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# SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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# FORM 10-Q

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

the Securities Exchange Act of 1934

# For the Quarterly Period Ended October 1, 2000

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# Commission file number 0-19924

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

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# Internal Revenue Service - Employer Identification No. 58-1498312

# 8215 Roswell Rd; Bldg. 600; Atlanta, GA 30350
(770) 399-9595

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Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.

# XX   Yes      No

As of November 10, 2000, there were 18,653,613 shares of common stock of the Registrant outstanding.

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# RARE Hospitality International, Inc. and Subsidiaries

# Index

`Part I - Financial Information                                                                 Page
                                                                                               ----
     Item 1. Consolidated Financial Statements:

                    Consolidated Balance Sheets as of
                    October 1, 2000 and December 26, 1999                                        1

                    Consolidated Statements of Earnings
                    for the Quarter and the Nine Months Ended
                    October 1, 2000 and September 26, 1999                                       2

                    Consolidated Statement of Shareholders' Equity
                    for the Nine Months Ended October 1, 2000                                    3

                    Condensed Consolidated Statements of Cash Flows
                    for the Nine Months Ended October 1, 2000
                    and September 26, 1999                                                       4

                    Notes to the Consolidated Financial Statements                              5-7

     Item 2. Management's Discussion and Analysis of
                 Financial Condition and Results of Operations                                  7-12

     Item 3. Quantitative and Qualitative Disclosures About
                 Market Risk                                                                     13

Part II - Other Information

     Item 1. Legal Proceedings                                                                   13

     Item 2. Changes in Securities and Use of Proceeds                                           13

     Item 3. Defaults Upon Senior Securities   14

     Item 4. Submission of Matters to a Vote of Securities
                 Holders                                                                         14

     Item 5. Other Information                                                                   14

     Item 6. Exhibits and Reports on Form 8-K  14

     Signatures                                                                                  15`

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# Part I. Financial Information
Item 1. Financial Statements

# RARE Hospitality International, Inc. and Subsidiaries
Consolidated Balance Sheets
(In thousands, except share amounts)
(Unaudited)

`October 1,                December 26,
Assets                                                       2000                       1999
                                                             ----                       ----
Current assets:
    Cash and cash equivalents                                $  2,996                 $  8,864
    Accounts receivable                                         5,195                    3,047
    Inventories                                                10,516                   10,213
    Prepaid expenses                                              700                      815
    Refundable income taxes                                     4,920                    2,568
    Deferred income taxes                                       7,541                    8,179
                                                             --------                 --------
        Total current assets                                   31,868                   33,686

Property & equipment, less accumulated
  depreciation                                                210,147                  187,281
Goodwill, less accumulated amortization                        20,540                   13,185
Deferred income taxes                                             230                        -
Other                                                           2,348                    2,966
                                                             --------                 --------
        Total assets                                         $265,133                 $237,118
                                                             ========                 ========
Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable                                         $ 15,059                 $ 17,870
    Accrued expenses                                           29,318                   26,847
                                                             --------                 --------
        Total current liabilities                              44,377                   44,717

Debt, net of current installments                              51,200                   40,000
Deferred income taxes                                               -                    1,103
Obligations under capital leases                                9,732                    9,732
                                                             --------                 --------
        Total liabilities                                     105,309                   95,552

Minority interest                                               1,470                    3,982

Shareholders' equity:
    Preferred stock                                                 -                        -
    Common stock                                              122,132                  110,258
    Unearned compensation-restricted stock                       (330)                    (376)
    Retained earnings                                          46,303                   29,589
    Treasury stock at cost; 870,750
      shares in 2000 and 216,750 shares
      in 1999                                                  (9,751)                  (1,887)
                                                             --------                 --------
        Total shareholders' equity                            158,354                  137,584
                                                             --------                 --------
        Total liabilities and shareholders'
         equity                                              $265,133                 $237,118
                                                             ========                 ========`

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

`Quarter Ended            Nine Months Ended
                                                              -------------            -----------------
Revenues:                                                 Oct. 1,      Sept. 26,       Oct. 1,     Sept. 26,
                                                           2000          1999           2000         1999
                                                           ----          ----           ----         ----
Restaurant sales:
   LongHorn Steakhouse                                   $ 79,716       $ 65,089      $242,865     $192,556
   The Capital Grille                                      14,866         12,917        47,184       41,278
   Bugaboo Creek                                           15,904         15,277        47,578       42,355
   Specialty concepts                                       1,958          1,871         5,651        5,256
                                                         --------       --------      --------     --------
     Total restaurant sales                               112,444         95,154       343,278      281,445
   Franchise revenues                                          92             45           289          124
                                                         --------       --------      --------     --------
     Total revenues                                       112,536         95,199       343,567      281,569
Costs and expenses:                                      --------       --------      --------     --------
 Cost of restaurant sales                                  40,533         34,624       123,043      101,394
 Operating expenses - restaurants                          50,464         43,719       151,478      126,868
 Depreciation and amortization - restaurants                4,292          3,846        12,655       11,203
Pre-opening expense - restaurants                           1,015            699         2,854        2,160
Provision for litigation settlement                             -              -         1,000            -
General and administrative expenses                         7,786          6,432        23,246       19,291
                                                         --------       --------      --------     --------
     Total costs and expenses                             104,090         89,320       314,276      260,916
                                                         --------       --------      --------     --------
 Operating income                                           8,446          5,879        29,291       20,653
Interest expense, net                                       1,016            870         3,063        2,832
Minority interest                                             122            291         1,259        1,194
   Earnings before income taxes and                      --------       --------      --------     --------
     cumulative effect of change in
     accounting principle                                   7,308          4,718        24,969       16,627
Income tax expense                                          2,405          1,560         8,255        5,485
Earnings before cumulative effect of                     --------       --------      --------     --------
   change in accounting principle                           4,903          3,158        16,714       11,142
Cumulative effect of change in accounting
   principle net of tax benefit                                 -              -             -        1,587
                                                         --------       --------      --------     --------
     Net earnings                                        $  4,903       $  3,158      $ 16,714     $  9,555
Basic earnings per common share:                         ========       ========      ========     ========
   Basic earnings before cumulative effect
     of change in accounting principle                   $   0.26       $   0.17      $   0.92     $   0.62
   Cumulative effect of change in
     accounting principle                                       -              -             -        (0.09)
                                                         --------       --------      --------     --------
Basic earnings per common share                          $   0.26       $   0.17      $   0.92     $   0.53
Diluted earnings per common share:                       ========       ========      ========     ========
   Diluted earnings before cumulative
     effect of change in accounting principle            $   0.25       $   0.17      $   0.87     $   0.59
   Cumulative effect of change in accounting
     principle                                                  -              -             -        (0.08)
                                                         --------       --------      --------     --------
Diluted earnings per common share                        $   0.25       $   0.17      $   0.87     $   0.51
                                                         ========       ========      ========     ========`

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# RARE Hospitality International, Inc. and Subsidiaries
Consolidated Statement of Shareholders' Equity
(In thousands, unaudited)

`Unearned
                                                         Compensation                                 Total
                                       Common Stock       Restricted    Retained     Treasury    Shareholders'
                                     Shares      Amount      Stock      Earnings       Stock         Equity
                                     ------      ------      -----      --------       -----         ------
Balance, December 26, 1999            18,576    $110,258     $(376)      $29,589      $(1,887)      $137,584
Net earnings                               -           -         -        16,714            -         16,714
Issuance of shares pursuant
  to exercise of stock options           523       4,973         -             -            -          4,973
Purchase of common stock                   -           -         -             -       (7,864)        (7,864)
Issuance of shares in
  connection with purchase
  of minority interest                   356       6,827          -            -            -          6,827
Issuance of shares pursuant
  to restricted stock awards               4          74       (74)            -            -              -
Amortization of restricted
  stock                                    -           -       120             -            -            120
                                      ------    --------     ------      -------      --------      --------
Balance, October 1, 2000              19,459    $122,132     $(330)      $46,303      $(9,751)      $158,354
                                      ======    ========     ======      =======      ========      ========`

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

`Nine Months Ended
                                                                                  -----------------
                                                                       October 1,             September 26,
                                                                          2000                    1999
                                                                          ----                    ----
Cash Flows from operating activities:
  Net earnings                                                          $ 16,714                 $  9,555
  Adjustments to reconcile net earnings to
    net cash provided by operating activities:
      Depreciation and amortization                                       14,278                   12,255
      Changes in working capital accounts                                 (5,175)                  (4,343)
      Cumulative change in accounting principle                                 -                   1,587
      Minority interest                                                    1,259                    1,194
      Deferred tax(benefit) expense                                         (695)                  (1,587)
                                                                        --------                 --------
  Net cash provided by operating activities                               26,381                   18,661
                                                                        --------                 --------
Cash flows from investing activities:
  Purchase of property and equipment                                     (36,242)                 (24,892)
  Asset acquisitions                                                      (3,742)                    (191)
                                                                        --------                 --------
  Net cash used by investing activities                                  (39,984)                 (25,083)
                                                                        --------                 --------
Cash flows from financing activities:
  Proceeds from (repayments of) credit facilities                         11,200                   (8,000)
  Proceeds from minority partners' contributions                              92                    1,689
  Distributions to minority partners                                      (1,144)                  (1,896)
  Increase in bank overdraft included in accounts
    payable                                                                  478                    5,054
  Purchase of common stock for treasury                                   (7,864)                  (1,139)
  Principal payments on capital leases                                        --                      (26)
  Proceeds from exercise of stock options                                  4,973                    1,924
                                                                        --------                 --------
  Net cash provided by (used in) financing
   activities                                                              7,735                   (2,394)
                                                                        --------                 --------
Net decrease in cash and cash equivalents                                 (5,868)                  (8,816)
Cash and cash equivalents, beginning of period                             8,864                   12,060
                                                                        --------                 --------
Cash and cash equivalents, end of period                                $  2,996                 $  3,244
                                                                        ========                 ========`

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# RARE Hospitality International, Inc.
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 October 1, 2000 and December 26, 1999 and for the
quarters and nine months ended October 1, 2000 and September 26, 1999 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 26, 1999.

The Companys fiscal
year is a 52- or 53-week year ending on the last Sunday in each calendar year.
Each of the four fiscal quarters is typically made up of 13 weeks; however,
since fiscal 2000 will be a 53-week period, the first quarter of 2000 contained
14 operating weeks.

## 2.      Litigation Settlement

In March 2000, an ongoing
legal dispute with a former joint venture partner was resolved by an arbitrator,
resulting in a judgment against the Company in the amount of $2.0 million. The
Companys consolidated statement of earnings for the first quarter of 2000
reflected a nonrecurring charge of $1.0 million ($670,000 net of income taxes)
for amounts not previously reserved for this dispute.

## 3.  Income Taxes

Income tax expense for the
nine months ended October 1, 2000 has been provided for based on the estimated
effective tax rate then currently expected to be applicable for the full 2000
fiscal year. The effective income tax rate of 32.9% for the quarter ended
October 1, 2000 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) and work opportunity tax credits partially
offset by state income taxes.

## 4.   Long-Term Debt

At October 1, 2000, $51.2
million was outstanding under the Companys $100 million revolving credit
agreement at a weighted average interest rate of 7.95%. Under an interest rate
swap agreement, the interest rate on $35.0 million of the amount outstanding
under the revolving credit facility is effectively fixed at 6.1%, plus a margin
of 1.25% to 2.0% (depending on the Companys leverage ratio). The margin on
October 1, 2000 was 1.25%; however, the margin is expected to be 1.5% during the
fourth quarter of 2000.

## 5.   Earnings Per Share

The Company effected a
three-for-two stock split in the form of a 50% stock dividend paid on September
5, 2000 to shareholders of record on August 15, 2000. All references to the
number of common shares and common share amounts have been restated to give
retroactive effect to the stock split for all periods presented.

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 or
restricted stock. 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. A reconciliation between basic
and diluted weighted average shares outstanding and the related earnings per
share calculation is presented below (in thousands, except per share amounts):

`13 Weeks     13 Weeks       40 Weeks     39 Weeks
                                                            Ended        Ended          Ended        Ended
                                                           Oct. 1,     Sept. 26,       Oct. 1,     Sept. 26,
                                                            2000         1999           2000         1999
                                                            ----         ----           ----         ----

Basic weighted average shares outstanding                  18,504       18,074        18,167         17,976
Dilutive effect of stock options                            1,243          927         1,027            725
Dilutive effect of restricted stock                            59           41            56             37
                                                          -------      -------       -------        -------
Diluted weighted average shares outstanding                19,806       19,042        19,250         18,738
                                                          =======      =======       =======        =======
Earnings before cumulative effect of change
  in accounting principle                                 $ 4,903      $ 3,158       $16,714       $ 11,142
Cumulative effect of change in accounting
  principle                                                     -            -             -         (1,587)
                                                          -------      -------       -------        -------
Net earnings                                              $ 4,903      $ 3,158       $16,714        $ 9,555
                                                          =======      =======       =======        =======
Basic earnings per common share:
  Basic earnings before cumulative effect
    of change in accounting principle                     $  0.26      $  0.17       $  0.92        $  0.62
  Cumulative effect of change in accounting
    principle                                                   -            -             -          (0.09)
                                                          -------      -------       -------        -------
Basic earnings per common share                           $  0.26      $  0.17       $  0.92        $  0.53
                                                          =======      =======       =======        =======
Diluted earnings per common share:
  Diluted earnings before cumulative effect
    of change in accounting principle                     $  0.25      $  0.17       $  0.87        $  0.59
  Cumulative effect of change in accounting
    principle                                                   -            -             -          (0.08)
                                                          -------      -------       -------        -------
Diluted earnings per common share                         $  0.25      $  0.17       $  0.87        $  0.51
                                                          =======      =======       =======        =======`

## 6. Comprehensive Income

For the quarters and nine
months ended October 1, 2000 and September 26, 1999, there was no difference
between the Companys net earnings and comprehensive income.

## 7. Shareholders' Equity

In February 2000, the
Companys Board of Directors authorized the Company to purchase up to $10.0
million of its common stock, through open market transactions, block purchases,
or in privately negotiated transactions. In April 2000, the Companys Board
of Directors further increased the dollar amount of the Companys common
stock authorized to be repurchased from $10.0 million to $25.0 million. During
the first nine months ended October 1, 2000, the Company purchased an aggregate
654,000 shares of its common stock for a total purchase price of
$7,864,000(average price of $12.02 per share).

## 8.      Recent Accounting Pronouncement

In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133, as amended by SFAS No.
137 and SFAS No. 138, establishes accounting and reporting standards for
derivative instruments and hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. This statement
is effective for the Company beginning in the first quarter of fiscal year 2001.
The Company believes that the adoption of the Statements will not have a
material effect on its financial statements, based on current activities.

## 9.      Business Combinations and Joint Ventures

In July 2000, the Company
acquired the ownership interest of its partners in two joint ventures. The first
partner, located in the Tampa, Florida market, had an ownership interest of
approximately 10% in five LongHorn Steakhouse restaurants. The interest was
purchased for an aggregate price of approximately $1.2 million, comprised of
$312,500 in cash and 48,492 shares of Company common stock. Two partners,
located in the North Carolina market, had an approximate one-third ownership
interest in 14 LongHorn Steakhouse restaurants. Their interests were purchased
for an aggregate price of approximately $9.0 million, comprised of $3.0 million
in cash and 307,035 shares of Company common stock. Both of these transactions
were accounted for under the purchase method of accounting.

## 10. Subsequent Event

In October 2000, the
Company entered into an interest rate swap agreement with a commercial bank,
which effectively fixes the interest rate at 6.52%, plus a margin of 1.25% to
2.0% (depending on the Companys leverage ratio) on $15.0 million of the
Companys borrowings through May 2001, increasing to $25.0 million through
March 2003, and increasing to $50.0 million through October 2003. When combined
with the Companys existing interest rate swap agreement, the interest rate
on $50.0 million of the Companys borrowings has effectively been fixed at
6.226%, plus the margin, through May 2001; 6.31%, plus the margin, through March
2003; and 6.52%, plus the margin, through October 2003. The margin on October 1,
2000 was 1.25%; however, the margin is expected to be 1.5% during the fourth
quarter of 2000.

# 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 and franchise revenues. Total
revenues increased 18.2% and 22.0% for the quarter and nine months ended October
1, 2000, respectively, as compared to the same periods of the prior fiscal year.

The Companys fiscal
year is a 52- or 53-week year ending on the last Sunday in each calendar year.
Each of the four quarters is typically made up of 13 weeks; however, since
fiscal 2000 will be a 53-week period, the first quarter of 2000 contained 14
weeks. This additional week had a favorable effect on the Companys revenue
comparisons and operating results for the first nine months of 2000.

Same store sales
comparisons for each of the Companys restaurant concepts for the quarter
ended October 1, 2000, consist of sales at restaurants opened prior to December
28, 1998.

# LongHorn Steakhouse:

Sales in the LongHorn
Steakhouse restaurants for the quarter and nine months ended October 1, 2000,
increased 22.5% and 26.1%, respectively, as compared to the same periods of the
prior fiscal year. The increases reflect a 15.5% and 17.8% increase in
restaurant operating weeks in the quarter and nine months ended October 1, 2000,
respectively, as compared to the same periods of the prior fiscal year,
resulting primarily from an increase in the restaurant base from 114 LongHorn
Steakhouse restaurants at the end of the third quarter of 1999 to 133 at the end
of the third quarter of 2000. Total operating weeks for the nine months ended
October 1, 2000 were positively affected by the additional week in the first
quarter 2000 14-week operating period as compared to 13-weeks in the first
quarter of 1999. Average weekly sales for all LongHorn Steakhouse restaurants in
the third quarter of 2000 was $47,169, a 6.0% increase over the comparable
period in 1999. Same store sales for the comparable LongHorn Steakhouse
restaurants increased 4.9% in the third quarter of 2000 as compared to the same
period in 1999, primarily due to an increase in customer counts.

# The Capital Grille:

Sales in The Capital Grille
restaurants increased 15.1% and 14.3% for the third quarter and nine months
ended October 1, 2000, compared to the same periods in 1999. There were 11 The
Capital Grille restaurants open during all of periods presented; however total
operating weeks for the nine months ended October 1, 2000 were positively
affected by the additional week in the first quarter 2000 14-week operating
period. Average weekly sales for all The Capital Grille restaurants in the third
quarter of 2000 was $103,959, a 15.1% increase from the comparable period in
1999. Same store sales for the comparable The Capital Grille restaurants
increased 11.8% in the third quarter of 2000, as compared to the same period in
1999, primarily due to an increase in customer counts.

# Bugaboo Creek:

Sales in the Bugaboo Creek
restaurants for the quarter and nine months ended October 1, 2000 increased 4.1%
and 12.3%, respectively, as compared to the same periods of the prior year. The
increases reflect a 3.5% and 7.8% increase in restaurant weeks in the quarter
and nine months ended October 1, 2000, respectively, compared to the same
periods of the prior year, resulting primarily from an increase in the
restaurant base from 17 Bugaboo Creek restaurants at September 26, 1999 to 18
restaurants at the end of the third quarter 2000. Total operating weeks for the
nine months ended October 1, 2000 were positively affected by the additional
week in the first quarter 2000 14-week operating period. Average weekly sales
for all Bugaboo Creek restaurants in the third quarter of 2000 was $67,967, a
0.5% increase from the comparable period for 1999. Same store sales for the
comparable Bugaboo Creek restaurants in the third quarter of 2000 increased 1.1%
as compared to the same period in 1999, primarily due to an increase in customer
counts.

# Franchise Revenue:

Franchise revenues
increased to $92,000 and $289,000 for the quarter and nine months ended October
1, 2000, respectively, as compared to $45,000 and $124,000 for the quarter and
nine months ended September 26, 1999, respectively. These increases were
primarily the result of the opening of franchised LongHorn Steakhouse
restaurants in September 1999 and February 2000.

# Costs and Expenses

Cost of restaurant sales as
a percentage of restaurant sales decreased to 36.0% from 36.4% for the third
quarter of 2000 and decreased to 35.8% from 36.0% for the nine months ended
October 1, 2000, as compared to the respective periods in 1999. The decreases
for the periods ended October 1, 2000 were due to more favorable pricing on
products utilized by the Company.

Restaurant operating
expense as a percentage of restaurant sales decreased to 44.9% from 45.9% for
the third quarter of 2000 and to 44.1% from 45.1% for the first nine months of
2000 as compared to the respective periods in 1999. The decrease in restaurant
operating expense as a percent of sales was due to higher aggregate and average
unit sales levels and the corresponding leverage of fixed and semi-fixed
expenses, as well as lower promotional and advertising expenses, particularly at
the Bugaboo Creek concept, along with lower credit card fees and insurance
expense.

Restaurant depreciation and
amortization decreased as a percentage of restaurant sales compared to the
corresponding periods of the prior year due to an increase in average unit sales
providing greater leverage of this fixed expense.

In March 2000, an ongoing
legal dispute with a former joint venture partner was resolved by an arbitrator,
resulting in a judgment against the Company in the amount of $2.0 million.
Accordingly, the Company recognized a nonrecurring charge of $1.0 million
($670,000 net of income taxes) in the first quarter of 2000, for amounts not
previously reserved for this dispute.

Pre-opening expense for the
third quarter 2000 was $1,015,000 relating to the six LongHorn restaurants
opened during the quarter, as well as incurred expenses relating to restaurants
that had not yet opened as of the end of the quarter.

General and administrative
expenses as a percentage of total revenues increased to 6.9% from 6.8% for the
third quarter of 2000 and decreased to 6.8% from 6.9% for the nine months ending
October 1, 2000 as compared to the respective periods for 1999. The increase for
the third quarter of 2000, as compared to the same period of the prior year, was
primarily due to higher goodwill amortization resulting from the purchase in
July 2000 of the ownership interest of joint venture partners in the Tampa,
Florida and North Carolina markets, as well as the increased goodwill
amortization resulting from the purchase of the joint venture interest in South
Florida in September 1999. The decrease for the nine months ended October 1,
2000, was principally due to greater leverage of fixed and semi-fixed general
and administrative expenses partially offset by the increase in goodwill
amortization.

As a result of the
relationships between revenues and expenses discussed above, the Companys
operating income increased to $8.4 million for the third quarter of 2000 from
$5.9 million for the corresponding period of the prior year.

Interest expense, net
increased to approximately $1.0 million in the third quarter of 2000 from
$870,000 for the corresponding period of the prior year primarily due to higher
average borrowings under the Companys revolving credit facility and the
amortization of loan costs associated with the amendment of the credit facility
in October 1999.

Minority interest expense
decreased to $122,000 for the third quarter of 2000 from $291,000 for the same
period of the prior year primarily due to the July 2000 and September 1999
purchase of joint venture partnership interests eliminating the minority
interest charge relating to these restaurants. The decrease in minority interest
was partially offset by improved operating results at the remaining joint
venture owned LongHorn Steakhouse restaurants.

Income tax expense for the
third quarter of 2000 was 32.9% of earnings before income taxes bringing the
Companys effective tax rate for the first nine months of 2000 to 33.1%.
This compares to 33.1% of earnings before income taxes and cumulative effect of
change in accounting principle for the third quarter of 1999 and 33.0% for the
first nine months of 1999. The Companys effective income tax rate differs
from applying the statutory federal income tax rate of 35% to pre-tax income,
primarily due to employee FICA tip tax credits and work opportunity tax credits
partially offset by state income taxes.

Net earnings increased to
$4.9 million for the third quarter of 2000 from net earnings of $3.2 million for
the third quarter of 1999, 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 nine months of 2000
the Companys principal sources of working capital were cash provided by
operating activities ($26.4 million), proceeds from the exercise of employee
stock options ($4.9 million), and borrowing under the Companys revolving
credit facility ($11.2 million). For the nine months ended October 1, 2000 the
principal uses of working capital were capital expenditures ($36.2 million) for
new and improved facilities and the purchase of Company common stock for
treasury ($7.9 million). As of October 1, 2000 the Company had $51.2 million
outstanding under the Companys $100 million revolving credit facility.

The Company intends to open
17 Company-owned LongHorn Steakhouse restaurants, one The Capital Grille
restaurant and one Bugaboo Creek restaurant in fiscal year 2000. The Company
estimates that its capital expenditures for fiscal year 2000 will be
approximately $45-50 million. During the first nine months of 2000, the Company
opened 15 LongHorn Steakhouse restaurants, and as of November 10, 2000, has
opened two LongHorn Steakhouse restaurants in the fourth quarter 2000. One
Bugaboo Creek restaurant and one The Capital Grille restaurant are expected to
be opened by the end of 2000. Management believes that available cash, cash
provided by operations, and available borrowings under the Companys $100
million revolving credit facility will provide sufficient funds to finance the
Companys expansion plans through the year 2002.

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.

# Recent Accounting Pronouncement

In June 1998, the Financial
Accounting Standards Board issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133, as amended by SFAS No.
137 and SFAS No. 138, establishes accounting and reporting standards for
derivative instruments and hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. This statement
is effective for the Company beginning in the first quarter of fiscal year 2001.
The Company believes that the adoption of the Statements will not have a
material effect on its financial statements, based on current activities.

# Forward-Looking Statements

Statements contained in
this Report concerning future results, performance or expectations are
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. All forward-looking statements in this Report
are based upon information available to the Company on the date of this Report.
All forward-looking statements involve risks and uncertainties that could cause
actual results, performance or developments to differ materially from those
expressed or implied by those forward-looking statements, such as: the
Companys ability to open the anticipated number of new restaurants on time
and within budget; the Companys ability to continue to increase same-store
sales at anticipated rates; a recession or other negative effect on business
dining patterns, or some other negative effect on the economy in general;
unexpected increases in cost of sales or other expenses; and the impact of any
negative publicity or public attitudes related to the consumption of beef. Other
risks and uncertainties include fluctuations in quarterly operating results,
seasonality, guest trends, competition and risks associated with the development
and management of new restaurant sites. More information about factors that
potentially may affect the Companys results, performance or development is
included in the Companys other filings with the Securities and Exchange
Commission, including its annual report on Form 10-K for the year ended December
26, 1999, and the Companys press releases and other communications.

# Item 3. Quantitative and Qualitative Disclosures About Market Risk

# Interest Rate Risk

As of November 10, 2000,
$56.4 million was outstanding under the Companys $100 million revolving
credit facility. Amounts outstanding under such credit facility bear interest at
LIBOR plus a margin of 1.25% to 2.0% (depending on the Companys leverage
ratio), or the administrative agents prime rate of interest plus a margin
of 0% to 0.75% (depending on the Companys leverage ratio) at the
Companys option. Accordingly, the Company is exposed to the impact of
interest rate fluctuations. To achieve the Companys objective of managing
its exposure to interest rate changes, the Company from time to time uses
interest rate swaps.

The Company has interest
rate swap agreements with commercial banks, which effectively fix the interest
rate on $50.0 million of the Companys borrowings at 6.226%, plus the
margin, through May 2001; 6.31%, plus the margin, through March 2003; and 6.52%,
plus the margin, through October 2003. The margin on October 1, 2000 was 1.25%;
however, the margin is expected to be 1.5% during the fourth quarter of 2000.
The Company is exposed to credit losses on this interest rate swap in the event
of counterparty non-performance, but does not anticipate any such losses.

While changes in LIBOR and
the administrative agents prime rate of interest could affect the cost of
borrowings under the credit facility in excess of amounts covered by the
interest rate swap agreement (of which only $6.4 million was outstanding in
excess of amounts covered by the interest rate swap agreement as of November 10,
2000) in the future, the Company does not consider its current exposure to
changes in such rates to be material, and the Company believes that the effect,
if any, of reasonably possible near-term changes in interest rates on the
Companys financial condition, results of operations or cash flows would
not be material.

# Investment Portfolio

The Company invests
portions of its excess cash, if any, in highly liquid investments. At October 1,
2000, the Company had $149,000 invested in high-grade overnight repurchase
agreements.

# Part II - Other Information

# Item 1. Legal Proceedings

In March 2000, an ongoing
legal dispute with a former joint venture partner was resolved by an arbitrator,
resulting in a judgment against the Company in the amount of $2.0 million. The
Company recognized a nonrecurring charge of $1.0 million ($670,000 net of income
taxes) in the first quarter 2000, for amounts not previously reserved for this
dispute.

# Item 2.  Changes in Securities and Use of Proceeds

On July 3, 2000, the
Company issued an aggregate of 307,035 shares of its common stock, no par value,
to two joint venture partners in Carolina Steakhouse Ventures, W.B. Dukes &
Associates, Inc. and WBD Columbia, Inc. in partial consideration for the
assignment to the Company of all of their ownership interest in and right and
title to Carolina Steakhouse Ventures. The Company also paid approximately $3.0
million in cash to W.B. Dukes & Associates, Inc. and WBD Columbia, Inc.
These shares of common stock were issued in an unregistered, non-public offering
in which no underwriters participated. The issuance of these was made in
reliance upon exemptions from registration under Section 4(2) of the Securities
Act of 1933 and of Regulation D of the Securities and Exchange Act of 1934. See
note 9 of the Notes to Consolidated Financial Statements for further information
regarding this transaction.

On July 11, 2000, the
Company issued 48,492 shares of its common stock, no par value, to RMA
Enterprises, Inc. in partial consideration for the assignment to the Company of
all of RMA Enterprises, Inc.s ownership interest in and right and title to
RMA-LSI Joint Venture. The Company also paid approximately $300,000 in cash to
RMA Enterprises, Inc. The shares of common stock were issued in an unregistered,
non-public offering in which no underwriters participated. The issuance of these
securities was made in reliance upon exemptions from registration under Section
4(2) of the Securities Act of 1933 and of Regulation D of the Securities and
Exchange Act of 1934. See Note 9 of the Notes to Consolidated Financial
Statements for further information regarding this transaction.

# Item 3. Defaults Upon Senior Securities

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

# Item 5. Other Information

# Item 6. Exhibits and Reports on Form 8-K

`(a)  Exhibits Filed.

             27 -- Financial Data Schedule (for SEC use only)


        (b)  Reports filed on Form 8-K.

             None.`

# 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.

`Date:    November 15, 2000                            /s/ W. Douglas Benn
         ------------------                           ------------------------
                                                      W. Douglas Benn
                                                      Executive Vice President, Finance
                                                      and Chief Financial Officer
                                                      (Principal Financial and
                                                      Accounting Officer)`

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