<PAGE>
 
                                                                    EXHIBIT 10.3
                                   AMENDMENT
 
     WHEREAS, Sizzler International, Inc. (the "Company") maintains a qualified
retirement plan known as the Sizzler International, Inc. Employee Savings Plan
(the "Plan"); and

     WHEREAS, the Company has reserved the right to amend the Plan under Section
11.1 of the Plan;
 
     NOW THEREFORE THE PLAN IS HEREBY AMENDED as follows.
 
     1.    Section 2.7 of the Plan is amended, effective as of January 1, 1994,
by adding the following new subsection 2.7(e) to the end of Section 2.7.
 
          (e)  In addition to other applicable limitations set forth in the
     Plan, and notwithstanding any other provision of the Plan to the contrary,
     for Plan Years beginning on or after January 1, 1994, the annual
     compensation of each Employee taken into account under the Plan shall not
     exceed the OBRA '93 annual compensation limit. The OBRA '93 annual
     compensation limit is $150,000, as adjusted by the Commissioner of the
     Internal Revenue Service for increases in the cost of living in accordance
     with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect
     for a calendar year applies to any period, not exceeding 12 months, over
     which compensation is determined ("determination period") beginning in such
     calendar year. If a determination period consists of fewer than 12 months,
     the OBRA '93 annual compensation limit shall be multiplied by a fraction,
     the numerator of which is the number of months in the determination period,
     and the denominator of which is 12.
 
          For Plan Years beginning on or after January 1, 1994, any reference in
     this Plan to the limitation under Code Section 401(a)(17) shall mean the
     OBRA '93 annual compensation limit set forth in this provision.
 
          If compensation for any prior determination period is taken into
     account in determining an employee's benefits accruing in the current Plan
     Year, the compensation for that prior determination period is subject to
     the OBRA '93 annual compensation limit in effect for that prior
     determination period. For this purpose, for determination periods beginning
     before the first day of the first Plan Year beginning on or after January
     1, 1994, the OBRA '93 annual compensation limit is $150,000.
<PAGE>
 
          2.    Section 4.4 of the Plan is amended, effective as of January 1,
     1992, by deleting the last sentence of Section 4.4.

          3.    Section 7.3(a) of the Plan is amended, effective as of January
     1, 1992, to read as follows:

               7.3  Forfeitures upon Termination of Employment.
                    -------------------------------------------

                    (a) Upon termination of Employment, the nonvested portion of
               a Participant's Employer Contribution Account shall be deemed to
               be forfeited immediately.

                         (i)    If an Employee terminates Employment, and the
                    value of the Employee's Vested Account balance is not
                    greater than $3,500, the Employee shall receive a
                    distribution of the value of the entire Vested portion of
                    such Account in accordance with Section 8.1 or 8.2, as
                    applicable, and the nonvested portion shall be treated as a
                    forfeiture. For purposes of this Section, if the value of an
                    Employee's Vested Account balance is zero, the Employee
                    shall be deemed to have received a distribution of such
                    Vested Account balance.

                         (ii)   If an Employee terminates Employment and the
                    value of the Employee's Vested Account balance is greater
                    than $3,500, if the Employee elects, in accordance with the
                    requirements of Article VIII, to receive the value of the
                    Employee's Vested Account balance, the nonvested portion
                    shall be deemed to be a forfeiture.

                         Forfeitures occurring under this subsection (a) shall
                    be subject to restoration under subsection (b), without any
                    repayment being permitted or required. Forfeitures for a
                    Plan Year shall first be applied in the manner prescribed in
                    Section 12.9. Any balance remaining shall then be allocated
                    under Section 5.3.

     4.   Section 7.3(b) of the Plan is amended, effective as of January 1,
1992, by deleting the last sentence thereof.

                                       2
<PAGE>
 
     5.   Section 8.1(a) of the Plan is amended, effective as of January 1,
1997, by deleting the last sentence thereof and substituting the following:

               Distribution shall occur as soon as practicable after Retirement,
          except as otherwise required by Section 8.7.

     6.   Section 8.2 of the Plan is amended, effective as of January 1, 1997,
by deleting the second and third sentences thereof and substituting the
following:

               Distribution shall occur as soon as practicable after termination
          of Employment, except to the extent an earlier or later distribution
          is required by Section 8.7. However, if the Participant's Vested
          Account does not exceed $3,500 (at the time of distribution), the
          Participant's Account shall be distributed as soon as practicable
          after termination of Employment, except to the extent an earlier
          distribution is required by Section 8.7.

     7.   Section 8.7(a) of the Plan is amended, effective as of January 1,
1992, by deleting the last sentence thereof.

     8.   Section 11.2(b) of the Plan is amended, effective as of January 1,
1992, to read as follows:

               (b)  Upon a complete or partial termination of the Plan or
          complete discontinuance of contributions to the Plan (within the
          meaning of Treasury Regulations section 1.411(d)-2), no further
          contributions shall be made under the Plan; all accrued benefits
          credited to the Account of each Participant (or, in the case of a
          partial termination, each affected Participant within the meaning of
          Treasury Regulations section 1,411(d)-2) shall fully Vest; and the
          Accounts of any affected Participants shall be distributed at the time
          and in the manner specified in Articles VIII and IX.

     9.   Section 11.2 of the Plan is amended, effective as of January 1, 1992,
by deleting Subsection (c) thereof, and redesignating Subsections (d) and (e) as
Subsections (c) and (d) respectively.

     10.  Section 12.1 of the Plan is amended, effective as of January 1, 1992,
by deleting Subsections (b) and (c) thereof, and redesignating Subsection (d) as
Subsection (b).

                                       3
<PAGE>
 
     11.  Section 12.10 of the Plan is amended, effective as of January 1, 1992,
to read as follows:
 
          12.10 Alienation.
                ----------
 
               Except to the extent permissible under Code Sections 401(a)(13)
          and 414(q), benefits payable under this Plan shall not be subject in
          any manner to anticipation, alienation, sale, transfer, assignment,
          pledge, encumbrance, charge, garnishment, execution, or levy of any
          kind, either voluntary or involuntary, including any liability which
          is for alimony or other payments for the support of a spouse or former
          spouse, or for any other relative of the Employee, prior to actually
          being received by the person entitled to the benefit under the terms
          of the Plan. Any attempt to anticipate, alienate, sell, transfer,
          assign, pledge, encumber, charge, or otherwise dispose of any right to
          benefits payable hereunder shall be void. The Trust Fund shall not in
          any manner be liable for, or subject to, the debts, contracts,
          liabilities, engagements, or torts of any person entitled to benefits
          hereunder.

               The preceding paragraph shall also apply to the creation,
          assignment, or recognition of a right to any interest or benefit
          payable with respect to a Participant pursuant to a domestic relations
          order, unless this order is determined to be a qualified domestic
          relations order (as defined in Code Section 414(p)). The Plan
          Administrator shall establish reasonable procedures to determine the
          qualified status of domestic relations orders and to administer
          distributions under these qualified orders.
 
EXECUTED ON March 5, 1997
            ----- - 
SIZZLER INTERNATIONAL, INC.


/s/ CHRISTOPHER R. THOMAS
----------------------------
   Christopher R. Thomas

                                       4