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                                  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 22, 2005                                      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 by check mark  whether  the  Registrant  is an  accelerated
filer (as defined in Rule 12b-2 of the Exchange Act.)

                                                                 /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 23, 2005
COMMON STOCK, $.01 PAR VALUE                        20,519,094 SHARES

                       LONE STAR STEAKHOUSE & SALOON, INC.

                                      INDEX

                                                                           PAGE
                                                                          NUMBER
                                                                          ------
PART I.   FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

      CONDENSED CONSOLIDATED BALANCE SHEETS                                 2
      AT MARCH 22, 2005 AND DECEMBER 28, 2004

      CONDENSED CONSOLIDATED STATEMENTS OF                                  3
      INCOME FOR THE TWELVE WEEKS ENDED
      MARCH 22, 2005 AND MARCH 23, 2004

      CONDENSED CONSOLIDATED STATEMENTS OF                                  4
      CASH FLOWS FOR THE TWELVE WEEKS ENDED
      MARCH 22, 2005 AND MARCH 23, 2004

      NOTES TO CONDENSED CONSOLIDATED                                       5
      FINANCIAL STATEMENTS

ITEM 2.  MANAGEMENT'S DISCUSSION AND                                        9
ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

ITEM 3. QUANTITATIVE AND QUALITATIVE                                       14
DISCLOSURES ABOUT MARKET RISKS

ITEM 4.  CONTROLS AND PROCEDURES                                           14

PART II.  OTHER INFORMATION
---------------------------
ITEMS 1, 3, 4 AND 5 HAVE BEEN OMITTED
SINCE THE ITEMS ARE EITHER INAPPLICABLE OR THE
ANSWER IS NEGATIVE

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS       14

ITEM 6.  EXHIBITS                                                          15

                                      -1-

                       LONE STAR STEAKHOUSE & SALOON, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

                                                                      March 22, 2005    December 28, 2004
                                                                      --------------    -----------------
                        ASSETS

Current assets:
    Cash and cash equivalents                                           $  27,568         $  38,515
    Short-term investments                                                 53,770            33,500
                                                                        ---------         ---------
                                                                           81,338            72,015
    Inventories                                                            11,989            12,765
    Prepaid insurance deposits                                             14,250            14,537
    Other current assets                                                   13,609            13,757
                                                                        ---------         ---------
        Total current assets                                              121,186           113,074
Property and equipment                                                    546,960           539,087
Less accumulated depreciation and amortization                           (222,845)         (217,837)
                                                                        ---------         ---------
                                                                          324,115           321,250

Other assets:
    Deferred income taxes                                                  25,239            24,434
    Intangible and other assets, net                                       39,877            39,534
                                                                        ---------         ---------
           Total assets                                                 $ 510,417         $ 498,292
                                                                        =========         =========
                        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                    $  17,549         $  13,845
    Accrued self insurance                                                 16,618            15,094
    Other current liabilities                                              42,575            44,813
                                                                        ---------         ---------
           Total current liabilities                                       76,742            73,752

Long term liabilities, principally defered compensation obligations        22,322            21,263
Deferred rent obligations                                                  10,706            10,496
                                                                        ---------         ---------
           Total liabilities                                              109,770           105,511

Stockholders' equity:
    Preferred stock                                                          --                --
    Common stock                                                              205               205
    Additional paid-in capital                                            140,108           139,570
    Retained earnings                                                     263,997           256,669
    Common stock held by Trust                                             (3,663)           (3,663)
                                                                        ---------         ---------
           Total stockholders' equity                                     400,647           392,781
                                                                        ---------         ---------
           Total liabilities and stockholders' equity                   $ 510,417         $ 498,292
                                                                        =========         =========

                             See accompanying notes.

                                       -2-

                       LONE STAR STEAKHOUSE & SALOON, INC.
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                  (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
                                   (UNAUDITED)

                                                                  For the twelve weeks ended
                                                         -----------------------------------------
                                                         March 22, 2005            March 23, 2004
                                                         ---------------           ---------------
                                                                                    As Restated

Net sales                                                 $ 165,353                   $ 160,596
Costs and expenses:
    Costs of sales                                           56,085                      55,953
    Restaurant operating expenses                            76,412                      72,984
    Depreciation and amortization                             4,396                       4,622
                                                          ---------                   ---------
Restaurant costs and expenses                               136,893                     133,559
General and administrative expenses                          11,453                      10,295
Non-cash stock compensation expense                             692                         910
                                                          ---------                   ---------
Income from operations                                       16,315                      15,832
Other income, net                                               146                         447
                                                          ---------                   ---------
Income from continuing operations before income taxes        16,461                      16,279
Provision for income taxes                                    5,472                       5,343
                                                          ---------                   ---------
Income from continuing operations                            10,989                      10,936
Discontinued operations:
    Income (loss) from operations before income tax             (78)                         51
    Income tax provision (benefit)                                2                         (15)
                                                          ---------                   ---------
    Income (loss) from discontinued operations                  (80)                         66
                                                          ---------                   ---------
Net income                                                $  10,909                   $  11,002
                                                          =========                   =========

Basic earnings per share:
    Continuing operations                                 $    0.54                   $    0.52
    Discontinued operations                                    --                          --
                                                          ---------                   ---------
    Basic earnings per share                              $    0.54                   $    0.52
                                                          =========                   =========
Diluted earnings per share:
    Continuing operatons                                  $    0.49                   $    0.46
    Discontinued operations                                    --                          --
                                                          ---------                   ---------
    Diluted earnings per share                            $    0.49                   $    0.46
                                                          =========                   =========

Dividends per share                                       $   0.175                   $   0.175
                                                          =========                   =========

                             See accompanying notes.

                                       -3-

                       LONE STAR STEAKHOUSE & SALOON, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

                                                                          For the twelve weeks ended
                                                                     ---------------------------------
                                                                      March 22, 2005   March 23, 2004
                                                                     ----------------  ---------------
Cash flows from operating activities:                                                    As Restated
    Net income                                                         $  10,909          $  11,002
    Adjustments to reconcile net income to net cash provided
        by operating activities:
        Depreciation and amortization                                      5,051              5,262
        Non-cash stock compensation expense                                  692                910
        Loss (gain) on sale of assets                                         95                (63)
        Deferred income taxes                                               (991)            (2,050)
        (Income) loss from discontinued operations                            80                (66)
        Net change in operating assets and liabilities:
             Change in operating assets                                    1,397              4,041
             Change in operating liabilities                               3,320              5,296
                                                                       ---------          ---------
Net cash provided by operating activities of continuing operations        20,553             24,332
Cash flows from investing activities:
    Acquisition of TX.C.C. Inc., net of cash acquired                       --              (12,505)
    Purchases of short-term investments                                  (20,270)              --
    Purchases of property and equipment                                   (7,885)            (3,804)
    Proceeds from sale of assets                                             113                 69
    Other                                                                    173                778
                                                                       ---------          ---------
Net cash used in investing activities of continuing operations           (27,869)           (15,462)
Cash flows from financing activities:
    Net proceeds from issuance of common stock                                30                672
    Cash dividends                                                        (3,581)            (3,688)
                                                                       ---------          ---------
Net cash used in financing activities of continuing operations            (3,551)            (3,016)
Net cash provided by (used in) discontinued operations                       (80)               837
                                                                       ---------          ---------
Net increase (decrease) in cash and cash equivalents                     (10,947)             6,691
Cash and cash equivalents at beginning of period                          38,515             96,230
                                                                       ---------          ---------
Cash and cash equivalents at end of period                             $  27,568          $ 102,921
                                                                       =========          =========

Supplemental disclosure of cash flow information:
    Cash paid for income taxes                                         $   1,437          $     900
                                                                       =========          =========

Non cash investing activities:
    Issuance of common stock in connection with acquisition            $    --            $   1,542
                                                                       =========          =========

                             See accompanying notes.

                                       -4-

                       LONE STAR STEAKHOUSE & SALOON, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1.    BASIS OF PRESENTATION

      The accompanying  unaudited condensed  consolidated  financial  statements
have been prepared in accordance with generally accepted  accounting  principles
for interim  financial  information  and with the  instructions to Form 10-Q and
Article  10 of  Regulation  S-X.  Accordingly,  they  do  not  include  all  the
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management all adjustments,
consisting of normal,  recurring accruals,  which Lone Star Steakhouse & Saloon,
Inc.  (the  "Company")  considers  necessary  for a  fair  presentation  of  the
financial  position and the results of operations for the periods presented have
been  included.  The results  for the twelve  weeks ended March 22, 2005 are not
necessarily  indicative  of the results to be expected  for the full year ending
December  27,  2005.  This  quarterly  report  on Form  10-Q  should  be read in
conjunction with the Company's audited consolidated  financial statements in its
annual report on Form 10-K for the year ended December 28, 2004.

      Certain amounts for the prior year have been  reclassified to conform with
the current year's presentation.

2.    RESTATEMENT OF PRIOR FINANCIAL INFORMATION

      In December 2004, the Company  commenced a review of its lease  accounting
and leasehold  depreciation  policies.  As a result of that review,  the Company
determined  it  appropriate  to  restate  its prior  financial  statements.  The
information  for the twelve  weeks ended March 23,  2004,  has been  restated to
reflect  depreciation for certain  leasehold  improvements and to recognize rent
expense on a straight line basis over the expected lease term, including renewal
option  periods  where  failure to  exercise  such  options  would  result in an
economic  penalty.  See Note 1 to the Consolidated  Financial  Statements in the
Company's 2004 Form 10-K for further discussion.

3.    EARNINGS PER SHARE

      Basic  earnings  per share  amounts  are  computed  based on the  weighted
average number of shares outstanding during the periods. For purposes of diluted
computations,  average shares  outstanding have been adjusted to reflect (1) the
number of  shares  that  would be issued  from the  exercise  of stock  options,
reduced  by the  number of shares  which  could  have  been  purchased  from the
proceeds  at the average  market  price of the  Company's  stock or price of the
Company's stock on the exercise date if options were exercised during the period
presented  and (2) the  number  of shares  that may be  issuable  to effect  the
settlement  of  certain  deferred  compensation   liabilities  pursuant  to  the
Company's Stock Option Deferred Compensation Plan. The effect of shares issuable
to settle the deferred  compensation  liabilities  has not been included for any
periods as their effect would have been antidilutive.

                                      -5-

      The weighted average shares  outstanding for the periods  presented are as
follows (in thousands):

                                             For the twelve weeks ended
                                          --------------------------------
                                          March 22, 2005    March 23, 2004
                                          --------------    --------------

Basic average shares outstanding             20,296            20,955
Diluted average shares outstanding           22,211            23,682

4.    TERM REVOLVER

      The  Company has a credit  facility  pursuant  to an  unsecured  revolving
credit agreement with a group of banks led by SunTrust Bank. The credit facility
allows the Company to borrow up to $30,000 with an accordian feature  permitting
for an increase in the credit  facility in an amount up to $20,000 such that the
total amount of the credit  facility  does not exceed  $50,000.  The  additional
borrowing  is subject  to the  approval  of the  lenders.  The credit  agreement
terminates in October 2007;  however, it is subject to acceleration in the event
of a change of  control  of the  Company  as that term is  defined in the credit
agreement. At the time of each borrowing,  the Company may elect to pay interest
at the higher of SunTrust Bank's  published prime rate or the Federal Funds Rate
plus  one-half  of one  percent  (0.50%);  or LIBOR  rate plus one and  one-half
percent (1.50%). The Company is required to achieve certain financial ratios and
to maintain certain net worth  requirements as defined in the credit  agreement.
The Company is required to pay on a quarterly basis a facility fee equal to .25%
per annum on the daily unused amount of the credit  facility.  At March 22, 2005
and at December 28, 2004, there were no borrowings  outstanding  pursuant to the
credit facility.

      The Company also has entered into a $5,000  revolving  term loan agreement
with a bank,  under which no borrowings  were  outstanding at March 22, 2005 and
December 28, 2004. The term loan agreement matures in October 2007. The interest
rate is at .50%  below the daily  prime  rate as  published  in the Wall  Street
Journal.  In addition,  the Company pays a facility fee of .25% per annum on the
daily unused portion of the credit facility.

5.    COMMON STOCK TRANSACTIONS

      The Board of  Directors  has from time to time  authorized  the Company to
purchase shares of the Company's common stock in the open market or in privately
negotiated  transactions.  The Company  made no  purchases  of its common  stock
during the twelve weeks ended March 22,  2005,  or during the twelve weeks ended
March  23,  2004.  The  Company  is  accounting  for  any  purchases  using  the
constructive  retirement method of accounting wherein the aggregate par value of
the stock is charged to the common stock account and the excess of cost over par
value is charged to paid-in capital. At March 22, 2005, the Company may purchase
up to 2,026,190 shares of its common stock pursuant to its current authorization
by the Board of Directors.

      In  September   2002,  the  Company   adopted  a  Stock  Option   Deferred
Compensation  Plan (the "Plan"),  which allows  certain key  executives to defer
compensation  arising  from the  exercise  of stock  options  granted  under the
Company's  1992  Incentive and  Nonqualified  Stock Option Plan. In fiscal 2003,
pursuant to the terms of the  Deferred  Plan in the  exercise  of certain  stock
options by a  participant,  the Company  issued  177,145 shares to a Rabbi trust
(the "Trust") with Intrust Bank, NA serving as the trustee.  The Trust holds the
shares for the benefit of the participating  employees  ("Participants").  Under
the terms of the Plan,  Participants may elect to change the Plan's  investments
from time to time which may result in the sale of the  shares.  Since the shares
held by the Trust  are held  pursuant  to a  deferred  compensation  arrangement

                                      -6-

whereby  amounts earned by an employee are invested in the stock of the employer
and placed in the Trust, the Company accounts for the arrangement as required by
Emerging Issues Task Force ("EITF") consensus on Issue No. 97-14, ACCOUNTING FOR
DEFERRED  COMPENSATION  ARRANGEMENTS  WHERE  AMOUNTS  EARNED ARE HELD IN A RABBI
TRUST AND INVESTED ("EITF No. 97-14").  Accordingly,  shares issued to the Trust
were  recorded  at fair  market  value at the date  issued by the Company in the
amount of $3,663, which is reflected in the accompanying  Condensed Consolidated
Balance  Sheets as Common  Stock  Held By Trust.  The  corresponding  amount was
credited to deferred compensation obligations.  Each period, the shares owned by
the Trust are valued at the closing market price, with corresponding  changes in
the underlying shares being reflected as adjustments to compensation expense and
deferred  compensation  obligations.  At March 22, 2005,  the Trust held 177,145
shares of the Company's  common stock.  Included in non-cash stock  compensation
expense  for the twelve  weeks  ended  March 22,  2005 and March 23,  2004 was a
charge of $204 and $760,  respectively,  relating to the changes in market price
for such shares.

6.    ACQUISITION OF TEXAS LAND AND CATTLE STEAK HOUSE

      On January 28, 2004,  the  Company's  Joint Plan of  Reorganization  ("the
Plan") to purchase  TX.C.C.,  Inc. and  affiliated  entities,  TXCC-Preston  and
TXLC-Albuquerque,  (collectively,  "TXCC") was  confirmed  by the United  States
Bankruptcy  Court for the  District of Texas,  Dallas  Division  and the Company
acquired  100% of  TXCC  on that  date.  The  Company's  consolidated  financial
statements  include  TXCC's  results of operations  from January 28, 2004.  TXCC
presently operates 20 Texas Land & Cattle Steak House(R) restaurants located
primarily  in Texas.  The  acquisition  of TXCC allows the Company to expand its
steakhouse  concepts,  provides strategic growth opportunities and significantly
increases  its  presence  in  the  Texas  market.  Pursuant  to  the  Plan,  the
pre-petition  creditors at their option were entitled to receive  either cash or
common stock of Lone Star Steakhouse &  Saloon,  Inc. in settlement of their
claims.  The aggregate  purchase price was $23,496 and consisted of cash, shares
of the Company's  common stock and the  assumption of certain  liabilities.  The
cash portion of the  acquisition  was funded from the  Company's  existing  cash
balances. In connection with the acquisition, the Company issued an aggregate of
119,485  shares of its common  stock valued at $2,679.  At March 23,  2004,  the
Company  had issued  68,747  shares of such shares  valued at $1,542.  Pro forma
results  giving  effect to the  acquisition  of TXCC are not  presented  for the
periods as such amounts are not significant.

7.    DISCONTINUED OPERATIONS

      The Company  accounts for its closed  restaurants  in accordance  with the
Provisions  of SFAS No.  144,  ACCOUNTING  FOR THE  IMPAIRMENT  OR  DISPOSAL  OF
LONG-LIVED ASSETS.  Therefore, when a restaurant is closed and the restaurant is
either held for sale or abandoned,  the  restaurant's  operations are eliminated
from ongoing operations. Accordingly, the operations of such restaurants, net of
applicable  income taxes,  are presented as  discontinued  operations  and prior
period  consolidated  financial  statements  are  reclassified.  The table below
reflects as discontinued  operations the applicable  operations of the Company's
Australian business and certain other domestic restaurants closed which meet the
criteria for such presentation.

                                      -7-

                                                  For the twelve weeks ended
                                              ---------------------------------
                                                March 22,             March 23,
                                                  2005                  2004
                                                  ----                  ----

Income (loss) from operations                $      (78)            $       51
Income tax benefit (expense)                         (2)                    15
                                             -----------            ----------
Net income (loss) from
discontinued operations                      $      (80)            $       66
                                             ===========            ==========

8.    INCOME TAX

      The effective  income tax rate from  continuing  operations  was 33.2% and
32.8%  for  the  twelve   weeks  ended  March  22,  2005  and  March  23,  2004,
respectively.  The factors  which cause the effective tax rates to vary from the
federal statutory rate of 35% include state income taxes, the impact of FICA Tip
and  other  credits,  certain  non-deductible  expenses  and the tax  effect  of
incentive  stock  options.  There is  generally  no tax  impact  to the  Company
associated with incentive stock options and the related amortization  associated
with such  options in the income  statement.  However,  tax  benefits  may arise
related to incentive  stock options at the time the options are exercised to the
extent  that the  exercise is followed  by a  disqualifying  disposition  of the
shares by the optionee. The 2004 effective tax rates reflect a greater amount of
tax benefits  arising from the impact of incentive  stock options as compared to
2005.

9.    SUBSEQUENT EVENTS

      On March 31, 2005, the Board of Directors declared the Company's quarterly
cash  dividend  of $.195 per share  payable  April 25, 2005 to  shareholders  of
record on April 11, 2005.

                                      -8-

                       LONE STAR STEAKHOUSE & SALOON, INC.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

GENERAL
     The following  discussion and analysis  should be read in conjunction  with
the  condensed  consolidated  financial  statements  including the notes thereto
included elsewhere in this Form 10-Q.

     The Company  opened no  restaurants  in either the twelve weeks ended March
22, 2005, or the twelve weeks ended March 23, 2004.

     There were 251  operating  domestic  Lone Star  Steakhouse & Saloon  ("Lone
Star") restaurants as of March 22, 2005. In addition,  a licensee operates three
Lone Star restaurants in California.

     The Company  currently  operates five Del Frisco's Double Eagle Steak House
("Del Frisco's") restaurants.  In addition, a licensee operates one Del Frisco's
restaurant.   The   Company   currently   operates  15   Sullivan's   Steakhouse
("Sullivan's")  restaurants,  20 Texas  Land & Cattle  Steak  House(R)  ("TXCC")
restaurants and onE Frankie's Italian Grille restaurant.

     Internationally,  licensees  operate  12  Lone  Star  Steakhouse  &  Saloon
restaurants in Australia and one in Guam.

     On January 28, 2004,  the Company  acquired 20 TXCC  restaurants  which are
located  primarily in Texas.  The  operating  results of those  restaurants  are
included  in the  Company's  consolidated  operating  results  from  the date of
acquisition.

RESTATEMENT OF PRIOR FINANCIAL INFORMATION

     In December  2004, the Company  commenced a review of its lease  accounting
and leasehold  depreciation  policies.  As a result of that review,  the Company
determined  it  appropriate  to  restate  its prior  financial  statements.  The
information  for the twelve  weeks ended March 23,  2004,  has been  restated to
reflect  depreciation for certain  leasehold  improvements and to recognize rent
expense on a straight line basis over the expected lease term, including renewal
option  periods  where  failure to  exercise  such  options  would  result in an
economic  penalty.  See Note 1 to the Consolidated  Financial  Statements in the
Company's 2004 Form 10-K for further discussion.

                                      -9-

                       LONE STAR STEAKHOUSE & SALOON, INC.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
             (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

RESULTS OF OPERATIONS

      The following  table sets forth for the periods  indicated the percentages
which  certain  items  included  in  the  condensed  consolidated  statement  of
operations bear to net sales:

                                                             TWELVE WEEKS ENDED (1)
                                                         -------------------------------
                                                         MARCH 22, 2005   MARCH 23, 2004
                                                         --------------   --------------
                                                                           AS RESTATED
STATEMENT OF OPERATIONS DATA:
Net sales ...........................................       100.0%              100.0%
Costs and expenses:
      Costs of sales ................................        33.9                34.8
      Restaurant operating expenses .................        46.2                45.5
      Depreciation and amortization .................         2.7                 2.9
                                                            -----               -----

           Restaurant costs and expenses ............        82.8                83.2

General and administrative expenses .................         6.9                 6.4
 Non-cash stock compensation expense ................         0.4                 0.6
                                                            -----               -----

Income from operations ..............................         9.9                 9.8
Other income, net ...................................         0.1                 0.3
                                                            -----               -----

Income from continuing operations before income taxes        10.0                10.1
Provision for income taxes ..........................         3.3                 3.3
                                                            -----               -----
Income from continuing operations ...................         6.7                 6.8
Income (loss) from discontinued operations, net of
  applicable income taxes ...........................        (0.1)                0.1
                                                            -----               -----
Net income ..........................................         6.6%                6.9%
                                                            =====               =====

(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.

                                      -10-

LONE STAR STEAKHOUSE & SALOON, INC.

   TWELVE WEEKS ENDED MARCH 22, 2005 COMPARED TO TWELVE WEEKS ENDED MARCH 23,
          2004 (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

     Net sales  increased  $4,757 or 3.0% to $165,353 for the twelve weeks ended
March 22, 2005,  compared to $160,596 for the twelve weeks ended March 23, 2004.
Sales for the twelve  weeks ended March 22, 2005  include  twelve weeks of sales
for TXCC as compared with the prior period for fiscal 2004 which  includes sales
of TXCC of  approximately  $9,800 covering an eight week period from the date of
acquisition.  The Company's blended same store sales, representing net sales, by
store,  for all the Company owned  restaurant  concepts  opened for more than 18
months in the  current  and  comparable  prior year period  decreased  .7%.  The
Company's average check increased 2.1% and guest counts decreased 2.75%.

     Costs of sales, primarily food and beverages,  decreased as a percentage of
net sales to 33.9% from 34.8% due primarily to decreased costs for beef which is
partly offset by increased costs for seafood items as a result of changes in the
menu-mix.

     Restaurant  operating  expenses  for the twelve  weeks ended March 22, 2005
increased  $3,428 to $76,412  compared  to $72,984 in the prior year  period and
increased  as a  percentage  of net  sales  to 46.2%  from  45.5%.  Labor  costs
increased  .4% primarily as the result of increased  management  staffing at the
restaurants.  Building  maintenance  costs  increased  .3%  and  utility  costs,
primarily for natural gas, increased .2%. The increases were partially offset by
a decrease in the costs  related to  preopening  expenses as such  expenses  for
fiscal 2005 were approximately $46 compared to $287 in the prior year period.

     Depreciation  and  amortization  decreased  $226 for the twelve weeks ended
March 22, 2005 compared with the prior period.  The decrease is  attributable to
the  continued  reduction in  depreciation  for certain  assets that have become
fully  depreciated  for the  Company's  historical  concepts  which is partially
offset by the depreciation of assets related to the TXCC acquisition.

     General and  administrative  expenses increased $1,158 for the twelve weeks
ended March 22, 2005  compared to the prior period.  General and  administrative
expenses reflect an increase of approximately  $300 for increases related to the
TXCC  acquisition for the additional four week period included in fiscal 2005 as
compared with the prior period. In addition,  general and  administrative  costs
reflect higher compensation related costs, increased travel expenses,  increased
Sarbanes-Oxley compliance costs as well as increased costs for legal services.

     Non-cash  stock  compensation  expense for the twelve weeks ended March 22,
2005  was $692  compared  to $910 for the  prior  year  period.  The  change  is
primarily  attributable  to a charge of $204 compared to a charge of $760 in the
prior year period relating to the accounting for certain shares of the Company's
common  stock  held  by  a  Rabbi  Trust  pursuant  to a  deferred  compensation
arrangement  (See  Note 5 to  the  Notes  to  Condensed  Consolidated  Financial
Statements).   In  addition,  the  change  also  reflects  an  increase  in  the
amortization of other stock based compensation in 2005 compared to 2004.

      Other  income,  net for the twelve  weeks  ended  March 22,  2005 was $146
compared  to $447 for the prior  year.  The  decrease  in other  income  results
primarily  from a decrease in  interest  income and a decrease in gains from the
sale of assets in 2005 as compared to 2004.

     The  effective  income tax rate from  continuing  operations  was 33.2% and
32.8%  for  the  twelve   weeks  ended  March  22,  2005  and  March  23,  2004,
respectively.  The factors  which cause the effective tax rates to vary from the
federal statutory rate of 35% include state income taxes, the impact of FICA Tip
and  other  credits,  certain  non-deductible  expenses  and the tax  effect  of
incentive  stock  options.  There is  generally  no tax  impact  to the  Company
associated with incentive stock options and the related amortization  associated
with such options in the income  statement.  However,  tax benefits may arise at
the time  incentive  options are  exercised  to the extent that the  exercise is
followed by a disqualifying  disposition of the shares by the optionee. The 2004

                                      -11-

period reflects a greater amount of tax benefits associated with the impact from
incentive stock options during the period as compared to 2005.
      Discontinued  operations  reflect the  operations  of  restaurants  closed
subsequent  to fiscal 2002 which are  required  to be  reported as  discontinued
operations  pursuant  to SFAS No.  144,  (see Note 7 to the  Notes to  Condensed
Consolidated Statements).

IMPACT OF INFLATION

      The  primary  inflationary  factors  affecting  the  Company's  operations
include food and labor costs. A 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. However, since the
majority of personnel  are tipped  employees,  minimum wage changes  should have
little effect on overall labor costs.  Historically,  as costs of food and labor
have increased, the Company has been able to offset these increases through menu
price  increases  and  economies of scale;  however,  there may be delays in the
implementation  of such menu price increases or in effecting timely economies of
scale, as well as competitive pressures which may limit the Company's ability to
recover any cost increase in its entirety. Historically, inflation has not had a
material  impact  on  operating   margins.   During  fiscal  2004,  the  Company
experienced  significant  volatility  in beef prices as such prices for the year
were generally above historical  levels.  During the first quarter of 2005, beef
prices were below 2004 levels.  However,  to the extent that beef prices  during
the remainder of fiscal 2005 were to rise significantly above historical levels,
it will have a material negative impact on operating margins.

LIQUIDITY AND CAPITAL RESOURCES  (AMOUNTS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

      The following table presents a summary of the Company's cash flows for the
twelve weeks ended March 22, 2005 and March 23, 2004:

                                                             Twelve weeks ended
                                                             ------------------
                                                        March 22, 2005      March 23, 2004
                                                        --------------      --------------

Net cash provided by operating activities ............     $ 20,553            $ 24,332
Net cash used in investing activities ................      (27,869)            (15,462)
Net cash used in financing activities ................       (3,551)             (3,016)
Net cash provided by (used in) discontinued operations          (80)                837
                                                           --------            --------
Net increase (decrease) in cash and cash equivalents .     $(10,947)           $  6,691
                                                           ========            ========

      The decrease in net cash provided by operating  activities  for the twelve
week period ended March 22, 2005  compared to the prior period is due  primarily
to  decreases in certain  operating  assets and  increases in certain  operating
liabilities during fiscal 2005 as compared to fiscal 2004.

      Net cash used in investing activities increased primarily due to increases
in property and equipment  additions  and the purchase of short-term  securities
partially offset by the acquisition of TXCC in 2004.

      During  the  twelve  week  period  ended  March 22,  2005,  the  Company's
investment in property and equipment was $7,885  compared to $3,804 for the same
period in 2004.

      During the twelve weeks ended March 22, 2005, the Company invested $20,270
in short term  securities  primarily  consisting of  investments in auction rate
securities  with  contractual  maturities  of up  to 30  years.  There  were  no
investments  in short-term  securities in the comparable  period of 2004.  These
auction rate securities have interest re-set dates that occur every 7 to 90 days

                                      -12-

and can be actively  marketed at ongoing auctions that occur every 7 to 90 days.
These   investments   are  in   investment-grade   debt   instruments   such  as
government-backed   securities.   Auction  rate  securities  are  classified  as
available-for-sale  and are  reported on the balance  sheet at par value,  which
equals market value, as the rate on such  securities  resets every 7 to 90 days.
Consequently,  interest rate movements do not affect the balance sheet valuation
of these fixed income investments.

      On January 28, 2004, the Company  acquired TXCC for an aggregate  purchase
price of $23,496 which consisted of cash,  shares of the Company's  common stock
and the assumption of certain  liabilities.  The cash portion of the acquisition
was funded from the Company's  existing  cash  balances and was $12,505,  net of
cash acquired.

      During the twelve week period ended March 22, 2005,  the Company  received
net proceeds of $30 from the issuance of 3,367 shares of its common stock due to
the exercise of stock options  compared to proceeds of $672 from the issuance of
75,213 shares in the comparable period of fiscal 2004.

      The Company's  Board of Directors has authorized the purchase of shares of
the Company's  common stock from time to time in the open market or in privately
negotiated  transactions.  The most recent  authorization  was November 17, 2004
when the Board of Directors approved the repurchase of up to 2,026,190 shares of
the  Company's  common  stock.  During the twelve weeks ended March 22, 2005 and
March 23, 2004, the Company made no purchases of its common stock.  At March 22,
2005,  the  Company  may  purchase up to  2,026,190  shares of its common  stock
pursuant to its current authorization by the Board of Directors.

      The Company has paid  quarterly  cash  dividends on its common stock since
the second  quarter of fiscal 2000. In January 2005,  the Company  increased its
quarterly  cash dividend from $.175 to $.195 per share  commencing in the second
quarter of fiscal  2005.  During the twelve  weeks  ended  March 22,  2005,  the
Company  paid  dividends  of $3,581 or $.175 per share as  compared to $3,688 or
$.175 per share in the same period in 2004.

      At March 22,  2005,  the Company had $81,338 in cash and cash  equivalents
and short term  investments.  As  described  in Note 4 to the Notes to Condensed
Consolidated  Financial  Statements in the Form 10-Q,  the Company has unsecured
revolving  credit  facilities that may permit  borrowings of up to $55,000 which
expire in October  2007.  At March 22,  2005,  the  Company  had no  outstanding
borrowings.

      The Company from time to time may utilize derivative financial instruments
in the form of live beef cattle  futures  contracts  to manage  market risks and
reduce its exposure  resulting from fluctuations in the price of meat.  Realized
and  unrealized  changes in the fair values of the  derivative  instruments  are
recognized in income in the period in which the change occurs. As of and for the
twelve  weeks ended March 22,  2005,  the  Company had no  positions  in futures
contracts.

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, as 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, the price of beef, competition and pricing and other risks set forth
in the Company's  Annual Report on Form 10-K for the fiscal year ended  December
28,  2004.  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.

                                      -13-

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

            The Company's  exposure to market risks was not  significant  during
            the twelve weeks ended March 22, 2005.

ITEM 4.     CONTROLS AND PROCEDURES

            Under the supervision and with the  participation of our management,
            including our principal  executive  officer and principal  financial
            officer,  we conducted an evaluation of our disclosure  controls and
            procedures,  as such term is defined  under Rules  13a-15(e)  of the
            Securities  Exchange Act of 1934, as amended (the  "Exchange  Act").
            Based on this evaluation,  our principal  executive  officer and our
            principal  financial officer concluded that our disclosure  controls
            and procedures were effective as of the end of the period covered by
            this Form 10-Q.

            No change in the Company's internal control over financial reporting
            (as defined in Rule  13a-15(f) of the Exchange Act) occurred  during
            the period  covered by this  report that  materially  affected or is
            reasonably  likely  to  materially  affect  the  Company's  internal
            control over financial reporting.

PART II.    OTHER INFORMATION

ITEM 2.     UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

            The table below  provides  information  concerning the repurchase of
            shares of the  Company's  common stock during the twelve weeks ended
            March  22,  2005.  The  Board of  Directors  on  November  17,  2004
            authorized  the Company to repurchase up to 2,026,190  shares of the
            Company's   common   stock.   Since   commencing   the  most  recent
            authorization for share repurchase,  the Company has not repurchased
            any shares of its common stock through March 22, 2005.

                      ISSUER PURCHASES OF EQUITY SECURITIES

                                                                               (c)Total number        (d) Maximum
                                                                                  of shares         Number of Shares
                                         (a) Total                            Purchased as Part     that May Yet Be
                                         Number of         (b) Average            of Publicly       Purchased Under
                                           Shares         Price Paid per        Announced Plans       the Plans or
                Period                   Purchased            Share               or Programs           Programs

            December 29, through              -                 -                      -                2,026,190
            January 25

            January 26, through               -                 -                      -                2,026,190
            February 22

            February 23, through              -                 -                      -                2,026,190
            March 22

            Total                             -                 -                      -                2,026,190

                                      -14-

            (1) Repurchases are subject to prevailing market prices, may be made
            in open market or in privately negotiated transactions, may occur or
            be  discontinued  at any time.  There can be no  assurance  that the
            Company will repurchase any shares.

ITEM 6.     EXHIBITS AND REPORTS ON FORM 8-K

            (a)     EXHIBITS

                      31.1        Certification   of  Chief  Executive   Officer
                                  pursuant to Section 302 of the  Sarbanes-Oxley
                                  Act
                      31.2        Certification   of  Chief  Financial   Officer
                                  pursuant to Section 302 of the  Sarbanes-Oxley
                                  Act
                      32.1        Certification   of  Chief  Executive   Officer
                                  pursuant to Section 906 of the  Sarbanes-Oxley
                                  Act
                      32.2        Certification   of  Chief  Financial   Officer
                                  pursuant to Section 906 of the  Sarbanes-Oxley
                                  Act

                                      -15-

                                   SIGNATURES

      Pursuant to the  requirements 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.

                                          LONE STAR STEAKHOUSE & SALOON, INC.
                                          (Registrant)

      Date:  May 2, 2005                  /s/ John D. White
                                          ------------------------
                                          John D. White
                                          Chief Financial Officer

                                      -16-
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