UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549
                            -------------------------


                                    FORM 10-Q


                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For quarter ended                                    Commission file number
March 25, 1997                                                0-19907
--------------                                                -------


                       LONE STAR STEAKHOUSE & SALOON, INC.
             (Exact name of registrant as specified in its charter)



          Delaware                                              48-1109495
          --------                                              ----------
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                           Identification Number)

                           224 EAST DOUGLAS, SUITE 700
                              WICHITA, KANSAS 67202
               (Address of principal executive offices) (Zip code)

                                 (316) 264-8899
              (Registrant's telephone number, including area code)

            Indicate  by check mark  whether  the  registrant  (1) has filed all
documents  and  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. 
                                                                  /X/ YES / / NO

            Indicate  the number of shares  outstanding  of each of the issuer's
classes of common stock, as of the latest practicable date.

            Class                               Outstanding at April 22, 1997
            -----                               -----------------------------
Common Stock, $.01 Par Value                         40,997,119 Shares
<PAGE>


                       LONE STAR STEAKHOUSE & SALOON, INC.

                                      Index

                                                              Page
                                                             Number
                                                             ------

PART I.   FINANCIAL INFORMATION
-------------------------------

ITEM 1.  FINANCIAL STATEMENTS

      CONDENSED CONSOLIDATED BALANCE SHEETS
      AT MARCH 25, 1997 AND DECEMBER 31, 1996                    2

      CONDENSED CONSOLIDATED STATEMENTS OF
      INCOME FOR THE TWELVE WEEKS ENDED
      MARCH 25, 1997 AND MARCH 19, 1996                          3

      CONDENSED CONSOLIDATED STATEMENTS OF
      CASH FLOWS FOR THE TWELVE WEEKS ENDED
      MARCH 25, 1997 AND MARCH 19, 1996                          4

      NOTES TO CONDENSED CONSOLIDATED
      FINANCIAL STATEMENTS                                       5

ITEM 2.  MANAGEMENT'S DISCUSSION AND
      ANALYSIS OF FINANCIAL CONDITION AND
      RESULTS OF OPERATIONS                                      6

PART II.  OTHER INFORMATION
---------------------------
ITEMS 1 THROUGH 5 HAVE BEEN OMITTED
SINCE THE ITEMS ARE EITHER INAPPLICABLE OR THE
ANSWER IS NEGATIVE

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                       11

PART III.  EXHIBITS
-------------------

11.1        STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS


                                      -1-
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                          March 25, 1997         December 31, 1996
                                                                                          --------------         -----------------
                                           ASSETS

Current assets:
<S>                                                                                      <C>                   <C>                
    Cash and cash equivalents                                                            $    157,992,396      $       150,721,286
    Accounts receivable                                                                         2,060,776                2,233,119
    Inventories                                                                                 6,718,187                4,728,071
    Pre-opening costs - net                                                                     5,765,153                6,250,241
    Deferred income taxes                                                                         954,383                  584,780
    Other current assets                                                                        1,346,414                  783,557
                                                                                                -----------            -----------
         Total current assets                                                                 174,837,309              165,301,054

Property and equipment, net                                                                   367,865,568              350,588,246
Intangible and other assets, net (principally goodwill)                                        26,521,246               26,262,455
                                                                                                -----------            -----------
            Total assets                                                                 $    569,224,123      $       542,151,755
                                                                                                ===========            ===========
                            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                                     $      9,964,804      $         8,202,116
    Other current liabilities                                                                  33,111,073               30,854,934
                                                                                               ------------           ------------
            Total current liabilities                                                          43,075,877               39,057,050


Deferred income taxes                                                                           6,613,528                7,306,978
Other non-current liabilities                                                                     228,692                  247,510
Minority interest                                                                                 134,449                  301,384
Stockholders' Equity:
    Preferred stock                                                                                     -                        -
    Common stock                                                                                  409,590                  407,027
    Additional paid-in capital                                                                347,123,784              341,158,492
    Retained earnings                                                                         172,411,048              154,207,532
    Translation adjustment                                                                       (772,845)                (534,218)
                                                                                               ------------           ------------
            Total stockholders' equity                                                        519,171,577              495,238,833
                                                                                               ------------           ------------
            Total liabilities and stockholders' equity                                   $    569,224,123      $       542,151,755
                                                                                               ============           ============
</TABLE>

                             See accompanying notes.
                                      - 2 -
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                                                    For the Twelve Weeks Ended
                                                                                              -------------------------------------
                                                                                              March 25, 1997         March 19, 1996
                                                                                              --------------         --------------
<S>                                                                                      <C>                        <C>           
Net sales                                                                                $    130,255,616           $  106,375,328
Costs and expenses:
    Costs of sales                                                                             45,957,040               37,584,027
    Restaurant operating expenses                                                              45,389,594               37,718,967
    Depreciation and amortization                                                               6,430,554                6,313,030
                                                                                               ------------           ------------
Restaurant costs and expenses                                                                  97,777,188               81,616,024
                                                                                               ------------           ------------
Restaurant operating income                                                                    32,478,428               24,759,304
General and administrative expenses                                                             4,643,388                4,665,802
                                                                                               ------------           ------------
Income from operations                                                                         27,835,040               20,093,502

Other income, principally interest                                                                986,147                  634,194
                                                                                               ------------           ------------

Income before income taxes and minority interest                                               28,821,187               20,727,696
Provision for income taxes                                                                    (10,602,788)              (8,183,856)
Minority interest                                                                                 (14,883)                 392,241
                                                                                               ------------           ------------
Net income                                                                               $     18,203,516           $   12,936,081
                                                                                               ============           ============

Primary net income per share                                                             $           0.44           $         0.33
                                                                                               ============           ============
</TABLE>

                             See accompanying notes.
                                      - 3 -
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                                  For the twelve weeks ended
                                                                                              -------------------------------------
                                                                                              March 25, 1997         March 19, 1996
                                                                                              --------------         --------------

<S>                                                                                         <C>                       <C>          
Cash flows from operating activities:
  Net income                                                                                $  18,203,516             $  12,936,081
  Adjustments to reconcile net income to net cash
     provided by operating activities:
        Depreciation and amortization                                                           6,522,664                 6,313,030
        Net change in operating assets and liabilities:
          Change in operating assets                                                           (3,993,942)                2,342,621
          Change in operating liabilities                                                       3,139,624                (1,122,428)
                                                                                            -------------             -------------
            Net cash provided by operating activities                                          23,871,862                20,469,304

Cash flows from investing activities:
  Purchases of property and equipment                                                         (21,423,374)              (23,890,992)
  Other                                                                                          (906,606)                1,608,009
                                                                                            -------------             -------------
            Net cash used in investing activities                                             (22,329,980)              (22,282,983)

Cash flows from financing activities:
  Net proceeds from issuance of common stock                                                    5,967,855                   628,411
                                                                                            -------------             -------------
        Net cash provided by financing activities                                               5,967,855                   628,411
                                                                                            -------------             -------------
Effect of exchange rate on cash                                                                  (238,627)                 (284,363)


        Net increase in cash and cash equivalents                                               7,271,110                (1,469,631)

Cash and cash equivalents at beginning of period                                              150,721,286                67,424,884
                                                                                            -------------             -------------
Cash and cash equivalents at end of period                                                  $ 157,992,396             $  65,955,253
                                                                                            =============             =============

Supplemental disclosure of cash flow information:
  Cash paid for income taxes                                                                $   4,690,690             $     869,920

</TABLE>

                             See accompanying notes.
                                      - 4 -
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.    BASIS OF PRESENTATION


      The unaudited  Condensed  Consolidated  Financial  Statements  include all
adjustments,  consisting  of  normal,  recurring  accruals,  which  the  Company
considers  necessary for a fair  presentation of the financial  position and the
results of operations for the periods presented. The results of the twelve weeks
ended  March 25,  1997,  are not  necessarily  indicative  of the  results to be
expected for the full year ending  December 30, 1997.  This quarterly  report on
Form 10-Q should be read in conjunction with the Company's audited  consolidated
financial statements in its 1996 Form 10-K.


2.    STOCK OPTIONS

      During the twelve week period  ended March 25, 1997,  the Company  granted
stock options for 3,491,040  shares of Common Stock at exercise  prices  ranging
from  $26.13 to $28.38  per share  pursuant  to its 1992 stock  option  plan for
employees.


3.    EARNINGS PER SHARE


      Primary  earnings  per share  amounts are  computed  based on the weighted
average  number of shares  actually  outstanding  plus the shares  that would be
outstanding  assuming exercise of dilutive stock options which are considered to
be common stock equivalents.  The number of shares that would be issued from the
exercise of stock  options  has been  reduced by the number of shares that could
have  been  purchased  from the  proceeds  at the  average  market  price of the
company's  stock.  The number of shares  resulting from this computation for the
twelve  weeks  ended  March  25,  1997 and  March 19,  1996 was  41,334,247  and
38,797,073, respectively.
Fully  diluted  computations  are not  presented as the dilutive  effect was not
significant.

4.    RECENTLY ISSUED ACCOUNTING STANDARDS

      In  February  1997,  the  Financial   Accounting  Standards  Board  issued
Statement of Financial  Accounting Standards No. 128, "Earnings per Share" ("FAS
128"),   which   specifies  the   computation,   presentation,   and  disclosure
requirements  for  earnings  per  share  with  the  objective  to  simplify  the
computation of earnings per share. FAS 128 is effective for financial statements
for periods  ending  after  December  15, 1997 and  earlier  application  is not
permitted.  After the effective  date, all prior period  earnings per share data
shall be restated to conform with the provisions of FAS 128. The adoption of FAS
128 is not  expected to have a material  impact on the  Company's  earnings  per
share data.

                                      -5-
<PAGE>

                       LONE STAR STEAKHOUSE & SALOON, INC.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

      The following  discussion and analysis should be read in conjunction  with
the Financial Statements and Notes thereto included elsewhere in this Form 10-Q.

      The Company is continuing its rapid expansion under which it has opened 36
restaurants  in  1993,  48  restaurants  in 1994,  45  restaurants  in 1995,  45
restaurants  in 1996 and  intends  to open at least 60 Lone  Star  Steakhouse  &
Saloon  restaurants in 1997, all of which are expected to be  Company-owned  and
operated. As of March 25, 1997 the Company has opened 10 of the 1997 development
restaurants.

      Pre-opening  costs  include  labor  costs,  costs of hiring  and  training
personnel and certain other costs relating to opening new  restaurants,  and are
capitalized  and amortized over a 12 month period,  beginning in the period that
the restaurants open.

      The Company is expanding its upper-end steakhouse presence,  where average
checks are $60 or more, by developing the Del Frisco's  Double Eagle Steak House
concept  ("Del  Frisco's")  in  addition  to its Lone Star  Steakhouse  & Saloon
restaurants.  The Company  opened its third Del Frisco's in Denver,  Colorado in
January, 1997 and expects to open two or three additional Del Frisco's in 1997.

      The Company is also developing its upscale steak restaurant  concept under
the tradename Sullivan's Steakhouse. The average check per Sullivan's Steakhouse
customer  is  approximately  $35 to  $40.  The  Company  opened  two  Sullivan's
Steakhouses  in 1996 and expects to develop  four to six  additional  Sullivan's
restaurant in 1997.

      Internationally, the Company, through a joint venture, operates twenty-two
Lone Star Steakhouse & Saloon restaurants in Australia, one of which opened this
year, and expects to open an additional eight to ten units in 1997.







                                      -6-
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS




RESULTS OF OPERATIONS
      The  following  table  sets  forth  for  the  periods  indicated  (i)  the
percentages which certain items included in the Condensed Consolidated Statement
of Income bear to net sales, and (ii) other selected operating data:

<TABLE>
<CAPTION>
                                                                               TWELVE WEEKS ENDED (1)
                                                                           MARCH 25,            MARCH 19,
                                                                             1997                  1996
                                                                             ----                  ----
                                                                              (DOLLARS IN THOUSANDS)

<S>                                                                      <C>                  <C>     
INCOME STATEMENT DATA:
      Net Sales                                                            100.0%               100.0%
      Costs and expenses:
            Costs of sales                                                  35.3                 35.3
            Restaurant operating expenses                                   34.8                 35.5
            Depreciation and amortization                                    4.9                  5.9
                                                                           -----                -----


                 Restaurant costs and expenses                              75.0                 76.7
                                                                           -----                -----


      Restaurant operating income                                           25.0                 23.3
      General and administrative expenses                                    3.6                  4.4
                                                                           -----                -----

      Income from operations                                                21.4                 18.9
      Other income, principally interest,
       and minority interest                                                 0.7                  1.0
                                                                           -----                -----


      Income before provision for income taxes                              22.1                 19.9
      Provision for income taxes                                             8.1                  7.7
                                                                           -----                -----


      Net income                                                            14.0%                12.2%
                                                                           =====                ===== 


RESTAURANT OPERATING DATA:
      Average sales per restaurant on an annualized basis (2)           $  2,479             $  2,664
      Number of restaurants at end of the period                             244                  180
</TABLE>


(1)   The Company operates on a fifty-two or fifty-three week fiscal year ending
      the last Tuesday in December.  The fiscal quarters for the Company consist
      of accounting periods of twelve,  twelve,  twelve and sixteen or seventeen
      weeks, respectively.

(2)   Average  sales per  restaurant  on an  annualized  basis are  computed  by
      dividing a  restaurant's  total  sales for full  accounting  periods  open
      during the  period by the  number of full  accounting  periods  open,  and
      multiplying the result by thirteen.

                                      -7-

<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.


TWELVE WEEKS ENDED MARCH 25, 1997 COMPARED TO TWELVE WEEKS ENDED MARCH 19, 1996


      Net sales increased  $23,880,000  (22.4%) to  $130,255,616  for the twelve
weeks ended March 25, 1997 compared to  $106,375,328  for the twelve weeks ended
March 19, 1996 principally  attributable to $25,254,000 in sales from the 52 new
domestic Lone Star  restaurants  opened since March 1996,  additional sales from
the  Sullivan's and Del Frisco's  restaurants  opened in 1996 and sales from the
Australian joint venture. Same store sales were down 5.1% in the first quarter.

      Costs of sales, primarily food and beverages were consistent,  at 35.3% of
sales for both periods.  During these periods,  the Company purchased beef under
contracted prices which allowed the company to maintain  consistent beef prices.
Such contracts have now been extended through September 1997.

      Restaurant  operating  expenses  for the twelve weeks ended March 25, 1997
increased  $7,671,000  (20.3%) from  $37,719,000 in the twelve weeks ended March
19, 1996 to  $45,390,000,  and such  expenses  decreased as a percentage  of net
sales from 35.5% to 34.8%.  Most of this improvement is attributable to improved
labor controls in the domestic Lone Star Steakhouse & Saloon restaurants.

      Depreciation  and  amortization  increased  $118,000  (1.9%) in the twelve
weeks ended March 25, 1997 over the twelve weeks ended March 19, 1996,  and such
expenses decreased as a percentage of net sales from 5.9% to 4.9%. The reduction
of capitalized  pre-opening  expenses for 64 new restaurants  opened since March
1996  versus  the  restaurants  opened  in 1995 and the  first  quarter  of 1996
resulted in a reduction of pre-opening  expense  amortization.  This improvement
offset the additional  depreciation and amortization expenses related to the new
units  opened  since March 1996.  General and  administrative  expenses  for the
twelve weeks ended March 25, 1997,  decreased  $22,000 (.5%) from the comparable
period in 1996.

      Certain accounting and administrative services are contracted from Coulter
Enterprises,  Inc,  a  restaurant  management  services  company  owned  by  the
Company's  Chairman  of the Board  and  Chief  Executive  Officer.  The  service
agreement provides for specified  accounting and  administration  services to be
provided on a cost  pass-through  basis  under  which the  Company  paid a fixed
annual charge of  $1,272,000,  plus an additional fee of $416 per restaurant per
28-day accounting  period and reimbursement of out-of-pocket  costs and expenses
during the fiscal  year ended  December  31,  1996.  The service  agreement  was
renewed for fiscal 1997 with the fixed annual  charge  increasing  to $2,010,000
and the per restaurant, per accounting period fee increasing to $440. Should the
service  agreement not be renewed in the future,  the Company would incur direct
costs  for  accounting  and  administration,  personnel,  rent and  other  costs
associated  with a separate  office;  however,  the Company  believes  that such
direct  costs  would  not be  materially  different  than the  costs  under  the
contractual arrangement.

      Other income,  principally interest,  for the twelve weeks ended March 25,
1997,  was $986,000,  a $352,000  increase from the  comparable  period in 1996,
reflecting  increased interest income from the investment of the net proceeds of
the 1996 public offering.

      The  effective  income tax rate for the twelve  weeks ended March 25, 1997
and the effective  income tax rate for the twelve weeks ended March 19, 1996 was
36.8% and 38.7%,  respectively.  The decrease in the rate is primarily due to an
increase in interest income nontaxable at the federal level.

                                      -8-
<PAGE>

                       LONE STAR STEAKHOUSE & SALOON, INC.

IMPACT OF INFLATION

      The  primary  inflationary  factors  affecting  the  Company's  operations
include  food and  labor  costs.  A large  number  of the  Company's  restaurant
personnel are paid at the federal and state established minimum wage levels and,
accordingly, changes in such wage levels affect the Company's labor costs. Since
the majority of personnel are tipped  employees the recent  minimum wage changes
will have very  little  effect on labor  costs.  As costs of food and labor have
increased,  the Company has  historically  been able to offset  these  increases
through  economies of scale,  although  there is no assurance  that such offsets
will  continue.  To date,  inflation has not had a material  impact on operating
margins.

FORWARD LOOKING STATEMENTS

      This report contains certain 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,  amended.  Stockholders are cautioned that all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the ability of the Company to open new restaurants,  general market
conditions,   competition  and  pricing.   Although  the  Company  believes  the
assumptions  underlying  the  forward-looking  statements  contained  herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements contained in the report will
prove to be accurate.




                                      -9-
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.



LIQUIDITY AND CAPITAL RESOURCES

      The following  table  presents a summary of the  Company's  cash flows for
each of the twelve weeks ended March 25, 1997 and March 19, 1996.



                                                        Twelve weeks ended
                                                      March 25,      March 19,
                                                        1997           1996
                                                        ----           ----

Net cash provided by operating activities.......    $23,871,862    $20,469,304
Net cash used in investment activities..........    (22,329,980)   (22,282,983)
Net cash provided by financing
      activities................................      5,967,855        628,411
Net increase (decrease) in cash.................      7,271,110     (1,469,631)

During the twelve week period ended March 25, 1997, the Company's  investment in
property and equipment was $21,423,000.

      The Company has opened 230  restaurants  in the past five fiscal  years of
which 48 opened in 1996 and an additional  twelve opened during the twelve weeks
ended March 25,  1997.  The Company  does not have  significant  receivables  or
inventory and receives  trade credit based upon  negotiated  terms in purchasing
food and  supplies.  Because  funds  available  from cash  sales are not  needed
immediately to pay for food and supplies,  or to finance inventory,  they may be
considered as a source of financing for noncurrent capital expenditures.

      At  March  25,  1997,  the  Company  had  $157,992,396  in cash  and  cash
equivalents.  While the  Company  has not  established  a credit  facility,  the
Company  believes it could  establish a facility on suitable  terms. As of March
25, 1997, the Company has acquired 30 sites for future development,  10 of which
are leased.  In  addition,  as of such date the Company had entered into one new
lease and nine  contracts  to purchase  sites.  The  Company  was also  actively
negotiating  to  purchase or lease nine  additional  sites.  In the future,  the
Company  anticipates that a greater  proportion of its new restaurant  locations
will  be  purchased   rather  than  leased.   The  Company   expects  to  expend
approximately  $110,000,000  to open new  restaurants  through the  remainder of
fiscal 1997.


                                      -10-

<PAGE>


                       LONE STAR STEAKHOUSE & SALOON, INC.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
                (a)  Exhibit   11.1           Computation of Per Share Earnings
                     Exhibit     27           Financial Data Schedule

                (b)  Forms on 8-K..............None





                                      -11-
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

                                   SIGNATURES

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  in its  behalf by the
undersigned thereunto duly authorized.

                                       LONE STAR STEAKHOUSE & SALOON, INC.
                                       (Registrant)

                                        /s/ John D. White
                                        ----------------------------------------
                                        John D. White
                                        Chief Financial and Principal Accounting
                                        Officer, Executive Vice President,
                                        Treasurer and Director



                                      -15-