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


                                    FORM 10-Q


                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934


        For quarter ended                                 Commission file number
         March 24, 1998                                         0-19907


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



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

                           224 East Douglas, Suite 700
                              Wichita, Kansas 67202
               (Address of principal executive offices) (Zip code)

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

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

                                                                 /X/ Yes  / / No

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

                 Class                             Outstanding at April 28, 1998
Common Stock, $.01 par value                              41,197,969 shares



<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

                                      Index

                                                                            Page
                                                                          Number
                                                                          ------
PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets
         at March 24, 1998 and December 30, 1997                              2

         Condensed Consolidated Statements of
         Income for the twelve weeks ended
         March 24, 1998 and March 25, 1997                                    3

         Condensed Consolidated Statements of
         Cash Flows for the twelve weeks ended
         March 24, 1998 and March 25, 1997                                    4

         Notes to Condensed Consolidated
         Financial Statements                                                 5

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

PART II.  OTHER INFORMATION
Items 1 through 5 have been omitted
since the items are either inapplicable or the
answer is negative

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

PART III.  EXHIBITS

11.1   Statement regarding computation of per share earnings


                                      -1-

<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                  March 24, 1998     December 30, 1997
                                                                  --------------     -----------------
             ASSETS

Current assets:
<S>                                                                 <C>               <C>          
    Cash and cash equivalents                                       $136,679,458      $ 135,996,996
    Inventories                                                       11,142,576         10,955,361
    Pre-opening costs - net                                            6,566,121          9,162,642
    Other current assets                                               5,797,201          6,523,785
                                                                    ------------      -----------
         Total current assets                                        160,185,356        162,638,784

Property and equipment, net                                          443,306,609        429,732,586
Intangible and other assets, net                                      28,656,262         28,440,560
                                                                    ------------      -----------
            Total assets                                            $632,148,227      $ 620,811,930
                                                                    ============      ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                $ 10,360,353      $  16,746,604
    Other current liabilities                                         31,059,833         29,118,934
                                                                    ------------     ------------
            Total current liabilities                                 41,420,186         45,865,538


Deferred income taxes                                                  8,667,995          8,619,262
Other non-current liabilities                                            111,340            158,736
Minority interest                                                     (1,073,710)            19,927
Stockholders' Equity:
    Preferred stock                                                            -                  -
    Common stock                                                         411,795            411,562
    Additional paid-in capital                                       350,013,979        349,607,732
    Retained earnings                                                237,726,553        223,015,141
    Accumulated other comprehensive income                            (5,129,911)        (6,885,968)
                                                                    ------------     ------------
            Total stockholders' equity                               583,022,416        566,148,467
                                                                    ------------     ------------
            Total liabilities and stockholders' equity              $632,148,227      $ 620,811,930
                                                                    ============     ============
</TABLE>

                             See accompanying notes.

                                      - 2 -
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

<TABLE>
<CAPTION>
                                                                  For the twelve weeks ended
                                                              ----------------------------------
                                                              March 24, 1998      March 25, 1997
                                                              ----------------------------------

<S>                                                           <C>                  <C>         
Net sales                                                     $153,513,854         $130,255,616
Costs and expenses:
    Costs of sales                                              57,214,706           45,957,040
    Restaurant operating expenses                               60,899,769           45,389,594
    Depreciation and amortization                                8,624,125            6,430,554
                                                              ------------         ------------
Restaurant costs and expenses                                  126,738,600           97,777,188
                                                              ------------         ------------
Restaurant operating income                                     26,775,254           32,478,428
General and administrative expenses                              5,442,111            4,643,388
                                                              ------------         ------------
Income from operations                                          21,333,143           27,835,040
Other income, principally interest                               1,537,880              986,147
Income before income taxes and minority interest                22,871,023           28,821,187
Provision for income taxes                                      (8,077,118)         (10,602,788)
Minority interest                                                  (82,493)             (14,883)
                                                              ------------         ------------
Net income                                                    $ 14,711,412         $ 18,203,516
                                                              ============         ============
Basic earnings per share                                      $       0.36         $       0.45
                                                              ============         ============
Diluted earnings per share                                    $       0.35         $       0.44
                                                              ============         ============

</TABLE>

                             See accompanying notes.

                                      - 3 -
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.
                 Condensed Consolidated Statements of Cash Flows
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                             For the twelve weeks ended
                                                                                    --------------------------------------------
                                                                                     March 24, 1998               March 25, 1997
                                                                                    ---------------               --------------
Cash flows from operating activities:
<S>                                                                                  <C>                           <C>         
   Net income                                                                        $ 14,711,412                  $ 18,203,516
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization                                                  8,717,298                     6,522,664
         Net change in operating assets and liabilities:
           Change in operating assets                                                     690,433                    (3,993,942)
           Change in operating liabilities                                             (4,444,015)                    3,139,624
                                                                                     ------------                  ------------
             Net cash provided by operating activities                                 19,675,128                    23,871,862

Cash flows from investing activities:
   Purchases of property and equipment                                                (19,374,711)                  (21,423,374)
   Other                                                                               (1,780,492)                     (906,606)
                                                                                     ------------                  ------------
             Net cash used in investing activities                                    (21,155,203)                  (22,329,980)

Cash flows from financing activities:
   Net proceeds from issuance of common stock                                             406,480                     5,967,855
                                                                                     ------------                  ------------
             Net cash provided by financing activities                                    406,480                     5,967,855

Effect of exchange rate on cash                                                         1,756,057                      (238,627)
                                                                                      --------------               ------------

             Net increase in cash and cash equivalents                                    682,462                     7,271,110

Cash and cash equivalents at beginning of period                                      135,996,996                   150,721,286
                                                                                     ------------                  ------------
Cash and cash equivalents at end of period                                           $136,679,458                  $157,992,396
                                                                                     ============                  ============

Supplemental disclosure of cash flow information:
   Cash paid for income taxes                                                        $  1,503,854                  $  4,690,690
</TABLE>

                             See accompanying notes.

                                       4

<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Basis of Presentation


      The unaudited  condensed  consolidated  financial  statements  include all
adjustments,  consisting  of  normal,  recurring  accruals,  which  the  Company
considers  necessary for a fair  presentation of the financial  position and the
results of operations for the periods presented. The results of the twelve weeks
ended  March 24,  1998,  are not  necessarily  indicative  of the  results to be
expected for the full year ending  December 29, 1998.  This quarterly  report on
Form 10-Q should be read in conjunction with the Company's audited  consolidated
financial statements in its 1997 Form 10-K.

2.    Stock Options

      During the twelve week period  ended March 24, 1998,  the Company  granted
stock options for 8,858 shares of Common Stock at exercise  prices  ranging from
$17.50 to $21.69 per share pursuant to its 1992 stock option plan for employees.


3.    Earnings Per Share

      Basic  earnings  per share  amounts  are  computed  based on the  weighted
average number of shares actually  outstanding.  The number of weighted  average
shares  outstanding  for the twelve week periods  ended March 24, 1998 and March
25, 1997 were 41,165,028 and 40,840,336, respectively.

      For purposes of diluted  computations,  the number of shares that would be
issued  from the  exercise of stock  options  has been  reduced by the number of
shares which could have been  purchased  from the proceeds at the average market
price of the Company's stock or the price of the Company's stock on the exercise
date if options were exercised during the period presented. The number of shares
resulting  from this  computation  of diluted  earnings per share for the twelve
weeks ended March 24, 1998 and March 25,  1997 was  42,235,190  and  41,334,247,
respectively.

4.    Recently Issued Accounting Standards

      In February 1998, the FASB cleared  AcSEC's SOP,  Accounting for the Costs
of Start-Up Activities, for final issuance subject to certain editorial changes.
AcSEC  plans to issue the  final  SOP by June  1998.  The SOP will  require  the
Company to expense start-up costs,  including  organizational costs, as incurred
and to  report  the  initial  adoption  as a  cumulative  effect  of a change in
accounting principle as described in APBO No. 20, Accounting Changes, during the
first quarter of its fiscal year 1999. The cumulative effect upon adoption would
result in a one-time  charge to income in an amount  equal to the net book value
of the  Company's  start-up  costs.  A  resulting  benefit of this change is the
discontinuance of amortization expense in subsequent periods.

                                       5

<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

Recently Issued Accounting Standards - continued

      As of December  31, 1997,  the Company  adopted the  Financial  Accounting
Standards Board Statement 130,  Reporting  Comprehensive  Income.  Statement 130
establishes new rules for the reporting and display of comprehensive  income and
its  components;  however,  the adoption of this  Statement had no impact on the
Company's  net  income or  shareholders'  equity.  Statement  130  requires  the
Company's foreign currency translation adjustments, which prior to adoption were
reported   separately  in  shareholders'   equity,   to  be  included  in  other
comprehensive income.

      During the first  quarter  of 1998 and 1997,  total  comprehensive  income
amounted to $16,467,469 and $17,964,889, respectively.

                                       6

<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

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

General

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

      The Company is continuing its rapid expansion under which it has opened 45
domestic restaurants in 1995, 45 restaurants in 1996, 60 restaurants in 1997 and
intends to open 60 Lone Star Steakhouse & Saloon  restaurants in 1998,  although
there can be no assurance that the Company will open 60 units in the fiscal year
ended  December  30,  1998.  All  units are  expected  to be  Company-owned  and
operated.  As of  March  24,  1998,  the  Company  has  opened  two of the  1998
development restaurants.

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

      The Company is continuing to develop its upscale steakhouse concepts.  The
Company  is  currently  operating  three  Del  Frisco's  locations  and  has one
additional  unit with  approximately  16,000 square feet of space in Rockefeller
Plaza in New York  City  under  construction  which it  expects  to open in late
summer of 1998.  The  Company  expects  to open one or two  other  Del  Frisco's
restaurants in 1998 in the United States.

      The Company  developed  and  operates a second  upscale  steak  restaurant
concept,  Sullivan's  Steakhouse,  where  the  average  check  per  customer  is
approximately  $50.  The Company is  operating  five  Sullivan's  locations  and
expects to develop five to seven additional Sullivan's restaurants in 1998.

      Internationally,  the Company,  through a joint venture,  operates 36 Lone
Star  Steakhouse & Saloon  restaurants  in  Australia,  two of which opened this
year, and expects to open an additional six to eight units in 1998.

                                       7

<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

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

Results of Operations

      The  following  table  sets  forth  for  the  periods  indicated  (i)  the
percentages which certain items included in the condensed consolidated statement
of income bear to net sales, and (ii) other selected operating data:
<TABLE>
<CAPTION>

                                                                                          Twelve Weeks Ended (1)
                                                                                       March 24,            March 25,
                                                                                         1998                  1997
                                                                                       ---------            ----------

                                                                                       (dollars in thousands)

Income Statement Data:
<S>                                                       <C>                         <C>                  <C>   
      Net Sales                                                                       100.0%               100.0%
      Costs and expenses:
            Costs of sales..........................................................    37.3                 35.3
            Restaurant operating expenses...........................................    39.7                 34.8
            Depreciation and amortization...........................................     5.6                  4.9
                                                                                        ----                 ----
                 Restaurant costs and expenses......................................    82.6                 75.0
                                                                                        ----                 ----
      Restaurant operating income...................................................    17.4                 25.0
      General and administrative expenses...........................................     3.5                  3.6
                                                                                        ----                 ----
      Income from operations........................................................    13.9                 21.4
      Other income, principally interest............................................     1.0                   .7
                                                                                        ----                 ----
      Income before provision for income taxes .....................................    14.9                 22.1
      Provision for income taxes....................................................     5.3                  8.1
                                                                                        ----                 ----
      Net income ...................................................................     9.6%                14.0%
                                                                                        ====                 ====


Restaurant Operating Data:
      Average sales per restaurant on an annualized basis (2)                         $2,344               $2,479
      Number of restaurants at end of the period                                         313                  244
</TABLE>


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

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

                                       8

<PAGE>
                      LONE STAR STEAKHOUSE & SALOON, INC.

Twelve Weeks Ended March 24, 1998 Compared to Twelve Weeks Ended March 25, 1997

      Net sales increased  $23,258,000  (17.9%) to  $153,514,000  for the twelve
weeks ended March 24, 1998 compared to  $130,256,000  for the twelve weeks ended
March 25, 1997 principally  attributable to $24,750,000 in sales from the 52 new
domestic Lone Star  restaurants  opened since March 1997,  additional sales from
the three Sullivan's  restaurants opened since March, 1997 and sales from the 14
additional  units  opened in the  Australian  joint  venture.  The  increase was
partially  offset by a 7.0%  decrease in  same-store  sales which  resulted from
lower customer counts during the quarter.

      Costs of sales, primarily food and beverages, increased as a percentage of
sales to 37.3% from 35.3% due to higher beef and produce prices,  and the higher
cost of sales of new entree's  introduced in the fourth quarter of 1997.  During
this period,  the Company did not purchase beef under contracted prices although
there may be a possibility of contracting prices in the future.

      Restaurant  operating  expenses  for the twelve weeks ended March 24, 1998
increased  $15,510,000  (34.2%) from $45,390,000 in the twelve weeks ended March
25, 1997 to  $60,900,000,  and such  expenses  increased as a percentage  of net
sales from 34.8% to 39.7%.  This increase is  attributable to higher labor costs
and higher fixed costs for building and  equipment  maintenance  on the domestic
Lone Star  restaurants  and higher labor and occupancy  costs in the  Australian
units,  and the  effect of fixed cost  components  on lower  average  restaurant
sales.

      Depreciation and amortization  increased  $2,194,000 (34.1%) in the twelve
weeks ended March 24, 1998 over the twelve weeks ended March 25, 1997,  and such
expenses  increased  as a  percentage  of net  sales  from  4.9%  to  5.6%.  The
capitalized  pre-opening  expenses for 55 new restaurants opened domestically as
well as 14  restaurants  opened in  Australia  since  March 1997  increased  the
pre-opening cost amortization for the first quarter of 1998 over the prior year.
General and  administrative  expenses  for the twelve weeks ended March 24, 1998
increased $799,000 (17.2%) from the comparable period in 1997,  primarily due to
the increased travel expenses associated with 69 additional  locations.  Certain
accounting and administrative  services are contracted from Coulter Enterprises,
Inc., a restaurant  management  services company owned by the Company's Chairman
of the Board and Chief Executive  Officer.  The service  agreement  provides for
specified  accounting  and  administration  services  to be  provided  on a cost
pass-through  basis  under  which  the  Company  paid a fixed  annual  charge of
$2,010,000,  plus an additional fee of $440 per restaurant per 28-day accounting
period and  reimbursement of out-of-pocket  costs and expenses during the fiscal
year ended December 30, 1997. The service  agreement was renewed for fiscal 1998
with the fixed annual charge  increasing to $3,737,000  and the per  restaurant,
per accounting  period fee increasing to $466.  Should the service agreement not
be renewed in the future,  the Company  would incur direct costs for  accounting
and administration,  personnel,  rent and other costs associated with a separate
office;  however,  the  Company  believes  that such  direct  costs would not be
materially different than the costs under the contractual arrangement.

      Other income,  principally interest,  for the twelve weeks ended March 24,
1998 was  $1,538,000,  a $552,000  increase from the comparable  period in 1997,
reflecting  an  increase  in  interest  income  from the  investment  of the net
proceeds of the 1997 public offering.

      The  effective  income tax rates for the twelve weeks ended March 24, 1998
and the twelve  weeks ended  March 25, 1997 were 35.4% and 36.8%,  respectively.
The decrease in the rate is primarily due to a reduction in the tax liability in
certain states.

                                       9

<PAGE>
                      LONE STAR STEAKHOUSE & SALOON, INC.

Impact of inflation

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

Forward looking statements

      This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities  Exchange Act of 1934,  amended.  Stockholders are cautioned that all
forward-looking  statements  involve risks and  uncertainty,  including  without
limitation,  the ability of the Company to open new restaurants,  general market
conditions,   competition  and  pricing.   Although  the  Company  believes  the
assumptions  underlying  the  forward-looking  statements  contained  herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements contained in the report will
prove to be accurate.

Year 2000 Compliance

      The registrant  currently believes that its essential  processes,  systems
and business functions will be ready for the millennium transition and is taking
the necessary  steps to accomplish  this  objective.  The Year 2000 issue is not
anticipated to have a material impact on the Registrant's results of operations,
financial position or its cash flows.


                                       10


<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

Liquidity and Capital Resources

      The following  table  presents a summary of the  Company's  cash flows for
each of the twelve weeks ended March 24, 1998 and March 25, 1997.

<TABLE>
<CAPTION>
                                                                     Twelve weeks ended
                                                                  March 24,        March 25,
                                                                    1998             1997
                                                                    ----             ----
<S>                                                            <C>             <C>          
Net cash provided by operating activities............          $ 19,675,128    $  23,871,862
Net cash used in investment activities...............           (21,155,203)     (22,329,980)
Net cash provided by financing
      activities.....................................               406,480        5,967,855
Effect of exchange rate on cash......................             1,756,057         (238,627)
Net increase in cash.................................               682,462        7,271,110
</TABLE>

During the twelve week period ended March 24, 1998, the Company's  investment in
property and equipment was $19,375,000.

      The Company has opened 241  restaurants  in the past five fiscal  years of
which 60 opened in 1997 and an additional 2 opened during the twelve weeks ended
March 24, 1998. The Company does not have  significant  receivables or inventory
and receives  trade credit based upon  negotiated  terms in purchasing  food and
supplies.  Because funds available from cash sales are not needed immediately to
pay for food and supplies, or to finance inventory,  they may be considered as a
source of financing for noncurrent capital expenditures.

      At  March  24,  1998,  the  Company  had  $136,679,000  in cash  and  cash
equivalents.  While the  Company  has not  established  a credit  facility,  the
Company  believes it could  establish a facility on suitable  terms. As of March
24, 1998, the Company has acquired eight sites for future development,  three of
which are leased. In addition, as of such date the Company had entered into nine
contracts  to  purchase  sites.  The Company was also  actively  negotiating  to
purchase  or  lease  39  additional   sites.   The  Company  expects  to  expend
approximately  $95,000,000  to open new  restaurants  through the  remainder  of
fiscal 1998.

                                       11


<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.


Item 6.  Exhibits and Reports on Form 8-K
            (a)  Exhibit 10.2      Employment  Agreement dated as of February 1,
                                   1998 by and between  Lone Star  Steakhouse  &
                                   Saloon, Inc. and John D. White

                 Exhibit 10.8      Employment  Agreement dated as of February 1,
                                   1998 by and between  Lone Star  Steakhouse  &
                                   Saloon, Inc. and Michael J. Archer

                 Exhibit 10.9      Employment  Agreement dated as of February 1,
                                   1998 by and between  Lone Star  Steakhouse  &
                                   Saloon, Inc. and Gerald T. Aaron

                 Exhibit 10.10     Employment  Agreement dated as of February 1,
                                   1998 by and between  Lone Star  Steakhouse  &
                                   Saloon, Inc. and Robert M. Kendall

                 Exhibit 10.11     Employment  Agreement dated as of February 1,
                                   1998 by and between  Lone Star  Steakhouse  &
                                   Saloon, Inc. and Frank E. Furstenberg, Jr.

                 Exhibit 11.1      Computation of Per Share Earnings
                 Exhibit 27        Financial Data Schedule

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



                                       12

<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.

                                   SIGNATURES

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

                                     Lone Star Steakhouse & Saloon, Inc.
                                     (Registrant)


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