FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the quarterly period ended   June 29, 1997
                                 -----------------------------------------------

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

For the transition period from   ____________________  to  ____________________

Commission file number           1-12692
                                 -----------------------------------------------

                         MORTON'S RESTAURANT GROUP, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                    13-3490149
--------------------------------------------------------------------------------
  (State or other jurisdiction              (I.R.S. employer identification no.)
of incorporation or organization)

3333 New Hyde Park Road, Suite 210, New Hyde Park, New York         11042
--------------------------------------------------------------------------------
(Address of principal executive offices)                          (zip code)

                                  516-627-1515
--------------------------------------------------------------------------------
              (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 period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes |X| No |_|

As of August 7, 1997, the registrant had 6,520,340 Shares of its Common Stock,
$.01 par value, issued and outstanding.


                                       1
<PAGE>

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

                                      INDEX

Part I - Financial Information                                             Page
------------------------------                                             ----

Item 1. Financial Statements

  Consolidated Balance Sheets as of June 29, 1997
   and December 29, 1996                                                    3-4

  Consolidated Statements of Income for the three
   and six month periods ended June 29, 1997 and
   June 30, 1996                                                             5

  Consolidated Statements of Cash Flows for the six
   month periods ended June 29, 1997 and June 30, 1996                       6

  Notes to Consolidated Financial Statements                                7-9

Item 2. Management's Discussion and Analysis of
   Financial Condition and Results of Operations                           10-13

Part II - Other Information
---------------------------

Item 1. Legal Proceedings                                                   14

Item 4. Submission of Matters to a Vote of Stockholders                     14

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

Signatures                                                                  15


                                        2
<PAGE>

Item 1. Financial Statements

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

                           Consolidated Balance Sheets

                             (amounts in thousands)

                                                       June 29,     December 29,
                                                         1997           1996
                                                         ----           ----
                                                             (unaudited)
    Assets
Current assets:
    Cash and cash equivalents                          $ 2,534        $ 2,276
    Accounts receivable                                  2,114          2,116
    Inventories                                          4,642          4,254
    Landlord construction receivables, 
     prepaid expenses and other
     current assets                                      2,755          2,408
    Deferred income taxes                                4,116          3,808
    Assets held for sale                                   371         12,474
                                                        ------         ------

         Total current assets                           16,532         27,336

Property and equipment, at cost:
    Furniture, fixtures and equipment                   15,656         13,552
    Leasehold improvements                              16,644         14,188
    Construction in progress                               472          1,284
                                                        ------         ------
                                                        32,772         29,024
    Less accumulated depreciation and amortization       5,345          4,353
                                                        ------         ------
         Net property and equipment                     27,427         24,671
                                                        ------         ------

Intangible assets, net of accumulated amortization
    of $3,256 at June 29, 1997 and $3,054 at
    December 29, 1996                                   12,739         12,941
Other assets and deferred expenses, net of 
    accumulated amortization of $3,367 at
    June 29, 1997 and $3,963 at December 29, 1996        7,855          5,909
Deferred income taxes                                    4,797          6,129
                                                        ------         ------
                                                       $69,350        $76,986
                                                        ======         ======

                                                          (Continued)


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<PAGE>

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

                     Consolidated Balance Sheets, Continued

                    (amounts in thousands, except share data)

                                                        June 29,    December 29,
                                                         1997           1996
                                                         ----           ----
                                                            (unaudited)
    Liabilities and Stockholders' Equity

Current liabilities:
    Accounts payable                                   $  4,765      $  4,694
    Accrued expenses                                      7,559         7,795
    Accrued income taxes                                    426           700
    Liabilities related to assets held for sale           3,352        12,134
                                                        --------      --------

           Total current liabilities                     16,102        25,323

Bank debt                                                21,970        24,900
Other liabilities                                         6,077         5,676
                                                        --------      --------

           Total liabilities                             44,149        55,899
                                                        --------      --------

Commitments and contingencies

Stockholders' equity:
    Preferred stock, $.01 par value per share.
      Authorized 3,000,000 shares, no shares
      issued or outstanding                                --             --
    Common stock,  $.01 par value per share.
      Authorized 25,000,000 shares, issued and
      outstanding 6,493,553 shares at June 29,
      1997 and 6,443,673 shares at December 29, 1996         65            64
    Nonvoting common stock, $.01 par value per share.
      Authorized 3,000,000 shares, no shares issued
      or outstanding                                       --             --
    Additional paid-in capital                           61,884        61,632
    Accumulated deficit                                 (36,748)      (40,609)
                                                        --------      --------

         Total stockholders' equity                      25,201        21,087
                                                        --------      --------

                                                       $ 69,350      $ 76,986
                                                        ========      ========


See accompanying notes to consolidated financial statements.

                                        4
<PAGE>

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

                        Consolidated Statements of Income

                  (amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                          Three Months Ended      Six Months Ended
                                         June 29,     June 30,   June 29,     June 30,
                                           1997         1996       1997         1996
                                           ----         ----       ----         ----
                                             (unaudited)              (unaudited)
<S>                                       <C>          <C>       <C>           <C>    
Revenues                                  $41,061      $46,476   $87,595       $95,345

Food and beverage costs                    14,226       15,639    30,171        31,910
Restaurant operating expenses              17,896       22,702    38,180        46,237
Depreciation, amortization and other                                           
  non-cash charges                          1,826        1,306     3,913         2,900
General and administrative expenses         3,202        3,544     6,892         7,246
Marketing and promotional expenses            975        1,014     2,082         2,152
Interest expense, net                         589          574     1,209         1,144
                                           ------       ------    ------        ------
                                                                               
        Income before income taxes          2,347        1,697     5,148         3,756
                                                                               
Income tax expense                            587          425     1,287           940
                                           ------       ------    ------        ------
                                                                               
        Net income                        $ 1,760      $ 1,272   $ 3,861       $ 2,816
                                           ======       ======    ======        ======
                                                                               
Net income per share                      $  0.26      $  0.19   $  0.56       $  0.42
                                           ======       ======    ======        ======
                                                                               
Weighted average shares outstanding         6,844        6,807     6,838         6,773
                                           ======       ======    ======        ======
</TABLE>


          See accompanying notes to consolidated financial statements.

                                        5
<PAGE>

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows

                             (amounts in thousands)

                                                            Six Months Ended
                                                        June 29,        June 30,
                                                          1997            1996
                                                          ----            ----
                                                              (unaudited)
Cash flows from operating activities:
  Net income                                           $ 3,861         $ 2,816
  Adjustments to reconcile net income 
    to net cash provided by operating
    activities:
  Depreciation, amortization and other
    non-cash charges                                     3,913           2,900
  Deferred income taxes                                  1,024             500
  Change in assets and liabilities:
      Accounts receivable                                    2           1,708
      Inventories                                         (388)           (369)
      Prepaid expenses and other assets                 (2,255)           (303)
      Accounts payable, accrued expenses
        and other liabilities                           (2,008)         (4,095)
      Accrued income taxes                                (274)            (39)
                                                        ------          ------
         Net cash provided by operating 
           activities                                    3,875           3,118
                                                        ------          ------

Cash flows from investing activities:
  Purchases of property and equipment, net              (3,438)         (2,527)
  Payments for start-up costs, licenses 
    and other deferred expenses                         (1,966)         (2,724)
    
  Proceeds from sale of Mick's and Peasant
    restaurants                                          4,308            --
                                                        ------          ------
         Net cash used by investing activities          (1,096)         (5,251)
                                                        ------          ------

Cash flows from financing activities:
  Principal reduction on bank debt                      (7,624)         (2,100)
  Proceeds from bank debt                                4,850           4,400
  Payments on note payable to related party               --              (483)
  Net proceeds from issuance of stock                      253              10
                                                        ------          ------
         Net cash provided (used) by financing
           activities                                   (2,521)          1,827
                                                        ------          ------

Net increase (decrease) in cash and cash 
  equivalents                                              258            (306)

Cash and cash equivalents at beginning 
  of period                                              2,276           2,351
                                                        ------          ------

Cash and cash equivalents at end of period             $ 2,534         $ 2,045
                                                        ======          ======


          See accompanying notes to consolidated financial statements.

                                        6
<PAGE>

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements

                         June 29, 1997 and June 30, 1996

1) The accompanying unaudited, consolidated financial statements have been
prepared in accordance with instructions to Form 10-Q and, therefore, do not
include all information and footnotes normally included in financial statements
prepared in conformity with generally accepted accounting principles. They
should be read in conjunction with the consolidated financial statements of
Morton's Restaurant Group, Inc., formerly known as Quantum Restaurant Group,
Inc., (the "Company") for the fiscal year ended December 29, 1996, filed by the
Company on Form 10-K with the Securities and Exchange Commission on March 27,
1997.

      The accompanying financial statements are unaudited and include all
adjustments (consisting of normal recurring adjustments and accruals) that
management considers necessary for a fair presentation of its financial position
and results of operations for the interim periods presented. The results of
operations for the interim periods are not necessarily indicative of the results
that may be expected for the entire year.

      On May 9, 1996, at the Company's Annual Meeting of Stockholders, the
stockholders voted to change the name of the Company from Quantum Restaurant
Group, Inc. to Morton's Restaurant Group, Inc.

      The Company uses a fiscal reporting period ending on the closest Sunday to
December 31. The fiscal year consists of 52 weeks and approximately every six or
seven years, a 53rd week will be added.

2) For the purposes of the consolidated statements of cash flows, the Company
considers all highly liquid instruments purchased with a maturity of three
months or less to be cash equivalents. The Company paid cash interest and fees,
net of amounts capitalized, of approximately $965,000 and $1,004,000, and income
taxes of approximately $835,000 and $506,000, for the six months ended June 29,
1997 and June 30, 1996, respectively. During the first six months of fiscal 1997
and 1996, the Company entered into capital lease arrangements of approximately
$777,000 and $1,100,000, respectively, for restaurant equipment.

3) As described below, on February 6, 1997, the Company completed the sale of
its Atlanta-based Mick's and Peasant restaurants. Effective January 2, 1995, the
Company adopted Statement of Financial Accounting Standards No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of " ("Statement 121").

      During the second quarter of fiscal 1995, the Company approved a plan for
the sale of Mick's Restaurants, Inc. ("Mick's") and The Peasant Restaurants,
Inc. ("Peasant"). Pursuant to Statement 121, the Company discontinued
depreciating fixed assets and amortizing goodwill relating to Mick's and Peasant
in April 1995.

      Coincident with the Company's approval of the plan of sale, the assets
held for sale and related liabilities for Mick's and Peasant have been
reclassified as "Assets held for sale" and "Liabilities related to assets held
for sale" when the Company reports its financial position. The accompanying
consolidated balance sheets include the following components:


                                        7
<PAGE>

                                                June 29,          December 29,
                                                 1997 (1)             1996
                                                 ----                 ----
                                              (amounts in thousands, unaudited)

Current assets                                     $   371         $  2,166
Net property and equipment                           1,897           10,704
Unamortized goodwill                                 --               8,077
Other assets                                           765            2,143
Write-down of carrying values                       (2,662)         (10,616)
                                                 ----------         -------
        Assets held for sale                           371           12,474
                                                 ----------         -------

Current liabilities                                    478            3,495
Other liabilities                                    --               1,612
Lease exit and other transaction costs               2,874            7,027
                                                 ----------         -------
        Liabilities related to assets held
          for sale                                   3,352           12,134
                                                 ----------         -------
          Net assets (liabilities related
            to assets) held for sale            $   (2,981)        $    340
                                                 ==========         =======

(1) Includes the four remaining non-Atlanta Mick's restaurants.

      The following represents the combined results of Mick's and Peasant for
the periods ended June 29, 1997 and June 30, 1996. Interest expense was not
allocated.

                                                        Six Months Ended
                                                     June 29,       June 30,
                                                     1997 (2)        1996
                                                     ----            ----
                                               (amounts in thousands, unaudited)

Revenues                                            $  7,181       $28,451

Food and beverage costs                                2,151         8,395
Restaurant operating expense                           4,320        17,948
Depreciation, amortization and other 
  non-cash charges                                         6           103
General and administrative expenses                      477         2,053
Marketing and promotional expenses                       123           561
                                                     -------        ------

        Income (loss) before income taxes           $    104       $  (609)
                                                     =======        ======

(2) Includes the Atlanta-based Mick's and Peasant restaurants through February
6, 1997, the date of sale, as discussed below, one non-Atlanta Mick's restaurant
which was closed in June 1997, and the four remaining non-Atlanta Mick's
restaurants which the Company intends to sell or otherwise dispose of.

      Management had been actively seeking potential buyers for the sale of all
Mick's and Peasant restaurants and in the fourth quarter of fiscal 1995 engaged
an investment banking firm to assist with the sale. Although marketing efforts
concentrated on selling all of the Mick's and Peasant restaurants, sales
materials indicated that a partial sale would be considered. Most of the
interest received related to the majority of the restaurants located mainly in
the Atlanta area. No meaningful offers were received for the remaining


                                        8
<PAGE>

restaurants (the "Remaining Restaurants"). Cash flow analyses prepared by
management for the Remaining Restaurants indicated that it would be less costly
to close such restaurants in an orderly fashion, rather than continue to operate
them through the end of their respective lease terms. Accordingly, assets of
$8,300,000 related to the Remaining Restaurants were written off and expenses of
$7,200,000, representing management's estimate of the expected costs to
terminate related leases, were accrued at December 31, 1995. During fiscal 1996
and the first six months of 1997, restaurant occupancy expense of approximately
$1,498,000 and $647,000 for the Remaining Restaurants has been charged against
the accrual for lease exit costs, respectively. During fiscal 1996, seven Mick's
restaurants and two Peasant restaurants were closed. During 1997, two Mick's
restaurants were closed in January, one Mick's was closed in June 1997 and
another was closed in July 1997.

      On February 6, 1997, the Company completed the sale of its Atlanta-based
Mick's and Peasant restaurants. In connection with the sale, the Remaining
Restaurants were transferred to another subsidiary of the Company. Pursuant to
these agreements, MRI Acquisition Corporation acquired an 80.1% interest in
Mick's and PRI Acquisition Corporation acquired an 80.1% interest in Peasant for
an aggregate of $6,800,000, consisting of $4,300,000 in cash and $2,500,000 in
the form of two unsecured promissory notes. The Company retained a 19.9%
interest in Mick's and Peasant. In conjunction with the sale, the Company had
recorded a fiscal 1996 fourth quarter charge of $11,500,000 to write-down the
Atlanta-based restaurants to their net realizable values based on the fair value
of the consideration received, accrue for the various expenses related to the
closing of such sale and to write-off two restaurants which are not part of the
sale, both of which were closed in 1997. As of July 1997, the Company continues
to operate three Mick's restaurants which the Company intends to sell or
otherwise dispose of.

      The write-down and related charges for net assets held for sale reflect
management's best estimate of the costs expected to be incurred in connection
with the disposition of Mick's and Peasant. As a result of the numerous
uncertainties which may impact the actual costs to be incurred by the Company,
such costs may differ from the current estimates used by management.

4) The Company is involved in various legal actions. See "Part II - Other
Information, Item 1. Legal Proceedings" on page 14 of this Form 10-Q for a
discussion of these legal actions.


                                        9
<PAGE>

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

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

Results of Operations

      Revenues decreased $5.4 million, or 11.7%, to $41.1 million for the three
month period ended June 29, 1997, from $46.5 million for the comparable 1996
period. Revenues from Morton's and Bertolini's increased $6.3 million, or 18.8%,
to $39.6 million for the three month period ended June 29, 1997, from $33.3
million during the comparable 1996 period. Of the increase in Morton's and
Bertolini's revenues, $4.3 million was attributable to incremental restaurant
revenues from seven new restaurants opened after January 1, 1996 and $2.0
million, or 6.6%, was attributable to additional comparable revenues from
restaurants open all of both periods. Average Morton's and Bertolini's revenues
per restaurant open for a full period increased 8.6%.

      Revenues decreased $7.8 million, or 8.1%, to $87.6 million for the six
month period ended June 29, 1997, from $95.3 million for the comparable 1996
period. Revenues from Morton's and Bertolini's increased $13.0 million, or
20.2%, to $80.4 million for the six month period ended June 29, 1997, from $66.9
million for the comparable 1996 period. Of the increase in Morton's and
Bertolini's revenues, $9.2 million was attributable to incremental restaurant
revenues from seven new restaurants opened after January 1, 1996 and $3.8
million, or 6.1%, was attributable to additional comparable revenues from
restaurants open all of both periods. Average Morton's and Bertolini's revenues
per restaurant open for a full period increased 7.3%. Included in 1997 six month
revenues is approximately $0.5 million of investment income. As stated in Note
3, the Company completed the sale of its Atlanta-based Mick's and Peasant
restaurants on February 6, 1997. Nine other non-Atlanta Mick's and Peasant
restaurants were closed during fiscal 1996 and four additional Mick's have been
closed during fiscal 1997. As a result, revenues for the Mick's and Peasant
restaurants decreased approximately $11.7 million and $21.3 million in the three
and six month periods ended June 29, 1997 versus the comparable periods of 1996.
As of July 1997, the Company continues to operate three Mick's restaurants which
the Company intends to sell or otherwise dispose of.

      Percentage changes in comparable restaurant revenues for the three and six
month periods ended June 29, 1997 versus June 30, 1996 for restaurants open all
of both periods are as follows:

                                  Three Months               Six Months
                               Ended June 29, 1997      Ended June 29, 1997
                                Percentage Change        Percentage Change
                                -----------------        -----------------

         Morton's                     8.1%                     7.9%
         Bertolini's                 -0.1%                    -2.1%
         Total                        6.6%                     6.1%

      The Company believes that revenues for the first quarter of 1996 were
adversely affected by severe winter storms in January 1996.


                                       10
<PAGE>

      Food and beverage costs decreased from $15.6 million for the three month
period ended June 30, 1996 to $14.2 million for the three month period ended
June 29, 1997 and decreased from $31.9 million for the six month period ended
June 30, 1996 to $30.2 million for the six month period ended June 29, 1997.
Food and beverage costs, excluding all Mick's and Peasant restaurants, increased
by $2.1 million to $13.8 million for the three month period ended June 29, 1997
from $11.7 million recorded for the three month period ended June 30, 1996 and
increased by $4.5 million to $28.0 million for the six month period ended June
29, 1997, from $23.5 million for the comparable 1996 period. These costs as a
percentage of related revenues decreased 0.4% for the three and six month
periods. As a result of the sale and closings of the Mick's and Peasant
restaurants as discussed in Note 3, there was a reduction in food and beverage
costs of approximately $3.5 million and $6.2 million in the three and six month
periods ended June 29, 1997 and June 30, 1996, respectively.

      Restaurant operating expenses which include labor, occupancy and other
operating expenses decreased from $22.7 million for the three month period ended
June 30, 1996 to $17.9 million for the three month period ended June 29, 1997, a
decrease of $4.8 million. For the six months ended June 29, 1997, these costs
decreased from $46.2 million during the 1996 period, to $38.2 million for the
comparable 1997 period. Restaurant operating expenses, excluding all Mick's and
Peasant restaurants, increased from $14.4 million for the three month period
ended June 29, 1996 to $17.0 million for the comparable 1997 period and
increased from $28.3 million for the six month period ended June 30, 1996 to
$33.9 million for the comparable 1997 period. Those costs, excluding Mick's and
Peasant, as a percentage of revenues decreased 0.1% from 43.1% for the three
month period ended June 30, 1996 to 43.0% for the three month period ended June
29, 1997 and decreased 0.2% from 42.3% for the six month period ended June 30,
1996 to 42.1% for the comparable 1997 period. Offsetting the increase in total
restaurant operating expenses was a reduction of approximately $7.5 million and
$13.6 million during the three and six month periods ended June 29, 1997 versus
the comparable 1996 periods, respectively, due to the sale and closings of
Mick's and Peasant restaurants as discussed in Note 3.

      Depreciation, amortization and other non-cash charges increased from $1.3
million for the three month period ended June 30, 1996 to $1.8 million for the
three month period ended June 29, 1997 and increased from 2.8% of revenues to
4.4%, respectively. For the six months ended June 29, 1997, such costs were $3.9
million versus $2.9 million for the comparable 1996 period. The 1997 period
increase is due to increased startup amortization.

      General and administrative expenses for the three month period ended June
29, 1997 were $3.2 million, a decrease of $0.3 million, from $3.5 million for
the three month period ended June 30, 1996. For the six months ended June 29,
1997, such costs were $6.9 million versus $7.2 million for the comparable 1997
period. General and administrative expenses, excluding all Mick's and Peasant
restaurants, increased $0.6 million from $2.5 million for the three month period
ended June 30, 1996 to $3.1 million for the comparable 1997 period and increased
$1.2 million from $5.2 million for the six month period ended June 30, 1996, to
$6.4 million for the comparable 1997 period. Such costs, excluding Mick's and
Peasant, as a percentage of revenues were 8.0% for the three month period ended
June 29, 1997, an increase of 0.4% from the three month period ended June 30,
1996 and 8.0% for the six months ended June 29, 1997, an increase of 0.2% from
the six months ended June 30, 1996. The increase in such expense is driven by
incremental costs associated with increased restaurant development. General and
administrative expenses relating to the Mick's and Peasant restaurant groups
decreased $1.0 million and $1.6 million during the three and six month periods
ended June 29, 1997, respectively, versus the comparable 1996 period as a result
of the sale and closings of Mick's and Peasant restaurants as discussed in Note
3.


                                       11
<PAGE>

      Marketing and promotional expenses were $1.0 million and $2.0 million for
the three and six month periods ended June 29, 1997 and June 30, 1996,
respectively. Marketing and promotional expenses, excluding Mick's and Peasant,
were $1.0 million, or 2.4% of revenues for the three months ended June 29, 1997,
as compared to $0.7 million, or 2.2% of revenues, for the comparable 1996 period
and were $2.0 million, or 2.4% of revenues for the six months ended June 29,
1997, as compared to $1.6 million, or 2.4% of revenues, for the comparable 1996
period. The increase is driven by incremental costs associated with increased
restaurant development. Mick's and Peasant marketing and promotional expenses
decreased $0.3 million and $0.4 million during the three and six month periods
ended June 29, 1997, respectively, versus the comparable 1996 periods.

      Interest expense, net of interest income, remained constant at $0.6
million for the three month periods ended June 29, 1997 and June 30, 1996. For
the six month period ended June 29, 1997, interest expense was $1.2 million,
versus $1.1 million for the comparable 1996 period.

      Income tax expense of $1.3 million for the six month period ended June 29,
1997 represents Federal income taxes, which were partially offset by the
establishment of additional deferred tax assets relating to FICA and other tax
credits that were generated during fiscal 1997, as well as state income taxes.

Liquidity and Capital Resources

      In the past, the Company has had, and may have in the future, negative
working capital balances. The Company does not have significant receivables or
inventories and receives trade credit based upon negotiated terms in purchasing
food and supplies. Funds available from cash sales not needed immediately to pay
for food and supplies or to finance receivables or inventories were used for
noncurrent capital expenditures and/or payments of long-term debt balances under
revolving credit agreements.

      The Company and BankBoston, N.A. (formerly The First National Bank of
Boston) entered into the Second Amended and Restated Revolving Credit and Term
Loan Agreement dated as of June 19, 1995, as amended from time to time
(collectively the "Credit Agreement"), pursuant to which the Company's credit
facility is $32,500,000, consisting of a $15,000,000 term loan (the "Term Loan")
and a $17,500,000 revolving credit facility (the "Revolving Credit Facility").
The final maturity date is December 31, 2002. Loans made pursuant to the Credit
Agreement bear interest at a rate equal to the lender's base rate (plus
applicable margin) or, at the Company's option, the Eurodollar Rate (plus
applicable margin). At June 29, 1997, the Company's applicable margin,
calculated pursuant to the Credit Agreement, was 0.00% on base rate loans and
2.0% on Eurodollar Rate loans. The Company has no outstanding futures contracts
or interest rate hedge agreements.

      During fiscal 1996, BankBoston syndicated portions of the Term Loan and
Revolving Credit Facility of the Credit Agreement to two additional lenders,
Imperial Bank and Heller Financial. BankBoston, as agent for the Lenders,
receives an annual fee of $10,000 paid by the Company.

      As of June 29, 1997 and December 29, 1996, the Company had outstanding
borrowings of $19,650,000 and $24,900,000, respectively, under the Credit
Agreement. At June 29, 1997, $221,000 was restricted for letters of credit
issued by the lender on behalf of the Company. Unrestricted and undrawn funds
available to the Company under the Credit Agreement were $12,629,000. The
weighted average interest rate on all bank borrowings on June 29, 1997 was
7.83%. In addition, the Company is obligated to pay fees of 0.25% on unused loan
commitments less than $10,000,000, 0.375% on unused loan commitments greater
than $10,000,000 and a per annum letter of credit fee (based on the face amount
thereof) equal to the applicable margin on the Eurodollar Rate loans.


                                       12
<PAGE>

      The availability under the Credit Agreement is scheduled to reduce by
$1,000,000 on June 30, 1999 and thereafter principal installments on the Term
Loan of $1,000,000 each will be due at the end of each calendar quarter through
December 31, 2002. The Revolving Credit Facility will be payable in full on
December 31, 2002. Borrowings under the Credit Agreement are secured by all
tangible and intangible assets of the Company. Total amounts of principal
payable by the Company under the Credit Agreement during the five years
subsequent to June 29, 1997 amount to $0 in 1997, $0 in 1998, $3,000,000 in
1999, $4,000,000 in 2000, $4,000,000 in 2001 and $8,650,000 in 2002. As stated
in Note 3 to the accompanying consolidated financial statements, the Company has
completed the sale of its Atlanta-based Mick's and Peasant restaurants. Net cash
proceeds from the sale were used to reduce the Company's Revolving Credit
Facility.

      The Credit Agreement contains certain restrictive covenants with respect
to the Company that, among other things, create limitations (subject to certain
exceptions) on: (i) the incurrence or existence of additional indebtedness or
the granting of liens on assets or contingent obligations; (ii) the making of
investments in any person; (iii) mergers, dispositions of assets or
consolidations; (iv) prepayment of certain other indebtedness; (v) making
capital expenditures above specified amounts; and (vi) the ability to make
certain fundamental changes or to change materially the present method of
conducting the Company's business. The Credit Agreement also requires the
Company to satisfy certain financial ratios and tests. As of June 29, 1997, the
Company believes it was in compliance with such covenants.

      In March 1997, a subsidiary of the Company and CNL Financial I, Inc.
("CNL") entered into a $2,500,000 loan agreement (the "CNL Loan"), which matures
on April 1, 2007 and has a 10.02% per annum interest rate. Principal and
interest payments will be made over the term of the loan. Proceeds from the CNL
loan were used to reduce the Company's Revolving Credit Facility. At June 29,
1997 the outstanding principal balance of the CNL Loan was $2,476,000, of which
approximately $156,000 is payable within the next fiscal year and therefore has
been included in "Accrued expenses" in the accompanying consolidated balance
sheet for the period ended June 29, 1997.

      During the first six months of fiscal 1997, the Company's net investment
in fixed assets and related investment costs, net of capitalized leases
approximated $5.4 million. The Company estimates that it will expend up to an
aggregate of $12.0 million in 1997 to finance ordinary refurbishment of existing
restaurants and pre-opening costs and capital expenditures, net of landlord
development and rent allowances and net of equipment lease financing, for new
restaurants. The Company has entered into various equipment lease financing
agreements with several financial institutions of which approximately $9.1
million in the aggregate has been funded from February 1994 through July 1997
and $7.4 million in the aggregate is available for future fundings. The Company
anticipates that funds generated through operations and funds available through
equipment lease commitments as well as those available under the Credit
Agreement will be sufficient to fund planned expansion.

In addition, the Company is entering the international market. A lease has been
signed to open a Morton's of Chicago restaurant in Singapore and other
international opportunities are being investigated.

Forward-Looking Statements

      Except for the historical information contained in this Form 10-Q, certain
statements made herein are forward-looking statements that involve risks and
uncertainties and are subject to important factors that could cause actual
results to differ materially from these forward-looking statements, including
without limitation, the effect of economic and market conditions, the impact of
competitive activities, the Company's expansion plans, restaurant profitability
levels and other risks detailed in the Company's public reports and SEC filings.


                                       13
<PAGE>

                MORTON'S RESTAURANT GROUP, INC. AND SUBSIDIARIES

Part II - Other Information

Item 1. Legal Proceedings

      The Company is involved in various legal actions incidental to the normal
conduct of its business. Management does not believe that the ultimate
resolution of these actions will have a material adverse effect on the Company's
consolidated financial position, equity, results of operations, liquidity and
capital resources.

Item 4. Submission of Matters to a Vote of Stockholders

      No matters were submitted to a vote of stockholders during the quarter for
      which this report was filed.

Item 6. Exhibits and Reports on Form 8-K

    (a) Exhibits.

        4.04 (i) Seventh Amendment to the Second Amended and Restated Revolving
        Credit and Term Loan Agreement, dated June 27, 1997 among the
        Registrant, Peasant Holding Corp., Morton's of Chicago, Inc. and
        BankBoston, N.A., individually and as agent.

        27.00 Financial Data Schedule

    (b) Reports on Form 8-K.

        No reports on Form 8-K were filed during the quarter for which this
        report was filed.


                                       14
<PAGE>

                                   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.

                                    MORTON'S RESTAURANT GROUP, INC.
                                    (Registrant)


Date  August 12, 1997
     --------------------
                                    By: /s/ ALLEN J. BERNSTEIN
                                        ------------------------------------
                                        Allen J. Bernstein
                                        Chairman of the Board and Chief
                                        Executive Officer


Date  August 12, 1997               By: /s/ THOMAS J. BALDWIN
     ---------------------              ------------------------------------
                                        Thomas J. Baldwin
                                        Executive Vice President
                                        and Chief Financial Officer


                                       15
<PAGE>

                                INDEX TO EXHIBITS

The following is a list of all exhibits filed as part of this report.
   Exhibit
   Number  Page  Document
   ------  ----  --------

   4.04(i)       Seventh Amendment to the Second Amended and Restated Revolving
                 Credit and Term Loan Agreement, dated June 27, 1997 among the
                 Registrant, Peasant Holding Corp., Morton's of Chicago, Inc.
                 and BankBoston, N.A., individually and as agent

   27.00         Financial Data Schedule