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 29, 1997  Commission File Number: 33-27611-NY
                          -----------------                          -----------

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

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

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


                                 (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. [X]

At  March  17, 1998, there were outstanding 9,970,691 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 sale trade price of the common
stock  as  reported  by  the National Association of Securities Dealers, Inc. on
March  17,  1998,  was  $29,042,462.  For  purposes  of  this  computation,  all
officers,  directors,  and  5% beneficial owners of the registrant are deemed to
be  affiliates.  Such  determination should not be deemed an admission that such
officers,  directors,  or  5%  beneficial owners are, in fact, affiliates of the
registrant.

Documents   incorporated  by  reference:  Portions  of  the  Registrant's  Proxy
Statement  for  the  1998  Annual  Meeting  of  Stockholders  is incorporated by
reference into Part III.
<PAGE>

                       MAIN STREET AND MAIN INCORPORATED
                          ANNUAL REPORT ON FORM 10-K
                      FISCAL YEAR ENDED DECEMBER 29, 1997
                               TABLE OF CONTENTS


PART I                                                                Page
   ITEM 1.    BUSINESS                                                  1
   ITEM 2.    PROPERTIES                                               10
   ITEM 3.    LEGAL PROCEEDINGS                                        10
   ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS      10
PART II
   ITEM 5.    MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
                RELATED STOCKHOLDER MATTERS                            11
   ITEM 6.    SELECTED CONSOLIDATED FINANCIAL DATA                     12
   ITEM 7.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                CONDITION AND RESULTS OF OPERATIONS                    13
   ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
                MARKET RISK                                            16
   ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA              16
   ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                ACCOUNTING AND FINANCIAL DISCLOSURE                    16
PART III
   ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT       17
   ITEM 11.   EXECUTIVE COMPENSATION                                   17
   ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                MANAGEMENT                                             17
   ITEM 13.   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS           17
PART IV
   ITEM 14.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
                ON FORM 8-K                                            18
SIGNATURES                                                             20
                                       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  30 and managing 16 T.G.I. Friday's restaurants.
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 San Francisco, California, 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 Los Angeles and San Diego metropolitan areas. The
Company  plans to develop additional T.G.I. Friday's restaurants in its existing
development  territories,  in  which  it  is  required  to  open  35  additional
restaurants  by  December  31, 2002. In addition, the Company owns one Front Row
Sports  Grill and has a 52% ownership interest in Redfish America, LLC, a cajun-
themed  restaurant  and  bar  concept,  which  currently  owns and operates 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  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  5,  1998,  TGI  Friday's Inc. had 166 franchisor-operated and 316
franchised restaurants operating worldwide. System-wide   sales   exceeded   $1
billion  in  1997.  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,  jalape-no 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,\T 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 23.6% 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 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 $1,450,000 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) $700,000 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 restaurants open for all of fiscal
1997 generated an average of approximately $2,949,000 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.  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 17, 1998.


<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
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
 Portland, Oregon (Front Row Sports Grill) .....  13,080        320           1996              1996
 Cerritos, California ..........................   6,250        223           1996              1996
 Las Vegas, Nevada .............................   6,700        251           1997              1997
 San Francisco, California .....................   6,700        251           1998              1998
Managed T.G.I. Friday's Restaurants(1)
 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
 Metarie, Louisiana ............................   9,000        290           1978              1996
 New Orleans, Louisiana ........................   7,100        258           1994              1996
 El Paso, Texas ................................   4,800        198           1997              1997
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
</TABLE>
------------

(1) Does  not  include  seven  T.G.I.  Friday's  restaurants  the  Company began
    managing  on  December 23, 1997 which are in the process of being purchased.
                                        3
<PAGE>
     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  Company believes the support as well as the standards, specifications,
and  operating  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.

     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;  and advertising and promotional programs. The T.G.I.
Friday's  System  also  includes  requirements  for  quality  and  uniformity of
products  and  services  offered;  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  the 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).

     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  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  six 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   Operations.  Restaurant  managers  are  responsible  for
day-to-day   restaurant   operations,   including   customer   relations,   food
preparation and service, cost control, restaurant maintenance, and personnel
                                        4
<PAGE>
relations.  The Company typically staffs its restaurants with an on-site general
manager,  one or two 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  standards,  accounting
procedures,  employee  selection  and  training,  and  the  performance  of  all
positions necessary for restaurant operations.

     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
Company's  restaurant  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
                                        5
<PAGE>
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,  utilized  by  TGI Friday's Inc. and many of its other
franchisees,  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. This supplier is
not  affiliated  with the 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
overnight  or  same  day  deliveries  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 "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. During October 1995, in
conjunction  with  TGI  Friday's  Inc.,  the Company introduced 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  30  existing  T.G.I.  Friday's
restaurants  as well as the exclusive rights to develop restaurants in specified
territories.  The  acquisitions  include  20 restaurants in California, three in
Arizona,  and  one  in  each  of  Colorado,  Kansas, Missouri, Nebraska, Nevada,
Oregon,  and  Washington.  The Company also has developed 15 new T.G.I. Friday's
restaurants.  These include five in California, three in Washington, two in each
of Arizona and Nevada, and one in each of Colorado, New
                                        6
<PAGE>
Mexico,   and   Texas.  See  "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 has developed one Friday's Front Row
Sports  Grill in Portland, Oregon and, in 1997 acquired a 52% ownership interest
in  Redfish  America,  LLC,  which  currently  owns  and  operates  four Redfish
Looziana  Roadhouse  & Seafood Kitchen restaurants. The Company recently entered
into  a  purchase  agreement  to  acquire  seven  T.G.I. Friday's restaurants in
northern California and the related T.G.I. Friday's Development Agreements.

     The   Company  plans  to  expand  its  restaurant  operations  through  the
development  of  additional  restaurants  in  the Company's existing development
territories.  The Company plans to open ten additional restaurants over the next
year  and to meet or exceed its development requirements thereafter. The Company
has  sites  for  new  T.G.I.  Friday's  restaurants in each of Mesa, Arizona, El
Paso,  Texas,  and  San  Diego, California. The Company currently is considering
other  sites  for  additional  restaurants,  but  has not entered into leases or
purchase agreements for any such sites.

     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  and traffic volume,
proximity  to  demand  generators (including shopping malls, lodging, and office
complexes)  and  potential  competition;  to  obtain financing for construction,
tenant  improvements, furniture, fixtures, equipment, and other expenditures; to
negotiate   acceptable   leases   or   terms  of  purchase;  to  secure  zoning,
environmental,  health  and similar regulatory approvals and liquor licenses; to
recruit  and  train  qualified personnel; and to 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 three 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 San Francisco, California, 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  Los  Angeles  and San Diego metropolitan
areas.
                                        7
<PAGE>
     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.

<TABLE>
<CAPTION>
                                  Los                 San                San
                                Angeles              Diego            Francisco        Southwest         Midwest
Year                        Territory(1)(2)     Territory(1)(2)     Territory(2)     Territory(3)     Territory(4)     Total
----                        ---------------     ---------------     ------------     ------------     ------------     -----
<S>                                <C>                 <C>               <C>              <C>              <C>          <C>
1998 .....................          2                   1                 1                2                1            7
1999 .....................          2                   1                 1                1                1            6
2000 .....................          3                   1                 1                1                1            7
2001 .....................          3                   1                 1                1                1            7
2002 .....................          4                   1                 1                1                1            8
                                   --                  --                --               --               --           --
                                   14                   5                 5                6                5           35
Existing Restaurants......         15                   3                 1 (5)            9 (6)            2           30
</TABLE>
------------
(1) TGI Friday's Inc. also will develop restaurants in this region.
(2) The  Los  Angeles,  San  Diego, and San Francisco Territories are covered by
    one development agreement.
(3) Includes  the  states  of  Arizona,  Nevada, and New Mexico and the El Paso,
    Texas metropolitan area.
(4) Includes metropolitan Kansas City, Kansas and Kansas City, Missouri.
(5) Does not include 12 restaurants managed in the San Francisco Territory.
(6) Does not include one restaurant managed in the Southwest Territory.

     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  a  separate franchise agreement with respect to
each  T.G.I.  Friday's  restaurant  that  it  develops pursuant to a development
agreement.  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 $4,800,000, $4,850,000, and
$4,120,000  during  fiscal  1995,  1996,  and 1997, 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 1997, 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
                                        8
<PAGE>
$2,360,000,  $1,554,000,  and  $1,919,000  during  fiscal  1995, 1996, and 1997,
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.

Competition

     The  restaurant  business  is  highly  competitive  with  respect to price,
service,  and  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 no assurances can be given that
the Company will be successful in this regard.

Employees

     The  Company  employs  approximately 1,430 persons on a full-time basis, of
whom  50  are  corporate management and staff personnel and 1,380 are restaurant
personnel.  The  Company  also  employs approximately 2,540 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.
                                        9
<PAGE>
ITEM 2. PROPERTIES

     In  December  1993, 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. See "Certain
Relationships and Related Transactions."

     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 material adverse effect on its business or financial condition.

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

     Not applicable.
                                       10
<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
                                            ----            ---
            1996
              First Quarter ............   $3-3/8         $2-3/8
              Second Quarter ...........    4-3/8          2-1/4
              Third Quarter ............    3-1/8          1-3/4
              Fourth Quarter ...........    2-7/8          1-3/8
            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
          
     On  March  17,  1998,  there  were  770  holders of record of the Company's
Common  Stock.  On March 17, 1998, the closing sale price of the Common Stock on
the Nasdaq National Market was $3 7/8.
                                       11
<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 29, 1997 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 "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. 31,        Dec. 26,        Dec. 25,       Dec. 30,       Dec. 29
                                                        1993            1994            1995           1996           1997
                                                        ----            ----            ----           ----           ----
<S>                                                  <C>             <C>              <C>           <C>            <C>
Statement of Operations Data:
Revenue .........................................    $  30,510       $  111,262       $119,508      $ 122,563      $107,997
Restaurant operating expenses:
 Cost of sales ..................................        8,645           30,516         34,005         35,089        30,995
 Payroll and benefits ...........................        9,604           34,849         36,769         38,858        32,469
 Depreciation and amortization ..................        1,176            3,884          4,353          4,586         3,552
 Other operating expenses .......................        8,364           31,621         35,250         36,944        30,589
                                                     ---------       ----------       --------      ---------      --------
  Total restaurant operating expenses ...........       27,789          100,870        110,377        115,477        97,605
                                                     ---------       ----------       --------      ---------      --------
Income from restaurant operations ...............        2,721           10,392          9,131          7,086        10,392
 Depreciation and amortization ..................          313            1,014          1,331          1,450           953
 General and administrative expenses ............        3,339            4,191          4,410          4,388         4,559
 Restructuring and reorganization ...............           --               --             --         20,208        (2,390)
                                                     ---------       ----------       --------      ---------      --------
Operating income (loss) .........................         (931)           5,187          3,390        (18,960)        7,270
 Interest expense, net ..........................          413            3,902          4,424          3,206         2,466
                                                     ---------       ----------       --------      ---------      --------
Net income (loss) from continuing
 operations before income taxes and
 extraordinary item .............................       (1,344)           1,285         (1,034)       (22,166)        4,804
Provision for income taxes ......................           --               --             --             --            --
                                                     ---------       ----------       --------      ---------      --------
Net income (loss) from continuing
 operations before extraordinary item ...........       (1,344)           1,285         (1,034)       (22,166)     $  4,804
Net income (loss)(1) ............................    $  (2,943)      $    1,285       $ (1,034)     $ (22,166)     $  3,166
Diluted earings per share:
 Net income (loss) from continuing
  operations before extraordinary item ..........    $   (0.42)      $     0.35       $  (0.22)     $   (2.73)     $   0.47
 Net income (loss)(1) ...........................    $   (0.93)      $     0.35       $  (0.22)     $   (2.73)     $   0.31
Weighted average shares outstanding --
 diluted ........................................        3,163            3,692          4,621          8,110        10,098
Balance Sheet Data:
 Working capital ................................    $  (2,452)      $  (10,905)      $ (7,848)     $  (1,343)     $ (1,330)
 Total assets ...................................       75,491           84,503         88,605         70,848        62,742
 Long-term debt, net of current portion .........       44,814           41,265         31,204         33,809        24,308
 Stockholders' equity ...........................       21,006           22,601         37,261         16,585        22,203
</TABLE>

------------
(1) Fiscal  1993 includes $1,599,000, or $0.51 per share, of net loss related to
    discontinued  operations.  Fiscal  1997  includes an extraordinary loss from
    debt extinguishment of $1,638,000 or $0.16 per share.
                                       12
<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   seven  years,  the  Company  has  grown  through  acquisitions  and
development of new restaurants and currently manages 51 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 the sale of 1,566,666 shares of Common Stock for $3,000,000
through  a  private  placement  transaction  in  January  1997, the sale of five
restaurants  in  northern  California  in  March  1997 for $10,575,000, of which
$8,000,000  in  proceeds  were used to repay debt (See Notes 3 and 5 to Notes to
Consolidated  Financial  Statements), and new borrowings of $21.3 million 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  has  also 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 a restructuring
and  reorganization gain of $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  next  step in the Company's strategy will be to reduce operating costs
and  expand  its  restaurant  operations.  This  will entail continuing to build
T.G.I.  Friday's  restaurants and evaluating other concepts in the casual dining
segment.  In  April  1997, the Company became a majority partner in a venture to
develop and operate cajun-themed restaurants.

Results of Operations

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

<TABLE>
<CAPTION>
                                                                Fiscal Year Ended
                                                 -----------------------------------------------
                                                  December 25,     December 30,     December 29,
                                                      1995             1996             1997
                                                      ----             ----             ----
<S>                                                   <C>              <C>              <C>
Revenue ......................................        100.0%           100.0%           100.0%
Restaurant operating expenses:
 Cost of sales ...............................         28.5             28.6             28.7
 Payroll and benefits ........................         30.8             31.7             30.1
 Depreciation and amortization ...............          3.6              3.7              3.3
 Other operating expenses ....................         29.5             30.2             28.3
                                                      -----            -----            -----
 Total restaurant operating expenses .........         92.4             94.2             90.4
                                                      -----            -----            -----
Income from restaurant operations ............          7.6              5.8              9.6
 Depreciation and amortization ...............          1.1              1.2               .9
 General and administrative expenses .........          3.7              3.6              4.2
 Restructuring and reorganization ............           --             16.5            ( 2.2)
                                                      -----            -----            -----
Operating income (loss) ......................          2.8            (15.5)             6.7
Interest expense, net ........................          3.7              2.6              2.3
                                                      -----            -----            -----
Net income (loss) before income taxes and
 extraordinary item ..........................        ( 0.9)%          (18.1)%            4.4%
                                                      =====            =====            =====
</TABLE>
                                       13
<PAGE>
     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.

     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.

     Fiscal 1996 Compared to Fiscal 1995

     Revenue  for  the  fiscal year ended December 30, 1996 increased by 2.6% to
$122,563,000  compared  to  $119,508,000  for the fiscal year ended December 25,
1995.  This  increase  related  primarily  to  restaurants developed during 1996
along with an additional week of revenue in the 53 week period ended
                                       14
<PAGE>
December  30, 1996 compared to the normal 52 week period of 1995. When comparing
revenue  for  1996  to  the prior year, same store sales decreased $3,580,000 or
3.2%.  Revenue  from  alcoholic beverages accounted for 23.6% of revenue for the
fiscal year ended December 30, 1996 compared to 22.2% for the prior year.

     Cost  of  sales  increased as a percentage of revenue to 28.6% in 1996 from
28.5%  in  1995 due to a shift in the beverage market to premium/specialty beers
and  liquors,  which  have  slightly  lower margins, and higher prices for dairy
products.  In  addition,  cost  of  sales  increased as a result of increases in
portion  sizes  on  several  menu items; however, some of the resulting increase
has been offset by negotiated purchasing discounts.

     Labor  costs  increased  as  a  percentage of revenue to 31.7% in 1996 from
30.8%  in  1995. This increase is almost entirely related to the decline in same
store  sales  in  relation to the fixed component of labor costs and an increase
in  minimum  wage  from  $4.25  to  $4.75  per  hour.  Approximately  75% of the
Company's  revenue  is  derived  from restaurants in non-tip credit states where
tipped  employees  are  paid  at or above the Federal minimum wage as opposed to
tip  credit states where tipped employees are paid at half the minimum wage. The
$0.50  per  hour  increase  in  minimum wage that became effective on October 1,
1996,  increased  the  Company's  labor  costs  as  a  percentage  of revenue by
approximately 1.0%.

     Other  restaurant  operating  expenses increased as a percentage of revenue
to  30.2%  in  1996  from  29.5% in 1995 primarily as a result of the relatively
fixed nature of these costs and the decline in same store sales.

     In  total,  depreciation  and  amortization  increased  as  a percentage of
revenue  to  4.9%  in  1996 from 4.7% in 1995. This increase is due primarily to
the fixed nature of these expenses given a decline in same store sales.

     General  and  administrative  expenses decreased as a percentage of revenue
to  3.6%  in  1996  from  3.7%  in  1995.  The decrease relates to reductions in
corporate  staff  coupled  with the relatively fixed nature of these expenses in
comparison to the overall increase in revenue.

     Interest   expense   was  approximately  $3,206,000  in  1996  compared  to
$4,424,000  in  1995. This decrease was a result of the retirement of $8,700,000
of  indebtedness with the proceeds from a public offering completed in September
1995.

     No  income  tax  provision  was  recorded  in  1996  or  1995  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  $1,722,000  in  1995,
$4,444,000  in 1996, and $2,624,000 in 1997. These were supplemented by net cash
flows  from financing of $4,195,000 and $2,051,000, for the years ended 1995 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 29, 1997 the Company
had  a cash balance of $8,424,000. Monthly cash receipts have been sufficient to
pay all obligations as they become due.

     At  December  29,  1997,  the Company had long-term debt of $24,308,000 and
current portion of long-term debt of $1,233,000.
                                       15
<PAGE>
     Approximately  $20,839,000  of  this debt is a Term Loan comprised of three
notes  from one lender, bears interest at 9.457% and is 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.

     In  October  1997,  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.  The  Company  recently entered into a purchase agreement to acquire
seven  T.G.I  Friday's restaurants in northern California and the related T.G.I.
Friday's  Development Agreements. The purchase price of approximately $8,600,000
will  be  funded  by the assumption of approximately $5,000,000 of existing debt
of  the  Seller,  $2,500,000  of  new  debt  and  $1,100,000  of  the  Company's
accumulated cash.

     The Company plans to develop at least ten  additional TGI Friday's over the
next year. The Company's primary lender has committed to finance the development
of these new restaurants and has given the Company different  alternatives under
with 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 $4,900,000 per year through 2002.

Year 2000

     The  Company  continues  to assess the impact that the Year 2000 issue will
have  on  its  information  systems  and  operations.  The  Company's  corporate
information   system,   which   consolidates  operating  results  from  all  the
restaurants  and  processes  accounts  payable  and  payroll,  will be Year 2000
compliant  through  updated  software  versions  that  are being released by the
software   vendor.   The  Company  is  currently  evaluating  new  point-of-sale
equipment  along  with  new  back-office  software  for each of its restaurants.
These  systems and related equipment which process guest orders, schedule labor,
and  provide  store  level  operating  data  need to be upgraded periodically to
incorporate  the  latest technology, which is estimated to cost up to $2,500,000
over  the next two years. These new systems will ensure that the Company is Year
2000 compliant.

     This   Mangement   Discussion   and   Analysis   contains   forward-looking
information  regarding  the  Company's business strategies. This forward-looking
information  is  based primarily on the Company's expectations and is subject to
a  number  of  risks  and  uncertainties, some of which are beyond the Company's
control.  Actual  results  could  differ  materially  from  the  forward-looking
information as a result of numerous factors.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
         MARKET RISK

     Not applicable.

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.
                                       16
<PAGE>
                                    PART III


ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  information  required by this Item is incorporated by reference to the
Company's Proxy Statement for its 1998 Annual Meeting of Stockholders.

ITEM 11. EXECUTIVE COMPENSATION

     The  information  required by this Item is incorporated by reference to the
Company's Proxy Statement for its 1998 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 for its 1998 Annual Meeting of Stockholders.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The  Company  has  adopted  a  policy  that  it  will  not  enter  into any
transactions  with directors, officers, or holders of more than 5% of its Common
Stock  on  terms  which are less favorable to the Company than could be obtained
from  independent third parties and that any loans to directors, officers, or 5%
stockholders will be approved by a majority of the disinterested directors.

     In  December  1993, the Company entered into a five-year lease for space to
serve  as  the  corporate  offices  of  the  Company.  Steven  A. Sherman owns a
majority  interest  in the building housing the space. The lease was approved by
the  disinterested  directors of the Company. The lease provides for annual rent
of  approximately  $175,000  in  1998. Rental payments under this agreement were
approximately $169,000 and $172,000 during 1996 and 1997, respectively.

     In  May  1991,  the  Company  became  a  party  to  a  five-year management
assistance  agreement  with  AsianStar,  Inc.  ("AsianStar").  J.  Y.  Lee,  the
Chairman  and  principal stockholder of AsianStar, was a director of the Company
from   September   27,   1991   to  February  13,  1996.  The  Company  recorded
approximately   $441,000   of  income  relating  to  the  management  assistance
agreement  during  fiscal 1995. In 1996, the Company finalized an agreement with
AsianStar  to exchange the receivable generated by this agreement, approximately
$1,497,000,  and  cash  of  approximately  $162,000 for an ownership interest in
AsianStar.  This  investment was subsequently written off due to the uncertainty
of  the  Korean  venture  resulting  from a down turn in the Korean economy. See
Note 2 to the Notes to Consolidated Financial Statements.

     During  1996,  the  Company sold 766,666 shares of its Common Stock at fair
market  value at the time of purchase to John F. Antioco and Gerard T. Bisceglia
for $1,500,000.

     In  January  1997,  the  Company  sold  a  total of 1,250,000 shares of its
Common  Stock  for $2,500,000, which exceeded the fair market value of the stock
on  the  date  of  purchase. Of these shares, John F. Antioco and Bart A. Brown,
Jr.  purchased  a  total  of  500,000  shares and unrelated accredited investors
purchased the balance.

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

     The   Company  believes  that  the  foregoing  transactions  were  no  less
favorable to the Company than could be obtained from non-affiliated parties.
                                       17
<PAGE>
                                    PART IV

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

(a) Exhibits

<TABLE>
<CAPTION>
Exhibit
Number       Exhibit
------       -------
<S>          <C>
  3.1        Certificate of Incorporation of the Registrant(3)
  3.2        Certificate of Amendment of Restated Certificate of Incorporation(6)
  3.3        Amended and Restated Bylaws of the Registrant(3)
 10.1        Registrant's 1990 Stock Option Plan(2)
 10.2        Purchase Agreement between the Registrant and TGI Friday's Inc.(1)
 10.3        Purchase Agreement between the Registrant and WRI U.S., Inc.(2)
 10.4        Asset Purchase Agreement between the Registrant and Kansas City Cafe Company(4)
 10.5        Form of Franchise Agreement between the Registrant and TGI Friday's Inc.(5)
 10.6        Stock Purchase Agreement, as amended, between the Registrant and TGI Friday's
             Inc.(5)
 10.7        Asset Conveance Agreement among CNL California Restaurants, LTD., Main St.
             California, Inc. and Registrant.(7)
 10.8        Stock Purchase Agreement among CNL California Restaurants, LTD., Main St.
             California, Inc. and Registrant.(7)
 10.9        Form of Management Agreement between Main St. California II, Inc. and Main St.
             California, Inc., a wholly owned subsidiary of Registrant.(7)
 10.10       Master Incentive Agreements between Main St. California II, Inc. and Main St.
             California, Inc., a wholly owned subsidiary of Registrant.(7)
 10.11       Employment Agreement with Bart A. Brown, Jr.(9)
 10.12       Employment Agreement with Gerard T. Bisceglia.(9)
 10.13       Promissory Note between Registrant and CNL Financial I, Inc.(9)
 10.14       Promissory Note between Registrant and CNL Financial I, Inc.(9)
 10.15       Promissory Note between Registrant and CNL Financial I, Inc.(9)
 10.16       Registrant's 1995 Stock Option Plan(8)
 10.17       Amended and Restated Development Agreement between TGI Friday's Inc. and
             Cornerstone Productions, Inc., a wholly owned subsidiary of the Registrant.
 10.18       Amended and Restated Development Agreement between TGI Friday's Inc. and Main
             St. California, Inc., a wholly owned subsidiary of the Registrant.
 10.19       Amended and Restated Development Agreement between TGI Friday's Inc. and Main
             St. Midwest, Inc., a wholly owned subsidiary of the Registrant.
 10.20       Amended and Restated Purchase Agreement between RJR Holdings, Inc. and Main St.
             California, Inc., a wholly owned Subsidiary of the Registrant.
   21        List of Subsidiaries
   27        Financial Data Schedule
</TABLE>

------------
 (1) Incorporated  by reference to the Registrant's Form 10-K for the year ended
     December  31, 1990, filed with the Securities and Exchange Commission on or
     about April 1, 1991.
 (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 10-K for the year ended
     December  30, 1991, filed with the Securities and Exchange Commission on or
     about March 31, 1992.
 (4) Incorporated  by  reference  to  the  Registrant's  Form 8-K filed with the
     Securities and Exchange Commission in May 1992.
 (5) Incorporated  by  reference  to  the  Registrant's  Form 8-K filed with the
     Securities and Exchange Commission on or about April 15, 1994.
 (6) Incorporated  by  reference  to  the Registrant's Registration Statement on
     Form S-3 (Registration No. 33-71230) which became effective in July 1994.
                                       18
<PAGE>
(7) Incorporated  by  reference  to  the Registrant's Form 8-K Report filed with
    the Commission in January 1997.
(8) Incorporated  by  reference  to  Registrant's  Proxy  Statement for its 1995
    Annual Meeting of Stockholders.
(9) 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.

(b)  The  following  report  of  Independent  Public  Accountants  and financial
     statements are filed as a part of this report.

     1. Consolidated  Financial Statements (included as Page F-1 through F-16 of
        this report)
        Report of Independent Public Accountants
        Consolidated Financial Statements:
           Consolidated  Balance Sheets as of December 30, 1996 and December 29,
             1997.
           Consolidated  Statements of Operations  for the years ended  December
             25, 1995, December 30, 1996 and December 29, 1997.
           Consolidated  Statements of Changes in  Stockholders'  Equity for the
             years ended  December 25, 1995,  December 30, 1996 and December 29,
             1997.
           Consolidated  Statements  of Cash Flows for the years ended  December
             25, 1995, December 30, 1996 and December 29, 1997.
           Notes to Consolidated Financial Statements

     2. Consolidated Schedules
        These  schedules  are  omitted  because  they  are not  applicable,  not
        required or because required information is included in the consolidated
        financial statements or notes hereto.

(c)  Report on Form 8-K

     The Registrant filed a Report on Form 8-K on January 16, 1997.
                                       19
<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 26, 1998                       /s/ BART A. BROWN, JR.
                                     By: --------------------------------------
                                         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.

<TABLE>
<S>                             <C>                                       <C>
/s/ JOHN F. ANTIOCO             Chairman of the Board                     March 26, 1998
--------------------------
    John F. Antioco

/s/ BART A. BROWN, JR.          President and Chief Executive Officer     March 26, 1998
--------------------------      (Principal Executive Officer)
    Bart A. Brown, Jr.

/s/ GERARD T. BISCEGLIA         Executive Vice President and Director     March 26, 1998
--------------------------
    Gerard T. Bisceglia
 
/s/ MARK C. WALKER              Chief Financial Officer (Principal        March 26, 1998
--------------------------       Financial and Accounting Officer),
    Mark C. Walker               Secretary and Treasurer
    
/s/ JANE EVANS                  Director                                  March 26, 1998
--------------------------
    Jane Evans

/s/ JOHN C. METZ                Director                                  March 26, 1998
--------------------------
    John C. Metz

/s/ STEVEN A. SHERMAN           Director                                  March 26, 1998
--------------------------
    Steven A. Sherman
</TABLE>
                                       20
<PAGE>
                       MAIN STREET AND MAIN INCORPORATED

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----
<S>                                                                                        <C>
Report of Independent Public Accountants ..............................................    F-2

Consolidated Balance Sheets at December 30, 1996 and December 29, 1997 ................    F-3

Consolidated Statements of Operations for the fiscal years ended December 25, 1995,
 December 30, 1996, and December 29, 1997 .............................................    F-4

Consolidated Statements of Changes in Stockholders' Equity for the fiscal years ended
 December 25, 1995, December 30, 1996, and December 29, 1997 ..........................    F-5

Consolidated Statements of Cash Flows for the fiscal years ended December 25, 1995,
 December 30, 1996, and December 29, 1997 .............................................    F-6

Notes to Consolidated Financial Statements ............................................    F-7
</TABLE>
                                       F-1
<PAGE>
                   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
29, 1997,  and December 30, 1996,  and the related  consolidated  statements  of
operations,  changes in stockholders'  equity and cash flows for the years ended
December 29, 1997,  December 30, 1996, and December 25, 1995. 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 29, 1997 and December 30, 1996,
and  the  results  of  their operations and their cash flows for the years ended
December  29, 1997, December 30, 1996, and December 25, 1995, in conformity with
generally accepted accounting principles.



                                         ARTHUR ANDERSEN LLP



Phoenix, Arizona
 March 13, 1998
                                       F-2
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

<TABLE>
<CAPTION>
                                                                  December 29,     December 30,
                                                                      1997             1996
                                                                      ----             ----
<S>                                                                <C>              <C>
ASSETS
Current Assets
   Cash and cash equivalents .................................     $   8,424        $   2,613
   Accounts receivable, net ..................................         3,293            1,248
   Inventories ...............................................         1,043            1,275
   Prepaid expenses ..........................................           289              173
   Assets held for disposal, net .............................           363           10,929
                                                                   ---------        ---------
      Total current assets ...................................        13,412           16,238
Property and equipment, net ..................................        30,194           32,162
Other assets, net ............................................         3,091            4,780
Franchise costs, net .........................................        15,288           16,418
Note receivable ..............................................           757            1,250
                                                                   ---------        ---------
                                                                   $  62,742        $  70,848
                                                                   =========        =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Current portion of long-term debt .........................     $   1,233        $   2,523
   Accounts payable ..........................................         3,890            3,750
   Other accrued liabilities .................................         9,619           11,308
                                                                   ---------        ---------
      Total current liabilities ..............................        14,742           17,581
                                                                   ---------        ---------
Long-term debt, net of current portion .......................        24,308           33,809
                                                                   ---------        ---------
Other liabilities and deferred credits .......................         1,489            2,873
                                                                   ---------        ---------
Commitments and contingencies ................................
Stockholders' Equity
Common stock, $.001 par value, 25,000,000 shares authorized;
 9,970,691 and 8,718,491 shares issued and outstanding in 1997
 and 1996, respectively ......................................            10                9
Additional paid-in capital ...................................        44,145           41,694
Accumulated deficit ..........................................       (21,952)         (25,118)
                                                                   ---------        ---------
                                                                      22,203           16,585
                                                                   ---------        ---------
                                                                   $  62,742        $  70,848
                                                                   =========        =========
</TABLE>

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 29,     December 30,     December 25,
                                                              1997             1996             1995
                                                              ----             ----             ----
<S>                                                        <C>              <C>              <C>
Revenue ................................................   $ 107,997        $  122,563       $ 119,508
                                                           ---------        ----------       ---------
Restaurant Operating Expenses
   Cost of sales .......................................      30,995            35,089          34,005
   Payroll and benefits ................................      32,469            38,858          36,769
   Depreciation and amortization .......................       3,552             4,586           4,353
   Other operating expenses ............................      30,589            36,944          35,250
                                                           ---------        ----------       ---------
      Total restaurant operating expenses ..............      97,605           115,477         110,377
                                                           ---------        ----------       ---------
Income from restaurant operations ......................      10,392             7,086           9,131
   Depreciation and amortization .......................         953             1,450           1,331
   General and administrative expenses .................       4,559             4,388           4,410
   Restructuring and reorganization ....................      (2,390)           20,208             --
                                                           ---------        ----------       ---------
Operating income (loss) ................................       7,270           (18,960)          3,390
Interest expense, net ..................................       2,466             3,206           4,424
                                                           ---------        ----------       ---------
   Net income (loss) before income taxes and
    extraordinary item .................................       4,804           (22,166)         (1,034)
Provision for income taxes .............................         --                --              --
                                                           ---------        ----------       ---------
   Net income (loss) before extraordinary item .........       4,804           (22,166)         (1,034)
   Extraordinary loss from debt extinguishment .........       1,638               --              --
                                                           ---------        ----------       ---------
Net income (loss) ......................................   $   3,166        $  (22,166)      $  (1,034)
                                                           =========        ==========       =========
Basic Earnings Per Share
   Income (loss) before extraordinary item .............   $    0.48        $    (2.73)      $   (0.22)
   Extraordinary item ..................................      ( 0.16)              --              --
                                                           ---------        ----------       ---------
    Net income (loss) ..................................   $    0.32        $    (2.73)      $   (0.22)
                                                           =========        ==========       =========
Diluted Earnings Per Share
   Income (loss) before extraordinary item .............   $    0.47        $    (2.73)      $   (0.22)
   Extraordinary item ..................................      ( 0.16)              --              --
                                                           ---------        ----------       ---------
      Net income (loss) ................................   $    0.31        $    (2.73)      $   (0.22)
                                                           =========        ==========       =========
   Weighted Average Number Of Shares Outstanding
    -- Basic ...........................................       9,918             8,110           4,621
                                                           =========        ==========       =========
   Weighted Average Number Of Shares Outstanding
    -- Diluted .........................................      10,098             8,110           4,621
                                                           =========        ==========       =========
</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)

<TABLE>
<CAPTION>
                                          Common Stock
                                       ------------------    Additional
                                                    Par       Paid-In       Accumulated
                                        Shares     Value      Capital         Deficit         Total
                                       --------   -------   -----------   --------------   -----------
<S>                                     <C>        <C>       <C>           <C>              <C>
BALANCE, December 26, 1994 .........    3,637      $  4      $ 24,515       $   (1,918)     $  22,601
 Shares issued in connection with
   public offering, net ............    4,313         4        15,674              --          15,678
 Shares issued in connection with
   options exercised ...............        2       --             16              --              16
 Net loss ..........................      --        --            --            (1,034)        (1,034)
                                        -----      ----      --------       ----------      ---------
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
                                        =====      ====      ========       ==========      =========
</TABLE>

 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 29,     December 30,     December 25,
                                                                1997             1996             1995
                                                                ----             ----             ----
<S>                                                        <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss) ..................................... $ 3,166          $ (22,166)       $ (1,034)
   Adjustments to reconcile net income (loss) to net cash
    provided by operating activities:
   Depreciation and amortization .........................   4,505              6,036           5,684
   Restructuring and reorganization ......................  (2,391)            20,208             --
   Extraordinary loss from debt extinguishment ...........   1,638                --              --
   Changes in assets and liabilities
      Accounts receivable, net ...........................     122              1,104            (378)
      Inventories ........................................     124                 57            (130)
      Prepaid expenses ...................................    (116)               288            (134)
      Other assets, net ..................................  (1,288)            (1,380)         (2,187)
      Accounts payable ...................................      57                207          (1,464)
      Other accrued liabilities ..........................  (3,193)                90           1,365
                                                           -------          ---------        --------
        Net Cash Flows -- Operating Activities ...........   2,624              4,444           1,722
                                                           -------          ---------        --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Cash paid to acquire assets through business
    combination ..........................................    (880)               --              --
   Payment of accrued acquisition costs ..................     --                 --             (242)
   Net additions to property and equipment ...............  (6,613)            (8,623)         (7,196)
   Sale of assets ........................................  17,326                 -              --
   Cash received from sale-leaseback transaction .........   1,641                --            3,213
                                                           -------          ---------        --------
        Net Cash Flows -- Investing Activities ...........  11,474             (8,623)         (4,225)
                                                           -------          ---------        --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from sale of common stock ....................   2,504              1,490          16,186
   Financing and offering costs paid .....................     (52)               --           (1,774)
   Long term debt borrowings .............................  21,554              4,506           3,028
   Principal payments on long term debt .................. (32,293)            (3,945)        (13,245)
                                                           -------          ---------        --------
        Net Cash Flows -- Financing Activities ...........  (8,287)             2,051           4,195
                                                           -------          ---------        --------
NET CHANGE IN CASH AND CASH EQUIVALENTS ..................   5,811             (2,128)          1,692
CASH AND CASH EQUIVALENTS, BEGINNING .....................   2,613              4,741           3,049
                                                           -------          ---------        --------
CASH AND CASH EQUIVALENTS, ENDING ........................ $ 8,424          $   2,613        $  4,741
                                                           =======          =========        ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
 INFORMATION:
   Cash paid during the year for interest ................ $ 3,404          $   2,987        $  5,041
                                                           =======          =========        ========
</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 30 T.G.I. Friday's restaurants and one
Front  Row  Sports  Grill,  and  operates  16  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 1996 and 1997, the Company recognized a
gain  on  sale  of  assets,  a  restructuring  charge, and impairment of certain
assets as follows (in thousands):

<TABLE>
<CAPTION>
                                                                         1997           1996
                                                                         ----           ----
<S>                                                                   <C>            <C>
          Gain on sale of assets ................................     $  (5,231)     $    --
          Impairment of non-core assets .........................         1,660         6,985
          Impairment of core assets held for disposal ...........           --          8,674
          Impairment of core assets used in operations ..........           842         3,141
          Other restructuring costs .............................           339         1,408
                                                                      ---------      --------
                                                                      $  (2,390)     $ 20,208
                                                                      =========      ========
</TABLE>

     Gain on Sale of Assets

     In  January  1997, the Company sold five restaurants in Northern California
(the  "Northern  California  Sale")  for  $10,575,000 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 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. The Company recorded approximately
$441,000  of  royalty  income  during  1995.  In  1996, the Company finalized an
agreement  with  AsianStar  to  exchange its receivable, from the recognition of
royalty  income,  for  an 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 and is included in other assets. 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 and now has plans to dispose of
within the next 12 months.

     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 closing a 20 year old T.G.I. Friday's
restaurant  in  southern  California  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.

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

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 and
professional services costs incurred in conjunction with the restructuring.

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.

     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):

<TABLE>
<CAPTION>
                                                        Useful Lives        1997           1996
                                                        ------------        ----           ----
<S>                                                        <C>           <C>            <C>
        Land .........................................      --           $     534      $   1,234
        Building and leasehold improvements ..........     5-20             20,924         21,950
        Kitchen equipment ............................      5-7              7,418          7,858
        Restaurant equipment .........................     5-10              3,162          3,539
        Smallwares and decor .........................     5-10              4,017          4,410
        Office equipment and furniture ...............      5-7              1,487          1,498
        Equipment under capital leases ...............       7                 315            357
                                                                         ---------      ---------
                                                                            37,857         40,846
        Less: Accumulated depreciation and
          amortization ...............................                     (11,340)       (10,520)
                                                                         ---------      ---------
                                                                            26,517         30,326
        Construction in progress .....................                       3,677          1,836
                                                                         ---------      ---------
           Total .....................................                   $  30,194      $  32,162
                                                                         =========      =========
</TABLE>

     Assets Held for Disposal

     In  January  1997  the Company sold five restaurants in Northern California
for  $10,575,000  in  cash.  The net carrying value of the five restaurants sold
was  approximately  $8,669,000  at  December  30, 1996 and is included in assets
held  for  disposal.  The  remaining  balance  of  assets  held  for disposal at
December  30,  1996  consists  of  the  net  assets  of  three  T.G.I.  Friday's
restaurants  and two parcels of land. Only one parcel of land remains undisposed
of at December 29, 1997.
                                       F-9
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     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):


<TABLE>
<CAPTION>
                                                     Amortization
                                                        Period          1997          1996
                                                        ------          ----          ----
<S>                                                     <C>          <C>           <C>
         Franchise fees and license costs .........     20-30        $ 17,775      $ 18,430
         Prepaid franchise fees ...................       --              100            30
                                                                     --------      --------
                                                                       17,875        18,460
         Less: Accumulated amortization ...........                    (2,587)       (2,042)
                                                                     --------      --------
            Total .................................                  $ 15,288      $ 16,418
                                                                     ========      ========
</TABLE>

     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 $227,000 and $148,000 as
of  December 29, 1997 and December 30, 1996, 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 $287,000, $318,000 and $640,000 in 1997, 1996, and 1995,
respectively.

     Other Accrued Liabilities

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

<TABLE>
<CAPTION>
                                                                     1997         1996
                                                                     ----         ----
<S>                                                                <C>          <C>
          Bank overdraft ......................................    $ 1,574      $  2,432
          Accrued payroll .....................................      2,074         2,429
          Accrued losses on assets held for disposal ..........      2,116         1,572
          Accrued sales tax ...................................        669           861
          Accrued interest ....................................          7           946
          Other accrued liabilities ...........................      3,179         3,068
                                                                   -------      --------
                 Total ........................................    $ 9,619      $ 11,308
                                                                   =======      ========
</TABLE>

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

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  29, 1997, December 30, 1996, and
December 25, 1995 (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                             1997                               1996
                               --------------------------------- -----------------------------------
                                                      Per Share                           Per Share
                                Net Income   Shares     Amount      Net Loss     Shares     Amount
                               ------------ -------- ----------- -------------- -------- -----------
<S>                               <C>        <C>       <C>         <C>           <C>     <C>
Basic EPS ....................    $ 3,166     9,918    $  0.32     $  (22,166)   8,110   $   (2.73)
                                                       =======                           =========
Effect of stock options ......        --        180                       --       --
                                  -------     -----                ----------    -----
Diluted EPS ..................    $ 3,166    10,098    $  0.31     $  (22,166)   8,110   $   (2.73)
                                  =======    ======    =======     ==========    =====   =========

<CAPTION>
                                              1995
                               -----------------------------------
                                                        Per Share
                                  Net Loss    Shares     Amount
                               ------------- -------- ------------
<S>                              <C>          <C>      <C>
Basic EPS ....................   $  (1,034)   4,621    $   (0.22)
                                                       =========
Effect of stock options ......         --       --
                                 ---------    -----
Diluted EPS ..................   $  (1,034)   4,621    $   (0.22)
                                 =========    =====    =========
</TABLE>

     Recently Issued Accounting Standards

     In  June  1997,  the  Financial Accounting Standards Board issued SFAS Nos.
130  and  131,  "Reporting  Comprehensive  Income" ("SFAS 130") and "Disclosures
about   Segments  of  an  Enterprise  and  Related  Information"  ("SFAS  131"),
respectively  (collectively, the "Statements"). The Statements are effective for
fiscal  years  beginning after December 15, 1997. SFAS 130 establishes standards
for  reporting  of  comprehensive  income and its components in annual financial
statements.   SFAS   131  establishes  standards  for  reporting  financial  and
descriptive  information  about an enterprise's operating segments in its annual
financial  statements  and  selected  segment  information  in interim financial
reports.  Reclassification or restatement of comparative financial statements or
financial  information for earlier periods is required upon adoption of SFAS 130
and  SFAS  131, respectively. Application of the Statements' requirements is not
expected  to have a material impact on the Company's financial position, results
of operations or earnings per share data as currently reported.
                                      F-11
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

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 1996 and
1995,  the  Company  generated  net  operating  losses  and in 1997, the Company
utilized   net  operating  losses.  The  effect  of  temporary  differences  and
carryforwards  that  gave rise to deferred tax balances at December 29, 1997 and
December 30, 1996 were as follows (in thousands):

<TABLE>
<CAPTION>
                                             Temporary Differences
                                            ------------------------       Tax Carry     Net Deferred
December 29, 1997                           Deductible       Taxable        Forwards      Tax Assets
-----------------                           ----------       -------        --------      ----------
<S>                                           <C>           <C>            <C>            <C>
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
                                              =======       =========      ========       =========
</TABLE>                         


<TABLE>
<CAPTION>
                                                                             
                                             Temporary Differences         Tax Carry
                                            ------------------------      Forwards and   Net Deferred
December 30, 1996                           Deductible       Taxable       Carrybacks     Tax Assets
-----------------                           ----------       -------       ----------     ----------
<S>                                           <C>           <C>           <C>             <C>
Excess tax over book depreciation
 and amortization ........................    $   --        $  (3,301)    $     --        $  (3,301)
Provision for estimated expenses .........      1,363             --            --            1,363
Restructuring and reorganization .........      6,955             --            --            6,955
Other ....................................        --             (491)          --             (491)
General business and AMT credits .........        --              --          2,117           2,117
Net operating loss carryforward ..........        --              --          4,461           4,461
Valuation reserve ........................        --              --        (10,790)        (10,790)
                                              -------       ---------     ---------       ---------
      Total ..............................    $ 8,318       $  (3,792)    $  (4,212)      $     314
                                              =======       =========     =========       =========
</TABLE>

     The  amounts  recorded  as net deferred tax assets at December 29, 1997 and
December  30,  1996  are  included  as  a  component  of  other  assets  in  the
consolidated  balance  sheets.  The  remaining  net  deferred  tax  asset  as of
December  29,  1997  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  1997,  the  Company's tax provision was fully offset by the reversal of
prior  year  valuation  allowances.  The Company did not recognize for financial
reporting  purposes  any  benefits  related  to  net  operating losses generated
during 1995 and 1996.

     At December  29, 1997,  the Company had  approximately  $14,700,000  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 2013.
                                      F-12
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

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

<TABLE>
<CAPTION>
                                                                1997            1996
                                                                ----            ----
<S>                                                             <C>             <C>
          Statutory federal rate .......................        34.0%           (34.0)%
          State taxes, net of federal benefit ..........         6.0            ( 6.0)
          Nondeductible expenses .......................         7.5              1.4
          Benefit of FICA credit .......................        (18.0)          ( 3.3)
          Change in valuation allowance ................        (29.5)           41.9
                                                                -----           -----
                                                                  0.0%            0.0%
                                                                =====           =====
</TABLE>

5. LONG-TERM DEBT

     Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                      Maturity
                                        Dates       Interest Rates           1997          1996
                                      ---------     ---------------       ---------     ---------  
<S>                                   <C>           <C>                    <C>           <C>
Term Loan I .......................      2002       2.8% over LIBOR        $    --       $ 26,500
Term Loan II ......................      2012           9.457%               20,839           --
TGI Friday's note payable .........      1997             12%                   --          1,817
Other notes payable ...............   1999-2015       9.96 - 11%              4,639         7,839
Capital Leases ....................      1999            11.5%                   63           176
                                                                           --------      --------
                                                                             25,541        36,332
Less current portion ..............                                          (1,233)       (2,523)
                                                                           --------      --------
Total .............................                                        $ 24,308      $ 33,809
                                                                           ========      ========
</TABLE>

     In  March 1997, the Term Loan I was repaid with $8,000,000 of proceeds from
the  Northern  California  Sale  (Note 3) and with proceeds from new borrowings.
The  new  borrowings  (Term  Loan II), comprised of three notes from one lender,
bear  interest  at  9.457%  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. Proceeds from the Term Loan II were also used to
repay  the  TGI  Friday's  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 Company currently finances equipment and
leasehold  improvements  at  certain restaurants it developes. These notes range
from  $400,000  to  $950,000,  have  interest  rates ranging from 10% to 11% and
require monthly principal and interest payments.

     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. In addition,
assets  at  five  T.G.I.  Friday's restaurants and at the Front Row Sports Grill
have been pledged as collateral for other debt.

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


                        1998 ...............  $  1,233
                        1999 ...............     1,338
                        2000 ...............     1,324
                        2001 ...............     1,452
                        2002 ...............     1,467
                        Thereafter .........    18,727
                                              --------
                           Total ...........  $ 25,541
                                              ========
                                      F-13
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

6. STOCKHOLDERS' EQUITY

     On  September  29,  1995,  the  Company sold 3,750,000 shares of its Common
Stock  in  connection with a public offering and an additional 562,500 shares of
its  Common  Stock  on  October  30,  1995  pursuant  to  the  exercise  of  the
Underwriter's  over-allotment  option. The net proceeds to the Company from this
offering  were  approximately  $15,678,000,  after  deducting estimated offering
expenses  and underwriting discounts and commissions. The Company used a portion
of  the  net  proceeds  to  retire  indebtedness  and  the remaining proceeds to
develop new restaurants and to provide funds for general corporate purposes.

     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).

     In  January  1996,  the  Company adopted a new stock option plan ("the 1996
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  1996  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 and the issuance
of  425,000  non-statutory stock options to two of the Company's officers during
1997.
                                      F-14
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     Stock  option  information  as of December 29, 1997, December 30, 1996, and
December 25, 1995 is as follows:

<TABLE>
<CAPTION>
                                                            1997                       1996                       1995
                                                 -------------------------  --------------------------  ----------------------- 
                                                                    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 ...................................... 1,596,500       $   3.40     118,413       $   12.93     173,037    $   12.74
  Granted ......................................   781,950           2.46   1,668,500            3.25         --           --
  Exercised ....................................     2,200           2.50        --               --        2,500         6.52
  Canceled .....................................   298,750           3.51     190,413            9.42      52,124        12.60
                                                 ---------                  ---------                     -------
  Options outstanding at end of period ......... 2,077,500           2.90   1,596,500            3.40     118,413        12.93
                                                 =========                  =========                     =======
  Exercisable at end of period ................. 1,224,291           3.40     350,000            2.00      86,469        12.85
                                                 =========                  =========                     =======
  Weighted average fair value of options
   granted ..................................... $   1.44                   $    0.59                        N/A
                                                 =========                  =========                     =======
</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 1997 and 1996, using Black-Scholes option pricing model with the
following weighted average assumptions:

                                                 1997       1996
                                               Options     Options
                                               -------     -------

          Risk free interest rate .........       6.2%       5.8%
          Expected dividend yield .........       0.0%       0.0%
          Expected lives in years .........       4.0        3.5
          Expected volatility .............      71.3%      40.7%

     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):

                                                    1997            1996  
                                                    ----            ----  
          Net income (loss):                                              
               Pro Forma ......................   $ 2,442       $ (22,451)
          Earnings per share:                                             
               Pro Forma -- Basic .............      0.25           (2.77)
               Pro Forma -- Diluted ...........      0.24           (2.77)

     The  effects  of  applying SFAS No. 123 for providing pro forma disclosures
for  1997  and  1996  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.
                                      F-15
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     Common Stock Warrants

     As  of  December 29, 1997 and December 30, 1996 the Company had outstanding
warrants to acquire its securities as follows:

<TABLE>
<CAPTION>
                                                                                 1997         1996
                                                                                 ----         ----
<S>                                                                            <C>          <C>
Common Stock to be acquired by warrants issued to a former Director;
 exercisable at $20.00 through June 1997; non-callable ....................        --        68,182
Common Stock to be acquired by warrants issued to various Company
 employees; exercisable at $12.50 through July 1997; non-callable .........        --        93,750
Common Stock to be acquired by warrants issued to lenders in connection
 with the Term Loan; exercisable at $9.08 through March 2004;
 callable .................................................................    231,277      202,898
                                                                               -------      -------
   Total ..................................................................    231,277      364,830
                                                                               =======      =======
</TABLE>

7. COMMITMENTS AND CONTINGENCIES

     Development Agreements

     The  Company  is  obligated  under three separate development agreements to
open   35   new  T.G.I.  Friday's  restaurants  through  2002.  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  development  territories  include Arizona, Nevada, New Mexico, the
Los  Angeles, San Diego and San Francisco, California areas, 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  $4,120,000,  $4,850,000 and
$4,800,000  under  these agreements during 1997, 1996 and 1995, respectively. In
addition,  the  Company  could  be  required to spend up to 4% of gross sales on
marketing,  although  during  1997  it  was  only required to pay up to 1.85% of
gross   sales.  Marketing  expense  under  these  agreements  was  approximately
$1,919,000,  $1,554,000 and $2,360,000 during 1997, 1996 and 1995, respectively.

     Operating Leases

     The  Company  leases  land and restaurant facilities under operating leases
having  terms  expiring  at  various  dates  through  March 2015. 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 29, 1997 were as follows (in thousands):

                      1998 ...............    $ 4,841
                      1999 ...............      4,722
                      2000 ...............      4,857
                      2001 ...............      4,947
                      2002 ...............      4,938
                      Thereafter .........     43,612
                                              -------
                          Total ..........    $67,917
                                              =======
                                      F-16
<PAGE>
               MAIN STREET AND MAIN INCORPORATED AND SUBSIDIARIES
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)

     Rental  expense  during  1997,  1996 and 1995 was approximately $5,081,000,
$6,299,000,   and   $5,872,000  respectively.  In  addition,  the  Company  paid
contingent  rentals  of  $499,000,  $539,000  and $433,000 during 1997, 1996 and
1995, 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   $78,000,  $79,000  and  $71,000  during  1997,  1996  and  1995,
respectively.

9. RELATED PARTY TRANSACTIONS

     In October  1997,  the Company sold three  T.G.I.  Friday's  resaurants  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  two  officers of the
Company.  The  lease provides for annual rent of approximately $175,000 in 1998.
Approximately  $172,000,  $169,000  and  $166,000  was paid in rent during 1997,
1996 and 1995, respectively.
                                      F-17