UNITED STATES
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 Fiscal Year Ended December 28, 1997
Commission File Number 1-6553

CARROLS CORPORATION
(Exact name of Registrant as specified in its charter)
        Delaware                        16-0958146
     (State or other jurisdiction of    (I.R.S. Employer
     incorporation or organization)     Identification No.)
       968 James Street
    Syracuse, New York        13203
(Address of principal executive office)                (Zip Code)

Registrant's telephone number, including area code:  (315) 424-0513
Securities registered pursuant to Section 12(b) of the Act:   None
Securities registered pursuant to Section 12(g) of the Act:
11-1/2% Senior Notes Due  2003
(Title of Class)
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  the  registrant's  knowledge,  in  definitive  proxy  or
information  statements incorporated by reference in Part III of this  Form
10-K or any amendment to this Form 10-K. [X]
The aggregate  market  value  of the voting stock held by non-affiliates of
the Registrant:   No voting stock is held by non-affiliates.
The number of shares outstanding  of  each  of  the Registrant's classes of
common stock, as of March 15, 1998:  10.

The Company uses a 52-53 week fiscal year ending  on  the Sunday closest to
December 31.  All references herein to the fiscal years ended  December 31,
1995, December 29, 1996  and December 28, 1997 will hereinafter be referred
to   as  the  fiscal  years  ended  December  31,  1995,  1996  and   1997,
respectively.

PART I

This 1997  Annual  Report on Form 10-K contains statements which constitute
forward-looking statements  within  the  meaning  of  Section  27A  of  the
Securities  Act  of  1933,  as  amended,  and Section 21E of the Securities
Exchange  Act  of  1934, as amended.  Those statements  include  statements
regarding the intent,  belief or current expectations of the Registrant and
its management team.  Investors are cautioned that any such forward-looking
statements are not guarantees  of  future performance and involve risks and
uncertainties, and that actual results  may  differ  materially  from those
projected  in the forward-looking statements.  Such risks and uncertainties
include, among  other things, competitive, economic and regulatory factors,
general economic  conditions,  the  ability of the Registrant to manage its
growth and successfully implement its business strategy and other risks and
uncertainties that are discussed herein.
ITEM 1. BUSINESS
Historical Development
Carrols Corporation ("Carrols" or the  "Company") is the largest franchisee
of Burger King restaurants  in the United  States.    As  of March 15, 1998
Carrols   was   operating  338  Burger  King  restaurants  located  in   13
Northeastern, Midwestern  and  Southeastern  states.   During the Company's
most  recent  fiscal  year,  the  Company  increased  the total  number  of
restaurants  that it operates by over 40% growing from 232  restaurants  in
1996 to 335 restaurants  at December 31, 1997.  During 1997, Carrols opened
11 new restaurants, acquired  93  restaurants in 6 transactions, and closed
one underperforming restaurant.
 Carrols was incorporated in 1968 and  through  1976 its principal business
was the operation of fast food hamburger restaurants under the name Carrols
Restaurants   and   the  operation  of  movie  theaters  under   the   name
CinemaNational. In 1976, as a result of growing competition from larger and
better recognized national  fast  food  restaurant chains, Carrols became a
franchisee  of Burger King Corporation ("BKC")  and  began  converting  its
restaurants  into   Burger   King  restaurants  and  ceased  operating  and
franchising restaurants under  the name of Carrols Restaurants. In order to
facilitate the  financing of the  conversion  of these restaurants, Carrols
disposed of a substantial portion of its movie theater assets.
In  1969,  Carrols  offered  its  common stock through  an  initial  public
offering. The Company's shares were  listed  for  trading  on  the New York
Stock  Exchange in 1983.
The  Company  was  acquired  in  December 1986 (the "1986 Acquisition")  by
Carrols Holdings Corporation ("Holdings"),  a  corporation formed to effect
the 1986 Acquisition by Mr. Vituli, the Company's current Chairman and CEO,
and  other  members  of  the Company's then-current  senior  management,  a
private investor group and certain institutional investors.  As a result of
the 1986 Acquisition, Carrols became a wholly-owned subsidiary of Holdings.
At the time of the 1986 Acquisition,  the  Company  owned  138  Burger King
restaurants  and a food distribution business. In August 1990, the  Company
sold its food  distribution  business  to Burger King Distribution Services
("BKDS"),   a    division   of   ("BKC").   Carrols   currently   purchases
substantially  all  of  its  requirements  for  foodstuffs  and  paper  and
packaging products from ProSource  Services  Corporation ("ProSource"), the
successor to BKDS, pursuant to a five year supply  agreement  which expires
on March 31, 1999.
  Atlantic  Acquisition.   On  April  3,  1996,  pursuant to the Securities
Purchase Agreement (the "Atlantic Agreement"), dated  as  of March 6, 1996,
among   Carrols,  Holdings,  the  stockholders  of  Holdings  and  Atlantic
Restaurants,  Inc.  ("Atlantic"),  Atlantic acquired Holdings, the owner of
100%  of  the  outstanding capital stock  of  the  Company  (the  "Atlantic
Acquisition").   Pursuant  to the Atlantic Agreement, Atlantic acquired all
of  the outstanding voting capital  stock  of  Holdings  for  an  aggregate
purchase  price  of  approximately  $86.5  million  in cash. Atlantic is an
indirect wholly-owned subsidiary of Bahrain International  Bank  (E.C.),  a
Bahrain exempt joint stock company ("BIB").
Recent Developments
Recapitalization.   On  February 20, 1997, the Certificate of Incorporation
of Holdings was amended (the  "Amendment")  such  that  (i)  the  3,146,110
shares of Common Stock held by Atlantic were converted into 850,000  shares
of  Common Stock, (ii) each of the classes consisting of (a) 882,353 shares
of Non-Voting  Common  Stock  of  Holdings,  (b)  750 shares of Class B 10%
Cumulative Redeemable Preferred Stock (Series  I)  of  Holdings,  par value
$0.01  per  share,  and (c) 750 shares of Class B 10% Cumulative Redeemable
Preferred Stock (Series  lI)  of  Holdings,  par  value $.01 per share, was
canceled and (iii) the outstanding warrants to purchase  488,111  shares of
Common  Stock  were  converted into warrants to purchase 131,876 shares  of
Common Stock.  After giving  effect  to the foregoing, Holdings had 850,000
shares of Common Stock outstanding, all  of  which  were  held by Atlantic,
with no other voting capital stock outstanding.
Madison  Dearborn  Investment.   On  March  27, 1997, pursuant to  a  Stock
Purchase Agreement (the "MD Agreement") dated  February  25,  1997, between
and among Holdings, Atlantic, Madison Dearborn Capital Partners,  L.P.  and
Madison  Dearborn Capital Partners II, L.P. (together with Madison Dearborn
Capital Partners, L.P., the "MD Investors"). the MD Investors acquired (the
"MD Investment")  (i)  from  Holdings  283,334  shares of Common Stock (the
"Holdings  Shares")  and  (ii) from Atlantic  283,333  of  the  outstanding
shares of Common Stock (the  "Atlantic  Shares,"  and,  together  with  the
Holdings  Shares,  the "MD Shares").  Pursuant to the MD Agreement, certain
members of senior management  also  purchased 10,810 shares of Common Stock
for $1.1 million.  The aggregate purchase  price  for  the  MD  Shares  was
approximately  $61  million  in  cash  (the  "MD Purchase Price"), of which
approximately one-half was paid to Holdings.
TCB Credit Facility.  On May 12, 1997 the Company and Holdings entered into
a  new  financing  agreement  (the  "TCB Refinancing")  pursuant  to  which
Chase/Texas Commerce Bank National Association  ("TCB"),  as Administrative
Agent  for  a syndicate of lenders (the "Lenders"), (i) established  a  $25
million Revolving Credit Facility that replaced the existing Senior Secured
Credit Facility with Heller Financial, Inc. ("Heller") and (ii) established
a $127 million  Advance  Term Loan ($5 million of which was used to replace
an existing $5 million term loan with Heller).
 Omega Acquisition.  On March 28, 1997, the Company acquired 23 Burger King
restaurants  (including  one  restaurant  under  construction)  located  in
Greenville,  North  Carolina   and  Spartanburg,  South  Carolina,  for  an
aggregate purchase price of $21.1 million in cash, pursuant to two separate
Purchase and Sale Agreements, each  dated  as  of  January 15, 1997, by and
between  the Company, Omega Food Services, Inc. and Harold  W.  Hobgood  as
Omega's agent.
Buffalo Acquisition.   On  August  20,  1997 the Company acquired 63 Burger
King  restaurants located in Western New York,  Pennsylvania,  Indiana  and
Kentucky  for  an  aggregate purchase price of approximately $52 million in
cash, pursuant to a Purchase Agreement, dated as of July 7, 1997, among the
Company and Richard  D.  Fors,  Jr., Charles J. Mund, Charles J. Mund, Jr.,
Eric W. Mund, William J. O'Donnell,  John  T.  Sweeney, William J. Reznicek
and certain other individuals and entities signatory thereto.
Business Strategy
Carrols business strategy is to continue to increase  revenues  and improve
operating  efficiencies  thus increasing restaurant profits and EBITDA  (as
defined).  The Company's strategy is based on the following components:
Develop New Burger King Restaurants in Existing Markets.  The Company looks
to expand in its existing  markets  through  the  development of new Burger
King restaurants where the demographics support the  Company's  ability  to
increase  profitability  and operating leverage.  The Company believes that
the  number  of markets that  it  operates  in  will  continue  to  provide
opportunities for the construction of new restaurants.  Management believes
that new restaurant  development  risk  is significantly reduced due to the
proven success of the Burger King concept.
The Company's new restaurant  development  efforts are primarily managed by
its own staff of real estate and construction professionals with input from
BKC's development field personnel.  Prior to  developing  a new restaurant,
the  Company  conducts  an extensive site selection and evaluation  process
including in-depth demographic, market and financial analysis.
Selective Acquisition of  Existing  Burger  King  Restaurants.  The Company
believes that due to the number of Burger King restaurants  and  the number
of franchisees within the Burger King system that there will continue to be
opportunities  for  selective growth through acquisition in contiguous  and
new geographic markets.   When  evaluating  acquisition  opportunities  the
Company  assesses  the  attractiveness  of  the  market  from a demographic
perspective including the potential for the development of new restaurants.
The  Company  believes  that its restaurant operating controls,  management
training and administrative  efficiencies  generally  enable  it to realize
greater  profitability  from  acquired  restaurants than the former  owners
realized.   It  believes  that  it achieves profit  efficiencies  from  its
ability to improve controls over  restaurant  food  costs,  more  efficient
labor usage, and by its ability to realize economies of scale by leveraging
its corporate infrastructure.
Consistently  Provide  High Quality Products and Superior Customer Service.
As the number of restaurants  that  the Company owns in a particular market
increases, the Company has a greater  ability  to  ensure  overall customer
satisfaction  in  that market through consistency in food quality,  service
and restaurant appearance.   Its  stronger  presence in a particular market
also allows the Company to maximize the effectiveness  of local Burger King
advertising and promotional programs.
Achieve Operating Efficiencies.  The Company's large number of restaurants,
centralized management structure and management information  systems enable
the Company to improve operating efficiencies for both existing  and  newly
acquired  restaurants.  These factors enable the Company to tightly control
restaurant  and  corporate  level  costs,  to capture economies of scale by
leveraging  its  existing  corporate overhead structure,  and  to  use  its
sophisticated management information  and  point-of-sale  systems  to  more
efficiently manage its restaurant operations.  Due to its size, the Company
also  realizes  benefits from its improved bargaining power with respect to
its purchasing and cost management activities.
Burger King Corporation
Overview.  The Company  believes that it realizes significant benefits from
its affiliation with BKC  as  a result of the widespread recognition of the
Burger King name and products,  the  size  and  market penetration of BKC's
media  advertising,  BKC's  overall management of the  Burger  King  brand,
including new product development,  and  from  the  continued growth of the
Burger  King  system.   According  to publicly available  information,  the
Burger King brand is the second largest restaurant franchised in the world,
with  more  than 9,400 Burger King restaurants  worldwide  and  system-wide
restaurant sales  of  $9.8  billion for its fiscal year ended September 30,
1997.  BKC is an indirect wholly  owned  subsidiary of Diageo PLC (a United
Kingdom  food  and  spirits  company  formed  from   the  merger  of  Grand
Metropolitan and Guinness).
Menu  and  Operations.  The  Burger  King  system  marketing   strategy  is
characterized  by its "Have It Your Way" service, flame-broiling,  generous
portions  and  competitive   prices.   Burger   King   restaurants  feature
flame-broiled  hamburgers,  the  most  popular  of which is The  Whopper(r)
sandwich.  The Whopper is a large, flame-broiled hamburger on a toasted bun
garnished  with combinations of mayonnaise, lettuce,  onions,  pickles  and
tomatoes.
The basic menu  of  all  Burger  King  restaurants  consists of hamburgers,
cheeseburgers, chicken and fish sandwiches, breakfast  items,  french fried
potatoes,  salads,  shakes,  desserts,  soft  drinks, milk and coffee.   In
addition, promotional menu items are introduced  periodically  for  limited
periods.  BKC continually seeks to develop new products as it endeavors  to
enhance the menu and service of Burger King restaurants.
The Company's  Burger  King  restaurants  are typically open seven days per
week with minimum operating hours from 7:00  AM  to 11:00 PM.   Burger King
restaurants  are  fast  food  restaurants  of distinctive  design  and  are
generally located in high-traffic areas throughout  the United States.  The
Company believes that convenience of location, quality of food, price/value
of food served, and speed of service are the primary competitive advantages
of  Burger King restaurants.  Burger King restaurants  appeal  to  a  broad
spectrum  of  consumers,  with multiple day-part meal segments appealing to
different groups of consumers.
Restaurant Configurations.   The Company' s Burger King restaurants consist
of one of several building types  with  various  seating capacities.  BKC's
traditional restaurant contains approximately 2,800  to  3,200  square feet
with  seating  capacity  for  90  to 100 customers,  has drive-thru service
windows, and has adjacent parking areas.   Of the Company's 338 restaurants
at  March 15, 1998, 316 are free-standing and  22  are  located  in  retail
shopping  centers.   In  Carrols' freestanding Burger King restaurants over
55% of sales are generated from its drive-thru service windows.
Franchise Agreements.
Each  of  Carrols'  Burger  King  restaurants  operates  under  a  separate
Franchise Agreement entered into between the Company and BKC. The Franchise
Agreements  require,  among  other  things,  that  all  restaurants  be  of
standardized  design and be operated  in  a  prescribed  manner,  including
utilization of  the  standard  Burger  King menu.  The Franchise Agreements
generally provide for an initial term of  20  years and have an initial fee
of $40,000.  A Successor Franchise Agreement may  be granted by Burger King
for  an  additional  20  year  term,  provided  the  restaurant  meets  the
then-current  BKC  operating standards and the Company is  not  in  default
under the relevant Franchise Agreement.  Currently, the Successor Franchise
Agreement  fee is $40,000.  The  Franchise  Agreements  are  non-cancelable
except for failure to abide by the terms thereof.
In addition  to  this  fee,  in  order  to  obtain  a  Successor  Franchise
Agreement,  a franchisee is typically required to make capital improvements
to the subject  restaurant to bring the restaurant up to BKC's then-current
design standards.  The amount of such capital expenditures will vary widely
depending upon the  magnitude  of  the  required  changes and the degree to
which the Company has made interim changes to the restaurant.  Although the
Company  estimates  that  a  substantial  remodeling can cost in excess  of
$250,000, the Company's average remodeling  cost  over  the past five years
has been approximately $135,000 per restaurant.
Carrols believes that it enjoys a good relationship with  BKC  and  that it
will  satisfy  BKC's  normal  Successor  Franchise  Agreement policies and,
accordingly, believes that Successor Franchise Agreements  will  be granted
in  due  course  by  BKC  at  the  expiration  of  its  existing  Franchise
Agreements.   Historically,  BKC has granted each of the Company's requests
for a Successor Franchise Agreement for its restaurants.
In addition to the initial franchise  fee, Carrols currently pays a monthly
royalty  of  3-1/2% of the gross revenues  from  its  restaurants  to  BKC.
Burger King franchisees currently also contribute 4% of gross revenues from
their  Burger  King   restaurants  to  fund  BKC's  national  and  regional
advertising.   BKC  engages   in   substantial   national  advertising  and
promotional  activities  and  other  efforts to maintain  and  enhance  the
nationwide Burger King system.  Carrols  supplements  BKC's  marketing with
local advertising and promotional campaigns.
The  cost  of  a  new  restaurant  also  includes  the requisite equipment,
furniture, signage and various other costs.  The Company estimates that the
average   initial   cost   for  a  standard  free-standing  restaurant   is
approximately $265,000 (excluding  the  cost of the building, land and site
improvements).  The  Company  estimates  that   the    aggregate   cost  of
constructing  a  free-standing  restaurant  and  the  cost of land and site
improvements varies considerably depending upon building  type,  land  cost
and site work, and generally ranges from $700,000 to $1,000,000.
The  BKC  Franchise Agreements do not grant any franchisee exclusive rights
to a defined  territory.   The Company believes that BKC generally seeks to
ensure that newly granted franchises do not materially adversely affect the
operations of existing Burger King restaurants.
The Company is required to obtain BKC's consent prior to the acquisition or
development of new Burger King  restaurants.   BKC  also  has  the right of
first  refusal to purchase any Burger King restaurant which is the  subject
of a contract of sale.  Since the Acquisition, BKC has granted its approval
to all of  the  Company's  acquisitions,  except  for  one instance when it
exercised  its  right  of  first refusal with respect to one  proposed  six
restaurant acquisition that the Company attempted to make in 1997.
Company Operations
Management  Structure. Substantially  all  executive  management,  finance,
marketing and  operations  support functions are conducted centrally at the
Company's Syracuse, New York  headquarters.   The Company currently has six
regional directors, five of whom are vice presidents  of  the  Company, who
are  each  responsible  for  the  operations  of  the  Carrols' Burger King
restaurants in their assigned region. Three of the regional  directors have
been  employed  by  Carrols  for over 20 years. The regional directors  are
supported by 44 district supervisors  that  are  responsible for the direct
oversight of the day-to-day operations of an average  of seven restaurants.
Typically,  district  supervisors  have  previously  served  as  restaurant
managers at one of Carrols' restaurants or at an acquired restaurant.  Both
regional directors and district supervisors are compensated  with  a  fixed
salary   plus  an  incentive  bonus  based  upon  the  performance  of  the
restaurants under their supervision.
A typical  Carrols' Burger King restaurant is staffed with hourly employees
who are supervised  by  a  salaried  manager  and  two  or  three  salaried
assistant managers.
Training.   The  Company maintains a comprehensive training and development
program for all of  its personnel.  This program emphasizes the Burger King
system-wide operating  procedures,  food  preparation  methods and customer
service  standards.   Carrols  provides  both  classroom and  in-restaurant
training  for  its  salaried  and  hourly personnel.   In  addition,  BKC's
training and development programs are also available to the Company.
Management  Information  Systems.  Financial   and  management  control  of
Carrols'   restaurants  is  facilitated  by  the  use  of   an   integrated
computerized  back  office  and  point  of sale system which electronically
transmits  data  from  each  of  the  Company's  restaurants  to  Corporate
headquarters on a daily basis.  These systems  provide  daily  tracking and
reporting of customer traffic counts, menu item sales,  payroll  data, food
and   labor   cost  analyses  and  other  operating  information  for  each
restaurant.  This information is available daily to the restaurant manager,
who is expected  to  react  quickly  to  trends or situations in his or her
restaurant.  The district supervisors also  receive  daily  information for
all  restaurants  under  their  respective control and have access  to  key
operating data on a remote basis  using  a laptop computer.  Key restaurant
performance indicators are monitored at each management level from district
supervisor through senior management.
The  Company's management information system,  typically  not  utilized  by
smaller  Burger King franchisees and other smaller quick-service restaurant
chains, provides  management  with the ability to analyze sales and product
mix data, to minimize shrinkage,  and  to  control  labor  costs.   Carrols
believes  that  these  systems  materially  enhance  its  ability  to  more
efficiently control and manage its restaurant operations.
Factors  Affecting  the Company's Operations. Carrols' business is affected
by  various  factors  including   weather,   gasoline   prices   and   road
construction.  Winter  weather conditions can be particularly severe in the
Northeast where the Company  operates  a  large  number  of its Burger King
restaurants.  Historically, the Company's business has also  been  affected
by  changes  in local and national economic conditions, demographic trends,
consumer spending  habits  and   tastes, and concerns about the nutritional
quality of quick-serve food.

Site Selection. The Company believes  that  the location of its restaurants
is very important to each restaurant's success.   Potential new development
sites   are   evaluated   based  upon  accessibility,  visibility,   costs,
surrounding traffic patterns,  competition and demographic characteristics.
The Company's senior management,  based  upon analyses prepared by its real
estate   professionals  and  its  operations  personnel,   determines   the
acceptability of all acquisition and new development sites.
Restaurant Locations
The following  table  sets  forth  the  locations  of  the  338 Burger King
restaurants in the Carrols' system at March 15, 1998.

State
Total
Restaurants
Connecticut
1
Indiana
5
Kentucky
6
Maine
4
Massachusetts
2
Michigan
23
New Jersey
2
New York
151
North Carolina
41
Ohio
72
Pennsylvania
11
South Carolina
19
Vermont
        1
    Total
338
Advertising and Promotion
The  Company  believes that one of the major advantages of being  a  Burger
King franchisee  is  the  value  of  the  extensive  regional  and national
advertising and promotional programs conducted by BKC. In addition  to  the
benefits  derived  from  BKC's  advertising  spending,  which  according to
information  published  by  BKC  was  over  $400  million for 1997, Carrols
supplements  BKC's  advertising  and  promotional  activities   with  local
advertising   and   promotions,   including   the  purchase  of  additional
television, radio and print advertising.  Carrols also utilizes promotional
programs, such as combination meals and discounted  prices, targeted to its
customers,  thereby  enabling  Carrols  to create a flexible  and  directed
marketing program.
 Burger King franchisees, as well as BKC-owned  restaurants,  are generally
required  to contribute 4% of gross revenues from restaurant operations  to
an advertising  fund,  utilized  by  BKC  for  its advertising, promotional
programs  and  public  relations  activities.  BKC's  advertising  programs
consist of national campaigns supplemented  by  local  advertising.   BKC's
advertising  campaigns  are  generally  carried on television, radio and in
circulated print media (national and regional newspapers and magazines).
Supplies and Distribution
The Company is a member of a national purchasing  cooperative  created  for
the  Burger King system known as Restaurant Services, Inc. ("RSI").  RSI is
a non-profit independent cooperative which acts as the purchasing agent for
approved distributors to the system and serves to negotiate the lowest cost
for the  Burger  King  system.   The  Company  uses its purchasing power to
negotiate directly with certain other vendors, as  well as its distributor,
to obtain favorable pricing and terms for supplying its restaurants.
As a Burger King franchisee, Carrols is required to  purchase  all  of  its
foodstuffs,   paper   goods   and  packaging  materials  from  BKC-approved
suppliers.  Other  non-food  items  such  as  kitchen  utensils,  equipment
maintenance tools and other supplies  may  be  purchased  from any suitable
source provided that such items meet BKC product uniformity standards.
Carrols currently obtains substantially all of its foodstuffs  (other  than
bread  products  which  it  purchases  from  local  bakeries), paper goods,
promotional  premiums  and packaging materials from ProSource  Distribution
Services, Inc. ("Prosource")  under  a  five-year  supply  agreement  which
expires on March 31, 1999.  The Company believes that ProSource's  services
are competitive with alternatives available to the Company.
There  are  other  BKC-approved  supplier/distributors  which  compete with
ProSource.  Carrols  believes  that  reliable  alternative sources for  all
restaurant supplies are readily available at competitive  prices should the
arrangements with ProSource or any other existing supplier  or  distributor
change.
All BKC-approved suppliers are required to purchase foodstuffs and supplies
from  BKC-approved  manufacturers  and  purveyors.  BKC is responsible  for
monitoring  quality  control and supervision  of  these  manufacturers  and
conducts regular visits  to  observe  the preparation of foodstuffs, and to
run various tests to ensure that only high  quality  foodstuffs are sold to
BKC-approved suppliers.  In addition, BKC coordinates and supervises audits
of  approved  suppliers  and  distributors to determine continuing  product
specification  compliance  and  to  ensure  that  manufacturing  plant  and
distribution center standards are met.
Quality Assurance
The Company's operations are focused  on achieving a high level of customer
satisfaction with speed, accuracy and quality of service closely monitored.
The  Company's  senior  management  and  restaurant  management  staff  are
principally  responsible for ensuring compliance  with  the  Company's  and
BKC's operating  procedures.   The  Company  and BKC have uniform operating
standards  and  specifications  relating  to the quality,  preparation  and
selection of menu items, maintenance and cleanliness  of  the  premises and
employee  conduct.   Detailed  reports  from  the  Company's own management
information  system  and  surveys  conducted  by  the Company  or  BKC  are
tabulated and distributed to management on a regular basis to help maintain
compliance.
All Burger King franchisees operate subject to a comprehensive  regimen  of
quality assurance and health standards set by BKC, as well as standards set
by  Federal,  state  and  local  governmental  laws  and regulations. These
standards  include  food preparation rules regarding, among  other  things,
minimum cooking times  and  temperatures,  sanitation  and cleanliness. The
"conveyor  belt"  cooking  system utilized in all Burger King  restaurants,
which  is calibrated to carry  hamburgers  through  the  flame  broiler  at
regulated  speeds,  is  one  of  the  safest  cooking  systems  among major
quick-service restaurants and helps to ensure that the standardized minimum
times  and  temperatures  for  cooking  are met.  In addition, BKC has  set
maximum time standards for holding unsold prepared food.
The Company closely supervises the operation  of  all of its restaurants to
help  ensure  that standards and policies are  followed  and  that  product
quality,  customer   service   and   cleanliness  of  the  restaurants  are
maintained.  In addition, BKC may conduct unscheduled inspections of Burger
King restaurants throughout the nationwide system.
Government Regulation
Carrols is subject to various Federal,  state  and local laws affecting its
business, including various health, sanitation,  fire and safety standards.
Newly constructed or remodeled restaurants are subject  to  state and local
building  code and zoning requirements.  In connection with the  remodeling
and alteration of the Company's restaurants, the Company may be required to
expend  funds  to  meet  certain  Federal,  state  and  local  regulations,
including  regulations  promulgated  by the Americans with Disabilities Act
(the "ADA") which require that remodeled or altered restaurants be handicap
accessible.  The Company is also subject to Federal and state environmental
regulations, although  such regulations  have not had, and are not expected
to have, a material effect on the Company's operations.
The Company is subject to the Fair Labor Standards  Act  and  various state
laws  governing  such  matters  as minimum wage requirements, overtime  and
other working conditions and citizenship  requirements.  In September 1997,
the  second phase of an increase in the minimum  wage  was  implemented  in
accordance   with  the  Federal  Fair  Labor  Standards  Act  of  1996.   A
significant number  of  the  Company's  food  service personnel are paid at
rates related to  the Federal minimum wage and,  accordingly,  increases in
the minimum wage have increased labor costs at the Company's restaurants.
The  Company  is  also  subject  to  various local, state and Federal  laws
regulating the discharge of pollutants  into  the environment.  The Company
believes  that  it conducts its operations in substantial  compliance  with
applicable environmental  laws  and  regulations.   In an effort to prevent
and, if necessary, to correct environmental problems,  the Company conducts
environmental  audits  of proposed restaurant sites in order  to  determine
whether there is any evidence  of  contamination  prior  to  purchasing  or
entering into a lease.
The  Company  believes  that  it is operating in compliance with applicable
Federal, state and local laws and regulations governing its operations.
Competition
The quick-service restaurant industry is highly competitive with respect to
price,  service,  location and food  quality.   In  each  of  its  markets,
Carrols' restaurants  compete  with a large number of national and regional
restaurant   chains,  as  well  as  locally-owned   restaurants,   offering
low-priced  and  medium-priced  fare.  Convenience  stores,  grocery  store
delicatessens   and  food  counters,  cafeterias  and  other  purveyors  of
moderately priced and quickly prepared foods also compete with the Company.
In the Company's markets, McDonald's, Wendy's and Hardee's provide the most
significant competition.
The Company's largest  competitor  is  McDonald's.  According  to  publicly
available  information,  as  of December 31, 1997, the McDonald's worldwide
system comprised over 23,000 restaurants and total system-wide revenues for
the year ended December 31, 1997 were $33.6 billion.   The Company believes
that product quality and taste,  national brand recognition, convenience of
location, speed of service, menu variety,  price  and ambiance are the most
important competitive factors in the quick-service  restaurant industry and
that its Burger King restaurants effectively compete in each category.
Employees
At  December  31, 1997, Carrols employed approximately  11,700  persons  of
which  approximately  200 were supervisory and administrative personnel and
11,500 were restaurant operating personnel.  None of Carrols' employees are
covered by collective bargaining  agreements.   Approximately 10,500 of the
restaurant  operating  personnel  at  December  31,  1997   were  part-time
employees.   Carrols  believes  that  the  dedication  of its employees  is
critical to its success, and that its employee relations are good.
ITEM 2. PROPERTIES
The Company owns the approximately 20,000 square foot building at 968 James
Street, Syracuse, New York, which houses its executive offices  and  all of
the Company's administrative operations (except for those conducted at five
small  regional  offices).   In addition to the above, at December 31, 1997
the Company owned or leased the following properties:
@@

Owned
Leased
Leased


Land;
Land;
Land;


Owned
Owned
Leased


Building
Building
Building
Total
Burger King restaurants
23
17
295 (a)
335





Burger King restaurants
 under construction

1

2

1

4
Excess properties:




  Leased to others
--
--
4
4
  Available for sale or lease
  4
  --
   --
    4
Total properties
28
19
300
347
@@
(a)     Includes 22 restaurants located in mall shopping centers.
Most of the Company's leases are  coterminous  with  the  related Franchise
Agreements. The Company believes that it generally will be  able  to renew,
at  commercially  reasonable rates, the leases whose terms expire prior  to
the subject Franchise Agreements.
Most leases require  the  Company,  as  lessee,  to  pay  utility and water
charges, premiums on insurance and real estate taxes.  Certain  leases also
require  contingent  rentals  based  upon a percentage of gross sales  that
exceed specified minimums.
ITEM 3. LEGAL PROCEEDINGS
The  Company  is  not a party to any pending  legal  proceeding  which,  in
management's belief,  will  have a material adverse effect on the Company's
results of operations or financial  condition,  nor  to  any  other pending
legal proceedings other than ordinary, routine litigation incidental to its
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED STOCKHOLDER
MATTERS
There  is  no established trading market for the Company's  capital  stock.
Carrols Holdings  Corporation owns 10 shares of common stock of the Company
(representing 100% of the capital stock of the Company).
Cash dividends paid  during  1996  and  1997 by Carrols to Holdings were as
follows:
@@

Per Share
        Total
January 1996
$       800.00
$        8,000
March 1996
$  41,480.00
$    414,800
August 1996
$  20,722.40
$    207,224
October 1996
$  37,000.38
$    370,004
April 1997
$184,217.01
$ 1,842,170
May 1997
$  37,087.78
$    370,878
July 1997
$  13,610.00
$    136,100
October 1997
$  13,610.00
$    136,100
December 1997
$185,309.46
$ 1,853,095

The  Company's  loan agreements impose limitations  on  certain  restricted
payments, which include  dividends  and  preferred stock redemptions.  As a
result of the 1997 investments by Madison  Dearborn  and senior management,
the Company has sufficient unrestricted amounts to enable  it  to  make the
required  payments  to  satisfy  preferred  stock  dividend  and redemption
requirements.

ITEM 6.  SELECTED FINANCIAL DATA

Dollars in thousands except per share data and restaurants


      1997__
      1996__
     1995__
     1994__
    1993 (a)
Summary of Operating Results:





Restaurant sales
$  295,436
$   240,809
$   226,257
$  203,927
$  171,137
Costs and expenses:





  Cost of sales
85,542
68,031
63,629
57,847
48,502
  Restaurant wages and related expenses
89,447
70,894
65,932
59,934
51,739
  Advertising expense
13,122
10,798
9,764
8,785
7,930
  Other restaurant operating expenses
61,691
48,683
45,635
42,390
35,192
  Administrative expenses
13,121
10,387
10,434
9,122
7,534
  Depreciation and amortization
15,102
11,015
11,263
11,259
12,143
  Unusual (b)
             -
          509
             -
      1,800
             -
Total operating costs and expenses
  278,025
   220,317
  206,657
  191,137
  163,040
Operating income
17,411
20,492
19,600
12,790
8,097
Interest income from income tax refund
(983)
-
-
-
-
Interest expense
   15,581
    14,209
   14,500
    14,456
    12,505
Income (loss) before taxes
2,813
6,283
5,100
(1,666)
(4,408)
Provision for (benefit from) income taxes
        655
      3,100
   (9,826)
         165
              -
Net Income Before Extraordinary Loss
2,158
3,183
14,926
(1,831)
(4,408)
Extraordinary Loss on Extinguishment of Debt
              -
              -
              -
               -
     (4,883)
Net Income (Loss)
$     2,158
$     3,183
$   14,926
$    (1,831)
$    (9,291)












Other Financial Data:





EBITDA (c)
$   32,513
$   31,507
$     30,863
$     24,049
$    20,240
Total assets
215,328
138,588
135,064
125,319
119,735
Long-term debt
  154,649
118,180
116,375
120,680
114,197
Capital lease obligations, long-term
       2,060
2,503
3,301
3,966
4,603
Total long-term debt and capital lease obligations
156,709
120,683
119,676
124,646
118,800
Stockholders' equity (deficit)
17,447
(11,662)
(12,916)
(27,208)
(22,404)






Number of Burger King Restaurants:





  At end of period
         335
            232
           219
           219
          195
  Annual weighted average
         280
            225
           219
           207
          185








(a) All years included 52 weeks except fiscal 1993 which had 53 weeks.
(b)  Includes  $509 in 1996 for costs associated with a change of  control;
includes $1,800 in 1994 for charges related to closing restaurants.
(c) EBITDA represents  operating income plus depreciation and amortization.
While EBITDA should not  be  construed as a substitute for operating income
or  a  better  indicator  of  liquidity   than  cash  flow  from  operating
activities,  which  are determined in accordance  with  generally  accepted
accounting principles,  EBITDA  is  included  herein  to provide additional
information with respect to the ability of the Company  to  meet its future
debt  service,  capital  expenditure and working capital requirements.   In
addition, management believes  that  certain  investors  and  lenders  find
EBITDA  to  be  a  useful  tool for measuring the ability of the Company to
service its debt.


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

Results of Operations

The following table sets forth, for the periods indicated, select operating
results as a percentage of restaurant sales.

1997
1996
1995
Restaurant sales
100.0%
 100.0%
 100.0%
Costs and expenses:



  Cost of sales
29.0
   28.3
   28.1
  Restaurant wages and related expenses
30.3
   29.4
   29.1
  Other restaurant expenses including advertising
25.3
   24.7
   24.5
  Administrative expenses
4.4
     4.5
4.6
  Depreciation and amortization
      5.1
      4.6
      5.0
Operating income
      5.9%
      8.5%
      8.7%
EBITDA
    11.0%
    13.1%
    13.6%





Restaurant Sales.  Restaurant sales for the year ended  December  31, 1997,
increased  22.7%  to  $295.4 million from $240.8 in 1996.  The increase  in
sales was primarily the  result  of the growth in the number of Burger King
restaurants operated by the Company  which increased from 232 at the end of
1996 to 335 at the end of 1997.  During  1997,  the  Company  opened 11 new
restaurants,  acquired  93 restaurants in six transactions, and closed  one
underperforming  restaurant.    Sales   at  the  Company's  214  comparable
restaurants  (those  units  operating  for the  entirety  of  the  compared
periods)  decreased 1.4% during 1997.  In  general,  the  Company  did  not
increase menu prices during 1997.

Restaurant  sales were $240.8 million and $226.3 million for 1996 and 1995,
respectively,  and  increased 6.4% and 10.9% over the year-earlier periods.
Comparable restaurant  sales  increased 3.2% in 1996 and 3.8% in 1995.  The
average number of restaurants operated  by  the  Company  was  280 in 1997,
compared to 225 in 1996 and 219 in 1995.

Operating Costs and Expenses.  Cost of sales (food and paper costs),  as  a
percentage of sales, were 29.0% in 1997 compared to 28.3% in 1996 and 28.1%
in  1995.   The  increase  in 1997, in part, reflected somewhat higher food
costs including approximately  a  2%  increase  in average beef prices from
1996 level.  The increase in 1996 was due to the  effect of higher discount
promotional activity over 1995, offset in part by lower commodity costs.

Restaurant wages and related expenses have increased  as  a  percentage  of
sales  during  the  past three years rising from 29.1% in 1995, to 29.4% in
1996, and to 30.3% in  1997.   Wages have increased over this period due to
higher labor rates including the effect of increases in the Federal minimum
wage rates over the past two years.   The  Federal Fair Labor Standards Act
of 1996 mandated an increase from $4.25 per  hour  to  $4.75 per hour which
took  effect  in October 1996, and a second increase in September  1997  to
$5.15 per hour.

Other restaurant  operating  expenses were 25.3% of sales in 1997, compared
to 24.7% in 1996 and 24.5% in  1995.   In  part,  the  increase  in 1997 is
reflective  of  general  inflationary  increases  without  a  corresponding
increase in comparable restaurant sales.  In addition, the Company  added a
significant  number  of  restaurants  through  acquisition during 1997, and
therefore, expense relationships have been somewhat  higher  as  these  new
units become fully integrated into the business of the Company.

Administrative  expenses  increased  approximately  $2.7  million, and as a
percentage of sales, were 4.4% in 1997 compared to 4.3% and  4.6%  in  1996
and  1995,  respectively.   This  increase  reflects  the addition of field
supervision and corporate support as a result of the 1997  addition of over
100 restaurants and to support the Company's plans for continued expansion.

EBITDA.   Earnings  before  interest,  taxes, depreciation and amortization
("EBITDA") increased from $31.5 million  in  1996 to $32.5 million in 1997.
As a percentage of sales, EBITDA decreased from  13.1%  in 1996 to 11.0% in
1997 as a result of the factors discussed above.  EBITDA  was $30.9 million
in 1995.

Depreciation  and  amortization.  Depreciation and amortization  was  $15.1
million in 1997, $11.0  million  in  1996 and $11.3 million in 1995.  These
costs  increased  $4.1  million in 1997 which  was  due  primarily  to  the
increase in goodwill and  purchased intangibles resulting from the purchase
method of accounting for newly acquired restaurants.

Interest expense.  Interest  expense  was $15.6 million in 1997 compared to
$14.2  million  and  $14.5 million in 1996  and  1995,  respectively.   The
increase in 1997 was the  result  of  higher  average debt balances brought
about by the funding of the restaurants that were acquired during the year.

Income Taxes.  The provision for income taxes of  $655,000 in 1997 resulted
in  an  effective  income tax rate of 23.2%.  The low  effective  rate  was
primarily attributable  to the favorable settlement of a Federal income tax
claim that the Company has  had outstanding for several years.  As a result
of the settlement, the Company's  tax provision was reduced by $806,000 and
the  Company  recorded  interest  income  of  $983,000.   The  higher  than
anticipated effective tax rate in 1996  was  principally  the result of the
$.5  million  of costs associated with a change of control of  the  Company
which  are not deductible.   The  income  tax  benefit  reflected  in  1995
resulted  from  the  reversal of a valuation allowance for the net deferred
income tax asset associated  with  the  Company's  tax  loss carryforwards.
This was based on a review of expected future earnings which concluded that
it  was  more  likely  than  not that the Company would fully  realize  the
benefits of the net operating loss carryforwards.

Liquidity and Capital Resources

The Company does not have significant receivables or inventory and receives
trade credit based upon negotiated  terms  in  purchasing food products and
other supplies.  The Company is able to operate  with a substantial working
capital deficit because (i) restaurant operations  are  conducted on a cash
basis, (ii) rapid turnover allows a limited investment in  inventories, and
(iii) cash from sales is usually received before related accounts for food,
supplies  and  payroll  become due.  The Company's cash requirements  arise
primarily  from the need to  finance  the  opening  and  equipping  of  new
restaurants,  for ongoing capital reinvestment in its existing restaurants,
for the acquisition  of  existing  Burger  King  restaurants,  and for debt
service.

The  Company's  1997  operations  generated approximately $19.9 million  in
cash, compared to $14.3 million during 1996 and $16.7 million in 1995.

Capital expenditures represent a major  investment of cash for the Company,
and totaled $96.7 million, $23.2 million  and  $8.5 million, 1997, 1996 and
1995, respectively.  The 1997 capital expenditures  included  $78.5 million
for the acquisition of 93 existing Burger King restaurants (including  real
estate  for  3  of  the  restaurants),  as  well  as  $9.7  million for the
construction  of  15  new  restaurants.   The  balance of the 1997  capital
expenditures  went  toward restaurant capital maintenance  and  remodeling.
During 1997, the Company  completed  23  remodels  in  conjunction with the
renewal of franchises that were scheduled to expire between  1997 and 1999.
During the past three years, the Company has completed 68 remodels.

In 1998, the Company anticipates capital expenditures of approximately  $35
million  not  including  the  cost of any acquisitions that the Company may
make.  These amounts include approximately  $15 million for construction of
new  units  (including  certain real estate) and  $8  million  for  ongoing
reinvestment and remodeling  of  its  existing  restaurants.  The Company's
1998  reinvestment and remodeling spending is anticipated  to  be  somewhat
higher  than  historical levels as the Company invests in the 1997 acquired
units to bring  them up to the Company's operating standards.  In 1998, the
Company  also  plans   to   upgrade   its   restaurant   point-of-sale  and
in-restaurant support systems, and has also undertaken an  upgrade  of  its
headquarters  information  and decision support systems.  The total cost of
these systems projects is estimated  to  be $11 to 12 million over the next
12 to 18 months.

On  March  27,1997,  Madison  Dearborn Capital  Partners  acquired  283,334
shares, and senior management acquired  10,810  shares, of Carrols Holdings
which resulted in the Company receiving net proceeds  of $30.4 million.  On
May  12, 1997  the Company also entered into a new credit  agreement  which
established  a  $25  million  Revolving  Loan  Facility  and a $127 million
Advance Loan Facility which is available to fund the cost  of acquisitions.
During 1997, the Company used the net proceeds from the sale of stock along
with  borrowings  under its credit facility to fund the acquisition  of  93
Burger King restaurants totaling $79.6 million.

The  sale and leaseback  of  15  restaurant  properties  in  December  1997
generated  $13  million,  the proceeds of which were used to reduce amounts
which had been borrowed under the Company's credit agreement.  In 1997, the
Company also paid dividends  to  Holdings  totaling  $4.3  million  for the
payment  by  Holdings  of  dividends  on  its  preferred  stock and for the
redemption  of  $3.6  million  of  the  preferred  stock.   The balance  of
Holdings'  preferred  stock  is  scheduled  for  mandatory redemption  with
payments of $1.8 million in December 1998 and December 1999.

At  December 31, 1997, the Company had $21.5 million  available  under  its
Revolving Loan facility after reserving $1.0 million for a letter of credit
guaranteed  by  the facility, and $64.3 million available under its Advance
Loan  Facility.   While   interest   is   accrued   monthly,   payments  of
approximately  $6.2  million  for  interest on the Company's 11.50%  Senior
Notes are made each February 15th and August 15th thus creating semi-annual
cash needs.  The Company believes that its operations and capital resources
will provide sufficient cash availability  to  cover  its  working capital,
capital expenditures, planned development and debt service requirements for
the foreseeable future.

The  Company's  loan  agreements  impose limitations on certain  restricted
payments, which include dividends and  preferred  stock  redemptions.  As a
result  of the 1997 investments by Madison Dearborn and senior  management,
the Company  has  sufficient  unrestricted amounts to enable it to make the
required  payments  to  satisfy preferred  stock  dividend  and  redemption
requirements.

Inflation

The inflationary factors  which  have  historically  affected the Company's
results of operations include increases in food and paper  costs, labor and
other  operating  expenses.   Wages paid in the Company' s restaurants  are
impacted by changes in the Federal  or  state  minimum  hourly  wage  rate.
Accordingly,  changes  in  the  Federal  or states minimum hourly wage rate
directly affect the Company's labor cost.    The Company and the restaurant
industry typically attempt to offset the effect  of  inflation, at least in
part,  through  periodic  menu price increases and various  cost  reduction
programs.  However, no assurance can be given that the Company will be able
to offset such inflationary cost increases in the future.

Year 2000

The Company recognizes the  need  to  ensure  its  operations  will  not be
adversely  impacted  by  Year  2000  software  failures.   The  Company  is
addressing this risk to the availability and integrity of financial systems
and  the  reliability  of  operational  systems.   As  discussed above, the
Company  has  projects  underway for the installation of new  point-of-sale
systems in its restaurants and for the replacement of a substantial portion
of its corporate financial and decision support systems.

The primary purpose of these projects is designed to improve the efficiency
of the Company's restaurant and support operations, however, they will also
provide the additional benefit  of  making its systems Year 2000 compliant.
The Company is installing commercially available point-of-sale hardware and
software, and has purchased a suite of financial software applications, all
of which are designed and warranted to be Year 2000 compliant.

ITEM 7A.        QUANTITATIVE  AND  QUALTITATIVE  DISCLOSURES  ABOUT  MARKET
RISKS

                Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Index to Financial Statements attached hereto is set forth in Item 14.
@@ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On August 12, 1997 the registrant dismissed  the  accounting firm of Arthur
Andersen LLP ("Arthur Andersen") as their principal  audit  accountant  and
has engaged the services of Coopers & Lybrand, L.L.P. ("Coopers & Lybrand")
as their principal accountants.
Arthur  Andersen were the principal audit accountants during the year ended
December  31,  1996  and  their  report on the financial statements for the
period  ended December 31, 1996 did  not  contain  an  adverse  opinion  or
disclaimer  of  opinion  nor were financial statement opinions qualified or
modified  as  to uncertainty,  as  to  audit  scope  or  as  to  accounting
principles.
There have been no disagreements on any matters of accounting principles or
practices, financial  statement  disclosure  or auditing scope of procedure
with the accounting firm of Arthur Andersen for the most recent year or any
subsequent interim period.

PART III
ITEM 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Directors and Executive Officers
The Company's Directors and executive officers are:

Name
Age
Position with the Company
Alan Vituli
56
Chairman of the Board and Chief Executive Officer
Daniel T. Accordino
47
President, Chief Operating Officer and Director
Paul R. Flanders
41
Vice President-Finance and Treasurer
Timothy J. LaLonde
41
Vice President-Controller
Richard H. Liem
44
Vice President-Financial Operations
Joseph A. Zirkman
37
Vice President, General Counsel and Secretary



Steven Barnes
49
Vice President-Regional Director
Michael A. Biviano
41
Vice President-Regional Director
Joseph W. Hoffman
35
Regional Director
David R. Smith
48
Vice President-Regional Director
James E. Tunnessen
43
Vice President-Regional Director
Richard L. Verity
41
Vice President-Regional Director



Benjamin D. Chereskin
39
Director
James M. Conlon
30
Director
David J. Mathies, Jr.
50
Director
C. Ronald Petty
52
Director
Robin P. Selati
32
Director
Clayton E. Wilhite
52
Director
Certain  biographical  information  regarding  each  current  Director  and
executive officer of the Company is set forth below:
Mr. Vituli has been Chairman of the Board of Carrols  since  1986 and Chief
Executive Officer since March 1992. He is also a director and  Chairman  of
the  Board  of Holdings.  Between 1983 and 1985, Mr. Vituli was employed by
Smith Barney,  Harris  Upham  &  Co.,  Inc.  as  a  senior  vice  president
responsible  for real estate  transactions.  From 1966 until joining  Smith
Barney, Mr. Vituli  was  associated  with  the accounting firm of Coopers &
Lybrand, first as an employee and the last ten  years  as  a partner. Among
the positions held by Mr. Vituli at Coopers & Lybrand was national director
of mergers and acquisitions. Prior to joining Coopers & Lybrand, Mr. Vituli
was employed in a family owned restaurant business.  Mr. Vituli also serves
as a Director on the Board of Directors of Pollo Tropical, Inc.
Mr. Accordino has been President, Chief Operating Officer and a Director of
Carrols  since  February 1993.  Prior thereto, he served as Executive  Vice
President-Operations  of  Carrols  from  December  1986  and as Senior Vice
President from April 1984.  From 1979 to April 1984 he was  Vice  President
responsible  for  restaurant  operations  of the Company, having previously
served as the Company's Assistant Director  of  Restaurant Operations.  Mr.
Accordino has been employed by the Company since 1973.
Mr.  Flanders  has been Vice President-Finance and  Treasurer  since  April
1997.  Prior to  joining Carrols he was Vice President-Corporate Controller
of Fay's Incorporated  from 1989 to 1997, and Vice President-Controller for
Computer  Consoles,  Inc.  from  1982  to  1989.   Mr.  Flanders  was  also
associated with the accounting firm of Touche Ross & Co. from 1977 to 1982.
Mr. LaLonde has been Vice  President-Controller  since July 1997.  Prior to
joining  Carrols  he was a Controller at Fay's Incorporated  from  1992  to
1997.  Prior to that he was a Senior Audit Manager with the accounting firm
of Deloitte & Touche LLP having been associated with that firm beginning in
1978.
Mr. Liem became Vice President-Financial Operations in May 1994.  Prior  to
joining Carrols Mr.  Liem  was  a  Senior Audit Manager with the accounting
firm of Price Waterhouse.  Mr. Liem  was with Price Waterhouse beginning in
1983.
Mr. Zirkman became Vice President and General Counsel of Carrols in January
1993.  He was appointed Secretary of the Company in February 1993. Prior to
joining Carrols, Mr. Zirkman was an associate  with  the  New York City law
firm of Baer Marks & Upham beginning in 1986.
Mr. Barnes is Vice President-Regional Director of Carrols.   He  has been a
Vice  President  since  February 1997 and a Regional Director of Operations
since   1993.    Prior   to  joining   Carrols,   Mr.   Barnes   was   Vice
President-Operations of Snapps Restaurants, Inc. from 1989 to 1993.
Mr. Biviano is Vice President-Regional  Director  of  Carrols.  He has been
Regional  Director  of  Operations  since  October 1989, having  served  as
District Supervisor from December 1983 to October  1989.   Mr.  Biviano has
been employed by the Company since 1973.
Mr.  Hoffman  has  been Regional Director of Carrols since July 1997.   Mr.
Hoffman joined the Company  in 1993 in connection with one of the Company's
acquisitions and served in the capacity of District Supervisor from 1993 to
1997.  Prior to 1993 he was in  a  similar  capacity  with  Community  Food
Service, Inc.
Mr.  Smith  is  Vice  President-Regional  Director of Carrols.  He has been
Regional  Director  of Operations since 1984,  having  served  as  District
Supervisor from 1975  to  1984.  Mr. Smith has been employed by the Company
since 1972.
Mr. Tunnessen is Vice President-Regional  Director of Carrols.  He has been
Regional  Director  of  Operations  since August  1988,  having  served  as
District  Supervisor from 1979 to August  1988.   Mr.  Tunnessen  has  been
employed by the Company since 1972.
Mr. Verity has been Vice President-Regional Director since August 1997 when
he joined the  Company  in  conjunction with the Company's acquisition of a
group of 63 restaurants.  Mr.  Verity was previously with Resser Management
Corp. from 1986 to 1997 and held the position of Executive Vice President.
Mr. Chereskin has served as a Director  since  March  1997.   He has been a
Vice  President of Madison Dearborn Capital Partners since co-founding  the
firm in  1993.   Prior to that Mr. Chereskin was with First Chicago Venture
Capital  for nine years.   Mr.  Chereskin  also  serves  on  the  Board  of
Directors  of  Beverages  &  More, Inc., The Cornerstone Investments Group,
Inc., Tuesday Morning Corporation and National Wholesale Liquidators, Inc.
Mr. Conlon has served as a Director  since  February  1998.  Since 1992, he
has held the position of Managing Director-Merchant Banking, USA for Dilmun
Investments,  Inc.   From 1989 to 1992 Mr. Conlon was a securities  analyst
for TIAA-CREF.
Mr. Mathies has served  as  a  Director  of Carrols since April 1996. Since
1988, Mr. Mathies has been President of Dilmun Investments, Inc.  From 1971
to 1988, he was employed by Mellon Bank, where he was Head of their Pension
Management Group, providing investment management services to middle market
clients.
Mr. Petty has served as a Director of Carrols  since  July 1997.  Mr. Petty
has been the Chairman, Chief Executive and President of  Peter  Piper, Inc.
since  November  1996.   Prior  to  joining Peter Piper, Mr. Petty was  the
Executive Vice President of Flagstar  Companies,  Inc.  and  President  and
Chief Executive Officer of Denny's.  Before that he served as President and
Chief  Executive  of  Miami  Subs  Corporation and held a variety of senior
positions  with  Burger  King Corporation  including  President  and  Chief
Operating Officer of its U.S. and International division.
Mr. Selati has served as a  Director  since March 1997.  Since 1993, he has
been associated with Madison Dearborn Capital  Partners.   Prior to 1993 he
was  associated  with Alex Brown & Sons Incorporated in the consumer/retail
investment banking  group.   Mr.  Selati  also  serves as a Director on the
Board of Directors of Peter Piper, Inc., Tuesday  Morning  Corporation, and
National Wholesale Liquidators, Inc.
Mr. Wilhite has served as a Director since July 1997.  Since  1996  he  has
been  the  Chairman of Thurloe Holdings, L.L.C..  Prior to 1996 he was with
D'Arcy Masius  Benton  &  Bowles,  Inc.  (DMB&B)  having served as its Vice
Chairman from 1995 to 1996, President of DMB&B/North  America  from 1988 to
1995, and as Chairman and Managing Director of DMB&B/St. Louis from 1985 to
1988.   Mr. Wilhite also serves as a Director on the Board of Directors  of
Pollo Tropical, Inc.
All Directors  hold office until the next annual meeting of stockholders or
until their successors  have  been  elected  and  qualified.  The executive
officers  of  the  Company  are  chosen  by  the  Board  and  serve  at its
discretion.   All  Directors of Carrols Corporation also serve as Directors
for Carrols Holdings Corporation.
ITEM 11.        EXECUTIVE COMPENSATION
The following tables  set  forth  certain  information for the fiscal years
ended December 31, 1997, 1996 and 1995 for the  Chief Executive Officer and
the next four most highly compensated executive officers of the Company who
were serving as executive officers at December 31,  1997  and  whose annual
compensation exceeded $100,000.  No other executive officers received total
compensation  in  excess of $100,000 in 1997.  Stock option data refers  to
the stock options of Carrols Holdings Corporation.
Summary Compensation Table




Long-Term


Compensation

Annual Compensation
Securities



(a)
  Underlying
Name and Principal Position
Year
Salary
Bonus
Options (#)
Alan Vituli
1997
$392,758
$          -
72,830
  Chairman of the Board and
1996
363,160
128,210
-
  Chief Executive Officer
1995
352,632
  245,000
20,000





Daniel T. Accordino
1997
288,386
-
31,479
  President, Chief Operating
1996
258,943
  91,778
-
  Officer and Director
1995
250,751
150,322
10,000





Joseph A. Zirkman
1997
120,436
-
1,118
  Vice President, General
1996
115,288
40,934
-
  Counsel and Secretary
1995
105,249
41,995
3,000





Paul R. Flanders
1997
105,925
-
1,500
  Vice-President, Finance
1996
-
-
-
  and Treasurer
1995
-
-
-





Richard H. Liem
1997
103,160
-
500
  Vice President,
1996
94,750
30,288
-
  Financial Operations
1995
93,092
37,153
3,000
        @@
(a) The Company provides  bonus compensation to Executive Officers based on
an  individual's  achievement  of  certain  specified  objectives  and  the
Company's achievement of specified increases in shareholder value.

Option Grants in Last Fiscal Year


Number of Securities Underlying Options
% of Total Options Granted to Employees

Exercise
 Price (Price per



Expiration
(c)
Potential Realizable  Value  at  Assumed  Rates  of  Stock Appreciation for
Option Term
Name
Granted
in 1997
Share
Date
5%
10%
Alan Vituli (a)
 72,830
61.1%
$ 101.76
3/26/2007
$5,429,590
$13,035,600
Daniel T. Accordino (a)
31,479
26.4%
101.76
3/26/2007
2,346,808
5,634,322
Joseph A. Zirkman (a)
368
 .3%
101.76
3/26/2007
27,435
65,867
(b)
750
 .6%
110.00
6/9/2007
51,884
131,484
Paul R. Flanders (b)
1,500
1.3%
110.00
6/9/2007
103,768
262,968
Richard H. Liem (b)
500
 .4%
110.00
6/9/2007
34,589
87,656

(a)  Stock option grants to Messrs. Vituli, Accordino  and  Zirkman include
29,480, 2,579 and 368 shares, respectively, granted at the time  of  the MD
Investment  under  the  Vituli  Non-Plan  Option  Agreement,  the Accordino
Non-Plan  Option  Agreement  and  the  Zirkman  Non-Plan  Option Agreement,
respectively.  At the time of the MD Investment, stock option  grants under
the 1996 Long-Term Incentive Plan were also made for 43,350 shares  to  the
Vituli  Family  Trust  in  exchange  for  options that it was holding.  Mr.
Accordino  was  also  granted  options for 28,900  shares  under  the  1996
Long-Term Incentive Plan.  These  plans,  as  well  as  the  terms  of  the
aforementioned grants, are described in detail separately in this report.
(b)  Stock option grants to Messrs. Zirkman, Flanders and Liem include 750,
1,500,  and  500  shares,  respectively,  granted  under the 1996 Long-Term
Incentive Plan.  These options become exercisable at  the  rate  of 25% per
year beginning on December 31, 1997.
(c)  Potential realizable value is based on an assumption that the price of
Holdings' common shares appreciate at 5% and 10% annually (compounded) from
the  date  of  grant  until  the  end  of  the ten year option term.  These
calculations are based on requirements promulgated  by  the  Securities and
Exchange  Commission  and  are  not  intended  to forecast possible  future
appreciation of the stock price.

Compensation Committee Interlocks and Insider Participation
During the last fiscal year, no executive officer  of the Company served as
a director of or member of a compensation committee of any entity for which
any of the persons serving on the Board of Directors  of  the Company or on
the  Compensation  Committee  of  the Board of Directors (the "Compensation
Committee")  is  an  executive  officer.   The  Compensation  Committee  is
comprised of Messrs. Chereskin, Mathies and Wilhite.
Board of Directors
Directors Compensation.  Directors who are Company employees do not receive
any additional compensation for serving  as  directors.   Directors who are
not  employees  of  the  Company  receive a fee of $15,000 per annum.   All
Directors are reimbursed for all reasonable  expenses  incurred  by them in
acting as Directors, including as members of any committee of the  Board of
Directors.
Liability  Limitation.  As permitted under the Delaware General Corporation
Law, the Company's  Restated  Certificate  of Incorporation provides that a
Director of the Company will not be personally liable to the Company or its
stockholders for monetary damages for breach  of  a  fiduciary duty owed to
the  Company or its stockholders. By its terms and in accordance  with  the
laws of  the  State of Delaware, however, this provision does not eliminate
or limit the liability  of  a Director of the Company (i) for any breach of
the Director's duty of loyalty  to  the  Company or  its stockholders, (ii)
for  an  act or omission committed in bad faith  or  involving  intentional
misconduct  or  a  knowing violation of law, (iii) for any transaction from
which the Director derived  an  improper  personal  benefit  or (iv) for an
improper declaration of dividends or purchase of the Company's securities.
Indemnification.   The  Company's  Restated  Certificate  of  Incorporation
provides that the Company shall indemnify its Directors and officers to the
fullest extent permitted by Delaware law.
Description of Plans
Employee  Savings  Plan.   The  Company  offers its salaried employees  the
option to participate in the Carrols Corporation Corporate Employee Savings
Plan (the "Savings Plan") which is qualified as a profit-sharing plan.   In
accordance  with the Savings Plan, Carrols  matches  up  to  $1,060  of  an
employee's contributions  by contributing $0.50 for each dollar contributed
by the employee.  Employees  are  fully  vested in their own contributions;
employees become vested in Carrols' contributions  beginning  in the fourth
year of service, and are fully vested after seven years of service  or upon
retirement  at  age  65 with five years' service, death, permanent or total
disability.  Benefits  may  be  paid  out upon the occurrence of any of the
foregoing events in a single cash lump  sum,  in periodic installments over
not  more  than  15  years  or  in the form of an annuity.  The  employee's
contributions may be withdrawn at  any  time,  subject  to  restrictions on
future  contributions.  Carrols'  matching  contributions may be  withdrawn
under certain conditions of financial necessity  or  hardship as defined in
the Savings Plan.
Bonus Plans. Carrols has cash bonus plans designed to  promote  and  reward
excellent  performance  by providing employees with incentive compensation.
Key senior management executives of each operating division can be eligible
for  bonuses  equal  to varying  percentages  of  their  respective  annual
salaries determined by the performance of the Company and the division.
1996 Long-Term Incentive Plan.  In connection with the MD Closing, Holdings
adopted the Carrols Holdings Corporation 1996 Long-Term Incentive Plan (the
"1996 Plan") pursuant  to  which  the  Company  may  grant "Incentive Stock
Options"  (as  defined  under  Section 422 of the Internal  Revenue  Code),
nonqualified stock options, stock  appreciation  rights,  restricted stock,
performance shares and performance units and other stock-based  awards (the
foregoing collectively "Awards") to certain officers and employees  of  the
Company  and  its  subsidiaries.   The 1996 Plan replaced a prior long-term
incentive plan which was adopted December  26,  1996  (the "Prior Incentive
Plan").  The 1996 Plan is designed to advance the interests of Holdings and
the  Company  by  providing an additional incentive to attract  and  retain
qualified  and  competent   persons  through  the  encouragement  of  stock
ownership or stock appreciation rights in Holdings.
The 1996 Plan permits the Company's  Compensation  Committee to grant, from
time to time, options to purchase an aggregate of up  to  106,250 shares of
Common Stock.  The vesting periods for awards and the expiration  dates for
exercisability of Awards granted under the 1996 Plan are determined  by the
Compensation  Committee; however, the exercise period for an option granted
under the 1996  Plan  may  not exceed ten years from the date of the grant.
The Compensation Committee is  authorized  to  grant options under the 1996
Plan  to  all  eligible  employees  of  the Company and  its  subsidiaries,
including executive officers and directors  (other  than  outside Directors
and members of the Compensation Committee).
The  option exercise price per share of any option granted under  the  1996
Plan is  determined  by  the  Compensation  Committee; however, in no event
shall the option price per share of any option  intended  to  qualify as an
Incentive  Stock  Option  be less than the fair market value of the  Common
Stock on the date such option  is granted.  Payment of such option exercise
price shall be made (i) in cash,  (ii) by delivering shares of Common Stock
already  owned  by  the  holder of such  options,  (iii)  by  delivering  a
promissory note payable over  a  three  year period and bearing interest at
the rate provided under Section 1274(d) of  the  Internal  Revenue  Code of
1986,  as amended from time to time or (iv) by a combination of any of  the
foregoing,  in  accordance  with the terms of the 1996 Plan, the applicable
stock option agreement and any  applicable  guidelines  of the Compensation
Committee in effect at the time.
Pursuant to the 1996 Plan, in the event of a Change of Control  (as defined
in  the 1996 Plan), any or all Stock Options (as defined in the 1996  Plan)
and  Stock  Appreciation  Rights  (as  defined  in  the  1996  Plan)  still
outstanding   shall,  notwithstanding  any  contrary  terms  of  the  Award
Agreement (as defined  in the 1996 Plan), accelerate and become exercisable
in full at least ten days  prior  to (and shall expire on) the consummation
of such Change of Control, on such conditions as the Compensation Committee
shall determine, unless the successor  corporation  assumes the outstanding
Stock  Options  or  Stock Appreciation Rights or substitutes  substantially
equivalent options.
Pursuant to the 1996 Plan, in the event that the holder of an option issued
pursuant to the 1996  Plan  elects to pay the exercise price of such option
by delivering a promissory note,  such  promissory  note  may be either (i)
unsecured  and  fully  recourse against the holder of such option  or  (ii)
nonrecourse but secured  by  the  shares of Common Stock being purchased by
such exercise and by other assets having  a  fair market value equal to not
less than forty percent of the exercise price of such option and, in either
event, such note shall mature on the fifth anniversary of the date thereof.
In addition, pursuant to the 1996 Plan, in the event of a Change of Control
(as defined in the 1996 Plan) during the term of employment with Carrols of
a holder of an option issued under the 1996 Plan,  the  portion of any such
option that is not vested shall vest and become exercisable  in full on the
date of such Change of Control.  In addition, as soon as practicable but in
no  event  later  than  thirty days prior to the occurrence of a Change  of
Control, the Compensation  Committee  shall  notify any holder of an option
granted under the 1996 Plan of such Change of  Control.   Further,  upon  a
Change  of  Control  that  qualifies as an Approved Sale (as defined in the
1996 Plan) in which the outstanding  Common Stock is converted or exchanged
for or becomes a right to receive any  cash,  property  or securities other
than Illiquid Consideration (as defined in the 1996 Plan),  (i) each option
granted under the 1996 Plan shall become exercisable solely for  the amount
of  such cash, property or securities that the holder of such option  would
have  been  entitled to had such option been exercised immediately prior to
such event (ii)  the holder of such option shall be given an opportunity to
either (A) exercise  such  option prior to the consummation of the Approved
Sale and participate in such  sale  as a holder of Common Stock or (B) upon
consummation of the Approved Sale, receive  in  exchange  for  such  option
consideration  equal  to  the amount determined by multiplying (1) the same
amount of consideration per  share  of Common Stock received by the holders
of Common Stock in connection with the  Approved  Sale  less  the  exercise
price  per share of Common Stock of such option to acquire Common Stock  by
(2) the  number  of  shares of Common Stock represented by such option; and
(iii) to the extent such  option  is not exercised prior to or simultaneous
with such Approved Sale, any such option shall be canceled.
Description of Employment Agreements
Vituli Employment Agreement.  On March  27,  1997 in connection with the MD
Closing, the Company entered into a Second Amended  and Restated Employment
Agreement  (the  "Vituli  Employment  Agreement") with Alan  Vituli,  which
amended and restated that certain Amended and Restated Employment Agreement
dated April 3, 1996 between the Company  and  Mr.  Vituli.  Pursuant to the
Vituli Employment Agreement, Mr. Vituli will continue  to serve as Chairman
of  the  Board  and  Chief  Executive Officer of the Company.   The  Vituli
Employment Agreement shall be for an initial term of four years, commencing
on March 27, 1997 and will be  subject to automatic renewals for successive
one-year terms unless either the  Company or Mr. Vituli elects not to renew
by giving written notice to the other  at  least 90 days before a scheduled
expiration date.  Pursuant to the Vituli Employment  Agreement,  Mr. Vituli
will  receive  a  base  salary  of $400,000 for the first year of the term,
which amount increases annually by  at  least $25,000 subject to additional
increases that may be authorized by the Compensation  Committee.   Pursuant
to  the  Vituli  Employment  Agreement,  Mr. Vituli will participate in the
Executive  Bonus  Plan of the Company and any  stock  option  plan  of  the
Company applicable to executive employees.  The Vituli Employment Agreement
also will require that  the  Company  is  responsible  for  maintaining the
premium payments on a split-dollar life insurance policy on the life of Mr.
Vituli providing a death benefit of $1.5 million payable to an  irrevocable
trust designated by Mr. Vituli.
Accordino Employment Agreement.   On March 27, 1997 in connection  with the
MD  Closing,  the  Company  entered  into  a  Second  Amended  and Restated
Employment Agreement (the "Accordino Employment Agreement") with  Daniel T.
Accordino,  which  amended  and  restated that certain Amended and Restated
Employment  Agreement dated April 3,  1996  between  the  Company  and  Mr.
Accordino.  Pursuant  to  the Accordino Employment Agreement, Mr. Accordino
will continue to serve as President  and  Chief  Operating  Officer  of the
company.   The  Accordino Employment Agreement shall be for an initial term
of four years, commencing  on  March  27,  1997  and  will  be  subject  to
automatic  renewal  for successive one-year terms unless either the Company
or Mr. Accordino elects  not to renew by giving written notice to the other
at least 90 days before a  scheduled  expiration  date.   Pursuant  to  the
Accordino Employment Agreement, Mr. Accordino will receive a base salary of
$300,000 for the first year of the term, which amount increases annually by
at  least $20,000 subject to additional increases that may be authorized by
the  Compensation   Committee.    Pursuant   to  the  Accordino  Employment
Agreement, Mr. Accordino will participate in the  Executive  Bonus  Plan of
the  Company  and  any  stock  option  plan  of  the  Company applicable to
executive employees.  The Accordino Employment Agreement  also will require
that the Company is responsible for maintaining the premium  payments  on a
split-dollar life insurance policy on the life of Mr. Accordino providing a
death  benefit  of $1 million payable to an irrevocable trust designated by
Mr. Accordino.
Option Agreements Pursuant to Holdings Stock Option Plans
Vituli Plan Option  Agreement.  On  December 30, 1996 (during the Company's
1997 fiscal year), pursuant to the Atlantic  Transaction,  Holdings granted
to  Alan  Vituli, under the 1996 Plan, an option (the "Vituli  Option")  to
purchase 43,350  shares  of  Common  Stock.   The  Vituli  Option  (i)  was
immediately  exercisable with regard to 15,300 shares of Common Stock at an
exercise price  of  $110.00 per share and (ii) was to become exercisable on
June 1, 1997 with regard  to  (a)  15,300  shares  of  Common  Stock  at an
exercise  price  of $130.00 per share and (b) 12,750 shares of Common Stock
at an exercise price of $140.00 per share.  On January 22, 1997, Mr. Vituli
contributed these options to the Vituli Family Trust for the benefit of his
children.
In connection with  the  MD Closing, Holdings granted an option to purchase
43,350 shares of Common Stock  under  the  1996  Plan  in  exchange for the
options  held  by  the Vituli Family Trust (the "New Vituli Plan  Option").
The Vituli Family Trust  agreed  to  reduce the exercise price to $101.7646
per share.  The New Vituli Plan Option  shall  (i) have a term of ten years
from the date of grant, shall (ii) become exercisable  on the date of grant
with  regard  to  15,300  shares  of  Common  Stock and (iii) shall  become
exercisable (a) on December 31, 1997 with regard  to 5,610 shares of Common
Stock,  (b)  on  December 31, 1998 with regard to 5,610  shares  of  Common
Stock, (c) on December 31, 1999 with regard to 5,610 shares of Common Stock
and (d) on December 31, 2000 with regard to 11,220 shares of Common Stock.
Accordino Plan Option Agreement. On December 30, 1996 (during the Company's
1997 fiscal year),  pursuant  to the Atlantic Transaction, Holdings granted
to Daniel T. Accordino, under the  1996  Plan,  an  option  (the "Accordino
Option")  to purchase 28,900 shares of Common Stock.  The Accordino  Option
(i) was immediately  exercisable  with  regard  to  10,200 shares of Common
Stock  at an exercise price of $110.00 per share and (ii)  was  to  becomes
exercisable on December 31, 1997 with regard to (a) 10,200 shares of Common
Stock at  an  exercise  price  of $130.00 per share and (b) 8,500 shares of
Common Stock at an exercise price of $140.00 per share.
In connection with the MD Closing,  the  Accordino  Option was canceled and
Holdings granted to Mr. Accordino, under the 1996 Plan, an option (the "New
Accordino Plan Option") to purchase 28,900 shares of  Common  Stock  at  an
exercise price of $101.7646 per share.  The New Accordino Plan Option shall
(i)  have  a term of ten years from the date of grant and shall (ii) become
exercisable  on  the  date  of grant with regard to 10,200 shares of Common
Stock and (iii) become exercisable  (a) on December 31, 1997 with regard to
3,740 shares of Common Stock, (b) on December 31, 1998 with regard to 3,740
shares of Common Stock, (c) on December  31,  1999  with  regard  to  3,740
shares  of  Common  Stock and (d) on December 31, 2000 with regard to 7,480
shares of Common Stock.
Other Option Agreements
Vituli Non-Plan Option  Agreement.   In  connection  with  the  MD Closing,
Holdings  granted  to  Mr.  Vituli a nonqualified stock option (the "Vituli
Non-Plan Option") to purchase  29,480 shares of Common Stock at an exercise
price of $101.7646.  The Vituli  Non-Plan  Option  shall have a term of ten
years  from the date of grant and shall become exercisable  in  five  equal
parts on  the  five  consecutive  anniversaries  of the date of grant.  The
Vituli Non-Plan Option will have substantially the  same  terms  as options
issued under the 1996 Plan with respect to (i) the method of payment of the
exercise  price  of  the  Vituli  Non-Plan Option and (ii) the effect of  a
Change in Control (as defined in the  New 1996 Plan) on the Vituli Non-Plan
Option.
Accordino Non-Plan Option Agreement.  In  connection  with  the MD Closing,
Holdings  granted  to  Mr.  Accordino  a  nonqualified  stock  option  (the
"Accordino Non-Plan Option") to purchase 2,579 shares of Common Stock at an
exercise  price of $101.7646.  The Accordino Non-Plan Option shall  have  a
term of ten  years  from  the date of grant and shall become exercisable in
five equal parts on the five  consecutive  anniversaries  of  the  date  of
grant.   The  Accordino  Non-Plan  Option  will have substantially the same
terms as the Vituli Non-Plan Option.
Zirkman Non-Plan Option Agreement.   In connection  with  the  MD  Closing,
Holdings  granted  to  Joseph  A.  Zirkman a nonqualified stock option (the
"Zirkman Non-Plan Option") to purchase  368  shares  of  Common Stock at an
exercise price of $101.7646.  The Zirkman Non-Plan Option shall have a term
of  ten years from the date of grant and shall become exercisable  in  five
substantially equal parts on the five consecutive anniversaries of the date
of grant.   The  Zirkman  Non-Plan  Option will have substantially the same
terms as the Vituli Non-Plan Option.

ITEM 12.        SECURITY  OWNERSHIP  OF   CERTAIN   BENEFICIAL  OWNERS  AND
MANAGEMENT
Principal Stockholders
The  following  tables  set forth the number and percentage  of  shares  of
voting common stock of the  Company  and of Holdings beneficially owned, as
of March 15, 1998, by (i) all persons  known  by  the  Company  to  be  the
beneficial  owners  of  more  than  5%  of the shares of such voting common
stock, (ii) each Director of the Company  who  owns  shares  of such voting
common stock, (iii) each executive officer of the Company included  in  the
Summary  Compensation  Table  above  and  (iv)  all  executive officers and
Directors of the Company as a group.

                          Shares Beneficially Owned (a)@@

Number
Percentage
Stockholders of Carrols Corporation:


Carrols Holdings Corporation
968 James Street
Syracuse, New York 13203
10
100%



Stockholders of Carrols Holdings Corporation:


Atlantic Restaurants, Inc.
566,667
47.8%
Madison Dearborn Capital Partners, L.P.
283,333
23.9%
Madison Dearborn Capital Partners, L.P. II
283,334
23.9%
Executive Officers and Directors:


Alan Vituli (b)
36,633
3.1%
Daniel T. Accordino
15,316
1.3%
Joseph A. Zirkman
385
---
Paul R. Flanders
375
---
Richard H. Liem
125
---
Directors and executive officers of Carrols
  as a group (12 persons)

52,959

4.5%
@@
(a)  As used in this table, "beneficial ownership" means the sole or shared
power  to  vote, or to direct the voting of, a security,  or  the  sole  or
shared investment  power  with respect to a security.  For purposes of this
table, a person is deemed as  of any date to have "beneficial ownership" of
any security that such person has the right to acquire within 60 days after
such date.  The number of shares  shown in the table includes stock options
which are currently exercisable or  exercisable within 60 days to purchase:
26,806 shares held by Mr. Vituli; 14,456  shares held by Mr. Accordino; 262
shares  held by Mr. Zirkman; 375 shares held  by  Mr.  Flanders;  and,  125
shares held by Mr. Liem.
(b)  Includes  20,910  vested  stock options contributed to and held by the
Vituli Family Trust.
ITEM 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None
ITEM 14.        EXHIBITS, FINANCIAL  STATEMENT  SCHEDULES,  AND  REPORTS ON
FORM 8-K
(a)     Financial Statements
CARROLS CORPORATION AND SUBSIDIARIES:
        Page
Opinion of Independent Certified        F-1 to
Public Accountants      F-2
Financial Statements:
Consolidated Balance Sheets     F-3 to
        F-4
Consolidated Statements of Operations   F-5
Consolidated Statements of Stockholder's Deficit        F-6
Consolidated Statements of Cash Flows   F-7 to
        F-8
Notes to Consolidated Financial F-9 to
Statements      F-18
(b)     Financial Statement Schedules
Schedule        Description     Page
CARROLS CORPORATION AND SUBSIDIARIES:
II      Valuation and Qualifying Accounts       F-19
Schedules other than those listed are omitted for the reason that  they are
not  required, not applicable, or the required information is shown in  the
financial statements or notes thereto.
Separate  financial statements of the Company are not filed for the reasons
that (1) consolidated  statements  of  the  Company  and  its  consolidated
subsidiaries  are  filed  and  (2)  the  Company  is primarily an operating
Company  and  all  subsidiaries  included  in  the  consolidated  financial
statements  filed  are wholly-owned, and indebtedness of  all  subsidiaries
included in the consolidated  financial statements to any person other than
the  Company does not exceed 5%  of  the  total  assets  as  shown  by  the
Consolidated Balance Sheet at December 31, 1997.

(c)     Exhibits Required by Item 601 of Regulation S-K
@@
EXHIBIT NUMBER


DESCRIPTION
INCORPORATED BY
REFERENCE
2.1
Purchase and Sale Agreement dated
February  10,  1994  between  Carrols  Corporation,  as  Purchase,  and KIN
Restaurant, Inc., as Seller

Exhibit 2.1 to the Company's 1994 Annual Report on Form 10-K
2.2
Purchase and Sale Agreement dated April 18, 1994 among Carrols Corporation,
as Purchaser, and Riva Development Corporation and John Riva, as Seller

Exhibit 2.2 to the Company's 1994 Annual Report on Form 10-K
2.3
Purchase  and  Sale Agreement dated May 31, 1994 among Carrols Corporation,
as Purchaser, and  Michael  P.  Jones  and  Donald  M. Cepiel, Sr., and the
corporations listed therein

Exhibit 2.3 to the Company's 1994 Annual Report on Form 10-K
2.4
Securities  Purchase  Agreement  dated as of March 6, 1996,  by  and  among
Atlantic   Restaurants,  Inc.,  Carrols   Holdings   Corporation,   Carrols
Corporation and certain Selling Shareholders

Exhibit 2.1  to  the  Company's  current report on Form 8-K filed March 21,
1996
2.5
Deferred Securities Purchase Agreement  dated  as  of  March 6, 1996 by and
among Atlantic Restaurants, Inc., Alan Vituli and Pryor, Cashman, Sherman &
Flynn

Exhibit  2.2 to the Company's current report on Form 8-K  filed  March  21,
1996
3.1
Restated Certificate of Incorporation
Exhibit 3.(3)(a) to the Company's 1987 Annual Report on Form 10-K

3.2
Certificate of Amendment of the Restated Certificate of Incorporation

Exhibit 3.2 to the Company's 1996  Annual Report on Form 10-K

3.3
Restated By-laws
Exhibit 3.(3)(b) to the Company's 1987 Annual Report on Form 10-K

4.1
Indenture  dated  as  of  August  17,  1993 among Holdings, the Company and
Marine Midland Bank, N.A.
Exhibit 4.1 to Amendment No. 3 to the  Company's  Registration Statement on
Form S-1 (Number 3365100) filed August 10, 1993


10.1
First  Amended  and  Restated  Loan Security and Preferred  Stock  Purchase
Agreement  by  and  among  Carrols  Merger  Corporation,  Carrols  Holdings
Corporation and Heller Financial, Inc. dated as of December 22, 1986

Exhibit 10.1 to the Company's 1987 Annual Report on Form 10-K

@@
EXHIBIT NUMBER


DESCRIPTION
INCORPORATED BY
REFERENCE
10.2
Second  Amended  and Restated Loan and  Security  Agreement  by  and  among
Carrols Corporation,  Carrols  Holdings  Corporation  and Heller Financial,
Inc. dated as of September 15, 1992

Exhibit 10.15 to the Company's 1992 Annual Report on Form 10-K
10.3
Senior Subordinated Credit Agreement dated as of September 15, 1992 between
Carrols  Corporation,  Carrols Holdings Corporation and World  Subordinated
Debt Partners, L.P.

Exhibit 10.17 to the Company's 1992 Annual Report on Form 10-K
10.4
Third Amended and Restated  Loan  and  Security  Agreement  by,  and  among
Carrols  Corporation,  Carrols  Holdings  Corporation and Heller Financial,
Inc. dated as of August 9, 1993

Exhibit  10.19 to Amendment No. 2 to the Company's  Form  S-1  Registration
Statement filed August 4, 1993
@@10.5
First Amendment  to  Third Amended and Restated Loan and Security Agreement
by and among Carrols Corporation,  Carrols  Holdings Corporation and Heller
Financial, Inc. dated as of October 27, 1993

The Company's 1993 Annual Report on Form 10-K
10.6
Second Amendment to Third Amended and Restated  Loan and Security Agreement
by and among Carrols Corporation, Carrols Holdings  Corporation  and Heller
Financial, Inc. dated as of March 11, 1994

The Company's 1993 Annual Report on Form 10-K
10.7
Third  Amendment  to Third Amended and Restated Loan and Security Agreement
among  Carrols  Holdings   Corporation,   Carrols  Corporation  and  Heller
Financial, Inc. dated as of May 2, 1994

Exhibit 10.9 to the Company's 1994 Annual Report on Form 10-K
10.8
Fourth Amendment to Third Amended and Restated  Loan and Security Agreement
among  Carrols  Holdings  Corporation,  Carrols  Corporation   and   Heller
Financial, Inc. dated as of December 20, 1994

Exhibit 10.10 to the Company's 1994 Annual Report on Form 10-K
10.9
Supply   Agreement  between  ProSource  Services  Corporation  and  Carrols
Corporation dated April 1, 1994

Exhibit 10.11 to the Company's 1994 Annual Report on Form 10-K
10.10
Fifth Amendment  to  Third Amended and Restated Loan and Security Agreement
among  Carrols  Holdings   Corporation,   Carrols  Corporation  and  Heller
Financing, Inc. dated as of February 22, 1995
Exhibit 10.10 to the Company's 1996  Annual Report on Form 10-K


EXHIBIT NUMBER


DESCRIPTION
INCORPORATED BY
REFERENCE
10.11
Sixth Amendment to Third Amended and Restated  Loan  and Security Agreement
among  Carrols  Holdings  Corporation,  Carrols  Corporation   and   Heller
Financing, Inc. dated as of February 14, 1996
Exhibit 10.11 to the Company's 1996  Annual Report on Form 10-K
10.12
Stock Purchase Agreement dated as of February 25, 1997 by and among Madison
Dearborn  Capital  Partners,  L.P.,  Madison  Dearborn Capital Partners II,
L.P., Atlantic Restaurants, Inc. and Carrols Holdings Corporation

Exhibit 10.12 to the Company's 1996  Annual Report on
Form 10-K
10.13
1994 Regional Directors Bonus Plan
Exhibit 10.19 to the Company's 1994 Annual Report on Form 10-K

10.14
Carrols Corporation Corporate Employee's Savings  Plan  dated  December 31,
1994

Exhibit 10.21 to the Company's 1994 Annual Report on Form 10-K
10.15
Commitment Letter from Texas Commerce Bank National Association  and  Chase
Securities  Inc.  and  accepted  and agreed to by Carrols Corporation as of
January 8, 1997

Exhibit 10.15 to the Company's 1996 Annual Report on Form 10-K
10.16
Escrow  Agreement  dated  as  of  March  6,  1996  by  and  among  Atlantic
Restaurants,  Inc., Bahrain International  Bank  (E.C.),  Carrols  Holdings
Corporation, Carrols  Corporation,  certain  selling  shareholders and Baer
Marks & Upham L.L.P.

Exhibit  2.3 to the Company's Current Report on Form 8-K  filed  March  21,
1996
10.17
Seventh Amendment to Third Amended and Restated Loan and Security Agreement
by and among  Heller  Financial,  Inc.,  Carrols  Holdings  Corporation and
Carrols Corporation dated as of April 3, 1996

Exhibit 10.27 to the Company's current report on Form 8-K filed  April  10,
1996
10.18
Amended  and Restated Employment Agreement dated as of April 3, 1996 by and
between Carrols Corporation and Alan Vituli

Exhibit 10.23  to  the  Company's Current Report on Form 8-K filed on April
10, 1996
10.19
Amended and Restated Employment  Agreement dated as of April 3, 1996 by and
between Carrols Corporation and Daniel T. Accordino

Exhibit 10.24  to the Company's Current  Report  on Form 8-K filed on April
10, 1996
10.20
Carrols Corporation 1996 Long-Term Incentive Plan

Exhibit 10.20 to the Company's 1996  Annual Report on Form 10-K
10.21
Stock Option Agreement dated as of December 30, 1996 by and between Carrols
Corporation and Alan Vituli
Exhibit 10.21 to the Company's 1996  Annual Report on Form 10-K




EXHIBIT NUMBER


DESCRIPTION
INCORPORATED BY
REFERENCE
10.22
Stock Option Agreement dated as of December 30, 1996 by and between Carrols
Corporation and Daniel T. Accordino

Exhibit 10.22 to the Company's 1996  Annual Report on Form 10-K
10.23
Form of Stockholders Agreement by and among Carrols  Holdings  Corporation,
Madison Dearborn Capital Partners, L.P., Madison Dearborn Capital  Partners
II, L.P., Atlantic Restaurants, Inc., Alan Vituli, Daniel T. Accordino  and
Joseph A. Zirkman

Exhibit 10.23 to the Company's 1996  Annual Report on Form 10-K
10.24
Form  of  Registration Agreement by and among Carrols Holdings Corporation,
Atlantic  Restaurants,  Inc.,  Madison  Dearborn  Capital  Partners,  L.P.,
Madison  Dearborn  Capital  Partners  II,  L.P.,  Alan  Vituli,  Daniel  T.
Accordino and Joseph A. Zirkman

Exhibit 10.24 to the Company's 1996  Annual Report on Form 10-K
10.25
Form of Second  Amended  and  Restated  Employment Agreement by and between
Carrols Corporation and Alan Vituli

Exhibit 10.25 to the Company's 1996  Annual Report on Form 10-K
10.26
Form of Second Amended and Restated Employment  Agreement  by  and  between
Carrols Corporation and Daniel T. Accordino

Exhibit 10.26 to the Company's 1996  Annual Report on Form 10-K
10.27
Form of Carrols Holdings Corporation 1996 Long-Term Incentive Plan

Exhibit 10.27 to the Company's 1996  Annual Report on Form 10-K
10.28
Form  of Stock Option Agreement by and between Carrols Holdings Corporation
and Alan Vituli

Exhibit 10.28 to the Company's 1996  Annual Report on Form 10-K
10.29
Form of  Stock Option Agreement by and between Carrols Holdings Corporation
and Daniel T. Accordino
Exhibit 10.29 to the Company's 1996  Annual Report on Form 10-K

10.30
Form of Unvested  Stock  Option  Agreement  by and between Carrols Holdings
Corporation and Alan Vituli

Exhibit 10.30 to the Company's 1996  Annual Report on Form 10-K
10.31
Form  of Unvested Stock Option Agreement by and  between  Carrols  Holdings
Corporation and Daniel T. Accordino
Exhibit 10.31 to the Company's 1996  Annual Report on Form 10-K
10.32
Form of  Unvested  Stock  Option  Agreement by and between Carrols Holdings
Corporation and Joseph A. Zirkman

Exhibit 10.32 to the Company's 1996  Annual Report on Form 10-K


EXHIBIT NUMBER


DESCRIPTION
INCORPORATED BY
REFERENCE
10.33
First Amendment to the Stock Purchase Agreement dated March 27, 1997 by and
among Carrols Holdings Corporation,  Atlantic  Restaurants,  Inc.,  Madison
Dearborn  Capital Partners, L.P. and Madison Dearborn Capital Partners  II,
L.P.

Exhibit 10.38  to  the Company's current report on Form 8-K filed March 27,
1997
10.34
Purchase and Sale Agreement  dated  as  of  January 15, 1997 by and between
Carrols Corporation, as Purchaser, Omega Services,  Inc.  as Seller and Mr.
Harold W. Hobgood as Omega's Agent.

Exhibit 10.39 to the Company's current report on Form 8-K filed  March  27,
1997
10.35
Purchase  and  Sale  Agreement  dated as of January 15, 1997 by and between
Carrols Corporation, as Purchaser,  Omega  Services, Inc. as Seller and Mr.
Harold W. Hobgood as Omega's Agent.

Exhibit 10.40 to the Company's current report  on  Form 8-K filed March 27,
1997
10.36
Purchase Agreement dated as of July 7, 1997 among Carrols  Corporation,  as
Purchaser,  and  the  individuals  and  trusts listed on Exhibit A attached
thereto,  as Sellers, the individuals and  entities  listed  on  Exhibit  B
attached thereto,  as Affiliated Real Property Owners, and Richard D. Fors,
Jr. And Charles J. Mund, as the Seller's representatives

Exhibit 10.41 to the  Company's current report on Form 8-K filed August 20,
1997
16.1
Letter re: change in certifying accountant

Exhibit 16.1 to the Company's 1996  Annual Report on Form 10-K

16.2
Letter re: change in certifying accountant
Exhibit 16.1 to the Company's  current  report on Form 8-K filed August 15,
1997

22.1
Subsidiaries of the Registrant:

Carrols J.G. Corp., Carrols Realty Holdings  Corp., Carrols Realty I Corp.,
Carrols Realty II Corp., CDC Theater Properties,  Inc.,  H.N.S. Equipment &
Leasing Corp., Quanta Advertising Corp., Confectionery Square Corp., Jo-Ann
Enterprises, Inc.

27
Financial Data Schedule


Reports on Form 8-K - No current reports on Form 8-K  were filed during the
quarter ended December 28, 1997.

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  on  the
25th day of March, 1998.
CARROLS CORPORATION
BY:     /s/ Alan Vituli
        Alan Vituli, Chairman 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.

SIGNATURE       TITLE   DATE
Alan Vituli
(Alan Vituli)   Director, Chairman and Chief
Executive Officer       March 25, 1998

Daniel T. Accordino
(Daniel T. Accordino)   Director, President and Chief
Operating Officer       March 25, 1998

Benjamin D. Chereskin
(Benjamin D. Chereskin) Director        March 25, 1998

James M. Conlon
(James M. Conlon)       Director        March 25, 1998

David J. Mathies, Jr.
(David J. Mathies, Jr.) Director        March 25, 1998

C. Ronald Petty
(C. Ronald Petty)       Director        March 25, 1998

Robin P. Selati
(Robin P. Selati)       Director        March 25, 1998

Clayton E. Wilhite
(Clayton E. Wilhite)    Director        March 25, 1998

Paul R. Flanders
(Paul R. Flanders       Vice President - Finance
and Treasurer   March 25, 1998

Timothy J. LaLonde
(Timothy J. LaLonde)    Vice President - Controller     March 25, 1998


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS




To the Board of Directors of
 Carrols Corporation


We have audited the consolidated balance sheet  of  Carrols  Corporation (a
wholly  owned  subsidiary of Carrols Holdings Corporation) and Subsidiaries
as of December   31,  1997  and  the  related  consolidated  statements  of
operations,  stockholders'  equity  (deficit)  and cash flows for the years
ended December 31, 1997 and December 31, 1995. These  financial  statements
are the responsibility of the Company's management.  Our responsibility  is
to express an opinion on these financial statements and financial statement
schedule 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 consolidated financial  position  of Carrols
Corporation  and Subsidiaries as of December 31, 1997, and the consolidated
results of their  operations  and  their  cash  flows  for  the years ended
December  31,  1997  and  December  31,  1995, in conformity with generally
accepted accounting principles.

Our audit was conducted for the purpose of  forming an opinion on the basic
consolidated  financial  statements  taken as a  whole.   The  accompanying
schedule for the years ended December  31,  1997 and 1995 as listed in Item
14 of the Form 10-K is presented for purposes of additional analysis and is
not a required part of the basic consolidated  financial  statements.  Such
information  has been subjected to the auditing procedures applied  in  the
audit of the basic  consolidated  financial statements and, in our opinion,
is  fairly  stated  in  all material respects  in  relation  to  the  basic
consolidated financial statements taken as a whole.


                                                                        /s/
Coopers & Lybrand, L.L.P.





Syracuse, New York
February 27, 1998

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS





To Carrols Corporation:


We have audited the accompanying  consolidated  balance  sheet  of  Carrols
Corporation (a wholly-owned subsidiary of Carrols Holdings Corporation) and
subsidiaries  as  of  December  29,  1996,  and  the  related  consolidated
statements  of  operations, stockholder's deficit, and cash flows  for  the
year then ended.   These consolidated financial statements and the schedule
referred to below are  the responsibility of the Company's management.  Our
responsibility is to express  an  opinion  on  these consolidated financial
statements and schedule based on our audit.

We  conducted  our  audit  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 audit
provides 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 Carrols Corporation and
subsidiaries  as of December 29, 1996, and the results of their  operations
and their cash  flows for the year then ended, in conformity with generally
accepted accounting principles.

Our audit was made  for  the  purpose  of  forming  an opinion on the basic
financial statements taken as a whole.  The schedule  for  the  year  ended
December  29, 1996 listed in the index at Item 14 is presented for purposes
of complying with the Securities and Exchange Commission's rules and is not
part of the  basic  financial statements.  This schedule has been subjected
to the auditing procedures  applied  in  the  audit  of the basic financial
statements and, in our opinion, fairly states in all material  respects the
financial  data  required to be set forth therein in relation to the  basic
financial statements taken as a whole.


/s/Arthur Andersen LLP




Rochester, New York,
March  7, 1997


CARROLS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

DECEMBER 31, 1997 AND 1996
___________



ASSETS
   1997
   1996



Current assets:


  Cash and cash equivalents
$ 2,252,000
$ 1,314,000
  Trade and other receivables, net of reserves of
      $130,000 and $310,000 at 1997 and 1996, respectively

748,000

793,000
  Inventories (Note 2)
 3,355,000
2,163,000
  Prepaid real estate taxes
939,000
725,000
  Prepaid expenses and other current assets
 1,388,000
932,000
  Refundable income taxes  (Note 5)
 2,141,000
     -
  Deferred income taxes (Note 5)
 2,605,000
   3,264,000



      Total current assets
 13,428,000
  9,191,000






Property and equipment, at cost (Notes 3 and 4):


  Land
 7,280,000
9,066,000
  Buildings and improvements
12,487,000
16,175,000
  Leasehold improvements
43,146,000
38,816,000
  Equipment
61,331,000
46,834,000
  Capital leases
14,548,000
  14,548,000

138,792,000
 125,439,000



  Less accumulated depreciation


      and amortization
(67,908,000)
 (63,356,000)



      Net property and equipment
70,884,000
  62,083,000



Franchise rights, at cost less accumulated amortization of
      $25,047,000 and $21,787,000 at 1997 and 1996, respectively

108,938,000

  46,203,000




Intangible assets, at cost less accumulated
      amortization of $8,900,000 and $8,326,000


      at 1997 and 1996, respectively
 7,864,000
    8,640,000






Other assets
  7,778,000
  5,834,000



Deferred income taxes (Note 5)
    6,436,000
    6,637,000




$215,328,000
$138,588,000




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


CARROLS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Continued)

DECEMBER 31, 1997 AND 1996
___________



LIABILITIES AND STOCKHOLDERS' EQUITY
   1997
    1996






Current liabilities:


  Accounts payable
$ 11,950,000
$ 9,319,000
  Accrued interest
   4,770,000
  4,741,000
  Accrued payroll, related taxes and benefits
   6,299,000
4,620,000
  Accrued income taxes
         -
  1,058,000
  Other liabilities
   5,104,000
 3,875,000
  Current portion of long-term debt (Note 4)
   3,137,000
    8,000
  Current portion of capital lease obligations (Note 3)
     441,000
      574,000



        Total current liabilities
  31,701,000
 24,195,000






Long-term debt, net of current portion (Note 4)
 154,649,000
118,180,000
Capital lease obligations, net of current portion (Note 3)
   2,060,000
2,503,000
Deferred income - sale/leaseback of real estate (Note 3)
  4,555,000
2,154,000
Accrued postretirement benefits (Note 9)
 1,627,000
1,522,000
Other liabilities
   3,289,000
  1,696,000



        Total liabilities
 197,881,000
150,250,000



Commitments and contingencies





Stockholders' equity (deficit) (Note 6):


  Common stock, par value $1; authorized
    1,000 shares, issued and outstanding -
    10 shares


10


10
  Additional paid-in capital
  28,362,990
 1,411,990
  Accumulated deficit
 (10,916,000)
(10,574,000)
  Less: note receivable - redemption of warrants
             -
  (2,500,000)



        Total stockholders' equity (deficit)
   17,447,000
(11,662,000)




  $215,328,000
$138,588,000










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



CARROLS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
___________





   1997
    1996
    1995








Restaurant  sales
  $295,436,000
 $240,809,000
 $226,257,000




Costs and expenses:



  Cost of sales
      85,542,000
     68,031,000
     63,629,000
  Restaurant wages and related expenses
      89,447,000
     70,894,000
     65,932,000
  Advertising expense
      13,122,000
     10,798,000
       9,764,000
  Other restaurant operating expenses
      61,691,000
     48,683,000
     45,635,000
  Administrative expenses
      13,121,000
     10,387,000
     10,434,000
  Depreciation and amortization
      15,102,000
     11,015,000
     11,263,000
  Costs associated with change of control
               -
          509,000
            -




      Total operating expenses
   278,025,000
   220,317,000
   206,657,000




Operating income
     17,411,000
     20,492,000
     19,600,000




Interest income (Note 5)
         (983,000)
              -
               -
Interest expense
     15,581,000
     14,209,000
     14,500,000




Income before income taxes
       2,813,000
       6,283,000
       5,100,000




Provision (benefit) for income taxes (Note 5)
          655,000
       3,100,000
      (9,826,000)




Net Income
 $    2,158,000
 $    3,183,000
$   14,926,000
















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









CARROLS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
___________






Additional


Total

Common
Paid-in
Accumulated
Notes
Stockholders'

 Stock
Capital
Deficit
Receivable
Equity (Deficit)






Balance at December 31, 1994
  $      10
 $  1,474,990
$(28,683,000)
$       -
$ (27,208,000)






Net income


    14,926,000

    14,926,000
Dividends declared

      (636,000)


        (636,000)
Exercise of stock options

            2,000


             2,000






Balance at December 31, 1995
          10
        840,990
  (13,757,000)
        -
   (12,916,000)






Net income


      3,183,000

      3,183,000
Dividends declared

    (1,000,000)


     (1,000,000)
Exercise of stock options

          12,000


           12,000
Tax benefit from sale of stock





    options due to change of control

     1,559,000


      1,559,000
Loan to purchase warrants



 (2,500,000)
     (2,500,000)






Balance at December 31, 1996
         10
     1,411,990
   (10,574,000)
 (2,500,000)
   (11,662,000)






Net income


      2,158,000

      2,158,000
Dividends declared

   (4,338,000)


     (4,338,000)
Capital contribution

  30,382,000


    30,382,000
Tax benefit from sale of stock





    options due to change of control

       907,000


         907,000
Redemption of warrants


    (2,500,000)
  2,500,000







Balance at December 31, 1997
  $      10
$ 28,362,990
$(10,916,000)
$        -
 $ 17,447,000
















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


CARROLS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
 ___________



   1997
    1996
    1995




Cash Flows From Operating Activities:



  Net income
    $  2,158,000
     $ 3,183,000
    $14,926,000
    Adjustments to reconcile net income



     to net cash provided by operating activities:



      (Gain) loss on disposal of property & equipment
         (344,000)
         (314,000)
          156,000
      Depreciation and amortization
      15,102,000
     11,015,000
     11,263,000
      Deferred income taxes
           860,000
          160,000
    (10,061,000)
  Changes in operating assets and liabilities:



      Refundable income taxes
      (2,141,000)
               -
               -
      Trade and other receivables
             45,000
         (105,000)
         (156,000)
      Inventories
         (588,000)
           129,000
           (38,000)
      Prepaid real estate tax expenses and other



         current assets
         (731,000)
         (174,000)
           (45,000)
      Other assets
         (149,000)
         (611,000)
           (80,000)
      Accounts payable
        2,631,000
           410,000
       1,363,000
      Accrued payroll, related tax and benefits
        1,286,000
         (256,000)
          297,000
      Accrued income taxes
      (1,058,000)
           983,000
            48,000
      Other liabilities - current
        1,229,000
           266,000
         (893,000)
      Accrued interest
             29,000
           (68,000)
           (90,000)
      Other liabilities - long-term
        1,593,000
         (231,000)
            84,000
      Other
             18,000
           (65,000)
           (92,000)




Net cash provided from operating activities
      19,940,000
      14,322,000
      16,682,000








Cash Flows For Investing Activities:



  Capital expenditures:



    New restaurant development
      (9,732,000)
     (5,280,000)
     (2,767,000)
    Remodels
      (3,807,000)
     (6,656,000)
     (2,524,000)
    Other capital expenditures
      (4,671,000)
     (3,319,000)
     (2,731,000)
  Acquisition of restaurants
    (78,485,000)
     (7,945,000)
        (516,000)
  Notes and mortgages issued
                 -
        (749,000)
     (2,503,000)
  Payments received on notes and mortgages
             88,000
           39,000
           32,000
  Disposal of property, equipment



    and franchise rights
        1,224,000
      2,342,000
          17,000
  Other investments
               -
      1,330,000
    (1,356,000)




Net cash used for Investing activities
    (95,383,000)
   (20,238,000)
  (12,348,000)







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



CARROLS CORPORATION AND SUBSIDIARIES

 CONSOLIDATED STATEMENTS OF CASH FLOWS, (Continued)

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
___________




   1997
    1996
    1995
Cash Flows From Financing Activities:



  Proceeds from long-term debt, net
   $  62,614,000
   $  2,997,000
   $  4,376,000
  Principal payments and retirements of
    long-term obligations

      (26,184,000)

      (2,047,000)

     (9,184,000)
  Proceeds from sale-leaseback transactions
       13,000,000
       4,246,000
         861,000
  Dividends paid
        (4,338,000)
      (1,000,000)
        (636,000)
  Exercise of employee stock options
         and related tax benefits

            907,000

       1,571,000

             2,000
  Capital contribution
       30,382,000
              -
               -




Net cash provided from (used for) financing activities
       76,381,000
       5,767,000
    (4,581,000)




Net increase (decrease) in cash and cash equivalents
           938,000
         (149,000)
       (247,000)




Cash and cash equivalents, beginning of year
        1,314,000
       1,463,000
     1,710,000




Cash and cash equivalents, end of year
   $   2,252,000
  $   1,314,000
 $  1,463,000








Supplemental disclosures:



  Interest paid on debt
   $ 15,552,000
  $14,277,000
 $14,590,000
  Income taxes paid
   $   1,456,000
  $     393,000
 $     153,000










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













CARROLS CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
________________


1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Basis of Consolidation  - The consolidated financial statements include the
accounts of Carrols Corporation  and its subsidiaries (the "Company").  All
significant   intercompany   transactions    have    been   eliminated   in
consolidation. The Company is a wholly-owned subsidiary of Carrols Holdings
Corporation ("Holdings").

At  December 31, 1997 the Company operated, as franchisee,  335  fast  food
restaurants  under the trade name "Burger King" in seven Northeastern, four
Midwestern and  two  Southeastern  states.  According to publicly available
information  the  Burger  King  brand  is  the  second  largest  franchised
restaurant system in the world.  The Company  is  the  largest  independent
Burger King franchisee in the United States.

Cash  and  Cash  Equivalents  -  The  Company  considers  all highly liquid
investments  with a maturity of three months or less when purchased  to  be
cash equivalents.

Inventories -  Inventories  are  stated  at  the  lower  of cost (first-in,
first-out) or market.

Property  and  Equipment  -  Property and equipment are recorded  at  cost.
Depreciation and amortization  is  provided  using the straight-line method
over the following estimated useful lives:

        Buildings and improvements              5 to 20 years
        Leasehold improvements          Remaining  life  of lease including
renewal options or life of
                                                        asset  whichever is
shorter
        Equipment                               3 to 10 years
        Capital leases                          Remaining life of lease

Depreciation expense for the years ended December 31, 1997, 1996  and  1995
was $9,718,000, $7,300,000 and $7,594,000, respectively.

Franchise  Rights - Fees for initial franchises and renewals paid to Burger
King Corporation are amortized using the straight-line method over the term
of the agreement,  generally  twenty  years. Acquisition costs allocated to
franchise rights are amortized using the  straight-line method, principally
over the remaining lives of the acquired leases  including renewal options,
but not  in excess of 40 years.

Intangible  Assets  -  Intangible  assets consist primarily  of  beneficial
leases which are amortized using the straight-line method over the lives of
the leases including renewal options, but not in excess of 40 years.

Long-Lived Assets - The Company assesses the recoverability of property and
equipment, franchise rights and  intangible  assets  by determining whether
the  amortization of these assets, over their respective  remaining  lives,
can  be   recovered  through  undiscounted  future  operating  cash  flows.
Impairment is reviewed whenever events or changes in circumstances indicate
the carrying amounts of these assets may not be fully recoverable.

Deferred Financing  Costs - Financing costs incurred in obtaining long-term
debt are capitalized  and amortized over the life of the related debt on an
effective interest basis  for costs associated with the Company's unsecured
senior notes and on a straight-line  basis  for  costs  associated with the
Company's advance loan facility.

Income  Taxes  -  The  Company  and its subsidiaries were included  in  the
consolidated federal income tax return  of Holdings through the date of the
change of control at April 3, 1996.  The  Company and its subsidiaries have
filed separate federal income tax returns for  the  period April 4, 1996 to
December 31, 1996 and the year ended December 31, 1997.

Advertising Costs - All advertising costs are expensed as incurred.

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 and disclosure of contingent assets and liabilities at the date
of the financial statements.  Estimates also affect the reported amounts of
revenues and expenses during the reporting period.   Actual  results  could
differ from those estimates.

Fair  Value  of  Financial Instruments - The following methods were used to
estimate the fair value of each class of financial instruments for which it
is practicable to estimate that fair value:

        Current Assets  and  Liabilities  -  The carrying value of cash and
cash equivalents and accrued liabilities approximates fair value because of
the short maturity of those instruments.

        Senior Notes - The fair value of senior  notes  is  based on quoted
market  prices.   The  fair  value  at  December  31, 1997 is approximately
$113,557,000.

        Revolving and Advance Loan Facilities - Rates  currently  available
to  the  Company  for debt with similar terms and remaining maturities  are
used to estimate fair  value. The recorded amount, as of December 31, 1997,
approximates fair value.

Stock-Based  Compensation  -  On  January  1,  1996,  the  Company  adopted
Statement  of Financial  Accounting  Standards  No.  123,  "Accounting  for
Stock-Based Compensation," (SFAS 123) which permitted entities to recognize
as an expense  over  the  vesting  period the fair value of all stock-based
awards on the date of grant.  Alternatively, SFAS 123 also allowed entities
to continue to apply the provisions  of  APB  25  and provide pro forma net
income   disclosures   for  employee  stock  option  grants   as   if   the
fair-value-based method  defined in SFAS 123 has been applied.  The Company
has elected to continue to  apply  the provisions of APB 25 and provide the
pro forma disclosure provisions of SFAS 123.

Fiscal Year - The Company uses a 52-53  week  fiscal  year  ending  on  the
Sunday closest to December 31. The financial statements included herein are
as  of  December  28,  1997  (52  weeks), December 29, 1996 (52 weeks), and
December 31, 1995 (52 weeks).

Reclassifications - Certain amounts  for prior years have been reclassified
to conform to the current year presentation.


2.  INVENTORIES

Inventories at December 31, consisted of:

1997
1996



Raw materials (food and paper products)
 $ 2,111,000
 $ 1,386,000
Supplies
    1,244,000
       777,000

 $ 3,355,000
$  2,163,000




3.  LEASES

The Company utilizes land and buildings  in  its  operations  under various
lease  agreements. These leases are generally for initial terms  of  twenty
years and,  in  most  cases,  contain  renewal  options  for  two  to  four
additional  five  year  periods.   The  rent  payable  under such leases is
generally  a  percentage  of sales with a provision for minimum  rent.   In
addition, most leases require  payment  of  property  taxes,  insurance and
utilities.

Deferred   gains   have   been  recorded  as  a  result  of  sale/leaseback
transactions and are being  amortized  over  the lives of the leases. These
leases  are operating leases, with a twenty year  primary  term  with  four
five-year  renewal  options  and  provide  for  additional  rent based on a
percentage  of  sales in excess of predetermined levels.  The net  deferred
gain  is  $4,555,000   and  $2,154,000  at  December  31,  1997  and  1996,
respectively.
Accumulated amortization  pertaining  to capital leases for the years ended
December 31, 1997 and 1996 was $9,951,000 and $9,151,000, respectively.

Minimum rent commitments under noncancelable  leases  at  December 31, 1997
were as follows:


      Capital
     Operating
Years Ending:


  1998
   $   758,000
$    18,807,000
  1999
        541,000
      17,884,000
  2000
        480,000
      17,470,000
  2001
        469,000
      16,889,000
  2002
        429,000
      16,069,000
  2003 and thereafter
     1,329,000
    123,819,000



Total minimum lease payments
     4,006,000
$  210,938,000



 Less amount representing interest
     1,505,000




Total obligations under capital leases
     2,501,000

 Less current portion
        441,000




Long term obligations under capital leases
  $ 2,060,000



Total rent expense on operating leases, including percentage  rent  on both
operating and capital leases, for the past three years was as follows:



1997
1996
1995




Minimum rent on real property
$    15,303,000
$    11,590,000
$     11,108,000
Additional rent based on a



  percentage of sales
        3,099,000
        2,700,000
         2,548,000
Equipment rent
           162,000
           167,000
            164,000

$    18,564,000
$    14,457,000
$     13,820,000






4.  LONG-TERM DEBT


Long-term debt at December 31 consisted of:


1997
1996
Collateralized:


  Revolving loan facility
        $ 2,500,000
       $  4,669,000
  Acquisition loan
                  -
           5,000,000
  Advance term loan facility
         46,786,000
                   -
  Other notes payable with interest rates to 10%
              863,000
              857,000



Unsecured 11.5% senior notes
       107,637,000
       107,662,000

       157,786,000
       118,188,000
Less current portion
           3,137,000
                  8,000




     $154,649,000
     $118,180,000

The  Company  issued $110 million of unsecured senior notes in August 1993.
The senior notes bear interest at a rate of 11.5%, payable semi-annually on
each February 15 and August 15, and are due August 15, 2003.  The notes are
redeemable at   the  option  of the Company in whole or in part on or after
August 15, 1998 at a price of  104.31%  of the principal amount if redeemed
before  August 15, 1999 and 102.88% of the  principal  amount  if  redeemed
before August  15, 2000, with other specified redemption prices thereafter.
Provisions of the  revolving  line  of credit facility place limitations on
the redemption or repurchase of the notes  so  long as the facility remains
in effect.

On  March 27, 1997, the Company entered into a loan  agreement  (the  "Loan
Agreement") among the Company, Texas Commerce Bank National Association, as
Agent,  and  other  lenders  (collectively  the  "Lenders") who are parties
thereto.  The Loan Agreement provides for: (i)  $127,000,000  Advance  Term
Loan  Facility  under  which  the  Company may borrow, through December 31,
1999,  up to 75% of the purchase costs  incurred  in  connection  with  the
acquisition  of restaurants and; (ii) a $25,000,000 Revolving Loan Facility
which replaced  the  Company's  previous  revolving  credit  facility.  The
Revolving Loan Facility is available to finance restaurant acquisitions and
new  restaurant  development by the Company, and for other working  capital
and general corporate  purposes.   At  December  31, 1997, $21,525,000  was
available  for  use  under  the  Revolving  Loan Facility  after  reserving
$975,000 for a letter of credit guaranteed by the facility.

The Loan Agreement provides for interest rate  options  of: (i) the greater
of  the  prime rate (or the Federal Funds Rate plus .50%) plus  a  variable
margin between  0%  and  1%  (1%  at December 31, 1997); or (ii) the London
Interbank offering rate plus a variable  margin between 1.5% and 2.5% (2.5%
of December 31, 1997), based upon debt to  cash  flow  ratios.   Commitment
fees  on  the  unused  balances  of the Advance Term Loan Facility and  the
Revolving Loan Facility are payable  quarterly at the annual rates of 0.25%
and 0.375%, respectively.

The Revolving Loan Facility has a maturity  date of December 31, 2001 while
the Advance Term Loan Facility requires quarterly  principal  repayments at
an  annual  rate  of 6% beginning with the end of the second quarter  after
each advance loan and  increasing  2% per year through the sixth year, with
the remainder repayable on June 30, 2003.

The  $5  million  acquisition  loan  was   collateralized   by   twenty-two
restaurants acquired during 1994.   This loan was paid in full in  1997 and
refinanced under the Company's Advance Term Loan Facility.

Substantially  all  assets  of  the  Company  are or will be pledged to the
lender as collateral under the loans made pursuant to the Loan Agreement.

Restrictive covenants of the senior notes and the  revolving  loan facility
include  limitations  with respect to the issuance of additional  debt  and
redeemable preferred stock;  the  sale  of  assets;  dividend  payments and
capital   stock  redemption;  transactions  with  affiliates;  investments;
consolidations,  mergers  and  transfers of assets and minimum interest and
fixed charge coverage ratios.


At December 31, 1997, principal payments required on all long-term debt are
as follows:

1998
$    3,137,000
1999
      4,274,000
2000
      5,153,000
2001
      8,486,000
2002
      6,438,000
2003 and thereafter
  129,798,000



$157,286,000


5.  INCOME TAXES

The  income tax provision (benefit)  was  comprised  of  the  following  at
December 31:


       1997
      1996
         1995
Current:



  Federal
$     887,000
$   981,000
  $       35,000
  State
       628,000
     400,000
         200,000

    1,515,000
  1,381,000
         235,000
Deferred:



  Federal
     (672,000)
  1,199,000
     (8,552,000)
  State
     (188,000)
     520,000
     (1,509,000)

     (860,000)
  1,719,000
   (10,061,000)





$    655,000
$3,100,000
  $ (9,826,000)


The components  of  deferred  income tax assets and liabilities at December
31, are as follows:


        1997
        1996
Deferred tax assets:


  Accounts receivable and other reserves
  $    408,000
  $    503,000
  Accrued vacation benefits
        508,000
        427,000
  Other accruals
        168,000
             -
  Deferred gain on sale of real estate
     1,710,000
        853,000
  Postretirement benefits
        650,000
        602,000
  Capital leases
        464,000
        463,000
  Property and equipment depreciation
        549,000
        671,000
  Alternative minimum tax credit carryforward
          21,000
              -
  Net operating loss carryforwards
   10,459,000
   12,348,000

   14,937,000
   15,867,000
Deferred tax liabilities:


  Amortization of franchise rights
     5,896,000
     5,966,000



Net deferred income tax assets
  $ 9,041,000
  $ 9,901,000

The Company has net operating loss carryforwards for income tax purposes of
approximately $27 million.  The  net operating loss carryforwards expire in
varying amounts beginning in 2003 through 2010.  Due to change in ownership
the  Company  is  limited,  for  Federal  tax  purposes,  to  a  $4,354,000
utilization of net operating losses  annually.  Realization of the deferred
income tax assets relating to these net  operating  losses  is dependent on
generating sufficient taxable income prior to the expiration  of  the  loss
carryforwards.  Based upon results of operations, management believes it is
more  likely  than  not  that  the  Company will generate sufficient future
taxable  income to fully realize the benefit  of  the  net  operating  loss
carryforwards  and existing temporary differences, although there can be no
assurance of this.   Accordingly,  during  1995,  the  previously  provided
valuation  allowance  was  eliminated  and the net deferred tax assets were
recognized as a deferred income tax benefit.

A reconciliation of the statutory federal  income tax rate to the effective
tax rates for the years ended December 31, is as follows:


1997

1996
Statutory federal income tax rate
$ 957,000          34.0%

$2,136,000          34.0%
State income taxes, net of federal benefit
   266,000            9.5%

     607,000            9.7%
Nondeductible expenses
   197,000            7.0%

     197,000            3.1%
Tax appeals settlement
  (806,000)       (28.7)%

            -                     -
Miscellaneous
     41,000           1.4 %

     160,000            2.5%

$  655,000         23.2%

$3,100,000          49.3%

Included in refundable income taxes at December  31,  1997  is  $983,000 of
interest income associated with a Federal tax appeals claim settlement.


6.  STOCKHOLDERS' EQUITY (DEFICIT)

The Company

The Company has 1,000 shares of common stock authorized of which  10 shares
are  issued  and  outstanding. Dividends on the Company's common stock  are
restricted to amounts permitted by various loan agreements.

Holdings

The sole activity of  Holdings  is  the  ownership  of 100% of the stock of
Carrols Corporation. In February 1997, a 1 for 3.701  reverse  stock  split
was  effected  to reduce the outstanding shares of common stock of Holdings
to 850,000 shares.  As a result of a recapitalization in February 1997, the
capital structure of Holdings was as follows at December 31, 1997:


       Class A, preferred stock 10% cumulative redeemable,

         par value $.01, authorized, issued

         and outstanding 3,633 and 7,250 shares

         respectively, at liquidation preference and

         redemption price
     $3,633,000
       Voting common stock, par value $.01, authorized

         3,000,000 and 6,000,000 shares, respectively,

         issued and outstanding 1,144,144 and 850,000

         shares, respectively
            11,000


The Class A preferred  stock  is  subject  to two remaining equal mandatory
redemptions,  scheduled  for  December 23, 1998  and  1999.   In  addition,
subject to the redemption restrictions  of  various  loan  agreements,  all
preferred  stock  may  be redeemed at the option of Holdings, at a price of
$1,000 per share, plus accrued  dividends.  In the event that the scheduled
redemptions are not made timely, the annual dividend  rate on the amount of
Class A Preferred Stock not redeemed is automatically increased to 14%.

Holders of the Preferred Stock are entitled to cumulative dividends payable
quarterly at the rate of 10% per annum.  In the event that  Holdings  fails
to pay four consecutive quarterly dividends on the Class A preferred stock,
the  subsequent  dividend  rate  increases  to  11.5%; if eight consecutive
quarterly dividends are missed, the rate increases  to  13% per annum until
such dividends are paid.

Warrants  outstanding  at December 31, 1996 to purchase 131,886  shares  of
Holdings Common Stock at  exercise  prices of $3.59 to $3.70 per share were
owned by an independent third party.   To  facilitate the sale and purchase
of  the  warrants,  Holdings loaned $2,500,000  to  the  purchaser  of  the
warrants which loan was secured by a collateral pledge of the shares of the
purchaser and of the warrants.  The receivable was reclassified to increase
stockholders' deficit as of December 31, 1996.  In 1997, Holdings exercised
its option to purchase  the  warrants  at  an aggregate price of $2,510,000
from the third party in exchange for payment on the related loan.


Change of Control Transactions

On  April  3,  1996,  Holdings,  Carrols Corporation  and  certain  selling
shareholders of Holdings sold approximately 97 percent of the issued common
stock  and common stock equivalents  (the  Class  B  Convertible  Preferred
stock, warrants  to  buy  common  stock  and  options  to buy common stock)
exclusive of the warrants referred to above to Atlantic  Restaurants,  Inc.
("Atlantic").   This change in control resulted in the Company incurring  a
one-time charge of $509,000 in fiscal 1996.

On March 27, 1997,  Holdings  and  Atlantic,  its  then  sole  stockholder,
entered  into  an  agreement whereby they agreed to sell 283,334 shares  of
common stock of Holdings  to  Madison  Dearborn  Capital Partners ("Madison
Dearborn"), an independent third party, resulting  in  approximately  $30.4
million  of  new equity for the Company.  Atlantic also sold 283,333 of its
shares of Holdings  to  Madison  Dearborn  resulting  in  both Atlantic and
Madison Dearborn having an equal interest in the Company.

Both  transactions  constituted  a "change of control" under the  Indenture
governing the Senior Notes Due 2003 ("Notes").  Accordingly, each holder of
the Notes had the right to require  the  Company  to  repurchase all or any
part of such holder's Notes at a repurchase price in cash  equal to 101% of
the principal amount of the Notes being repurchased plus accrued and unpaid
interest  in  both 1996 and in 1997.  Such redemptions totaled  $25,000  in
1997 and $838,000 in 1996.


Stock Options

Holdings adopted  an  Employee  Stock Option and Award Plan on December 14,
1993 ("The 1993 Plan"). Effective  April  1,  1994, Holdings also adopted a
Stock Option Plan for non-employee directors ("Directors  Plan"). The Plans
allowed for the granting of non-qualified stock options, stock appreciation
rights and incentive stock options to directors, officers and certain other
Company employees.  The Company was authorized to grant options  for  up to
229,700 shares, 27,000 shares for non-employee directors and 202,700 shares
for  employees. Options were generally exercisable over 5 years with 25,600
options  exerciseable  as  of  December 31, 1995.  As of December 31, 1995,
non-employee directors were granted  options  totaling 4,900 shares.  Under
the  Directors  Plan, no options were exercised or  canceled  during  1995.
During 1996, 57,000  options  (36,600  at $14.80 and 20,400 at $22.65) were
canceled  by  the sale of such options in  conjunction  with  the  sale  to
Atlantic and the  plans  were  canceled.  The remaining 32,426 options were
subject to a deferred purchase agreement  whereby the sale and cancellation
occurred in January, 1997.

A summary of all option activity in the 1993  Plan  and  the Directors Plan
for the years ended December 31, 1997, 1996 and 1995 is as follows:


Options at
Options at

$14.80
$22.65



Balance at December 31, 1994
      69,441
          -
  Granted
           -
      26,777
  Exercised
          (162)
          -
  Canceled
       (3,350)
          (621)
Balance at December 31, 1995
      65,929
      26,156
  Exercised
          (810)
          -
  Canceled
     (38,098)
     (20,751)
Balance at December 31, 1996
      27,021
        5,405
  Canceled
     (27,021)
       (5,405)
Balance at December 31, 1997
         -
          -




Holdings  adopted a stock option plan in 1996 entitled the  1996  Long-Term
Incentive Plan ("1996 Plan") and authorized a total of 106,250 shares to be
granted at prices ranging from $101.77 to $140.00 per share.  Options under
this plan generally vest over a four year period  There were no outstanding
options in  fiscal  1996 under this plan.  In 1997, options were granted at
prices ranging from $101.77 to $110.00 per share.

A summary of all option  activity  in  the  1996  Plan  for  the year ended
December 31, 1997 was as follows:


Options at
Options at

$101.77
$110.00
Balance at December 31, 1996
            -
             -
   Granted
        72,250
         14,460
   Canceled
            -
             (570)
Balance at December 31, 1997
        72,250
          13,890



Exercisable at December 31, 1997
        34,850
              -

In addition, in conjunction with the 1997 sale of Holdings common  stock to
Madison  Dearborn,  additional options not part of the 1996 Plan for 32,427
shares at a price of  $101.77  were  granted  with vesting over a five year
period.  None of these options were exercisable at December 31, 1997.

Had compensation cost been determined based upon  the  fair  value  of  the
stock  options  at  grant  date consistent with the method of SFAS 123, the
Company's pro-forma net income  for  the year ended December 31, 1997 would
have been $1,527,000 as compared with $2,158,000, as reported.

The fair value of each option grant was  estimated  using the minimum value
option  pricing model with the following weighted-average  assumptions  for
the year ended December 31, 1997:

Risk-free interest rate
6.53%
Annual dividend yield
      0%
Expected life
5 years


7.  LITIGATION

The Company is a party to various legal proceedings arising from the normal
course of  business.   Management  believes  adverse  decisions relating to
litigation and contingencies in the aggregate would not  materially  effect
the Company's results of operations or financial condition.

8.  EMPLOYEE SAVINGS PLAN

The  Company offers a savings plan for salaried employees.  Under the plan,
participating  employees may contribute up to 10% of their salary annually.
The Company's contributions,  which  begin  to  vest  after three years and
fully vest after seven years of service, are equal to 50% of the employee's
contributions  to  a  maximum Company contribution of $530  annually.   The
employees  have  various   investment   options  available  under  a  trust
established  by  the plan.  The plan expense  was  $208,000,  $164,000  and
$125,000  for  the  years   ended   December   31,  1997,  1996  and  1995,
respectively.


9.  POSTRETIREMENT BENEFITS

While  the  Company reserves the right to change its  policy,  the  Company
provides postretirement  medical  and  life  insurance  benefits   covering
substantially all salaried employees.
The  following  is  the  plan status and accumulated postretirement benefit
obligation (APBO) at December 31:


          1997
         1996
Accumulated benefit obligation:


   Retirees
 $       519,000
 $      518,000
   Fully eligible active participants
            28,000
           26,000
   Other active plan participants not fully eligible
          814,000
         697,000



       Total APBO
       1,361,000
      1,241,000
   Unrecognized prior service cost
          286,000
         315,000
   Unrecognized net  actuarial losses
           (20,000)
          (34,000)



Accrued postretirement benefit obligation
 $    1,627,000
 $   1,522,000




Net periodic postretirement  benefit  cost for 1997, 1996 and 1995 included
the following components:


1997
1996
1995




     Service cost - benefits earned during the year
 $   69,000
 $   64,000
 $  47,000
     Interest cost on accumulated benefit obligation
      85,000
      77,000
     76,000
     Net amortization of actuarial



       gains and losses and prior service costs
     (25,000)
     (25,000)
    (29,000)

 $ 129,000
 $ 116,000
 $  94,000





A 6.50% annual rate of increase in the  per  capita costs of covered health
care benefits was assumed for 1997, gradually  decreasing  to  5.5%  by the
year  2001.   Increasing  the  assumed  health care cost trend rates by one
percentage  point  in  each  future  year would  increase  the  accumulated
postretirement benefit obligation as of  December  31, 1997 by $137,000 and
increase  the  sum  of  the  service cost and interest cost  components  by
$26,000 in 1997.

For 1997, 1996 and 1995, a discount  rate  of  7% was used to determine the
accumulated postretirement benefit obligation. Actual benefit costs paid on
behalf of retirees in 1997, 1996 and 1995 was  $24,000 in each year.

10. ACQUISITIONS

On  March  28,  1997, the Company purchased certain  assets  and  franchise
rights of twenty-three  Burger King restaurants in North and South Carolina
for a cash price of approximately $21 million.

On August 20, 1997, the Company  purchased  certain  assets  and  franchise
rights  of  sixty-three  Burger King restaurants, primarily in Western  New
York State, Indiana and Kentucky  for  a  cash  price  of approximately $52
million.

The  following  unaudited  proforma  results  of  operations  assume  these
acquisitions occurred as of the beginning of the respective periods:
(Unaudited)
                                                                Year  Ended
December 31,

1997
1996
Revenues
$ 341,889,000
$ 329,927,000



Operating Income
 $  21,129,000
 $  28,652,000



Net income
$     2,829,000
$     5,603,000

The  unaudited  results of operations are not necessarily indicative of the
actual operating results that would have occurred had the acquisitions been
consummated on January  1  of  each  fiscal  year,  or  of future operating
results of the combined companies.

During the year ended December 31, 1997, the Company acquired a total of 93
restaurants.  Assets acquired and liabilities assumed in these transactions
were as follows:

Inventory
$      604,000
Land
     1,025,000
Buildings and improvements
     1,532,000
Equipment
   10,221,000
Franchise rights
   65,496,000
Accrued payroll, related taxes and benefits
       (393,000)



$ 78,485,000


CARROLS CORPORATION AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
___________



Col. A
Col. B
Col. C
Col. D
Col E


Additions



Balance at
Charged to

Balance at

Beginning
Costs and

End
Description
of Period
Expenses
Deductions
of Period





Year ended December 31, 1997:









 Reserve for doubtful trade accounts
  receivable

         310,000

               -

        (180,000)(b)

           130,000





 Other reserves (a)
         753,000
        133,000
              -
           886,000










Year ended December 31, 1996:









 Reserve for doubtful trade accounts
  receivable

         419,000

          16,000

        (125,000)(b)

            310,000





 Other reserves (a)
         788,000

          (35,000)(b)
            753,000










Year ended December 31, 1995:









 Reserve for doubtful trade accounts
  receivable

         424,000

           12,000

          (17,000)(b)

           419,000





 Other reserves (a)
         542,000
         388,000
        (142,000)(b)
           788,000








(a) Included principally in other assets
(b) Represents write-offs of accounts.



??










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