<PAGE>   1


                                 United States

                       Securities and Exchange Commission

                             Washington, D.C. 20549


                                   FORM 10-Q


              Quarterly Report Pursuant to Section 13 or 15(d) of

                      the Securities Exchange Act of 1934


                  For the Quarterly Period Ended June 28, 1998

                         Commission file number 0-19924


                      RARE Hospitality International, Inc.
             (Exact name of registrant as specified in its charter)


               Georgia                                58-1498312
--------------------------------------------------------------------------------
   (State or other jurisdiction of                (I. R. S. Employer
    incorporation or organization)                Identification No.)

   8215 Roswell Rd; Bldg 200;      Atlanta, GA                30350
--------------------------------------------------------------------------------
   (Address of principal executive offices)                (Zip Code)

                                (770) 399-9595
                                --------------
             (Registrant's telephone number, including area code)
 
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter three quarters that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
                                  XX Yes      No
                                  --       --

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

<TABLE>
<CAPTION>
          Class                         Outstanding as of August 3, 1998
          ------                        --------------------------------
   <S>                                  <C>              
   Common Stock, no par value                     12,072,106 shares
</TABLE>





                                       1
<PAGE>   2




Part I. Financial Information
Item 1. Financial Statements

              RARE Hospitality International, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                            (In thousands, unaudited)
<TABLE>
<CAPTION>
                                                  June 28,          December 28,
                    Assets                          1998                1997
                    ------                       ----------         ------------
<S>                                              <C>                <C>
Current assets:
   Cash and cash equivalents                      $  3,315            $  1,752
   Marketable debt securities                          648                 609
   Accounts receivable                               2,401               2,054
   Inventories                                       8,847               9,152
   Prepaid expenses                                    685               1,373
   Pre-opening costs, net of
     accumulated amortization                        1,828               3,385
   Refundable income taxes                           3,900               6,900
                                                  --------            --------
       Total current assets                         21,624              25,225

Property and equipment, less
  accumulated depreciation and
  amortization                                     161,698             155,758
Goodwill, less accumulated
  amortization                                       5,159               5,304
Deferred income taxes                                4,008               4,408
Other assets                                         2,212               2,356
                                                  --------           ---------
       Total assets                               $194,701            $193,051
                                                  ========           =========


Liabilities and Shareholders' Equity
Current liabilities:
   Accounts payable                               $  8,907            $ 12,739
   Accrued expenses                                 14,673              14,873
   Current installments of obligations
     under capital leases                              518                 518
                                                  --------            --------
       Total current liabilities                    24,098              28,130

Long-term debt                                      40,000              43,000
Obligations under capital leases,
  net of current installments                        7,429               5,051
                                                  --------            --------
       Total liabilities                            71,527              76,181
                                                  --------            --------

Minority interest                                    5,528               4,890

Shareholders' equity:
   Preferred stock                                      --                  --
   Common stock                                    104,883             103,981
   Unearned compensation - restricted stock           (575)                 --
Retained earnings                                   13,338               7,999
                                                  --------            --------
   Total shareholders' equity                      117,646             111,980
                                                  --------            --------

   Total liabilities and
     shareholders' equity                         $194,701            $193,051
                                                  ========            ========

</TABLE>

See accompanying notes to consolidated financial statements.


                                       2
<PAGE>   3




              RARE Hospitality International, Inc. and Subsidiaries
                       Consolidated Statements of Earnings
                      (In thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                  Quarter Ended               Six Months Ended
                                                  -------------               ----------------
Revenues:                                     June 28,      June 29,      June 28,      June 29,
                                                1998          1997          1998          1997
                                                ----          ----          ----          ----
<S>                                           <C>           <C>           <C>           <C>     
  Restaurant sales:
    LongHorn Steakhouse                       $ 51,187      $ 41,496      $104,052      $ 82,673
    Bugaboo Creek Steak House                   12,044        10,477        24,543        21,703
    The Capital Grille                          12,082         9,591        23,943        17,796
    Specialty concepts                           1,688         2,705         3,239         5,420
                                              --------      --------      --------      --------
      Total restaurant sales                    77,001        64,269       155,777       127,592
    Franchise revenues                              --            --            --            27
                                              --------      --------      --------      --------
      Total revenues                            77,001        64,269       155,777       127,619
                                              --------      --------      --------      --------
Costs and expenses:
  Cost of restaurant sales                      28,103        24,086        57,391        46,835
  Operating expenses
    - restaurants                               34,357        28,935        69,005        57,088
  Depreciation and amortization
    - restaurants                                4,390         3,638         8,910         7,162
  General and administrative
    expenses                                     5,421         4,421        10,749         8,759
                                              --------      --------      --------      -------
      Total costs and expenses                  72,271        61,080       146,055       119,844
                                              --------      --------      --------      --------
  Operating income                               4,730         3,189         9,722         7,775
 Interest expense, net                             627           149         1,391           299
 Minority interest                                 285           250           692           589
                                              --------      --------      --------      --------
    Earnings before income taxes                 3,818         2,790         7,639         6,887
 Income tax expense                              1,150           837         2,300         2,060
                                              --------      --------      --------      --------
    Net earnings                              $  2,668      $  1,953      $  5,339      $  4,827
                                              ========      ========      ========      ========

 Basic earnings per common share              $   0.22      $   0.17      $   0.45      $   0.41
                                              ========      ========      ========      ========

 Diluted earnings per common
  share
                                              $   0.22      $   0.17      $   0.44      $   0.41
                                              ========      ========      ========      ========
</TABLE>



See accompanying notes to consolidated financial statements.

                                       3

<PAGE>   4




              RARE Hospitality International, Inc. and Subsidiaries

                 Consolidated Statements of Shareholders' Equity
                                 (In thousands)
                                   (unaudited)



<TABLE>
<CAPTION>
                                                                Unearned
                                         Common Stock         compensation                    Total
                                     --------------------      -restricted     Retained    shareholders'
                                     Shares        Amount         stock        earnings       equity
                                     ------        ------         -----        --------       ------

<S>                                 <C>           <C>           <C>            <C>           <C>     
Balances, December 28, 1997           11,979      $103,981      $     --       $  7,999      $111,980
Net earnings                              --            --            --          2,671         2,671
Issuance of shares pursuant to
  exercise of stock options               29           308            --             --           308
                                    --------      --------      --------       --------      --------
Balances, March 29, 1998              12,008       104,289            --         10,670       114,959
Net earnings                              --            --            --          2,668         2,668
Issuance of shares pursuant to
  restricted stock award                  45           575          (575)            --           --
Issuance of shares pursuant to
  exercise of stock options                2            19            --             --            19
                                    --------      --------      --------       --------      --------

Balances, June 28, 1998               12,055      $104,883      $   (575)      $ 13,338      $117,646
                                    ========      ========      ========       ========      ========
</TABLE>




See accompanying notes to consolidated financial statements.







                                       4

<PAGE>   5




              RARE Hospitality International, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                             Six Months Ended
                                                            -------------------
                                                            June 28,   June 29,
                                                              1998       1997
                                                              ----       ----
<S>                                                         <C>        <C>
Cash flows from operating activities:
  Net earnings                                              $  5,339   $  4,827
  Adjustments to reconcile net earnings to net cash
    provided by (used in) operating activities:
    Depreciation and amortization                              9,350      7,251
    Changes in operating assets and liabilities               (6,888)   (13,130)
    Minority interest                                            692        589
    Preopening costs                                            (972)    (1,798)
    Deferred tax (benefit) expense                               500     (2,681)
                                                            --------   --------
      Net cash provided by (used in) operating
        activities                                             8,021     (4,942)
                                                            --------   --------

Cash flows from investing activities:
   Proceeds from maturity of marketable debt securities           --        252
   Purchase of property and equipment                        (10,144)   (16,249)
   Asset acquisitions                                             --     (3,262)
                                                            --------   --------

      Net cash used in investing activities                  (10,144)   (19,259)
                                                            --------   --------


Cash flows from financing activities:
   Proceeds from (repayments of)lines of credit               (3,000)    19,900
   Proceeds from minority partners' contributions              1,664      1,203
   Distributions to minority partners                         (1,718)    (1,475)
   Increase in bank overdraft included in accounts
     payable, net                                              6,507         --
   Principal payments on capital leases                          (94)        --
   Proceeds from exercise of stock options                       327        134
                                                            --------   --------
       Net cash provided by financing activities               3,686     19,762
                                                            --------   --------


Net increase (decrease) in cash and cash equivalents           1,563     (4,439)
Cash and cash equivalents, beginning of period                 1,752      6,478
                                                            --------   --------
Cash and cash equivalents, end of period                    $  3,315   $  2,039
                                                            ========   ========
</TABLE>




See accompanying notes to consolidated financial statements.



                                       5

<PAGE>   6



              RARE Hospitality International, Inc. and Subsidiaries

                   Notes to Consolidated Financial Statements
                                   (unaudited)


1. Basis of Presentation

The consolidated financial statements of RARE Hospitality International, Inc.
and Subsidiaries (the "Company") as of December 28, 1997 and June 28, 1998 and
for the quarters and six-month periods ended June 28, 1998 and June 29, 1997
have been prepared by the Company, pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished herein reflects
all adjustments (consisting of normal recurring accruals and adjustments) which
are, in the opinion of management, necessary to fairly present the operating
results for the respective periods. Certain information and footnote disclosures
normally presented in annual financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to such
rules and regulations. These financial statements should be read in conjunction
with the consolidated financial statements and notes thereto contained in the
Company's annual report on Form 10-K for the year ended December 28, 1997.

2. Income Taxes

Income tax expense for the quarter has been provided for based on the estimated
effective tax rate expected to be applicable for the full 1998 fiscal year. The
effective income tax rate of 30.1% for the six-months ended June 28, 1998
differs from applying the statutory federal income tax rate of 35% to pre-tax
earnings primarily due to employee FICA tip tax credits (a reduction in income
tax expense) partially offset by state income taxes.

3. Long-Term Debt

At June 28, 1998, $40.0 million was outstanding under the Company's $60.0
million revolving credit agreement at a weighted average interest rate equal to
6.9375%.

4. Earnings Per Common Share

Basic earnings per common share equals net earnings divided by the weighted
average number of common shares outstanding and does not include the dilutive
effect of stock options. Diluted earnings per common share equals net earnings
divided by the weighted average number of common shares outstanding, after
giving effect to dilutive stock options and restricted stock. The number of
shares used in the basic earnings per common share calculation for the six month
periods ended June 28, 1998 and June 29, 1997 was 11,995,000 and 11,661,000,
respectively. The number of shares used for the diluted earnings per share
calculation for the six-month periods ended June 28, 1998 and June 29, 1997 was
12,068,000 and 11,726,000, respectively.



                                       6
<PAGE>   7


5. Comprehensive Income

In 1997, the Financial Accounting Standards Board (the "FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 which is effective for the Company in 1998, establishes
standards for reporting and display of comprehensive income and its components
in a full set of general-purpose financial statements. Comprehensive income is
defined as the change in equity of a business enterprise during a period from
transactions and other events and circumstances from nonowner sources. It
includes all changes in equity during a period, except those resulting from
investments by owners and distributions to owners. For the quarter and six-month
period ended June 28, 1998, there were no differences between the Company's net
earnings and comprehensive earnings.





















                                       7
<PAGE>   8



Item 2.         Management's Discussion and Analysis of
                Financial Condition and Results of Operations


RESULTS OF OPERATIONS

REVENUES

The Company currently derives all of its revenues from restaurant sales. Total
revenues increased 19.8% and 22.1% for the quarter and six-months ended June 28,
1998, respectively, from the same periods of the prior year.

Same store sales comparisons, for each of the Company's restaurant concepts, for
the quarter ended June 28, 1998, consist of sales at restaurants opened prior to
September 30, 1996.

LongHorn Steakhouse:

Sales in the LongHorn Steakhouse restaurants for the second quarter and the
six-months ended June 28, 1998, increased 23.4% and 25.9%, respectively, as
compared to the same periods of the prior year. The increase reflects a 18.5%
and 20.0% increase in restaurant weeks in the second quarter and first six
months of 1998, respectively, as compared to the same periods of the prior year,
resulting from an increase in the restaurant base from 82 LongHorn Steakhouse
restaurants at the end of the second quarter of 1997 to 96 restaurants at the
end of the second quarter of 1998. Average weekly sales for all LongHorn
Steakhouse restaurants in the second quarter of 1998 was $41,247, a 4.2%
increase over the comparable period in 1997. Same store sales for the 68
comparable LongHorn Steakhouse restaurants increased 2.7% in the second quarter
of 1998 as compared to the same period in 1997, primarily due to an increase in
customer counts.

Bugaboo Creek Steak House:

Sales in the Bugaboo Creek Steak House restaurants for the second quarter and
the six-months ended June 28, 1998 increased 15.0% and 13.1% compared to the
same periods of the prior year. Average weekly sales for all Bugaboo Creek Steak
House restaurants in the second quarter of 1998 were $61,451, a 6.8% increase
from the comparable period for 1997. Same store sales for the 13 comparable
Bugaboo Creek Steak House restaurants in the second quarter of 1998 increased
1.6% as compared to the same period in 1997, primarily due to an increase in
customer counts resulting from increased marketing efforts. The increase in
average weekly sales was greater than the percentage increase in same store
sales due to i) the closure of one Bugaboo Creek Steak House restaurant that was
operating well below the system average sales volume and ii) higher than system
average sales volumes for one of the Bugaboo Creek Steak House restaurants that
opened during 1997.

The Capital Grille:

Sales in The Capital Grille restaurants increased 26.0% and 34.5% for the second
quarter and the six-months ended June 28, 1998, compared to the same 


                                       8
<PAGE>   9

periods in 1997. The increase reflects a 45.8% and 52.5% increase in restaurant
weeks in the second quarter and first six months of 1998, respectively, as
compared to the same periods in 1997, resulting from an increase in the
restaurant base from eight The Capital Grille restaurants at the end of the
second quarter of 1997 to 11 restaurants at the end of the second quarter of
1998. Average weekly sales for all The Capital Grille restaurants in the second
quarter of 1998 were $86,302, a 13.6% decrease from the comparable period in
1997. The decrease in average weekly sales is due to i) expected lower than
system average sales volumes at the Company's newer The Capital Grille
restaurants and ii) unexpected significantly lower than system average sales
volumes at one The Capital Grille, which opened in the fourth quarter of 1997.
Same store sales for the five comparable The Capital Grille restaurants
increased 6.3% in the second quarter of 1998 as compared to the same period in
1997, which is primarily attributable to an increase in customer counts.

Company-wide:

Franchise revenues were eliminated prior to the first quarter of 1998. During
1997, the two remaining LongHorn Steakhouse restaurants, which operated as a
franchise and paid royalties, were acquired by the Company.

COSTS AND EXPENSES

Cost of restaurant sales as a percentage of restaurant sales decreased to
36.5% from 37.5% for the second quarter of 1998 and increased to 36.8% from
36.7% for the first six-months of 1998 as compared to the corresponding periods
of 1997. The decrease in the cost of sales percentage for the second quarter of
1998 was primarily due to the favorable comparisons with the second quarter of
1997 when operational difficulties were beginning in the LongHorn concept.
Additionally, effective in February 1998, the Company began purchasing meat
under a new contract at prices which have stabilized the cost of restaurant
sales as a percentage of restaurant sales. This contract continues for the
remainder of 1998.

Restaurant operating expenses as a percentage of restaurant sales decreased to
44.6% from 45.0% for the second quarter of 1998 and to 44.3% from 44.7% for the
first six-months of 1998 as compared to the corresponding periods for 1997. The
second quarter decrease in operating expenses as a percentage of sales was
primarily due to the increase in average unit sales providing greater leverage
of fixed and semi-fixed expenses, principally management labor and certain other
restaurant operating expenses.

Restaurant depreciation and amortization increased over the corresponding
periods of the prior year primarily due the construction of new restaurants.

General and administrative expenses as a percentage of total revenues increased
to 7.0% from 6.9% for the second quarter and remained constant at 6.9% for the
first six-months of 1998 as compared to the corresponding periods of the prior
year. This increase in the second quarter of 1998 is due to an increase in
staffing levels to allow for future acceleration of the Company's new restaurant
openings.



                                       9
<PAGE>   10

As a result of the relationships between revenues and expenses discussed above,
the Company's operating income increased to $4.7 million for the second quarter
of 1998 as compared to $3.2 million for the corresponding period of the prior
year.

Interest expense, net increased to $627 thousand in the second quarter of 1998
from $149 thousand for the same period of the prior year due to an increase in
the average balance outstanding under the Company's revolving credit agreements.

Minority interest expense increased to $285 thousand for the second quarter of
1998 from $250 thousand for the same period of the prior year due to an increase
in the number of restaurants operated under joint ventures agreements, partially
offset by a decrease in the average profitability of certain LongHorn Steakhouse
restaurants operated under joint venture agreements.

Income tax expense for the second quarter of 1998 was 30.1% of earnings before
income taxes. This compares to 30.0% of earnings before income taxes for the
second quarter of 1997. The Company's effective income tax rate differs from
applying the statutory federal income tax rate of 35% to earnings before income
taxes primarily due to employee FICA tip tax credits and state income taxes.

Net earnings increased 36.6% to $2.7 million for the second quarter of 1998 from
net earnings of $2.0 million for the second quarter of 1997, reflecting the net
effect of the items discussed above.


Liquidity and Capital Resources:

The Company requires capital primarily for the development of new restaurants,
selected acquisitions and the remodeling of existing restaurants. During the
first six-months of 1998, the Company's principal source of cash was cash
provided by operating activities ($8.0 million). The principal use of cash was
capital expenditures ($10.1 million) for new and improved facilities. As of June
28, 1998, $40.0 million was outstanding and $20.0 million was available under
the Company's $60.0 million revolving credit facility. In July 1998, the Company
received from its current lead lender a commitment, subject to customary
conditions, to amend and restate the current $60 million revolving credit
facility to $100 million with a three-year initial term. This amended and
restated revolving credit facility is expected to close in August 1998.

During the first six-months of 1998, the Company opened two LongHorn Steakhouse
restaurants and one The Capital Grille restaurant. During this period the
Company also closed one Bugaboo Creek Steak House restaurant and closed two
other specialty concept restaurants, all of which the Company had provided
reserves for in the fourth quarter of 1997. In total, the Company intends to
open approximately eight Company-owned and joint venture Longhorn Steakhouse
restaurants, two Bugaboo Creek Steak House restaurants and two The Capital
Grille restaurants in 1998. The Company estimates that its capital expenditures
for 1998 will be approximately $38-40 million.



                                       10
<PAGE>   11

Management believes that available cash, cash provided by operations, and
available borrowings under the Company's existing and amended lines of credit
will provide sufficient funds to finance restaurant expansion plans through
1999.

Since substantially all sales in the Company's restaurants are for cash, and
accounts payable are generally due in seven to 30 days, the Company operates
with little or negative working capital.

IMPACT OF THE YEAR 2000 ISSUE

INTRODUCTION. The term "Year 2000" issue is a general term used to describe the
various problems that may result from the improper processing of dates and
date-sensitive calculations by computers and other machinery as the year 2000 is
approached and reached. These problems generally arise from the fact that most
of the world's computer hardware and software has historically used only two
digits to identify the year in a date, often meaning that the computer will fail
to distinguish dates in the "2000's" from dates in the "1900's." These problems
may also arise from other sources as well, such as the use of special codes and
conventions in software that make use of the date field. The following
information was prepared to comply with the guidelines for Year 2000 disclosure
that the Commission issued in an Interpretive Release, effective August 4, 1998.
These guidelines required significantly more and detailed information than was
previously required by the Commission.

THE COMPANY'S STATE OF READINESS. The Company's key financial, informational and
operational systems have been assessed and detailed plans have been developed
to address system modifications required by September 30, 1999. These systems
include information technology systems ("IT"). The Company has assessed its
major IT vendors and technology providers and is in the process of testing its
systems to determine Year 2000 compliance. In addition, the Company is in the
process of assessing its non-IT systems that utilize embedded technology such as
microcontrollers and reviewing them for Year 2000 compliance.

To operate its business, the Company relies upon government agencies, utility
companies, providers of telecommunication services, suppliers, and other third
party service providers ("Material Relationships"), over which it can assert
little control. The Company's ability to conduct its core business is dependent
upon the ability of these Material Relationships to fix their Year 2000 issues
to the extent they affect the Company. If the telecommunications carriers,
public utilities and other Material Relationships do not appropriately rectify
their Year 2000 issues, the Company's ability to conduct its core business may
be materially impacted, which could result in a material adverse effect on the
Company's financial condition.

The Company has begun an assessment of all Material Relationships to determine
risk and assist in the development of contingency plans. This effort is to be
completed by March 1, 1999.

COSTS TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES. The Company expenses costs
associated with Year 2000 system changes as the costs are incurred except for
system change costs that the Company would otherwise capitalize. To date, the
Company has incurred costs of approximately $25,000 in connection with its Year
2000 compliance plan ("Year 2000 Plan") and estimates it will spend an
additional $75,000 to $150,000 to complete its Year 2000 Plan. The financial
impact of these expenses has not been material, and the Company does not expect
future remediation costs to be material to the Company's consolidated financial
position or results of operations. However, the Company is unable to estimate
the costs that it may incur as a result of Year 2000 problems suffered by the
parties with which it deals, such as Material Relationships, and there can be no
assurance that the Company will successfully address the Year 2000 problems
present in its own systems.

RISKS PRESENTED BY YEAR 2000 PROBLEMS. The Company has recently begun the system
integration testing phase of its Year 2000 Plan. However, until system
integration testing is substantially in process the Company cannot fully assess
the risks of its Year 2000 issue. As a result of system integration testing, the
Company may identify areas of its business that are at risk of Year 2000
disruption. The absence of any such determination at this point represents only
the status currently in the implementation of the Company's Year 2000 Plan, and
should not be construed to mean that there is no area of the Company's business
which is at risk of a Year 2000 related disruption. As noted above, many of the
Company's business critical Material Relationships may not appropriately address
their Year 2000 issues, the result of which could have a material adverse affect
on the Company's financial condition and results of operations.

THE COMPANY'S CONTINGENCY PLANS. The Company's Year 2000 Plan calls for the
development of contingency plans for areas of the business that are susceptible
to a substantive risk of a disruption resulting from a Year 2000 related event.
Because the Company has only recently begun system integration testing, and
accordingly has not fully assessed its risk from potential Year 2000 failures,
the Company has not yet developed detailed contingency plans specific to Year
2000 events for any specific area of business. The Company does, however,
maintain contingency plans, outside of the scope of the Year 2000 issue,
designed to address various other business interruptions. The Company is
prepared for the possibility that system integration testing may hereafter
identify certain areas of business at risk. Consistent with its Year 2000 Plan,
the Company will develop specific Year 2000 contingency plans for such areas of
business as and if such determinations are made.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the FASB issued, SFAS No. 131 "Disclosure about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way public business enterprises report information about operating segments in
annual financial statements and requires that those enterprises report selected
information about operating segments in interim financial reports issued to
shareholders. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. This statement is
effective for financial statements for periods beginning after December 15,
1997. In the initial year of application, comparative information for earlier
years is to be presented. This statement need not be applied to interim
financial statements in the initial year of its application, but comparative
information for interim periods is to be reported in financial statements for
interim periods in the second year of application.

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." SOP 98-1 identifies the
characteristics of internal-use software and specifies that once the preliminary
project stage is complete, certain external direct costs, certain direct
internal payroll and payroll-related costs and interest costs incurred during
the development of computer software for internal use should be capitalized and
amortized. SOP 98-1 is effective for financial statements for fiscal years
beginning after December 15, 1998, with earlier application encouraged, and must
be applied to internal-use computer software costs incurred in those fiscal
years for all projects, including those projects in progress upon initial
application of this SOP. The Company currently expenses all such costs as
incurred. Management has not yet quantified the dollar impact of adopting SOP
98-1; however, when implemented in 1999, it will result in the capitalization of
costs which would have been previously expensed.

As is currently the practice of many casual dining and upscale restaurant
entities, the Company defers its restaurant pre-opening costs and amortizes them
over the twelve-month period following the opening of each respective
restaurant.

Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities" was
issued in April 1998. SOP 98-5 requires entities to expense as incurred all
start-up and pre-opening costs that are not otherwise capitalizable as
long-lived assets. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998, although earlier adoption is encouraged. Restatement of
previously issued financial statements is not permitted by 



                                       11
<PAGE>   12

SOP 98-5, and entities are not required to report the pro forma effects of the
retroactive application of the new accounting standard. The Company's adoption
of the expense-as-incurred accounting principle required by SOP 98-5 will
involve the recognition of the cumulative effect of the change in accounting
principle required by SOP 98-5 as a one-time charge against earnings, net of any
related income tax effect, retroactive to the beginning of the fiscal year of
adoption. The Company has not currently elected to adopt SOP 98-5 early. Based
on net deferred pre-opening costs at June 28, 1998, the cumulative effect would
be approximately $1.8 million, less applicable income taxes.

FORWARD-LOOKING STATEMENTS

Statements contained in this Report concerning future results, performance or
expectations, including those regarding the opening of additional restaurants,
planned capital expenditures, the adequacy of the Company's capital resources,
disclosures related to the effect of the advent of the year 2000 on the Company
and its systems and other statements regarding trends relating to various
revenue and expense items, are forward looking statements. These statements are
subject to a number of risks and uncertainties beyond the Company's control that
could cause the Company's actual results to differ materially from those
projected in such forward-looking statements.

Actual results, performance or developments could differ materially from those
expressed or implied by those forward-looking statements as a result of known or
unknown risks, uncertainties and other factors, including those associated with
restaurant openings, restaurant sales and operating expenses and others
described from time to time in the Company's filings with the Securities and
Exchange Commission, press releases and other communications.


Part II - Other Information

Item 1. Legal Proceedings.

In January 1996, the Company and Moo Management, Inc. ("Moo") formed a joint
venture ("RTL Joint Venture") for the development of LongHorn Steakhouse
restaurants. The parties never developed LongHorn Steakhouse restaurants and,
beginning in the fall of 1996, negotiated to amend their joint venture agreement
to develop Bugaboo Creek Steak House restaurants in an expanded territory. While
these negotiations were taking place, the parties entered into a ground lease
(the "Ground Lease") in the name of RTL Joint Venture and the Company, with its
own funds, subsequently built on the leased premises a Bugaboo Creek Steak House
restaurant. This restaurant has not yet been opened. In the fall of 1997, the
negotiations between the Company and Moo broke down. The Company believes that
the parties did not reach a binding agreement to develop Bugaboo Creek Steak
House restaurants while Moo asserts that such an agreement was reached.

On April 30, 1998, the Company filed a Petition for Declaratory Relief and
Contract Reformation styled Rare Hospitality 



                                       12
<PAGE>   13

International, Inc. v. Centercap Associates, L.L.C. and Moo Management, Inc.,
C.A. No. 16350 NC in the Chancery Court of New Castle County, Delaware seeking a
determination that the Company, and not RTL Joint Venture, is the tenant under
the Ground Lease. In its amended Answer and Counterclaim in this action, Moo
alleges that the Company and Moo agreed to the terms of a binding joint venture
agreement to develop Bugaboo Creek Steak House restaurants and entered into the
Ground Lease in furtherance thereof. In its Counterclaim, Moo alleges that the
Company has breached the alleged agreement and, as a result, Moo has been
deprived of the profit that it would have earned from the purchase and operation
of three Bugaboo Creek Steak House restaurants owned by the Company, has been
damaged by the efforts undertaken and the expenses incurred by Moo in
preparation for performance of the alleged joint venture agreement and has been
deprived of the profits lost and that would be lost as the result of the
Company's failure to perform the alleged joint venture agreement. Moo seeks an
unspecified amount of monetary damages and the dismissal of the Company's
petition.

On June 9, 1998, the Company filed a demand for arbitration versus Moo with the
American Arbitration Association in Atlanta, Georgia. In this arbitration, the
Company sought an immediate hearing and injunctive relief directing that the
Ground Lease be transferred to the Company and that Moo and its principals be
relieved from liability on the Ground Lease. The Company further requested an
award declaring that there is no joint venture or partnership between the
Company and Moo to develop Bugaboo Creek Steak house restaurants and granting
monetary damages for the Company's losses incurred as a result of the wrongful
conduct of Moo.

On July 7, 1998, the Company filed a complaint in the Superior Court of Fulton
County, Georgia in the matter styled Rare Hospitality International, Inc. v. Moo
Management, Inc., Robert C. Rosenblit, David C. Tuttleman, Mark Greene and RTL
Joint Venture, C.A. File No. E-71219. In this action, the Company seeks
injunctive relief and damages resulting from the defendants', Rosenblit, Greene,
Tuttleman and Moo, enticing certain of the Company's top managers to discontinue
their employment with the Company and enticing others not to enter into or
continue business relationships with the Company.

Moo has not yet filed an answer to the Company's demand for arbitration and the
defendants have not yet filed an answer in the action in Fulton County, Georgia.

A hearing was held on July 23, 1998 in the arbitration in Atlanta, Georgia, with
respect to the Company's request for preliminary relief. On July 29, 1998, the
arbitrator entered an Order determining that the Company's request for
preliminary injunctive relief was subject to arbitration, that the arbitrator
had jurisdiction to decide that request and granting the Company's request for
preliminary relief by ordering Moo to sign on behalf of RTL Joint Venture an
assignment of the Ground Lease to the Company. This Order also directs the
Company to use its best efforts to cause the landlord to release Moo, Robert C.
Rosenblit, Maryellen Rosenblit and David C. Tuttleman from all liability under
the Ground Lease and the guaranty thereof and to indemnity Moo, 



                                       13
<PAGE>   14

Robert C. Rosenblit, Maryellen Rosenblit and David C. Tuttleman against all
liabilities arising out of the Ground Lease or the guaranty thereof. If the
Company does not obtain a release from the landlord within 180 days following
the date of the Order, the Company must deposit $200,000 in escrow as collateral
for this indemnity. The Company must also make an accounting to Moo on a monthly
basis of the operations of the Bugaboo Creek Steak House restaurant operated on
the Ground Lease until further order of the arbitrator.

The Company denies any liability with respect to the claims of Moo in its
counterclaim against the Company. The Company intends to vigorously pursue its
interest in the New Castle County, Delaware restaurant and to vigorously defend
the counterclaim. This action is in its earliest stages and it is not possible
at this time to determine the outcome of the Delaware lawsuit, the arbitration
or the Georgia lawsuit or the effect of the resolution of these disputes on the
Company's financial position or operating results. Management believes that the
Company's position has merit and the resolution of these matters will not have a
material adverse effect on the Company's financial condition or results of
operations.


Item 2.  Changes in Securities and Use of Proceeds.

On June 29, 1998, the Company issued 45,098 shares of its common stock, no par
value to D.C. George Management Corporation, in consideration for the assignment
to the Company of all right, title and interest of D.C. George Management
Corporation in the Venture Manager Agreement dated as of March 14, 1997, by and
between Carolina Steakhouse Ventures, a joint venture in which the Company is a
partner, and D.C. George Management Corporation. The shares are subject to the
terms of a Restricted Stock Agreement among the Company, D.C. George Management
Corporation and its sole shareholder, David C. George, and will vest over time,
conditioned upon Mr. George's continued employment by the Company. The issuance
of these securities to a single purchaser, the sole shareholder of which is a
management employee of the Company, was made in reliance upon exemptions from
registration under Rules 504, 506 and 507 of Regulation D of the Securities and
Exchange Commission.


Item 4. Submission of Matters to a Vote of Securities Holders

The 1998 Annual Meeting of Shareholders of the Company was held on May 20, 1998,
at which the following proposals were voted upon by the shareholders (i) the
election of two directors in Class III to serve until the 2001 Annual Meeting of
Shareholders, and one director in Class II to serve until the 2000 Annual
Meeting of Shareholders; (ii) the approval of the RARE Hospitality
International, Inc. 1997 Long-Term Incentive Plan, as amended; and (iii) the
ratification of the selection of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 27, 1998. Holders of
12,008,308 shares of the Company's common stock were entitled to vote at that
meeting.

The shareholders elected two directors in Class III with a term expiring at the
2001 Annual Meeting and one director in Class II with a term expiring at the
2000 Annual Meeting. As to each of the following named individuals, the holders
of the indicated number of shares of the Company's common stock 



                                       14
<PAGE>   15

voted for his election and the holders of the indicated number of shares
withheld authority to vote for election and there were no broker non-votes:

<TABLE>
<CAPTION>
                                Shares Voting           Shares Withholding
                                     For                     Authority
Class III                       -------------          ------------------
<S>                             <C>                    <C>    
Ronald W. San Martin              10,974,777                  109,262
John G. Pawly                     10,975,545                  108,494

Class II
Philip J. Hickey, Jr.             10,975,745                  108,294
</TABLE>

The following directors' terms of office continue after the meeting and expire
at the annual meeting of shareholders in the year indicated.

<TABLE>
<S>                                     <C>
Class I
Don L. Chapman                          1999
George W. McKerrow, Sr.                 1999

Class II
George W. McKerrow, Jr.                 2000
Edward P. Grace III                     2000
</TABLE>



The proposal to approve the Company's Long-Term Incentive Plan, as amended, was
approved as follows: Shares voting for approval 4,799,965; Shares voting against
approval 1,715,130; and Shares abstaining 613,409. There were no broker
non-votes.

The selection of KPMG Peat Marwick LLP as independent auditors for the Company
for the fiscal year ending December 27, 1998 was ratified as follows: 10,999,763
shares voted in favor of the ratification; 66,024 shares voted against the
ratification; and 18,252 shares abstained. There were no broker non-votes.


Item 5. Other information.

In May 1998, the Securities and Exchange Commission amended Rule 14a-4 under the
Securities Exchange Act of 1934, as amended, to provide shareholders and
companies with clearer guidance on the exercise of discretionary voting
authority by proxies. Pursuant to this Rule, the Company may exercise
discretionary voting authority granted in proxies solicited by it in connection
with the Annual Meeting of Shareholders in 1999 with respect to any shareholder
proposal to be presented at the meeting, if the Company does not receive notice
of the proposal on or before March 1, 1999.


Item 6. Exhibits and Reports on Form 8-K

   (a) Exhibits Filed.


                                       15
<PAGE>   16

          27.1 - Financial Date Schedule (for SEC use only)
         
          27.2 - Restated Financial Data Schedule (for SEC use only)

   (b) Reports filed on Form 8-K.
          None. 


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.



                                     RARE Hospitality International, Inc.






Date: August 12, 1998                /s/ W. Douglas Benn
     --------------------------     --------------------
                                     W. Douglas Benn
                                     Executive Vice President and
                                     Chief Financial Officer
                                     (Principal Financial
                                     Officer and Chief Accounting
                                     Officer, and a duly authorized
                                     officer)



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