G. Shrader......  51  Executive Vice President, Chief Operating Officer,
                                and Director
James Yeager............  48  Vice President-Finance, Secretary, and Treasurer

     BART  A.  BROWN,  JR. has been the President and Chief Executive Officer of
the  Company  since  December  1996.  Mr.  Brown  was affiliated with Investcorp
International,  N.A.,  an international investment banking firm, from April 1996
until  December  1996.  Mr.  Brown  served  as  the Chairman and Chief Executive
officer  of  Color  Tile, Inc. at the request of Investcorp International, Inc.,
which  owned all of that company's common stock, from September 1995 until March
1996,  shortly  after  Color  Tile,  Inc.  filed  under Chapter 11 of the United
States  Bankruptcy Code. Mr. Brown served as Chairman of the Board of the Circle
K  Corporation  from  June  1990,  shortly after filing for reorganization under
Chapter  11  of  the  United  States Bankruptcy Code, until September 1995. From
September  1994 until September 1996, Mr. Brown served as the Chairman and Chief
Executive  Officer  of  Spreckels  Industries,  Inc.  Mr.  Brown  engaged in the
private  practice  of law from 1963 through 1990 after seven years of employment
with the Internal Revenue Service.

     WILLIAM  G.  (BILL)  SHRADER  has served as Executive Vice President, Chief
Operating  Officer  and  Director  of  the Company since March 1, 1999. Prior to
joining  the  Company,  Mr.  Shrader  was Senior Vice President of Marketing for
Tosco  Marketing  Company  from February 1997 to March 1999. From August 1992 to
February  1997,  Mr.  Shrader  served  in several capacities at Circle K Stores,
Inc.,  including  President  of  the  Arizona Region, President of the Petroleum
Products/Services  Division,  Vice  President  of  Gasoline  Operations and Vice
President  of  Gasoline  Marketing.  Mr. Shrader began his career in 1976 at The
Southland  Corporation  and  departed  in  1992 as National Director of Gasoline
Marketing.

                                       10
<PAGE>
     JAMES  YEAGER has served as Vice  President-Finance  of the  Company  since
January 1999 and as Secretary and Treasurer of the Company since April 1998. Mr.
Yeager  served as Corporate  Controller of the Company from June 1997 to January
1999.  Prior to joining the Company,  Mr. Yeager was Chief Financial  Officer of
Restaurants of America, Inc., a multiple concept restaurant company. Previously,
he was Chief  Financial  Officer of an engineering  and high tech  manufacturing
company,  a multi-office  law firm, a 160 unit chain of retail drug stores, a 60
unit chain of retail drug stores,  and a full-service real estate investment and
management company.  Mr. Yeager began his career as a manager and a partner in a
local public accounting firm in Dallas, Texas from 1972 to 1983.

ITEM 2. PROPERTIES

     In  December  1998, the Company entered into a five-year lease for space to
serve  as  its  corporate offices. The Company believes that the leased space is
adequate  for  its  current and reasonably anticipated needs and that it will be
able to secure adequate space upon the expiration of the lease.

     The  Company  leases space for all its restaurants. The initial lease terms
range  from  10  to 20 years and contain renewal options for up to 20 years. The
leases  typically  provide for a fixed rental plus percentage rental. See Note 7
to Consolidated Financial Statements.

ITEM 3. LEGAL PROCEEDINGS

     From  time to time, the Company is subject to routine contract, negligence,
employment  related,  and  other  litigation in the ordinary course of business.
The  Company  does not believe that it is subject to any pending litigation that
will  have a material adverse effect on its business or financial condition that
is   not   otherwise  reserved  for  in  the  Company's  consolidated  financial
statements.

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

     Not applicable.

                                       11
<PAGE>
                                     PART II

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

     The  Company's  Common  Stock has been quoted on the Nasdaq National Market
under  the  symbol "MAIN" since October 30, 1992. The following table sets forth
the  quarterly  high  and low sales prices of the Company's Common Stock for the
periods indicated as reported by the Nasdaq Stock Market.

                                                          HIGH           LOW
                                                          ----           ---
        1997
          First Quarter ..............................  $2 9/16        $1 9/16
          Second Quarter..............................   2 25/32        1 5/8
          Third Quarter ..............................   3 7/8          2 5/16
          Fourth Quarter..............................   4 3/8          2 5/8
        1998
          First Quarter ..............................  $4             $2 9/16
          Second Quarter..............................   3 15/16        3 1/8
          Third Quarter ..............................   4 5/16         3 5/16
          Fourth Quarter..............................   3 7/8          2 15/16
        1999
          First Quarter (through March 23, 1999)......  $3 5/8         $2 31/32

     On  March  23,  1999,  there  were  782  holders of record of the Company's
Common  Stock.  On March 23, 1999, the closing sale price of the Common Stock on
the Nasdaq National Market was $3.125 per share.

     The  Company  has  never  declared  or paid any cash dividends. The Company
intends  to  retain any earnings to fund the growth of its business and does not
anticipate  paying  any  cash  dividends in the foreseeable future. In addition,
the  Company's  existing  debt obligations prohibit the Company from paying cash
dividends.

                                       12
<PAGE>
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

     The  following  table  sets  forth selected consolidated financial data for
the  Company for the periods indicated. The selected consolidated financial data
for  each  of  the  five fiscal years in the period ending December 28, 1998 has
been  derived  from  the Company's consolidated financial statements, which have
been  audited  by Arthur Andersen LLP, independent accountants. This data should
be  read  in  conjunction with, and are qualified by reference to, the Company's
consolidated   financial   statements   and   the  notes  thereto  and  Item  7,
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations" included elsewhere in this Report.
<TABLE>
<CAPTION>
                                                                Fiscal Year Ended
                                           ---------------------------------------------------------
                                                    (In thousands, except per share amounts)
                                            Dec. 26,     Dec. 25,    Dec. 30,    Dec. 29    Dec. 28
                                             1994         1995        1996        1997       1998
                                           ---------   ---------   ---------   ---------   ---------
<S>                                         <C>         <C>         <C>         <C>         <C>
STATEMENT OF OPERATIONS DATA:
Revenue ..................................  $111,262    $119,508    $122,563    $107,997    $115,324
Restaurant operating expenses:
 Cost of sales ...........................    30,516      34,005      35,089      30,995      33,242
 Payroll and benefits ....................    34,849      36,769      38,858      32,469      34,353
 Depreciation and amortization ...........     3,884       4,353       4,586       3,552       4,391
 Other operating expenses ................    31,621      35,250      36,944      30,589      31,083
                                            --------    --------    --------    --------    --------
  Total restaurant operating expenses ....   100,870     110,377     115,477      97,605     103,069
                                            --------    --------    --------    --------    --------
Income from restaurant operations ........    10,392       9,131       7,086      10,392      12,255
 Depreciation and amortization ...........     1,014       1,331       1,450         953         983
 General and administrative expenses .....     4,191       4,410       4,388       4,559       4,906
 Restructuring and reorganization ........        --          --      20,208      (2,390)        (17)
                                            --------    --------    --------    --------    --------
Operating income (loss) ..................     5,187       3,390     (18,960)      7,270       6,383
 Interest expense, net ...................     3,902       4,424       3,206       2,466       2,218
                                            --------    --------    --------    --------    --------
Net income (loss) from continuing
 operations before income taxes and
 extraordinary item ......................     1,285      (1,034)    (22,166)      4,804       4,165
Provision for income taxes ...............        --          --          --          --          --
                                            --------    --------    --------    --------    --------
Net income (loss) from continuing
 operations before extraordinary item ....     1,285      (1,034)    (22,166)      4,804       4,165
Net income (loss)(1) .....................  $  1,285    $ (1,034)   $(22,166)   $  3,166    $  4,165

DILUTED EARNINGS PER SHARE:
 Net income (loss) from continuing
  operations before extraordinary item....  $   0.35    $  (0.22)   $  (2.73)   $   0.47    $   0.39
 Net income (loss)(1) ....................  $   0.35    $  (0.22)   $  (2.73)   $   0.31    $   0.39
Weighted average shares outstanding --
 diluted .................................     3,692       4,621       8,110      10,098      10,608

BALANCE SHEET DATA:
 Working capital .........................  $(10,905)   $ (7,848)   $ (1,343)   $ (1,330)   $ (2,807)
 Total assets ............................    84,503      88,605      70,848      61,168      70,255
 Long-term debt, net of current portion...    41,265      31,204      33,809      24,308      28,264
 Stockholders' equity ....................    22,601      37,261      16,585      22,203      26,372
</TABLE>
------------
(1) Fiscal  1997  includes  an  extraordinary  loss  from debt extinguishment of
    $1,638,000, or $0.16 per share.

                                       13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

GENERAL

     The  Company  commenced  its  restaurant  operations  in  May 1990 with the
acquisition  of  four  T.G.I. Friday's restaurants in Arizona and Nevada. During
the   past   eight  years,  the  Company  has  grown  through  acquisitions  and
development of new restaurants and currently manages 55 restaurants.

     During  1996,  the  Company  had  a  change in management and implemented a
long-term  business  strategy  to  enhance its financial position, to place more
emphasis  on  its  casual  dining  business  in certain designated areas, and to
dispose of underperforming assets.

     The  first  step  was  to strengthen the Company's financial position. This
was  accomplished  by  (i)  the  sale  of  1,250,000  shares of Common Stock for
$2,500,000  through  a  private  placement transaction in January 1997; (ii) the
sale   of   five   restaurants  in  northern  California  in  January  1997  for
$10,800,000,  of which $8,000,000 in proceeds were used to repay debt (see Notes
3  and  5  to  Notes  to  Consolidated  Financial  Statements);  and  (iii)  new
borrowings  of  $21,300,000  with  a repayment period of 15 years. Proceeds from
the  new  borrowings  were used primarily to pay off debt with shorter repayment
periods (see Note 5 to Notes to Consolidated Financial Statements).

     The  Company  also  has renegotiated its development agreements with T.G.I.
Friday's  Inc.  to  reduce  the  number  of  T.G.I.  Friday's  restaurants it is
required  to  build  with  the  intent to focus on those development territories
that  are  most  economically  favorable  (see  Note  7 to Notes to Consolidated
Financial  Statements).  In addition, the Company has recorded net restructuring
and  reorganization  gains  of $17,000 in 1998, $2,390,000 in 1997 and a loss of
$20,208,000  in  1996  to  dispose  of  various  non-core  assets and write down
certain  core  assets  to realizable values (see Note 2 to Notes to Consolidated
Financial Statements).

     The  Company's current strategy is to reduce operating costs and expand its
restaurant  operations. This will entail continuing to build T.G.I. Friday's and
Redfish  restaurants and evaluating other concepts in the casual dining segment.

RESULTS OF OPERATIONS

     The  following table sets forth, for the periods indicated, the percentages
that certain items of income and expense bear to total revenue:

                                                   Fiscal Year Ended
                                        ----------------------------------------
                                        December 30,  December 29,  December 28,
                                           1996          1997          1998
                                        -----------   ------------  ------------
Revenue ................................   100.0%        100.0%       100.0%
Restaurant operating expenses:
 Cost of sales .........................    28.6          28.7         28.8
 Payroll and benefits ..................    31.7          30.1         29.8
 Depreciation and amortization .........     3.7           3.3          3.8
 Other operating expenses ..............    30.2          28.3         27.0
                                           -----         -----        -----
 Total restaurant operating expenses ...    94.2          90.4         89.4
                                           -----         -----        -----
Income from restaurant operations ......     5.8           9.6         10.6
 Depreciation and amortization .........     1.2           0.9          0.9
 General and administrative expenses ...     3.6           4.2          4.2
 Restructuring and reorganization ......    16.5          (2.2)          --
                                           -----         -----        -----
Operating income (loss) ................   (15.5)          6.7          5.5
Interest expense, net ..................     2.6           2.3          1.9
                                           -----         -----        -----
Net income (loss) before income taxes
 and extraordinary item ................   (18.1)%         4.4%         3.6%
                                           =====         =====        =====

                                       14
<PAGE>
FISCAL 1998 COMPARED TO FISCAL 1997

     Revenue  for  the  fiscal  year  ended  December 28, 1998 increased 6.8% to
$115,324,000  as  compared  with $107,997,000 for the fiscal year ended December
29,  1997. This increase was due primarily to the acquisition of six restaurants
in  May  1998,  the development of three new restaurants during the year, and an
increase  in  same  store  sales  of 4.7% for the year. Additionally, management
fees  from  restaurants  in  Louisiana,  El  Paso, Texas and northern California
increased  from  $979,000  in  1997  to  $1,083,000  in 1998. Sales of alcoholic
beverages  accounted  for  23.3%  of revenue for the year as compared with 23.6%
for the year ended December 29, 1997.

     Cost of sales  increased  as a  percentage  of  revenue to 28.8% in 1998 as
compared with 28.7% in 1997. This increase was the result of the introduction of
Jack Daniels Grill menu items in mid-1997, which have higher food costs, as well
as higher  food  costs  associated  with the  Redfish  restaurants,  which  were
acquired by the Company in April 1997.  Additionally,  certain  dairy and potato
products had higher costs in 1998 as compared with 1997.

     Labor  costs  decreased  as  a  percentage  of  revenue to 29.8% in 1998 as
compared  with 30.1% in 1997. A $0.40 per hour increase in the minimum wage rate
in  September 1997 and an additional $0.60 per hour increase in the minimum wage
rate  in  California  in March 1998 was more than offset by menu price increases
and better management of labor costs in 1998.

     Other  operating  expenses  include  rent,  real estate taxes, advertising,
insurance,   maintenance,  supplies,  and  utilities.  Also  included  in  other
operating  expenses  is  a  4% royalty fee paid to TGI Friday's Inc. pursuant to
the  franchise  agreements,  as  well  as  payments to a national marketing fund
managed  by  the franchisor. The franchise agreements require the Company to pay
up  to  4%  of revenue to this marketing fund, although the Company was required
to  only  pay approximately 1.9% in 1997. The Company is required to pay 2.1% of
revenue  into  the  marketing  fund  in  1999.  The  decrease in other operating
expenses  is attributable to lower insurance costs and to the Company's on-going
cost reduction efforts in supply, maintenance and advertising costs.

     Depreciation  and amortization increased as a percentage of revenue to 4.7%
in  1998  as  compared  with  4.2%  in  1997  due  primarily  to amortization of
pre-opening  costs  of  three  new  restaurants  developed  in  1997, as well as
additional  depreciation associated with these three new restaurants and the six
northern California restaurants purchased in May 1998.

     General  and  administrative  expenses  as  a  percentage of revenue remain
unchanged at 4.2% for both 1997 and 1998.

     Interest  expense  decreased  as  a percentage of revenue to $2,218,000, or
1.9%  of  revenue,  in  1998 as compared with $2,466,000, or 2.3% of revenue, in
1997.  This  decrease was primarily due to the capitalization of financing costs
associated  with restaurants developed during 1998. Additionally, the percentage
decrease  is  attributable  to  the  relatively  fixed nature of these financing
costs as compared with increasing revenues from 1997 to 1998.

     No  income  tax  provision  was  recorded  in  1998  or  1997  due  to  the
availability of net operating loss carryforwards.

FISCAL 1997 COMPARED TO FISCAL 1996

     Revenue  for  the  fiscal  year  ended December 29, 1997 decreased 11.9% to
$107,997,000  compared  to  $122,563,000  in  the fiscal year ended December 30,
1996.  This  decrease  was due primarily to an additional week of revenue in the
53-week  period ended December 30, 1996 compared to the normal 52 week period in
1997,  the  sale of five restaurants in northern California in January 1997, and
the  sale  of  eight restaurants in Washington, Oregon, Colorado and Nebraska in
October  1997.  The  Company  currently  manages the five restaurants it sold in
northern  California,  along  with  four  other  T.G.I.  Friday's restaurants in
Louisiana  and El Paso, Texas, generating management fee revenue of $979,000 for
the  fiscal  year ended December 29, 1997. Revenue for the nine restaurants that
the  Company  manages  totaled $23,500,000 for the year ended December 29, 1997.
The  decrease  in  revenue  was  partially offset by a 2% increase in same store
sales  and  revenue  from  the  Redfish restaurants of $4,693,000 for the fiscal
year  ended  December  29,  1997. Revenue from alcoholic beverages accounted for
23.6%  of revenue for the fiscal year ended December 29, 1997 which is unchanged
from the prior year.

                                       15
<PAGE>
     Cost  of  sales  as a percentage of revenue increased to 28.7% in 1997 from
28.6%  in  1996. The increase resulted from a lower-priced lunch menu introduced
in  April  1997,  the  introduction of Jack Daniels Grill menu items, which have
higher  food costs, and the consolidation of the Redfish restaurants, which have
higher  food costs than T.G.I. Friday's restaurants. This increase was partially
offset  by  $979,000  in  management  fees included in 1997 revenue which has no
corresponding cost of sales.

     Labor  costs decreased as a percentage of revenue to 30.1% in 1997 from the
31.7%  in  1996.  A  $.50  per hour increase in minimum wage in October 1996 was
more  than offset by a menu price increase and better controls on managing labor
costs.  Minimum  wage in California, which restaurants in California account for
60%  of the Company's revenue, has increased to $5.75 in March 1998. The Company
increased its menu prices in 1998 to offset this increased labor cost.

     Other  operating  expenses  include  rent,  real  estate taxes, common area
maintenance  charges,  advertising,  insurance,  maintenance,  and utilities. In
addition,  the  franchise  agreements  between TGI Friday's Inc. and the Company
require  a  4%  royalty and a contribution to a national marketing pool of up to
4%  of  gross sales, although the Company was only required to pay 1.9% and 1.7%
during  1997  and  1996,  respectively, and will contribute 2.2% for 1998. Other
operating  expenses  decreased  as a percentage of revenue to 28.3% in 1997 from
30.2%  in  1996.  The  decreases  were  a  result  of  lower  advertising costs,
specifically  related to the Company's frequency program, and lower supplies and
insurance  costs, which were partially offset by an increase in contributions to
a national marketing pool administered by TGI Friday's Inc.

     In  total,  depreciation  and  amortization  decreased  as  a percentage of
revenue  to  4.2%  in  1997 from 4.9% in 1996. The decrease was due primarily to
the write-offs in the fourth quarter of 1996 related to asset impairments.

     General  and  administrative  expenses as a percentage of revenue increased
to  4.2%  in  1997  from  3.6%  in 1996. These increases relate primarily to the
relative  fixed nature of these expenses in comparison to the overall decline in
revenue.

     Interest   expense   was  approximately  $2,466,000  in  1997  compared  to
$3,206,000  in  1996.  These  decreases  were a result of the retirement of $8.0
million  of  indebtedness  with  proceeds  from  the sale of five restaurants in
northern California in January 1997.

     No  income  tax  provision  was  recorded  in  1997  or  1996  due  to  the
availability of net operating loss carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  primary  use of funds over the past five years has been for
the   acquisition   of   existing  T.G.I.  Friday's  restaurants  and  exclusive
development  rights.  These  acquisitions  were financed principally through the
issuance  of  long-term  debt  and  Common  Stock. The Company has also expended
funds  for  the  development  of  new restaurants. The principal source of these
funds has been operating cash flow, supplemented by bank and lease financing.

     Net   cash  flows  from  operating  activities  were  $4,444,000  in  1996,
$1,050,000  in 1997, and $9,062,000 in 1998. These were supplemented by net cash
flows  from financing of $4,092,000 and $2,051,000, for the years ended 1998 and
1996,  respectively,  to  fund the Company's acquisitions and development of new
restaurants.  In  1997,  the  Company  used  $8,287,000  of  net  cash flows for
financing activities which came primarily from the sale of assets.

     The  Company's current liabilities exceed its current assets due in part to
cash  expended  on  the  Company's development requirements and also because the
restaurant  business  receives  substantially immediate payment for sales, while
payables  related  to  inventories  and other current liabilities normally carry
longer  payment  terms,  usually 15 to 30 days. At December 28, 1998 the Company
had  a cash balance of $7,294,000. Monthly cash receipts have been sufficient to
pay all obligations as they become due.

     At  December  28,  1998,  the Company had long-term debt of $28,264,000 and
current portion of long-term debt of $1,365,000.

                                       16
<PAGE>
     Approximately  $19,118,000  of  this  debt is a Term Loan comprised of five
notes  from one lender, three of the notes bear interest at 9.457% per annum and
two  of  the  notes  bear  interest  at  the one month LIBOR rate plus 320 basis
points  and  are payable in equal monthly installments of principal and interest
of  approximately $222,000 (combined) until the notes are paid in full on May 1,
2012.

     The Company  plans to develop at least 14 additional  restaurants  over the
next year. The Company's primary lender has committed $30,000,000 to finance the
development  of these  new  restaurants  and has  given  the  Company  different
alternatives  under  which  this  financing  would  be  provided  for  each  new
restaurant.

     The  Company leases all of its restaurants with terms ranging from 10 to 20
years.  Minimum  payments  on  the  Company's  existing  lease  obligations  are
approximately $5,800,000 per year.

YEAR 2000

     The  Company continues to assess and quantify the impact that the Year 2000
issue  will  have  on  its  information  systems,  imbedded systems and business
processes.  The  systems  that  might be affected by the Year 2000 issue are (1)
the   Company's  internal  corporate  support  systems,  including  a  mid-range
computer  system  the  Company  relies upon to assimilate accounting information
and  produce  internal  and  external  accounting  reports;  (2)  the  Company's
internal  personal  computer network and related software that it relies upon to
produce correspondence and daily and weekly financial data; (3) the Com-pany's
point-of-sale  and restaurant back-office accounting systems that it relies upon
to  process  guest  orders,  track the status of orders, schedule and track time
and  attendance  information  and  related  labor costs, and produce store-level
operating  data;  (4)  restaurant  equipment  necessary  to  prepare the guests'
orders;  and  (5)  third-party  systems  such  as  computer  systems used by the
banking,  telephone,  utility, food preparation and distribution industries, all
of which are necessary to the basic operation of the Company's restaurants.

     In  1998,  the  Company  began  identifying  those most critical areas that
might  be  deficient  and  established  a  time  line  to complete the necessary
analysis   and   remediation   plans.  The  Company  has  begun  correcting  the
deficiencies  identified in all affected areas and anticipates completion of the
remediation  plans  by  September 30, 1999. The established cost of the analysis
and  remediation  plans  related  to  the  Year  2000  issues  is  approximately
$450,000.

     As  part  of  this  process,  the Company has assessed the role of critical
suppliers  of  products  and  services  to determine the extent that the Company
might  be  vulnerable in the event that these suppliers have failures due to the
Year  2000  issue.  A  questionnaire has been provided to, and research is being
conducted  on,  critical  suppliers  to  determine  their  state  of  Year  2000
readiness.

     When  critical suppliers or processes might not be compliant, or compliance
is  uncertain,  the  Company is establishing contingency plans in the event that
such  suppliers  or  processes  fail  to  perform  after December 31, 1999. Such
contingency  plans  might consist of converting to manual systems or changing to
alternative  processes  or  suppliers that will function properly after December
31,  1999. The Company anticipates that it will complete these contingency plans
by  September  30,  1999.  As  of the filing date of this Report, the Company is
unable  to reasonably estimate the effect, if any, on its consolidated financial
position,  results  of  operations  or  cash  flows  from  the  failure  of  its
significant vendors to be Year 2000 ready.

     The  Company  has  determined  that  the worst case scenario related to the
Year  2000  issue would be a complete failure of the Company's systems and those
of  the  Company's  critical  suppliers of products and services. The failure of
the  Company's  information  systems, embedded systems, or business processes or
the  systems  of third parties to timely achieve Year 2000 compliance could have
a  material  adverse  effect  on the Company's business, financial condition and
operating results.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK

     Not applicable.

                                       17
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reference  is  made  to  the  financial statements, the report thereon, the
notes  thereto and the supplementary data commencing at page F-1 of this report,
which   financial  statements,  report,  notes  and  data  are  incorporated  by
reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE.

     Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information  required by this Item relating to the Company's directors
is  incorporated  by  reference to the Company's Proxy Statement to be filed for
its  1999  Annual Meeting of Stockholders. The information required by this Item
relating  to  the  Company's executive officers is included in Item 1, "Busniess
-- Executive Officers."

ITEM 11. EXECUTIVE COMPENSATION

     The  information  required by this Item is incorporated by reference to the
Company's   Proxy  Statement  to  be  filed  for  its  1999  Annual  Meeting  of
Stockholders.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

     The  information  required by this Item is incorporated by reference to the
Company's   Proxy  Statement  to  be  filed  for  its  1999  Annual  Meeting  of
Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  information  required by this Item is incorporated by reference to the
Company's   Proxy  Statement  to  be  filed  for  its  1999  Annual  Meeting  of
Stockholders.

                                       18
<PAGE>
                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
          FORM 8-K

(a)  FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES.

     (1)  Financial Statements are listed in the Index to Consolidated Financial
          Statements on page F-1 of this Report.

     (2)  No Financial  Statement  Schedules  are included  because they are not
          applicable or are not required or the  information  required to be set
          forth therein is included in the consolidated  financial statements or
          notes thereto.

(b)  REPORTS ON FORM 8-K.

     Not applicable.

(c)  EXHIBITS

Exhibit
Number      Exhibit
------      -------
3.1     Certificate of Incorporation of the Registrant(1)
3.2     Certificate of Amendment of Restated Certificate of Incorporation(1)
3.3     Amended and Restated Bylaws of the Registrant(1)
10.1    Registrant's 1990 Stock Option Plan(2)
10.5    Form of  Franchise  Agreement  between the  Registrant  and TGI Friday's
        Inc.(3)
10.7    Asset Conveance Agreement among CNL California  Restaurants,  LTD., Main
        St. California, Inc. and Registrant.(4)
10.8    Stock Purchase  Agreement among CNL California  Restaurants,  LTD., Main
        St. California, Inc. and Registrant.(4)
10.9    Form of Management  Agreement  between Main St.  California II, Inc. and
        Main St. California, Inc., a wholly owned subsidiary of Registrant.(4)
10.10   Master  Incentive  Agreements  between Main St.  California II, Inc. and
        Main St. California, Inc., a wholly owned subsidiary of Registrant.(4)
10.11   Employment Agreement with Bart A. Brown, Jr.(5)
10.11A  Employment  Agreement dated January 1, 1999 between Main Street and Main
        Incorporated and Bart A. Brown, Jr.
10.13   Promissory Note between Registrant and CNL Financial I, Inc.(5)
10.14   Promissory Note between Registrant and CNL Financial I, Inc.(5)
10.15   Promissory Note between Registrant and CNL Financial I, Inc.(5)
10.16   Registrant's 1995 Stock Option Plan(6)
10.17   Amended and Restated Development Agreement between TGI Friday's Inc. and
        Cornerstone  Productions,   Inc.,  a  wholly  owned  subsidiary  of  the
        Registrant.(7)
10.18   Amended and Restated Development Agreement between TGI Friday's Inc. and
        Main  St.   California,   Inc.,  a  wholly  owned   subsidiary   of  the
        Registrant.(7)
10.18A  First  Amendment  to  Development  Agreement  dated  February  10, 1999,
        between TGI Friday's, Inc. and Main St. California, Inc.
10.19   Amended and Restated Development Agreement between TGI Friday's Inc. and
        Main St. Midwest, Inc., a wholly owned subsidiary of the Registrant.(7)
10.20   Amended and Restated Purchase  Agreement between RJR Holdings,  Inc. and
        Main  St.   California,   Inc.,  a  wholly  owned   Subsidiary   of  the
        Registrant.(7)
10.21   Development  Agreement dated April 22, 1998 between Main St. California,
        Inc.  and  TGI  Friday's,  Inc.,  and  First  Amendment  to  Development
        Agreement  dated  February 10, 1999 between TGI Friday's,  Inc. and Main
        St. California, Inc., a wholly owned subsidiary of the Registrant.

                                       19
<PAGE>
Exhibit
Number     Exhibit
------     -------
21      List of Subsidiaries(7)
23      Consent of Independent Public Accountants
27      Financial Data Schedule
------------
(1) Incorporated by reference to the  Registrant's  Form 10-K for the year ended
    December 30, 1991,  filed with the Securities and Exchange  Commission on or
    about March 31, 1992.
(2) Incorporated by reference to the Registrant's Registration Statement on Form
    S-1 (Registration No. 33-40993) which became effective in September 1991.
(3) Incorporated  by  reference  to the  Registrant's  Form 8-K  filed  with the
    Securities and Exchange Commission on or about April 15, 1994.
(4) Incorporated by reference to the Registrant's Form 8-K Report filed with the
    Commission in January 1997.
(5) Incorporated by reference to the  Registrant's  Form 10-K for the year ended
    December 30, 1996,  filed with the Securities and Exchange  Commission on or
    about April 14, 1997.
(6) Incorporated  by  reference to  Registrant's  Proxy  Statement  for its 1995
    Annual Meeting of Stockholders.
(7) Incorporated by reference to the  Registrant's  Form 10-K for the year ended
    December 29, 1997,  filed with the  Securities  and Exchange  Commission  on
    March 27, 1998.

                                       20
<PAGE>
                                   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.


                                      MAIN STREET AND MAIN INCORPORATED

Date: March 23, 1999                  By:  /s/ Bart A. Brown, Jr.
                                         -------------------------------------
                                         Bart A. Brown, Jr.
                                         President and Chief Executive Officer

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


 /s/ John F. Antioco         Chairman of the Board                March 23, 1999
--------------------------
     John F. Antioco

/s/ Bart A. Brown, Jr.       President, Chief Executive Officer,  March 23, 1999
--------------------------   and Director (Principal Executive
    Bart A. Brown, Jr.       Officer)

/s/ William G. Shrader       Executive Vice President, Chief      March 23, 1999
--------------------------   Operating Officer and Director
    William G. Shrader

/s/ James Yeager             Vice President-Finance (Principal    March 23, 1999
--------------------------   Financial and Accounting Officer),
    James Yeager             Secretary and Treasurer

/s/ Jane Evans               Director                             March 23, 1999
--------------------------
    Jane Evans

/s/ John C. Metz             Director                             March 23, 1999
--------------------------
    John C. Metz

/s/ Steven A. Sherman        Director                             March 23, 1999
--------------------------
    Steven A. Sherman

                                       21
<PAGE>
                       MAIN STREET AND MAIN INCORPORATED

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                                                                            Page
                                                                            ----
Report of Independent Public Accountants...................................  F-2

Consolidated Balance Sheets at December 29, 1997 and December 28, 1998.....  F-3

Consolidated Statements of Operations for the fiscal years ended
 December 30, 1996, December 29, 1997, and December 28, 1998...............  F-4

Consolidated Statements of Changes in Stockholders' Equity for the
 fiscal years ended December 30, 1996, December 29, 1997, and
 December 28, 1998.........................................................  F-5

Consolidated Statements of Cash Flows for the fiscal years ended
 December 30, 1996, December 29, 1997, and December 28, 1998...............  F-6

Notes to Consolidated Financial Statements.................................  F-7


                                       F-1
<PAGE>
                               ARTHUR ANDERSEN LLP

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To Main Street and Main Incorporated:

We have audited the accompanying  consolidated balance sheets of MAIN STREET AND
MAIN  INCORPORATED (a Delaware  corporation) and subsidiaries as of December 28,
1998,  and  December  29,  1997,  and the  related  consolidated  statements  of
operations,  changes in stockholders'  equity and cash flows for the years ended
December 28, 1998,  December 29, 1997, and December 30, 1996. These consolidated
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements based on our audits.

     We  conducted  our  audits  in  accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about  whether  the  financial  statements  are  free  of
material  misstatement.  An  audit includes examining, on a test basis, evidence
supporting  the  amounts  and  disclosures in the financial statements. An audit
also   includes   assessing  the  accounting  principles  used  and  significant
estimates  made  by  management,  as  well  as  evaluating the overall financial
statement  presentation.  We  believe that our audits provide a reasonable basis
for our opinion.

     In  our opinion, the financial statements referred to above present fairly,
in  all  material  respects,  the  financial  position  of  Main Street and Main
Incorporated  and  subsidiaries  as  of December 28, 1998 and December 29, 1997,
and  the  results  of  their operations and their cash flows for the years ended
December  28, 1998, December 29, 1997, and December 30, 1996, in conformity with
generally accepted accounting principles.



                                                   /s/ ARTHUR ANDERSEN LLP

Phoenix, Arizona
 February 19, 1999

                                      F-2
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                (In Thousands)

                                                      December 28,  December 29,
                                                         1998          1997
                                                       --------      --------
ASSETS
Current Assets
   Cash and cash equivalents .......................   $  7,294      $  6,850
   Accounts receivable, net ........................      2,096         3,293
   Inventories .....................................        840         1,043
   Prepaid expenses ................................        593           289
   Assets held for disposal, net ...................         --           363
                                                       --------      --------
      Total current assets .........................     10,823        11,838
Property and equipment, net ........................     39,195        30,194
Other assets, net ..................................      2,337         3,091
Franchise costs, net ...............................     17,900        15,288
Note receivable ....................................         --           757
                                                       --------      --------
                                                       $ 70,255      $ 61,168
                                                       ========      ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Current portion of long-term debt ...............   $  1,365      $  1,233
   Accounts payable ................................      4,183         3,890
   Other accrued liabilities .......................      8,082         8,045
                                                       --------      --------
      Total current liabilities ....................     13,630        13,168
                                                       --------      --------
Long-term debt, net of current portion .............     28,264        24,308
                                                       --------      --------
Other liabilities and deferred credits .............      1,989         1,489
                                                       --------      --------
Commitments and contingencies
Stockholders' Equity
Common stock, $.001 par value, 25,000,000 shares
 authorized; 9,976,416 and 9,970,691 shares issued
 and outstanding in 1998 and 1997, respectively ....         10            10
Additional paid-in capital .........................     44,149        44,145
Accumulated deficit ................................    (17,787)      (21,952)
                                                       --------      --------
                                                         26,372        22,203
                                                       --------      --------
                                                       $ 70,255      $ 61,168
                                                       ========      ========

                     The accompanying notes are an integral
                   part of these consolidated balance sheets.

                                      F-3
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
                                                              Year Ended
                                               -----------------------------------------
                                               December 28,   December 29,  December 30,
                                                   1998          1997          1996
                                                ---------     ---------     ---------
<S>                                           <C>            <C>           <C>
Revenue ......................................  $ 115,324     $ 107,997     $ 122,563
                                                ---------     ---------     ---------
Restaurant Operating Expenses
 Cost of sales ...............................     33,242        30,995        35,089
 Payroll and benefits ........................     34,353        32,469        38,858
 Depreciation and amortization ...............      4,391         3,552         4,586
 Other operating expenses ....................     31,083        30,589        36,944
                                                ---------     ---------     ---------
    Total restaurant operating expenses ......    103,069        97,605       115,477
                                                ---------     ---------     ---------
Income from restaurant operations ............     12,255        10,392         7,086
 Depreciation and amortization ...............        983           953         1,450
 General and administrative expenses .........      4,906         4,559         4,388
 Restructuring and reorganization ............        (17)       (2,390)       20,208
                                                ---------     ---------     ---------
Operating income (loss) ......................      6,383         7,270       (18,960)
Interest expense, net ........................      2,218         2,466         3,206
                                                ---------     ---------     ---------
   Net income (loss) before income taxes and
    extraordinary item .......................      4,165         4,804       (22,166)
Provision for income taxes ...................         --            --            --
                                                ---------     ---------     ---------
   Net income (loss) before extraordinary
     item ....................................      4,165         4,804       (22,166)
   Extraordinary loss from debt
     extinguishment ..........................         --         1,638            --
                                                ---------     ---------     ---------
Net income (loss) ............................  $   4,165     $   3,166     $ (22,166)
                                                =========     =========     =========
Basic Earnings Per Share
 Income (loss) before extraordinary item .....  $    0.42     $    0.48     $   (2.73)
 Extraordinary item ..........................         --         (0.16)           --
                                                ---------     ---------     ---------
   Net income (loss) .........................  $    0.42     $    0.32     $   (2.73)
                                                =========     =========     =========
Diluted Earnings Per Share
 Income (loss) before extraordinary item .....  $    0.39     $    0.47     $   (2.73)
 Extraordinary item ..........................         --         (0.16)           --
                                                ---------     ---------     ---------
   Net income (loss) .........................  $    0.39     $    0.31     $   (2.73)
                                                =========     =========     =========
 Weighted Average Number Of Shares Outstanding
  -- Basic ...................................      9,976         9,918         8,110
                                                =========     =========     =========
 Weighted Average Number Of Shares Outstanding
  -- Diluted .................................     10,608        10,098         8,110
                                                =========     =========     =========
</TABLE>

  The accompanying notes are an integral part of these consolidated statements.

                                      F-4
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                (In Thousands)


                                 Common Stock
                                --------------  Additional
                                          Par    Paid-In   Accumulated
                                Shares   Value   Capital     Deficit     Total
                                ------   -----   -------     -------     -----
BALANCE, December 25, 1995 ..... 7,952    $ 8    $40,205    $ (2,952)  $ 37,261
 Shares issued in connection
  with private placement .......   766      1      1,489          --      1,490
 Net loss ......................    --     --         --     (22,166)   (22,166)
                                 -----    ---    -------    --------   --------
BALANCE, December 30, 1996 ..... 8,718      9     41,694     (25,118)    16,585
 Shares issued in connection
  with private placement ....... 1,250      1      2,447          --      2,448
 Shares issued in connection
  with options exercised .......     3     --          4          --          4
 Net income ....................    --     --         --       3,166      3,166
                                 -----    ---    -------    --------   --------
BALANCE, December 29, 1997 ..... 9,971     10     44,145     (21,952)    22,203
 Shares issued in connection
  with options exercised .......     5     --          4          --          4
 Net income ....................    --     --         --       4,165      4,165
                                 -----    ---    -------    --------   --------
BALANCE, December 28, 1998 ..... 9,976    $10    $44,149    $(17,787)  $ 26,372
                                 =====    ===    =======    ========   ========


 The accompanying notes are an integral part of these consolidated statements.

                                      F-5
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In Thousands)
<TABLE>
<CAPTION>
                                                                 Year Ended
                                                  ------------------------------------------
                                                  December 28,   December 29,   December 30,
                                                     1998           1997           1996
                                                   --------       --------       --------
<S>                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss) ............................... $  4,165       $  3,166       $(22,166)
 Adjustments to reconcile net income (loss) to
  net cash provided by operating activities:
 Depreciation and amortization ...................    5,374          4,505          6,036
 Restructuring and reorganization ................      (17)        (2,391)        20,208
 Extraordinary loss from debt extinguishment .....       --          1,638             --
 Changes in assets and liabilities
  Accounts receivable, net .......................     (865)           122          1,104
  Inventories ....................................      203            124             57
  Prepaid expenses ...............................     (304)          (116)           288
  Other assets, net ..............................     (341)        (1,288)        (1,380)
  Accounts payable ...............................      293             57            207
  Other accrued liabilities ......................      554         (4,767)            90
                                                   --------       --------       --------
    Net Cash Flows -- Operating Activities .......    9,062          1,050          4,444
                                                   --------       --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
 Cash paid to acquire assets through business
  combination ....................................       --           (880)            --
 Cash received from note receivable ..............      757             --             --
 Net additions to property and equipment .........  (19,002)        (6,613)        (8,623)
 Cash paid to acquire franchise rights ...........   (3,318)            --             --
 Sale of assets ..................................    2,062         17,326             --
 Cash received from sale-leaseback transactions...    6,791          1,641             --
                                                   --------       --------       --------
    Net Cash Flows -- Investing Activities .......  (12,710)        11,474         (8,623)
                                                   --------       --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
 Proceeds from sale of common stock ..............        4          2,504          1,490
 Financing and offering costs paid ...............       --            (52)            --
 Long term debt borrowings .......................    5,620         21,554          4,506
 Principal payments on long term debt ............   (1,532)       (32,293)        (3,945)
                                                   --------       --------       --------
    Net Cash Flows -- Financing Activities .......    4,092         (8,287)         2,051
                                                   --------       --------       --------
NET CHANGE IN CASH AND CASH EQUIVALENTS ..........      444          4,237         (2,128)
CASH AND CASH EQUIVALENTS, BEGINNING .............    6,850          2,613          4,741
                                                   --------       --------       --------
CASH AND CASH EQUIVALENTS, ENDING ................ $  7,294       $  6,850       $  2,613
                                                   ========       ========       ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
 Cash paid during the year for interest .......... $  2,557       $  3,404       $  2,987
                                                   ========       ========       ========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.

                                      F-6
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. ORGANIZATION AND BASIS OF PRESENTATION

     Main   Street   and   Main  Incorporated  (the  "Company")  is  a  Delaware
corporation  engaged  in  the  business  of  acquiring, developing and operating
restaurants.  The  Company  currently  owns  38  T.G.I. Friday's restaurants and
operates  10  T.G.I.  Friday's  restaurants  under  management  agreements.  The
Company  has  a  52%  ownership interest in Redfish America, LLC which currently
owns and operates four Redfish restaurants.

     PRINCIPLES OF CONSOLIDATION

     The  consolidated financial statements include the accounts of the Company,
its   wholly   owned  subsidiaries,  and  Redfish  America,  LLC.  All  material
intercompany transactions have been eliminated in consolidation.

     FISCAL YEAR

     The Company's restaurants operate on a fiscal year which ends on the Monday
closest to December 31.

     USE OF ESTIMATES

     The  preparation  of  financial  statements  in  conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect  the  reported  amounts  of  assets  and  liabilities,
disclosure  of  contingent  assets  and liabilities at the date of the financial
statements,  and  the  reported  amounts  of  revenues  and  expenses during the
reporting period. Actual results could differ from those estimates.

2. RESTRUCTURING AND REORGANIZATION

     The  Financial Accounting Standards Board has issued Statement of Financial
Accounting   Standards  ("SFAS")  No.121,  "Accounting  for  the  Impairment  of
Long-Lived  Assets  and  for  Long-Lived  Assets  to  be Disposed of " which the
Company  adopted  in  1996.  SFAS  No.  121  requires  that long-lived assets be
reviewed  for  impairment  whenever  events  or  circumstances indicate that the
carrying  amount of the asset may not be recoverable. If the sum of the expected
future  cash  flows (undiscounted and without interest charges) from an asset to
be  held and used in operations is less than the carrying value of the asset, an
impairment  loss  must be recognized in the amount of the difference between the
carrying  value  and  the fair value. Assets to be disposed of must be valued at
the lower of carrying value or fair value less costs to sell.

     During  1996,  the  Company  implemented  a  long-term business strategy to
place  more emphasis on the core business and to dispose of underperforming core
assets  and non-core assets. As a result of implementing this strategy, combined
with  certain  events  occurring  during fiscal years ended 1996, 1997 and 1998,
the  Company  recognized  a  gain on sale of assets, a restructuring charge, and
impairment of certain assets as follows (in thousands):

                                        December 28,  December 29,  December 30,
                                           1998          1997           1996
                                        -----------   -----------   -----------
    Gain on sale of assets .............  $  --        $(5,231)       $    --
    Impairment of non-core assets ......     --          1,660          6,985
    Impairment of core assets held for
      disposal .........................   (648)            --          8,674
    Impairment of core assets used in
      operations .......................     --            842          3,141
    Other restructuring costs ..........    631            339          1,408
                                          -----        -------        -------
                                          $ (17)       $(2,390)       $20,208
                                          =====        =======        =======
     GAIN ON SALE OF ASSETS

     In  January  1997, the Company sold five restaurants in northern California
(the  "Northern  California  Sale")  for  $10,800,000 in cash and entered into a
management agreement with the buyer to manage

                                      F-7
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)


the   restaurants.   This  transaction  resulted  in  a  gain  before  taxes  of
approximately  $1,595,000.  Of the total proceeds, $8,000,000 was used to reduce
the  Company's  Term  Loan I with the balance used for working capital purposes.
In  addition,  the Company sold eight T.G.I. Friday's restaurants in Washington,
Oregon,  Colorado  and  Nebraska.  The  sale  price of these restaurants totaled
$8,877,000 and resulted in a gain before taxes of approximately $3,636,000.

     IMPAIRMENT OF NON-CORE ASSETS

     In  December  1993,  the  Company  sold  its  dairy  and  food distribution
business   for  $7,500,000,  including  a  promissory  note  in  the  amount  of
$6,000,000  due  on  December  31,  1996. During the second quarter of 1996, the
debtor  on  the  $6,000,000  promissory  note  sold  assets related to its dairy
operations,  which  represented a significant portion of the collateral securing
the  note.  The  debtor  used  cash from the sale to pay down senior debt and to
provide  working  capital  for its ice cream novelty production facility. Due to
uncertainty  of the business, the Company's promissory note, net of the deferred
gain  booked  at  the  time  of the initial sale, was written down by $4,136,000
during  1996. During 1997, the Company wrote off the remaining carrying value of
$1,000,000  due  to  further  adverse  developments  with  the  dairy  and  food
distribution business.

     In  May  1991,  the  Company entered into a five-year management assistance
agreement  with  AsianStar  Co.,  Ltd.  (AsianStar), a Korean company affiliated
with  a  former  director  of  the  Company,  to provide management services and
expertise   relative  to  the  development  and  operation  of  T.G.I.  Friday's
restaurants  in  the  Republic  of  Korea.  The  management assistance agreement
provided  for the Company to receive a fee of 3% of the net revenue of the first
two  restaurants  developed  in  Seoul, Korea. In 1996, the Company finalized an
agreement  with  AsianStar to exchange its receivable for a $1,660,000 ownership
interest  in  AsianStar.  Due  to  uncertainty  of  the  Korean  venture and the
estimated  length  of  time  before  the  Company will receive any return on its
investment,  a  $1,000,000  impairment loss was taken during 1996. The Company's
investment  in  the Korean venture was approximately $660,000 as of December 30,
1996.  During  1997,  the Company wrote off the remaining carrying value of this
investment  due  to  further  uncertainty of the Korean venture resulting from a
down turn in the Korean economy.

     In  addition,  during  1996,  the  Company  determined  that  property  and
equipment  related  to  its  indoor entertainment center being leased to a third
party  exceeded  its realizable value based on the level of lease payments to be
received  over  the remaining life of the lease, which resulted in an impairment
loss  of  $582,000.  The  remaining  balance  of the 1996 impairment of non-core
assets  is  comprised  primarily  of write downs of real estate that the Company
was holding for future restaurant development or sale.

     IMPAIRMENT OF CORE ASSETS HELD FOR DISPOSAL

     During  1996,  the  Company  recorded  a  $5,541,000  charge  to  write off
property  and  equipment  and  pre-opening  costs  associated  with  two  of the
Company's  recently  developed  restaurants.  One of the restaurants was a Front
Row  Sports  Grill  in  Portland,  Oregon  and  the  other was a T.G.I. Friday's
restaurant  in  Denver,  Colorado.  In  addition,  the Company took a $1,096,000
impairment  loss  charge  in  1996  related  to  a  20  year old T.G.I. Friday's
restaurant  in  southern  California  which  was  closed  in 1997. The remaining
balance  of  the  1996  impairment  loss  of  $2,037,000 of core assets held for
disposal  relates  to  assets  of  three  T.G.I.  Friday's restaurants that were
written  down to fair value and disposed of during 1997. During 1998 a favorable
lease  payoff  was  negotiated related to the Front Row Sports Grill. A $648,000
gain  was  recognized  in  connection  with  the lease settlement resulting in a
reversal of the remaining reserve.

                                      F-8
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)


     IMPAIRMENT OF CORE ASSETS USED IN OPERATIONS

     In  accordance  with  SFAS  No.  121,  the  Company  recorded  a  charge of
$3,141,000  during  1996  related  to  three  of its T.G.I. Friday's restaurants
where  undiscounted  cash  flows  over  the  remaining term of the lease did not
support  the  carrying  value of the assets. During 1997, the Company recorded a
charge   of   $874,000  related  primarily  to  two  Redfish  restaurants  where
undiscounted cash flows did not support the carrying value of the assets.

     OTHER RESTRUCTURING COSTS

     Other   restructuring   costs   include  severance,  contract  termination,
professional  services  costs incurred in conjunction with the restructuring and
estimated costs of litigation.

     RESERVES

     In  connection  with  the  restructuring  and   reorganization   charge  of
approximately  $20,208,000  taken in 1996,  the  Company  recorded a reserve for
projected losses of approximately $2,318,000 in other accrued liabilities.

     In 1997, the Company recorded a gain on the sale of assets of approximately
$5,231,000 and  restructuring  and  reorganizing  charges of $2,841,000.  Of the
$2,841,000 in charges,  $2,269,000 was recorded as a reduction  against  certain
impaired  assets and  $572,000  was  recorded  as an increase in the reserve for
projected  losses.  The balance in the reserve for projected  losses at December
29, 1997 was approximately $2,115,000.

     In 1998,  the  Company  increased  the  reserve  for  projected  losses  by
approximately  $631,000.  The reserve was  decreased by  approximately  $648,000
related to a favorable  lease  settlement  and  approximately  $731,000 in other
costs  associated with terminating the lease and legal fees. The reserve balance
in other accrued  liabilities at December 28, 1998 was approximately  $1,367,000
for the remaining severance, legal, and condemnation costs.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The  consolidated  financial  statements  reflect  the  application  of the
following accounting policies:

     CASH AND CASH EQUIVALENTS

     Cash  and  cash  equivalents include funds on hand, short-term money market
investments  and certificate of deposit accounts with original maturities within
91 days of purchase.

     INVENTORIES

     Inventories  consist  primarily  of  food,  beverages  and supplies and are
stated at cost using the first-in, first-out (FIFO) method.

                                      F-9
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     PROPERTY AND EQUIPMENT

     Property  and  equipment are stated at cost, depreciated on a straight-line
basis  over  the  estimated  useful  lives,  and  consist  of  the following (in
thousands):
                                                       December 28, December 29,
                                         Useful Lives      1998         1997
                                         ------------  -----------  -----------
   Land..................................     --        $    897      $    534
   Building and leasehold improvements...    5-20         24,324        20,924
   Kitchen equipment.....................    5-7          10,354         7,418
   Restaurant equipment..................    5-10          4,555         3,162
   Smallwares and decor..................    5-10          4,678         4,017
   Office equipment and furniture........    5-7           1,687         1,487
   Equipment under capital leases........     7              315           315
                                                        --------      --------
                                                          46,810        37,857
   Less: Accumulated depreciation and
    amortization.........................                (14,914)      (11,340)
                                                        --------      --------
                                                          31,896        26,517
   Construction in progress..............                  7,299         3,677
                                                        --------      --------
      Total..............................               $ 39,195      $ 30,194
                                                        ========      ========
     ASSETS HELD FOR DISPOSAL

     At  December  29, 1997, assets held for disposal consisted of one parcel of
land.  During  1998,  management  determined the parcel of land was suitable for
development  and  has  made  plans  to construct a T.G.I. Friday's restaurant at
this  location  during  1999.  The  $363,000  carrying  value  of  the  land was
reclassified and included in land at December 28, 1998.

     FRANCHISE COSTS

     The  Company  has  paid  certain franchise costs for the exclusive right to
operate  restaurants  in  its  franchise  territories.  These  costs  are  being
amortized  on a straight-line basis and consist of the following (in thousands):

                                       Amortization   December 28,  December 29,
                                          Period          1998          1997
                                       -------------  -----------   ------------
   Franchise fees and license costs....    20-30        $ 21,093      $ 17,775
   Prepaid franchise fees..............      --              100           100
                                                        --------      --------
                                                          21,193        17,875
   Less: Accumulated amortization......                   (3,293)       (2,587)
                                                        --------      --------
      Total............................                 $ 17,900      $ 15,288
                                                        ========      ========

     Franchise  fees  and  license  costs  represent  the  value assigned to the
franchise  agreements in the regions acquired and to the licenses to operate the
restaurants.  These  agreements provide for an initial term of 20 years with two
renewal   terms  of  10  years  each.  Prepaid  franchise  fees  relate  to  the
restaurants  the  Company  is  committed  to  develop  under  the  terms  of the
development agreements (Note 7).

     PRE-OPENING COSTS

     The  Company  defers certain start-up costs directly related to the opening
of  new restaurants. Pre-opening costs of approximately $168,000 and $227,000 as
of  December 28, 1998 and December 29, 1997, respectively, are included in other
assets in the consolidated balance sheets.

     The  Company's  policy  is  to  amortize  pre-opening  costs over 12 months
commencing  with the opening of each new restaurant. Amortization of pre-opening
costs   (excluding   amounts   included   in   the  restructuring  charge),  was
approximately $661,000, $287,000 and $318,000 in 1998, 1997, and 1996,
respectively.

                                      F-10
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     In  April  1998,  the AICPA issued Statement of Position 98-5 ("SOP 98-5"),
Reporting   of   the  Costs  of  Start-up  Activities  effective  for  financial
statements  issued  for  years  beginning  after  December 15, 1998. SOP 98-5 is
effective  for  the Company's first quarter financial statements in fiscal 1999.
Under  the  new accounting requirement, the costs of start-up activities will be
expensed  as  incurred.  The  adoption  of  SOP  98-5  will  result  in deferred
preopening  costs  on  the Company's consolidated balance sheet being charged to
operations  as  the cumulative effect of a change in accounting principle. As of
December  28,  1998,  the balance of deferred preopening costs was approximately
$168,000.  The ultimate impact of the adoption of SOP 98-5 on the accounting for
preopening  costs  is  contingent upon the number of future restaurant openings,
and thus cannot be reasonably estimated at this time.

     OTHER ACCRUED LIABILITIES

     Other accrued liabilities consist of the following ( in thousands):

                                              December 28,     December 29,
                                                  1998             1997
                                              ------------     ------------
         Bank overdraft......................     $   76          $    --
         Accrued payroll.....................      2,079            2,074
         Reserve for projected losses........      1,367            2,116
         Accrued sales tax...................        899              669
         Accrued interest....................        --                 7
         Other accrued liabilities...........      3,661            3,179
                                                  ------          -------
           Total.............................     $8,082          $ 8,045
                                                  ======          =======
     INCOME TAXES

     The  Company  utilizes  the liability method of accounting for income taxes
as  set  forth  in SFAS No.109, Accounting for Income Taxes. Under the liability
method,  deferred  taxes are provided based on the temporary differences between
the  financial  reporting  basis  and  the tax basis of the Company's assets and
liabilities,  using  enacted tax rates in the years in which the differences are
expected  to  reverse.  The effect on deferred taxes of a change in tax rates is
recognized in income during the period that includes the enactment date.

     EARNINGS PER SHARE

     In  February 1997, the Financial Accounting Standards Board issued SFAS No.
128,  Earnings  Per  Share, which supersedes Accounting Principles Board ("APB")
Opinion  No. 15, the existing authoritative guidance. The statement modifies the
calculation  of  primary  and  fully  diluted  earnings  per  share  ("EPS") and
replaces  them  both  with  basic and diluted EPS. SFAS No. 128 is effective for
financial  statements  for  both  interim  and  annual  periods  presented after
December  15,  1997  and  as  a  result,  all  prior  period  EPS data have been
restated.  The following table sets forth basic and diluted EPS computations for
the  years ended December 28, 1998, December 29, 1997, and December 30, 1996 (in
thousands, except per share amounts):
<TABLE>
<CAPTION>
                             1998                          1997                           1996
                 ----------------------------  -----------------------------   ----------------------------
                                    Per Share                      Per Share                      Per Share
                 Net Income  Shares  Amount    Net Income  Shares   Amount     Net Loss   Shares    Amount
                 ----------  ------  ------    ----------  ------   ------     --------   ------    ------
<S>                <C>       <C>     <C>        <C>         <C>      <C>       <C>         <C>      <C>
Basic EPS .....    $4,165    9,976   $0.42      $3,166      9,918    $0.32     $(22,166)   8,110    $(2.73)
Effect of stock
 options ......        --      632      --          --        180       --           --       --       --
                   ------   ------   -----      ------     ------    -----     --------    -----    ------
Diluted EPS ...    $4,165   10,608   $0.39      $3,166     10,098    $0.31     $(22,166)   8,110    $(2.73)
                   ======   ======   =====      ======     ======    =====     ========    =====    ======
</TABLE>
                                      F-11
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS

     Effective  December 30, 1997, the Company adopted SFAS No. 131, Disclosures
About  Segments  of  an  Enterprise  and  Related Information, which established
revised  standards  for  the  reporting of financial and descriptive information
about operating segments in financial statements.

     The  Company  has  determined that it has one reportable operating segment.
Although  the  Company has two operating segments which are managed based on its
restaurant  concepts, T.G.I. Friday's and Redfish, the Redfish operating segment
is  immaterial  to  the  Company  as  a  whole  and does not meet the reportable
thresholds of SFAS No. 131.

     As  a  result  of  the  foregoing,  the  Company  has determined that it is
appropriate  to  present  one reportable segment consistent with the guidance in
SFAS  No.  131.  Accordingly,  the  Company has not presented separate financial
information  for  each  of  its operating segments as the Company's consolidated
financial statements present its one reportable segment.

     RECLASSIFICATIONS

     Certain  prior  period  amounts  have been reclassified to conform with the
current year presentation.

4. INCOME TAXES

     Deferred  income  taxes arise due to differences in the treatment of income
and  expense  items  for  financial  reporting and income tax purposes. In prior
years,  the  Company  generated  net  operating losses and in 1998 and 1997, the
Company  utilized  net operating losses. The effect of temporary differences and
carryforwards  that  gave rise to deferred tax balances at December 28, 1998 and
December 29, 1997 were as follows (in thousands):

                                  Temporary Differences
                                  ---------------------  Tax Carry  Net Deferred
December 28, 1998                  Deductible  Taxable    Forwards   Tax Assets
-----------------                  ----------  -------    --------   ----------
Excess tax over book depreciation
 and amortization .................  $   --    $(3,296)   $    --     $(3,296)
Provision for estimated expenses ..   1,290         --         --       1,290
Restructuring and reorganization ..   2,481         --         --       2,481
Other .............................      --       (438)        --        (438)
General business and AMT credits...      --         --      3,403       3,403
Net operating loss carryforward ...      --         --      4,849       4,849
Valuation reserve .................      --         --     (7,921)     (7,921)
                                     ------    -------    -------     -------
      Total .......................  $3,771    $(3,734)   $   331     $   368
                                     ======    =======    =======     =======

                                      F-12
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

                                  Temporary Differences
                                  --------------------- Tax Carry   Net Deferred
December 29, 1997                  Deductible  Taxable   Forwards    Tax Assets
-----------------                  ----------  -------   --------    ----------
Excess tax over book depreciation
 and amortization  ...............  $  --      $(2,757)   $    --     $(2,757)
Provision for estimated expenses..   1,207          --         --       1,207
Restructuring and reorganization..   3,673          --         --       3,673
Other  ...........................      --        (491)        --        (491)
General business and AMT credits        --          --      2,668       2,668
Net operating loss carryforward         --          --      5,905       5,905
Valuation reserve  ...............      --          --     (9,837)     (9,837)
                                    ------     -------    -------     -------
      Total  .....................  $4,880     $(3,248)   $ 1,264     $   368
                                    ======     =======    =======     =======

     The  amounts  recorded  as net deferred tax assets at December 28, 1998 and
December  29,  1997  are  included  as  a  component  of  other  assets  in  the
consolidated  balance  sheets.  The  remaining  net  deferred  tax  asset  as of
December  28,  1998  consists  primarily of the benefits to be obtained from the
use  of  net operating loss carryforwards and credits expected to be realized in
the future.

     In  1998,  the  Company's tax provision was fully offset by the reversal of
prior year valuation
allowances.

     At  December  28,  1998,  the  Company had approximately $12,100,000 of net
operating  and capital loss carryforwards to be used to offset future income for
income tax purposes. These carryforwards expire in the years 2002 to 2012.

     Reconciliations  of  the federal income tax rate to the Company's effective
tax rate were as follows:

                                                  December 28,     December 29,
                                                      1998             1997
                                                  -----------      -----------
     Statutory federal rate    ..................      34.0%           34.0%
     State taxes, net of federal benefit   ......       6.0              6.0
     Nondeductible expenses    ..................       6.3              7.5
     Benefit of FICA credit    ..................     (15.2)           (18.0)
     Change in valuation allowance   ............     (31.1)           (29.5)
                                                     ------           ------
                                                        0.0%             0.0%
                                                     ======           ======
5. LONG-TERM DEBT

     Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
                               Maturity                         December 28,  December 29,
                                Dates       Interest Rates         1998          1997
                                -----       --------------         ----          ----
<S>                           <C>        <C>                   <C>            <C>
Term Loan I..................   2002       2.8% over LIBOR       $    --        $    --
Term Loan II.................   2012      9.457% and the one       19,118         20,839
                                           month LIBOR rate
                                         plus 320 basis points
Other notes payable.......... 1999-2015       8.75 - 11%           10,511          4,639
Capital leases...............   1999            11.5%                 --              63
                                                                 --------       --------
                                                                   29,629         25,541
Less current portion.........                                      (1,365)        (1,233)
                                                                 --------       --------
Total........................                                    $ 28,264       $ 24,308
                                                                 ========       ========
</TABLE>
                                      F-13
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)


     In March 1997, the Term Loan I was repaid with  $8,000,000 of proceeds from
the Northern California sale (Note 2) and with proceeds from new borrowings. The
new borrowings ("Term Loan II") consist of five notes from one lender.  Three of
the notes bear  interest at 9.457% and two of the notes bear interest at the one
month  LIBOR rate plus 320 basis  points.  All of the notes are payable in equal
monthly  installments  of  principal  and  interest  of  approximately  $222,000
(combined)  until the notes are paid in full on May 1, 2012.  Proceeds  from the
Term  Loan II were  also used to repay the TGI  Friday's,  Inc.  note  including
accrued  interest of  $301,000,  with the  remaining  proceeds  used for general
corporate purposes.  The early  extinguishment of the Term Loan I resulted in an
extraordinary loss of $1,638,000, before income taxes.

     The  Term  Loan  II  is  secured  by  the  assets  of  16  T.G.I.  Friday's
restaurants  and  contains  one  financial  covenant  relative to a fixed charge
coverage  ratio, which the Company currently is in compliance with. Assets at 11
T.G.I.  Friday's  restaurants and at one Redfish restaurant have been pledged as
collateral for other notes payable.

     In  May  1998  the  Company  acquired  six  T.G.I.  Friday's restaurants in
northern  California  for  approximately  $6,800,000,  funded  in  part  by  the
assumption  of  existing  long-term  debt and the addition of new long-term debt
for a total increase in debt of $5,737,000.

     Maturities   of  long-term  debt,  giving  effect  to  the  new  borrowings
discussed above, are as follows at December 28, 1998 (in thousands):

                     1999...............  $ 1,365
                     2000...............    1,569
                     2001...............    1,723
                     2002...............    1,772
                     2003...............    1,735
                     Thereafter.........   21,465
                                          -------
                     Total..............  $29,629
                                          =======
6. STOCKHOLDERS' EQUITY

     During  1996,  the  Company  sold 766,666 shares of its Common Stock to two
officers  of  the  Company  for  $1,500,000.  In  January 1997, the Company sold
1,250,000  shares  of  its  Common Stock to various investors, including 500,000
shares  purchased  by  two  officers  of  the  Company,  for  total  proceeds of
$2,500,000.

     STOCK OPTIONS

     In  July  1990,  the  Company's  Board of Directors approved a stock option
plan  ("the  1990  Plan").  The 1990 Plan provides for issuance of up to 250,000
options  to  acquire  shares  of  the  Company's  Common  Stock. The options are
intended  to  qualify  as  incentive stock options within the meaning of Section
422A  of  the Internal Revenue Code of 1986 or as options which are not intended
to  meet  the requirements of such section (non-statutory stock options) and may
include  stock  appreciation  rights,  restricted  stock  awards, phantom stock,
performance shares or non-employee director options.

     The  exercise  price  of all incentive stock options granted under the 1990
Plan  must  be  at least equal to the fair market value of such shares as of the
date  of  grant or, in the case of incentive stock options granted to the holder
of  10%  or more of the Company's Common Stock, at least 110% of the fair market
value  of  such  shares  on  the  date  of  grant.  The  exercise  price  of all
non-statutory  stock  options granted under the 1990 Plan shall be determined by
the  Board  of  Directors  of  the  Company  at  the  time of grant. The maximum
exercise  period  for which the options may be granted is 10 years from the date
of  grant  (five  years  in  the  case  of incentive stock options granted to an
individual owning more than 10% of the Company's Common Stock).

                                      F-14
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)


     In  January  1996,  the  Company adopted a new stock option plan ("the 1995
Plan"),  with  terms  comparable  to  the  1990 Plan, covering 325,000 shares of
Common Stock.

     During  1997,  the  Company  canceled substantially all outstanding options
and  granted  new  options  under  the  1990  and  1995  Plans. In addition, the
Company's  Board  of  Directors approved the issuance of 1,250,000 non-statutory
stock  options  to  three of the Company's officers during 1996, the issuance of
425,000  non-statutory  stock  options  to  two of the Company's officers during
1997,  and  the  issuance  of  210,000 non-statutory stock options to two of the
Company's officers during 1998.

     Stock  option  information  as of December 28, 1998, December 29, 1997, and
December 30, 1996 is as follows:
<TABLE>
<CAPTION>
                                                   1998                1997                 1996
                                             -----------------   -----------------   -----------------
                                                         Wtd.                 Wtd.               Wtd.
                                                         Avg.                 Avg.               Avg.
                                              Shares     Price     Shares    Price     Shares   Price
                                              ------     -----     ------    -----     ------   -----
<S>                                          <C>         <C>     <C>         <C>       <C>      <C>
Options outstanding at beginning of
 period  ..................................  2,077,500   $2.90   1,596,500   $3.40     118,413  $12.93
Granted  ..................................    416,000    3.27     781,950    2.46   1,668,500    3.25
Exercised   ...............................     (2,500)   2.50      (2,200)   2.50          --      --
Canceled    ...............................   (110,000)   2.54    (298,750)   3.51    (190,413)   9.42
                                             ---------           ---------           ----------
Options outstanding at end of period   ....  2,381,000    2.98   2,077,500    2.90   1,596,500    3.40
                                             =========           =========           =========
Exercisable at end of period  .............  1,590,577    2.56   1,224,291    3.40     350,000    2.00
                                             =========           =========           =========
Weighted average fair value of options
 granted    ...............................  $    1.87           $    1.44           $    0.59
                                             =========           =========           =========
</TABLE>

     Entities  electing to remain with the accounting in APB Opinion No. 25 must
make  pro forma disclosures of net income and earnings per share, as if the fair
value based method of accounting defined in SFAS No. 123 had been applied.

     The  Company  has elected to account for its stock-based compensation plans
under  APB  Opinion No. 25; therefore, no compensation cost is recognized in the
accompanying financial statements for stock-based  employee  awards. The Company
had  computed,  for  pro  forma  disclosure  purposes,  the value of all options
granted  during 1998 and 1997, using the Black-Scholes option pricing model with
the following weighted average assumptions:

                                               1998        1997
                                              Options     Options
                                              -------     -------
          Risk free interest rate   ......     5.42%       6.2%
          Expected dividend yield   ......      0.0%       0.0%
          Expected lives in years   ......      4.0%       4.0
          Expected volatility    .........     70.6%      71.3%

     If  the  Company had accounted for its stock-based compensation plans using
a  fair  value based method of accounting, the Company's year end net income and
earnings  per  share  would  have been reported as follows (in thousands, except
per share amounts):
                                        December 28,     December 29,
                                            1998             1997
                                        ------------     ------------
        Net income (loss):
          Pro Forma  ..................     $3,351          $2,442
        Earnings per share:
          Pro Forma -- Basic  .........       0.34            0.25
          Pro Forma -- Diluted   ......       0.32            0.24

                                      F-15
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     The  effects  of  applying SFAS No. 123 for providing pro forma disclosures
for  1998  and  1997  are  not  likely  to  be  representative of the effects on
reported  net  income  and earnings per common stock and common stock equivalent
for  future years, because options vest over several years and additional awards
are made each year.

     COMMON STOCK WARRANTS

     As  of  December 28, 1998 and December 29, 1997 the Company had outstanding
warrants to acquire its securities as follows:

                                                               1998      1997
                                                               ----      ----
Common Stock to be acquired by warrants issued to
 lenders in connection with the Term Loan I;
 exercisable at $9.08 through March 2004; callable..........  231,277   231,277
                                                              =======   =======
7. COMMITMENTS AND CONTINGENCIES

     DEVELOPMENT AGREEMENTS

     The  Company  is  obligated  under  four separate development agreements to
open   46   new  T.G.I.  Friday's  restaurants  through  2003.  The  development
agreements  give  TGI  Friday's  Inc.  certain remedies in the event the Company
fails  to  timely  comply  with  the development agreements, including the right
under  certain  circumstances,  to  reduce the number of restaurants the Company
may  develop  in  the  related  franchised territory, or terminate the Company's
exclusive  rights  to  develop  restaurants in the related franchised territory.
The  Company's  development  territories  include  Arizona,  Nevada, New Mexico,
California and the Kansas City and El Paso metropolitan areas.

     FRANCHISE, LICENSE AND MARKETING AGREEMENTS

     In  accordance  with  the terms of the T.G.I. Friday's restaurant franchise
agreements,  the  Company  is required to pay franchise fees of $50,000 for each
restaurant  opened. The Company is also required to pay a royalty of up to 4% of
gross  sales.  Royalty  expense  was  approximately  $3,929,000,  $4,120,000 and
$4,850,000  under  these agreements during 1998, 1997 and 1996, respectively. In
addition,  the  Company  could  be  required to spend up to 4% of gross sales on
marketing,  although during 1998 it was only required to pay up to 1.9% of gross
sales.  Marketing  expense  under these agreements was approximately $1,805,000,
$1,919,000 and $1,554,000 during 1998, 1997 and 1996, respectively.

     OPERATING LEASES

     The  Company  leases  land and restaurant facilities under operating leases
having  terms  expiring  at  various  dates through January 2021. The restaurant
leases  have  from two to three renewal clauses of five years each at the option
of  the Company and have provisions for contingent rentals based upon percentage
of  gross  sales  as  defined. The Company's minimum future lease payments as of
December 28, 1998 were as follows (in thousands):


                      1999   ............   $ 5,782
                      2000   ............     5,864
                      2001   ............     5,907
                      2002   ............     5,783
                      2003   ............     5,480
                      Thereafter   ......    43,289
                                            -------
                      Total  ............   $72,105
                                            =======

                                      F-16
<PAGE>
              MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)


     Rental  expense  during  1998,  1997 and 1996 was approximately $5,604,000,
$5,081,000,   and  $6,299,000,  respectively.  In  addition,  the  Company  paid
contingent  rentals  of  $523,000,  $499,000  and $539,000 during 1998, 1997 and
1996, respectively.

     CONTINGENCIES

     In  the  normal  course of business, the Company is named as a defendant in
various  litigation matters. In management's opinion, the ultimate resolution of
these  matters  will  not  have  a  material  impact  on the Company's financial
statements.

     The  Company is also subject, from time to time, to audit by various taxing
authorities  reviewing  the  Company's  income, property, sales, use and payroll
taxes.  Management  believes  that any findings from such audits will not have a
material impact on its financial statements.

8. BENEFIT PLANS

     The  Company  maintains a 401(k) Savings Plan for all of its employees. The
Company  currently  matches 25% of the participants' contributions for the first
6%  of  the  participants'  compensation.  Contributions  by  the  Company  were
approximately  $100,000,  $78,000  and  $79,000  during  1998,  1997  and  1996,
respectively.

9. RELATED PARTY TRANSACTIONS

     In  October  1997,  the  Company  sold three T.G.I. Friday's restaurants in
Colorado  and  Nebraska  to  Sherman  Restaurants,  LLC for $2,768,000 (Note 2).
Sherman  Restaurants, LLC is controlled by Samuel Sherman, the brother of Steven
Sherman who serves as a director of the Company.

     In  December 1993, the Company entered into a five year lease agreement for
corporate  office  space with an entity controlled by a director of the Company.
During  1998  the  lease was amended to extend the original term through January
31,  2004. The lease provides for annual rent of approximately $236,000 in 1999.
Approximately  $177,000,  $172,000  and  $169,000  was paid in rent during 1998,
1997 and 1996, respectively.

                                      F-17