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
         June 15, 1999                                      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 July 23, 1999
Common Stock, $.01 par value                     35,721,366 shares



<PAGE>
                       Lone Star Steakhouse & Saloon, Inc.

                                      Index

                                                                 Page
                                                                Number
PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements

      Condensed Consolidated Balance Sheets
      at June 15, 1999 and December 29, 1998                     2

      Condensed Consolidated Statements of
      Income for the twelve weeks ended
      June 15, 1999 and June 16, 1998                            3

      Condensed Consolidated Statements of
      Income for the twenty-four weeks ended
      June 15, 1999 and June 16, 1998                            4

      Condensed Consolidated Statements of
      Cash Flows for the twenty-four weeks ended
      June 15, 1999 and June 16, 1998                            5

      Notes to Condensed Consolidated
      Financial Statements                                       6

Item 2.  Management's Discussion and
      Analysis of Financial Condition and
      Results of Operations                                      8

Item 3.  Quantitative and Qualitative
      Disclosure about Market Risks                             15

PART II.  OTHER INFORMATION
Items 1 through 3 and Item 5 have been omitted
since the items are either inapplicable or the
answer is negative
Item 4.  Submission of matters to a vote of stockholders        16

Item 6.  Exhibits and Reports on Form 8-K                       16

Signature page                                                  17

                                      -1-
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.
                      Condensed Consolidated Balance Sheets
                                 (In thousands)
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                 June 15,1999  December 29, 1998
                                                                 ------------  -----------------
                            ASSETS

Current assets:
<S>                                                               <C>             <C>
    Cash and cash equivalents                                     $  64,152       $ 89,847
    Inventories                                                      13,581         15,894
    Other current assets                                              5,538          6,565
                                                                  ---------       ---------
         Total current assets                                        83,271        112,306

Property and equipment, net                                         474,047        461,065
Intangible and other assets, net                                     34,387         35,212
                                                                  ---------       ---------
            Total assets                                          $ 591,705       $608,583
                                                                  =========       =========

               LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                              $   6,983       $ 10,545
    Other current liabilities                                        29,313         34,168
                                                                  ---------       ---------
            Total current liabilities                                36,296         44,713


Deferred income taxes                                                12,406         10,429
Stockholders' Equity:
    Preferred stock
    Common stock                                                        358            386
    Additional paid-in capital                                      287,542        314,366
    Retained earnings                                               263,387        248,522
    Accumulated other comprehensive income (loss)                    (8,284)        (9,833)
                                                                  ---------       --------
            Total stockholders' equity                              543,003        553,441
                                                                  ---------       --------
            Total liabilities and stockholders' equity            $ 591,705       $608,583
                                                                  =========       ========
</TABLE>



                             See accompanying notes.

                                       -2-
<PAGE>

                       LONE STAR STEAKHOUSE & SALOON, INC.
                   Condensed Consolidated Statements of Income
                  (In thousands, except for per share amounts)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                      For the twelve weeks ended
                                                         -----------------------------------------------------------------
                                                           June 15,1999                        June 16,1998
                                                         -----------------------------   ---------------------------------
                                                                                                (Restated)

<S>                                                      <C>                                    <C>
Net sales                                                $    134,753                           $    141,023
Costs and expenses:
    Costs of sales                                             47,805                                 53,448
    Restaurant operating expenses                              61,087                                 62,713
    Depreciation and amortization                               6,819                                  5,882
                                                         ------------                           ------------
Restaurant costs and expenses                                 115,711                                122,043
                                                         ------------                           ------------
Restaurant operating income                                    19,042                                 18,980
General and administrative expenses                             8,101                                  7,589
                                                         ------------                           ------------
Income from operations                                         10,941                                 11,391

Other income, principally interest                                333                                  1,373
                                                         ------------                           ------------

Income before income taxes                                     11,274                                 12,764
Provision for income taxes                                      4,191                                  4,287
                                                         ------------                           ------------
Net Income                                               $      7,083                                  8,477
                                                         ============                           ============
Basic earnings per share                                 $       0.20                           $       0.21
                                                         ============                           ============
Diluted earnings per share                               $       0.20                           $       0.21
                                                         ============                           ============
</TABLE>



                             See accompanying notes.


                                       -3-
<PAGE>
                       LONE STAR STEAKHOUSE & SALOON, INC.
                   Condensed Consolidated Statements of Income
                  (In thousands, except for per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                              For the twenty-four weeks ended
                                                             -----------------------------------------------------------------
                                                                    June 15,1999                        June 16,1998
                                                             -----------------------------   ---------------------------------
                                                                                                         (Restated)

<S>                                                          <C>                                    <C>
Net sales                                                    $    274,691                           $    294,537
Costs and expenses:
    Costs of sales                                                 98,191                                110,663
    Restaurant operating expenses                                 122,717                                124,414
    Depreciation and amortization                                  14,051                                 11,594
                                                              -----------                           ------------
Restaurant costs and expenses                                     234,959                                246,671
                                                              -----------                           ------------
Restaurant operating income                                        39,732                                 47,866
General and administrative expenses                                16,390                                 13,031
                                                              -----------                           ------------
Income from operations                                             23,342                                 34,835
Other income, principally interest                                    580                                  2,828
                                                              -----------                           ------------

Income before income taxes                                         23,922                                 37,663
Provision for income taxes                                          9,057                                 13,059
                                                              -----------                           ------------
Income before cumulative effect of a change
    in accounting principle                                        14,865                                 24,604
Cumulative effect of change in accounting principle                     -                                 (6,904)
                                                              -----------                           ------------
Net Income                                                   $     14,865                           $     17,700
                                                              ===========                           ============

Basic earnings per share:
  Income before cumulative effect of a change
      in accounting principle                                $       0.41                           $       0.60
  Cumulative effect of change in accounting principle                   -                                  (0.17)
                                                              -----------                           ------------
Basic earnings per share                                     $       0.41                           $       0.43
                                                              ===========                           ============

Diluted earnings per share:
    income before cumulative effect of a change
         in accounting principle                             $       0.40                           $       0.60
    Cumulative effect of change in accounting principle                 -                                  (0.17)
                                                              -----------                           ------------
Diluted earnings per share                                   $       0.40                           $       0.43
                                                              ===========                           ============
</TABLE>

                             See accompanying notes.

                                       -4-
<PAGE>

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

                                                                              For the twenty-four weeks ended
                                                             ---------------------------------------------------
                                                                    June 15,1999                 June 16,1998
                                                             -----------------------------   -------------------
                                                                                                  (Restated)

<S>                                                                 <C>                     <C>
Cash flows from operating activities:
   Net income                                                       $  14,865               $       17,700
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization                                 14,881                       11,594
         Cumulative effect of accounting change                             -                        6,904
         Net change in operating assets and liabilities:
     Change in operating assets                                         3,387                       (1,667)
     Change in operating liabilities                                   (6,440)                     (10,946)
                                                                     --------                  -----------
             Net cash provided by operating activities                 26,693                       23,585

Cash flows from investing activities:
   Purchases of property and equipment                                (25,344)                     (32,735)
   Other                                                                 (240)                        (431)
                                                                     --------                  -----------
             Net cash used in investing activities                    (25,584)                     (33,166)

Cash flows from financing activities:
   Net proceeds from issuance of common stock                              12                          997
   Common stock repurchased and retired                               (26,864)                     (24,959)
                                                                     --------                  -----------
             Net cash provided by (used in) financing activities      (26,852)                     (23,962)

Effect of exchange rate on cash                                            48                          (10)
                                                                     --------                  -----------

      Net decrease in cash and cash equivalents                       (25,695)                     (33,553)

Cash and cash equivalents at beginning of period                       89,847                      135,997
                                                                     --------                  -----------
Cash and cash equivalents at end of period                          $  64,152               $      102,444
                                                                     ========                  ===========

Supplemental disclosure of cash flow information:
   Cash paid for income taxes                                       $   7,316               $        1,504

</TABLE>
                             See accompanying notes.

                                       -5-


<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 twenty-four
weeks ended June 15, 1999 are not  necessarily  indicative  of the results to be
expected for the full year ending  December 28, 1999.  This quarterly  report on
Form 10-Q should be read in conjunction with the Company's audited  consolidated
financial statements in its 1998 Form 10-K.

      The 1998 condensed consolidated financial statements have been restated to
reflect the adoption of SOP 98-5 Reporting the Costs of Start-Up Activities.

      Certain   reclassifications   have  been   made  to  the  1998   condensed
consolidated financial statements to conform to the 1999 presentation.

2.   Comprehensive Income
     --------------------

Comprehensive income is comprised of the following (in thousands):

<TABLE>
<CAPTION>

                                            For the twelve weeks ended       For the twenty-four weeks ended
                                            --------------------------       -------------------------------
                                            June 15, 1999  June 16, 1998      June 15, 1999   June 16, 1998
                                            -------------  -------------      -------------   -------------

<S>                                       <C>                <C>              <C>           <C>

Net Income                                    $7,083           $8,477            $14,865         $17,700
Foreign currency translation adjustments         616           (7,746)             1,549         ($5,990)
                                             -------           ------            -------         -------
                                              $7,699           $  731            $16,414         $11,710
                                              ======           ======          =========         =======

</TABLE>

3.   Earnings Per Share
     -------------------

      Basic  earnings  per share  amounts  are  computed  based on the  weighted
average  number  of  shares  actually  outstanding.   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 weighted average shares  outstanding for the periods  presented are as
follows (in thousands):

<TABLE>
<CAPTION>

                                            For the twelve weeks ended       For the twenty-four weeks ended
                                            --------------------------       -------------------------------
                                            June 15, 1999  June 16, 1998      June 15, 1999   June 16, 1998
                                            -------------  -------------      -------------   -------------

<S>                                          <C>          <C>                <C>               <C>
Basic average share outstanding               35,813          40,780            36,663            40,973
Basic average share outstanding               36,078          41,060            36,845            41,323
</TABLE>


                                       -6-

<PAGE>

4.   Accounting Change
     -----------------

      In April 1998,  the American  Institute of  Certified  Public  Accountants
issued SOP 98-5-Reporting the Costs of Start-Up Activities (the SOP),  requiring
the costs related to start-up activities be expensed as incurred. Prior to 1998,
the Company  capitalized  certain  pre-opening costs incurred in connection with
the opening of new restaurant  locations.  The Company adopted the provisions of
the SOP in its financial  statements  for the year ended  December 29, 1998, and
retroactively  made it  effective  the  beginning  of 1998.  The  effect  of the
adoption  of the SOP  resulted  in a charge  for the  cumulative  effect  of the
accounting  change of $6,904,000,  net of income taxes of $2,922,000  ($0.17 per
share),  to  expense  costs  that had been  capitalized  prior to 1998.  This is
reflected in the restated condensed  consolidated  statements of income and cash
flows for the periods presented in 1998.

Treasury Stock Transactions
---------------------------

      In 1998,  the Board of Directors  authorized the Company to purchase up to
5,900,000  shares  of the  Company's  common  stock  in the  open  market  or in
privately negotiated  transactions.  Pursuant to the authorization,  the Company
purchased  2,798,000  shares of its common  stock during the  twenty-four  weeks
ended June 15,  1999 at an  average  price of $9.60 per  share.  The  Company is
accounting  for the  purchases  using  the  constructive  retirement  method  of
accounting wherein the aggregate par value of the stock is charged to the common
stock  account  and the  excess  of cost over par value is  charged  to  paid-in
capital.

5.   Recently Issued Accounting Standards
     ------------------------------------

      In June 1998, the FASB issued Statement No. 133 (SFAS 133), Accounting for
Derivative  Instruments and Hedging Activities,  which is required to be adopted
in years  beginning  after June 15, 2000.  The Company  expects to adopt the new
Statement  effective  January 2, 2001. The Statement will require the Company to
recognize all  derivatives on the balance sheet at fair value.  Derivatives  not
considered hedges must be adjusted to fair value through income. If a derivative
is a hedge,  depending on the nature of the hedge,  changes in the fair value of
the  derivative  will  either be offset  against the change in fair value of the
hedged asset,  liability or firm commitment  through earnings,  or recognized in
other comprehensive income until the hedged item is recognized in earnings.  The
ineffective  portion of a derivative's  change in fair value will be immediately
recognized  in  earnings.  The Company does not  anticipate  the adoption of the
Statement  will  have a  significant  effect on its  results  of  operations  or
financial position.

                                      -7-

<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.

      In May 1998 the Company temporarily suspended development of new Lone Star
restaurants  other than  properties  which had been  committed for or were under
construction.     During    1998    the    Company    substantially    completed
remodel/construction  of twelve additional  restaurants  (including one that was
damaged by fire and rebuilt),  and  anticipates  opening all twelve in 1999. The
Company opened 45 restaurants in 1995, 45 restaurants in 1996, 60 restaurants in
1997,  and two in 1998. As of June 15, 1999,  the Company had not opened any new
restaurants,   but  had  development   sites  available  for  eight   additional
restaurants,  six of which  were  acquired  by  purchase  and two by lease.  The
Company does not  anticipate  that any of the eight sites will be constructed or
opened in 1999.  During  the  second  quarter of 1999,  the  Company  closed two
underperforming domestic Lone Star restaurants.  As of June 15, 1999, there were
264 operating domestic Lone Star restaurants.

      Although,  the Company believes  considerable  opportunities  exist in the
upscale steakhouse market, the Company has temporarily curtailed the development
of its upscale  steakhouse  concepts.  Future development will be evaluated on a
site-by-site basis with no current  commitments to open additional upscale units
beyond  the  two Del  Frisco's  restaurants  and  three  Sullivan's  restaurants
scheduled to open in 1999, described below.

      The Company is currently operating three Del Frisco's  restaurants and has
two additional  restaurants under  construction;  one with approximately  16,000
square feet of space in Rockefeller Plaza in New York City and one in Las Vegas,
Nevada. The Company expects to open both of these restaurants in 1999.

      As of June 15, 1999 the Company was operating twelve Sullivan's steakhouse
restaurants.  In the first  quarter of 1999  restaurants  were opened in Denver,
Colorado and Palm Desert, California. In the second quarter the Company opened a
Sullivan's restaurant in Chicago, Illinois. The Company expects to open two more
Sullivan's restaurants in 1999 in Raleigh, North Carolina and Tucson, Arizona.

      Internationally,  there are 41 Lone Star Steakhouse & Saloon  restaurants,
40 in Australia, operated through a joint venture, and one in Guam operated by a
licensee.  Although  there  are  currently  no plans for  further  international
development,  the Company  believes that all of its concepts have  international
development potential.

                                      -8-


<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)        Twenty-four Weeks Ended (1)
                                                               June 15,   June 16,            June 15,      June 16,
                                                                 1999      1998                 1999          1998
                                                                 ----      ----                 ----          -----
                                                                               (dollars in thousands)

<S>                                                          <C>        <C>               <C>               <C>
Income Statement Data:
      Net Sales                                                 100.0%     100.0%              100.0%          100.0%
      Costs and expenses:
            Costs of sales..................................     35.5       37.9                35.7            37.6
            Restaurant operating expenses...................     45.3       44.4                44.7            42.3
            Depreciation and amortization...................      5.1        4.2                 5.1             3.9
                                                                -----       ----                ----           -----

               Restaurant costs and expenses................     85.9       86.5                85.5            83.8
                                                                -----       ----                ----           -----

      Restaurant operating income...........................     14.1       13.5                14.5            16.2
      General and administrative expenses...................      6.0        5.4                 6.0             4.4
                                                                -----       ----                ----           -----

      Income from operations................................      8.1        8.1                 8.5             11.8
      Other income, principally interest....................      0.3        1.0                 0.2              1.0
                                                                -----       ----                ----           -----

      Income before provision for income taxes..............      8.4        9.1                 8.7             12.8
      Provision for income taxes............................      3.1        3.1                 3.3              4.4
                                                                -----       ----                ----           -----

      Income before cumulative effect of change
            in accounting principle.........................      5.3        6.0                 5.4              8.4
      Cumulative effect of change in accounting principle...       --         --                  --             (2.4)
                                                                  ---        ---                 ---             -----

      Net Income............................................      5.3%       6.0%                5.3%             6.0%
                                                                =====      =====                ====             =====

Restaurant Operating Data:
      Average sales per restaurant on an annualized basis (2)  $1,811     $1,945              $1,843           $2,044
      Number of restaurants at end of the period                  322        315                 322              315

</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 reporting period, and annualizing the result.

                                      -9-

<PAGE>

Lone Star Steakhouse & Saloon, Inc.

 Twelve Weeks Ended June 15, 1999 Compared to Twelve Weeks Ended June 16, 1998
                          (Dollar amounts in thousands)

      Net sales  decreased  $6,270 (4.4%) to $134,753 for the twelve weeks ended
June 15,  1999  compared to  $141,023  for the twelve  weeks ended June 15, 1998
principally  attributable to a decline in average sales per restaurant resulting
from lower customer counts during the period.  The decrease was partially offset
by additional sales of $6,589 from 2 new Lone Star restaurants in Australia, and
7 Sullivan's restaurants opened since June 1998.

      Costs of sales, primarily food and beverages, decreased as a percentage of
sales to 35.5% from 37.9% due  primarily  to  improved  margins as the result of
lower promotional discounting of menu prices and lower beef prices. During 1999,
the  Company  began  to  purchase  beef  under  contracted   prices  that  cover
approximately  70% of the  Company's  estimated  usage for the  remainder of the
year.

      Restaurant  operating  expenses  for the twelve  weeks ended June 15, 1999
decreased $1,626 from $62,713 in the twelve weeks ended June 16, 1998 to $61,087
and  increased  as a percentage  of net sales from 44.4% to 45.3%.  The absolute
dollar  amounts  reflect  the impact of  increased  operating  costs for the new
restaurants  opened  since  June 1998,  as well as  increased  costs  related to
manager  training  expenses and certain  uninsured claim amounts.  The increases
were  partially  offset by  decreases  in labor  costs  related to cost  control
measures taken to improve  operating  efficiencies  at the  restaurants and by a
decrease in building  and  equipment  maintenance  expenses.  The  increase as a
percentage of sales  primarily  reflects the fixed cost components of restaurant
operating expenses on lower average restaurant sales experienced in the quarter.

      Depreciation and  amortization  increased $937 (15.9%) in the twelve weeks
ended June 15, 1999 over the twelve weeks ended June 16,  1998.  The increase is
attributable  primarily  to the  restaurants  opened  since  June  of  1998  and
depreciation  beginning in fiscal 1999 related to the  installation of new point
of sale systems.

      General and  administrative  expenses increased $512 (6.7%) as compared to
1998.  The increases in general and  administrative  expenses were  attributable
primarily to costs  related to the  recruitment  of new  managers and  increased
costs related to expenses  incurred in connection  with the  installation of the
new point-of-sale systems as well as the new database information systems.

      Other income,  principally  interest,  for the twelve weeks ended June 15,
1999 was $333 as compared to $1,373 in 1998.  The  decrease is  attributable  to
reduced funds available for short term investment purposes.

      The  effective  income tax rates for the twelve  weeks ended June 15, 1999
and the twelve weeks ended June 16, 1998 were 37.1% and 33.6%, respectively. The
increase in the  effective  tax rate is due  primarily to  valuation  allowances
provided in fiscal 1999 related to certain Australian losses.

                                      -10-

<PAGE>
Lone Star Steakhouse & Saloon, Inc.

   Twenty-four Weeks Ended June 15, 1999 Compared to Twenty-four Weeks Ended
                                 June 16, 1998
                          (Dollar amounts in thousands)

      Net sales decreased  $19,846 (6.7%) to $274,691 for the twelve weeks ended
June 15, 1999 compared to $294,537 for the twenty-four weeks ended June 16, 1998
principally  attributable to a decline in average sales per restaurant resulting
from lower customer counts during the period.  The decrease was partially offset
by additional  sales of $14,217 from 2 new Lone Star  restaurants  in Australia,
and 7 Sullivan's restaurants opened since June 1998.

      Costs of sales, primarily food and beverages, decreased as a percentage of
sales to 35.7% from 37.6% due  primarily  to  improved  margins as the result of
lower promotional discounting of menu prices and lower beef prices. During 1999,
the  Company  began  to  purchase  beef  under  contracted   prices  that  cover
approximately  70% of the  Company's  estimated  usage for the  remainder of the
year.

      Restaurant  operating  expenses for the  twenty-four  weeks ended June 15,
1999 decreased $1,697 from $124,414 in the twenty-four weeks ended June 16, 1998
to $122,717 and increased as a percentage of net sales from 42.3% to 44.7%.  The
absolute dollar amounts reflect the impact of increased  operating costs for the
new  restaurants  opened since June 1998, as well as increased  costs related to
manager  training  expenses and certain  uninsured claim amounts.  The increases
were  partially  offset by  decreases  in labor  costs  related to cost  control
measures taken to improve  operating  efficiencies  at the  restaurants and by a
decrease in building  and  equipment  maintenance  expenses.  The  increase as a
percentage of sales  primarily  reflects the fixed cost components of restaurant
operating expenses on lower average restaurant sales experienced in the quarter.

      Depreciation and amortization  increased $2,457 (21.2%) in the twenty-four
weeks ended June 15, 1999 over the  twenty-four  weeks ended June 16, 1998.  The
increase is attributable  primarily to the restaurants opened since June of 1998
and  depreciation  beginning in 1999 related to the installation of new point of
sale systems.

      General and  administrative  expenses increased $3,359 (25.8%) as compared
to 1998. The increases in general and administrative  expenses were attributable
primarily  to increased  legal  costs,  increased  travel and  recruiting  costs
related to the  recruitment  of new  managers  and  increased  costs  related to
expenses  incurred in connection with the installation of the new  point-of-sale
systems as well as the new database  information  systems.  Various  other costs
increased as a result of the variable costs  associated with the increase in the
number of restaurants opened since June 1998.

      Other income,  principally interest,  for the twenty-four weeks ended June
15, 1999 was $580 as compared to $2,828 in 1998. The decrease is attributable to
reduced funds available for short term investment purposes.

      The effective  income tax rates for the  twenty-four  weeks ended June 15,
1999 and the  twenty-four  weeks  ended  June 16,  1998 were  37.9%  and  36.4%,
respectively.  The  increase  in the  effective  tax  rate is due  primarily  to
valuation  allowances  provided  in fiscal  1999  related to certain  Australian
losses.

      The  cumulative  effect of change in accounting  principle  represents the
effect of adoption of Statement of Position  98-5,  "Reporting on Costs of Start
Up  Activities".   The  adoption  of  this  statement  impacted  accounting  for
pre-opening costs and as a result the Company began to report  pre-opening costs
as a component of restaurant operating expenses effective December 31, 1997. The
cumulative  effect of the change in accounting of  $6,904,000,  net of taxes was
recorded on a one time charge in the first quarter of 1998.

                                      -11-

<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.

Year 2000 Computer Issue

      The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable  year. Any of the Company's
computer  programs or  hardware  that have  date-sensitive  software or embedded
chips may  recognize  a date  using "00" as the year 1900  rather  than the year
2000.  This  could  result  in  a  system  failure  or  miscalculations  causing
disruptions  of  operations,   including,   a  temporary  inability  to  process
transactions, send invoices, or engage in similar normal business activities.

      The Company has  instituted  a Year 2000  project to prepare its  computer
systems  and  communication  systems  for the Year 2000.  The  project  includes
identification and assessment of all software, hardware and equipment that could
potentially  be affected by the Year 2000 issue and remedial  action and further
testing, if necessary.

      In the  fourth  quarter of 1998,  the  Company  committed  to a program to
install new  point-of-sale  devices and systems in most of its  restaurants.  In
addition, the Company is installing a new data base information system that will
provide significant enhancements to its capabilities to process and analyze data
provided by the new point-of-sale  systems. The Company expects these systems to
be fully implemented by September  30,1999.  The hardware and software providers
of the new systems have warranted that the new systems are Year 2000  compliant.
The Company  believes  that certain  existing  software,  hardware and equipment
which will continue to be utilized with the new systems are  substantially  Year
2000 compliant, but will require some modification and replacement;  however, if
such  modifications  and replacements are not made, or are not completed timely,
the Year 2000 issue could have a  significant  impact on the  operations  of the
Company.

      The Company's  plan to resolve the Year 2000 Issue  involves the following
four phases: assessment,  remediation, testing, and implementation. To date, the
Company has fully  completed  its  assessment  of all systems that, it believes,
could be  significantly  affected  by the year 2000.  The  completed  assessment
indicated that certain parts of the Company's significant information technology
systems could be affected,  particularly  the financial  reporting  systems.  In
addition,  the Company is gathering  information  about the year 2000 compliance
status of its  significant  suppliers  and service  providers  and  continues to
monitor their compliance.

                                      -12-

<PAGE>

      For its information  technology  exposures,  to date the Company estimates
that it is 90%  complete  on the  remediation  phase  and  expects  to  complete
software  reprogramming  and  replacement  no later  than  July 31,  1999.  Once
software is  reprogrammed  or replaced for a system,  the Company begins testing
and  implementation.  These phases run  concurrently for different  systems.  To
date,  the Company has completed 95% of its testing and has  implemented  90% of
its  remediated  systems.  Completion of the testing  phase for all  significant
systems is expected by July 31, 1999, with all recommended  systems fully tested
and implemented by August 31, 1999, with 100% completion  targeted for September
30, 1999.

      The Company has queried its  significant  suppliers and service  providers
(external  agents) that do not share  information  systems with the Company.  To
date, the Company is not aware of any external agent with a year 2000 issue that
would  materially  impact the Company's  results of  operations,  liquidity,  or
capital resources.  However,  the Company has no means of ensuring that external
agents will be year 2000 ready.  The  inability  of external  agents to complete
their year 2000 resolution  process in a timely fashion could materially  impact
the  Company.   The  effect  of   non-compliance   by  external  agents  is  not
determinable.

      The  Company  will  utilize  both  internal  and  external   resources  to
reprogram,  replace,  test and implement the software and hardware equipment for
year 2000  modifications.  The total cost of the Year 2000 Issue is estimated to
be less than  $100,000  and the Company  expects  that most of the costs will be
expensed.  All costs are being funded through operating cash flow. The projected
costs do not include the costs of the new point-of-sale  devices and systems and
the  costs  of  equipment,  software,  and  installation  of the new  data  base
information system previously discussed.

      Management of the Company believes it has an effective program in place to
resolve the Year 2000 Issue in a timely manner.  As noted above, the Company has
not yet completed all  necessary  phases of the Year 2000 project.  In the event
that the Company does not complete any additional  phases,  the Company might be
unable  to  process  transactional  and  financial  reporting  information.   In
addition,  disruptions  in the economy  generally  resulting  from the year 2000
issues could also materially  adversely affect the Company. The Company could be
subject to  litigation  for  computer  systems  product  failure,  for  example,
equipment  shutdown or failure to properly date business records.  The amount of
potential  liability  and lost revenue  cannot be  reasonably  estimated at this
time.

      The Company has contingency plans for certain critical applications and is
working on such plans for others.  These contingency plans involve,  among other
actions,  manual  workarounds,  increasing  inventories,  and adjusting staffing
strategies.

                                      -13-

<PAGE>

                       Lone Star Steakhouse & Saloon, Inc.


Liquidity and Capital Resources (Dollar amounts in thousands)

      The following  table  presents a summary of the  Company's  cash flows for
each of the twenty-four weeks ended June 15, 1999 and June 16, 1998.

                                                  Twenty-four weeks ended
                                                  -----------------------
                                              June 15, 1999        June 16, 1998
                                             --------------          (Restated)
                                                                      ---------

Net cash provided by operating activities        $ 26,693              $ 23,585
Net cash used in investment activities            (25,584)              (33,166)
Net cash used in financing activities             (26,852)              (23,962)
Effect of exchange rate on cash                        48                   (10)
                                                ---------               -------
Net decrease in cash                             $(25,695)             $(33,553)
                                                 ========               ========

      During the  twenty-four  week period  ended June 15, 1999,  the  Company's
investment in property and equipment was $25,344.

      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 non-current capital expenditures.

      At June 15,  1999,  the Company had $64,152 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.  The  Company is not  actively
negotiating to purchase or lease of additional restaurant sites.

      During 1998, the Company's  Board of Directors  authorized the purchase of
up to 5,900,000  shares of the  Company's  common stock from time to time in the
open market or in privately  negotiated  transactions.  During the current year,
the  Company  has  purchased  2,798,000  shares at a cost of  $26,864  and since
inception  of the program it has  purchased  5,408,000  shares with a cumulative
cost of approximately $63,239.

      Beginning  in the fourth  quarter of 1998,  the  Company  began  utilizing
derivative  financial  instruments in the form of commodity futures contracts to
manage market risks and reduce its exposure  resulting from  fluctuations in the
prices  of meat.  The  Company  uses  live  beef  cattle  futures  contracts  to
accomplish its objective.  Realized and unrealized changes in the fair values of
the derivative  instruments  are recognized in income in the period in which the
change occurs.  Realized and unrealized gains and losses for the period have not
been significant. As of June 15, 1999, the Company's exposure for open positions
in futures contracts was not significant.

                                      -14-

<PAGE>

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.

Item 3.     Quantitative and Qualitative Disclosure about Market Risks
            ----------------------------------------------------------
            Not Applicable

                                      -15-

<PAGE>



LONE STAR STEAKHOUSE & SALOON, INC.


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

      On May 27, 1999, the Company held its Annual Meeting of Stockholders  (the
"Meeting").  At the Meeting the stockholders  elected Michael J. Archer and Fred
B. Chaney to the Board of  Directors  to serve until the 2002 Annual  Meeting of
Stockholders and until their succesors have been duly elected and qualified.  As
to the newly elected  Directors,  there were 32,268,056  votes "For" and 489,701
votes  "Withheld" for Michael J. Archer and  32,323,452  votes "For" and 434,306
votes "Withheld" for Fred B. Chaney. In addition,  the stockholders ratified the
appointment of Ernst & Young LLP as the Company's  independent  auditors for the
year ending  December 28, 1999. As to the  ratification  of auditors  there were
32,702,523 votes "For" 37,167 votes "Against", and 18,068 votes "Abstained.

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

          (a)     Exhibit 27 .....................Financial Data Schedule

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

                                      -16-

<PAGE>

                                   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)


Date July 30, 1999                      /s/John D. White
                                        ----------------------------------------
                                        Chief Financial and Principal Accounting
                                        Officer, Executive Vice President,
                                        Treasurer and Director

                                      -17-