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
  July 15, 1998                                           0-14370

                                  BUFFETS, INC.
             (Exact name of registrant as specified in its charter)

    Minnesota                                          41-1462294
(State of incorporation)                   (I.R.S. Employer Identification No.)


                   10260 Viking Drive, Eden Prairie, MN 55344
                    (Address of principal executive offices)

                                 (612) 942-9760
                         (Registrant's telephone number)

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
                  ----                                      ----

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

        CLASS                                OUTSTANDING AS OF AUGUST 3,1998
        -----                                -------------------------------
Common Stock, $.01 par value                         45,686,215 shares



                                        1

<PAGE>







                         BUFFETS, INC. AND SUBSIDIARIES


                                      INDEX


                                                                        PAGE NO.
                                                                        --------

 PART I.     FINANCIAL INFORMATION

 Item 1.     Consolidated Financial Statements:

             Consolidated Balance Sheets-
             December 31, 1997 and July 15, 1998............................. 3

             Consolidated  Statements of Operations-  Twenty-Eight Weeks
             ended July 16, 1997 and July 15, 1998 and Twelve Weeks ended
             July 16, 1997 and July 15, 1998 ................................ 4

             Consolidated Statements of Cash Flows-
             Twenty-Eight Weeks ended July 16, 1997
             and July 15, 1998............................................... 5

             Notes to Consolidated Financial Statement ...................... 6

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

 PART II.    OTHER INFORMATION ..............................................12





                                        2

<PAGE>



Part I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS

                         BUFFETS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>

                                                                    DECEMBER 31,   JULY 15,
                                                                       1997         1998
                                                                    ------------   --------

                    (in thousands, except par value amounts)
                                     ASSETS
<S>                                                                  <C>          <C>
CURRENT ASSETS:
  Cash and cash equivalents .......................................  $ 43,030      $ 79,977
  Receivable from landlords .......................................     1,430         1,358
  Inventory  ......................................................     4,934         3,971
  Prepaid rents....................................................                   2,133
  Other current assets ............................................     1,986         1,793
  Refundable income taxes..........................................     1,313
  Deferred income taxes ...........................................    12,418        12,762
                                                                     --------      --------
      TOTAL CURRENT ASSETS ........................................    65,111       101,994

PROPERTY AND EQUIPMENT:
   Land............................................................    15,688        15,688
   Building........................................................    31,773        32,460
   Equipment ......................................................   246,006       256,457
   Leasehold improvements .........................................   203,874       212,932
                                                                     --------      --------
                                                                      497,341       517,537
   Less accumulated depreciation and amortization .................   166,694       187,701
                                                                     --------      --------
                                                                      330,647       329,836
GOODWILL, net of accumulated amortization of $1,965 and
   $2,161, respectively ...........................................     5,624         8,958
OTHER ASSETS ......................................................     2,194         1,914
                                                                     --------      --------
                                                                     $403,576      $442,702
                                                                     ========      ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Accounts payable ...............................................  $ 29,910      $ 28,474
   Accrued payroll and related benefits ...........................    15,520        17,690
   Accrued rents ..................................................    15,640        16,161
   Accrued sales taxes ............................................     3,393         5,224
   Accrued insurance...............................................     5,561         6,429
   Accrued store closing costs.....................................     7,955         7,664
   Other accrued expenses .........................................     5,310         7,213
   Income taxes payable............................................                  10,729
   Current portion of capital leases...............................     2,239         2,087
                                                                     --------      --------
      TOTAL CURRENT LIABILITIES ...................................    85,528       101,671

LONG-TERM DEBT ....................................................    41,500        41,500
LONG-TERM PORTION OF CAPITAL LEASES................................     2,954         1,772
DEFERRED INCOME ...................................................       212
DEFERRED INCOME TAXES .............................................     6,695         6,522

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Preferred stock, $.01 par value; authorized 5,000 shares;
      none issued and outstanding
   Common stock, $.01 par value; authorized 60,000 shares;
      issued and outstanding 45,371 and
      45,683 shares, respectively .................................       454           457
   Additional paid-in capital .....................................   117,626       120,714
   Retained earnings ..............................................   148,607       170,066
                                                                     --------      --------
      TOTAL STOCKHOLDERS' EQUITY ..................................   266,687       291,237
                                                                     --------      --------
                                                                     $403,576      $442,702
                                                                     ========      ========

</TABLE>

                 See Notes to Consolidated Financial Statements.

                                        3

<PAGE>





                         BUFFETS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)


<TABLE>
                                       TWENTY-EIGHT WEEKS ENDED       TWELVE WEEKS ENDED
                                         JULY 16,      JULY 15,     JULY 16,      JULY 15,
                                           1997          1998         1997          1998
                                         --------      --------     --------      -------
                                              (in thousands, except per share amount)
<S>                                      <C>          <C>           <C>           <C> 
RESTAURANT SALES.......................  $431,277     $461,408      $190,536      $204,579

RESTAURANT COSTS:
         Food costs ...................   147,531      150,029        63,752        65,473
         Labor costs ..................   129,913      138,689        56,112        60,178
         Direct and occupancy costs ...   104,719      106,838        45,768        46,966
                                         --------     --------      --------      --------
         Total restaurant costs .......   382,163      395,556       165,632       172,617
                                         --------     --------      --------      --------

RESTAURANT PROFITS ....................    49,114       65,852        24,904        31,962

SELLING, GENERAL AND
         ADMINISTRATIVE EXPENSES ......    24,111       31,455        10,841        13,562
OTHER SITE CLOSING COSTS ..............                    200
                                         --------     --------      --------      --------
                                           25,003       34,197        14,063        18,400

OTHER (EXPENSE) INCOME ................      (632)         697          (147)          453
                                         --------     --------      --------      --------
EARNINGS BEFORE INCOME TAXES ..........    24,371       34,894        13,916        18,853

INCOME TAXES ..........................     9,504       13,435         5,424         7,259
                                         --------     --------      --------      --------

NET EARNINGS ..........................  $ 14,867     $ 21,459      $  8,492      $ 11,594
                                         ========     ========      ========      ========


EARNINGS PER SHARE:
         Basic.........................      $.33         $.47          $.19          $.25
                                         ========     ========      ========      ========
         Diluted.......................      $.32         $.45          $.18          $.24
                                         ========     ========      ========      ========

WEIGHTED AVERAGE COMMON SHARES
ASSUMED OUTSTANDING:
         Basic.........................    45,203       45,471        45,219        45,567
         Diluted.......................    49,028       49,972        49,070        50,506

</TABLE>

                 See Notes to Consolidated Financial Statements.


                                        4

<PAGE>



                         BUFFETS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
<TABLE>
                                                                        TWENTY-EIGHT WEEKS ENDED
                                                                          JULY 16,     JULY 15,
                                                                            1997         1998
                                                                          -------      -------
                                                                             (in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                        <C>         <C>    
            Net earnings ...............................................   $14,867     $21,459
            Adjustments to reconcile net earnings
               to net cash provided by operating activities:
              Depreciation and amortization ............................    21,735      22,499
              Impairment of assets and site closing costs...............                   200
              Tax benefit from early disposition of
                 common stock...........................................       143         557
              Deferred income...........................................      (212)       (212)
              Deferred income taxes ....................................       212        (517)
              Changes in assets and liabilities net of acquisitions:
                 Inventory .............................................      (379)      1,036
                 Other current assets ..................................     2,072      (1,940)
                 Refundable income taxes................................                 1,313
                 Other assets ..........................................        (2)         95
                 Accounts payable ......................................    (2,870)     (1,669)
                 Accrued payroll and related benefits ..................     1,893       2,170
                 Accrued store closing costs............................      (840)       (291)
                 Other accrued expenses ................................     4,215       5,106
                 Income taxes payable ..................................     5,855      10,729
                                                                           -------     -------

                 Total adjustments .....................................    31,822      39,076
                                                                           -------     -------

                 Net cash provided by operating activities..............    46,689      60,535

CASH FLOWS FROM INVESTING ACTIVITIES:
            Capital expenditures, net of retirements ...................   (29,571)    (20,358)
            Purchase of eleven restaurants..............................                (5,557)
            Cash received from landlords ...............................     2,409       1,127
                                                                           -------     -------

                 Net cash used in investing activities .................   (27,162)    (24,788)

CASH FLOWS FROM FINANCING ACTIVITIES:
            Proceeds from exercise of employee stock options............       198       2,534
            Payments on capital leases..................................    (1,098)     (1,334)
                                                                           -------     -------

                 Net cash (used in) provided by
                  financing activities .................................      (900)      1,200
                                                                           -------     -------

NET INCREASE IN CASH AND CASH EQUIVALENTS ..............................    18,627      36,947

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR .........................    10,772      43,030
                                                                           -------     -------

CASH AND CASH EQUIVALENTS AT END OF PERIOD .............................   $29,399     $79,977
                                                                           =======     =======

Supplemental disclosures of cash flow information:

Cash paid during the period for:
            Interest (net of capitalized interest of $142
            and $149 in 1997 and 1998, respectively)....................   $ 1,922     $ 1,846
            Income taxes ...............................................     3,294       1,353

</TABLE>
                 See Notes to Consolidated Financial Statements.

                                        5

<PAGE>



                         BUFFETS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       In the opinion of Management,  the accompanying  unaudited consolidated
         financial statements contain all adjustments (consisting only of normal
         recurring  adjustments)  necessary  to  present  fairly  the  financial
         position of Buffets,  Inc. and subsidiaries as of July 15, 1998 and the
         results of operations for the twelve weeks ended July 16, 1997 and July
         15,  1998  and  the  results  of  operations  and  cash  flows  for the
         twenty-eight weeks ended July 16, 1997 and July 15, 1998.

2.       These  statements  should  be read in  conjunction  with  the  Notes to
         Consolidated  Financial  Statements  contained in the Company's  Annual
         Report on Form 10-K for the fiscal  year ended  December  31,  1997 and
         with  Management's  Discussion and Analysis of Financial  Condition and
         Results of Operations appearing on pages 7 through 12 of this quarterly
         report.

3.       Effective  January 1, 1998, the Company adopted  Statement of Financial
         Accounting Standards No. 130, "Reporting Comprehensive Income." For the
         periods presented, comprehensive income is the same as net earnings.

4.       On May 11,  1998,  the Company  reached an  agreement  in  principle to
         purchase 11 Country  Harvest Buffet  restaurants  from Country  Harvest
         Buffet Restaurants, Inc. of Seattle, Washington. The transaction closed
         on June 29, 1998, and became effective on June 30, 1998.

5.       Basic  earnings  per share are  computed by dividing  net income by the
         weighted average number of common shares outstanding.  Diluted earnings
         per share assumes  conversion of convertible  subordinated  notes as of
         the  beginning  of the year and  exercise  of stock  options  using the
         treasury stock method,  if dilutive.  The following is a reconciliation
         of the numerators and denominators  used to calculate  diluted earnings
         per share:

<TABLE>
                                    Twenty-Eight   Twenty-Eight    Twelve       Twelve
                                    Weeks Ended    Weeks Ended   Weeks Ended  Weeks Ended
                                      July 16,       July 15,      July 16,     July 15,
                                       1997           1998          1997          1998
                                    -----------    ------------  -----------  -----------
<S>                                    <C>             <C>           <C>         <C>    
Net earnings .....................     $14,867         $21,459       $ 8,492     $11,594
Interest on convertible
 subordinated notes (after tax)...         954             962           409         412
                                       -------         -------       -------     -------

Income available to common
 shareholders and assumed
 conversion ......................     $15,821         $22,421       $ 8,901     $12,006
                                       =======         =======       =======     =======

Weighted average common
 shares outstanding...............      45,203          45,471        45,219      45,567
Dilutive effect of:
 Convertible subordinated notes...       3,556           3,556         3,556       3,556
 Stock options....................         269             945           295       1,383
                                       -------        --------       -------     -------
Common shares assuming dilution...      49,028          49,972        49,070      50,506
                                       =======        ========       =======     =======

</TABLE>
                                        6

<PAGE>



Item 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS.

    The Company  operates on a fifty-two or fifty-three  week fiscal year, which
ends on the Wednesday  nearest December 31. The Company's first quarter consists
of sixteen  weeks;  all other  quarters are  comprised of twelve  weeks.  When a
fifty-three week year occurs,  the Company's fourth quarter consists of thirteen
weeks.

RESULTS OF OPERATIONS

TWELVE WEEKS ENDED JULY 15, 1998
--------------------------------

RESTAURANT  SALES.  Restaurant sales of $204.6 million during the second quarter
of 1998  represented  a 7.4%  increase  over  sales of  $190.5  million  for the
comparable period of 1997,  primarily due to sales generated by new restaurants,
and a comparable restaurant sales increase of 2.5%. One new restaurant opened in
the second  quarter of 1998  compared to two during the second  quarter of 1997,
bringing the total number of Company-owned  restaurants to 376 at the end of the
quarter,  including the acquisition of eleven Country Harvest restaurants,  (246
Old Country Buffet,  113 HomeTown Buffet, 4 Original Roadhouse Grill, 11 Country
Harvest, 1 PIZZAPLAY,  and 1 Country Roadhouse Buffet & Grill),  compared to 357
restaurants open at the end of the second quarter of 1997.  Average weekly sales
per  restaurant  for the second  quarter of 1998  increased 2.2% to $46,532 from
$45,543  in the  comparable  period of 1997.  The seven new  restaurants  opened
during 1998 generated average weekly sales of $55,686 during the second quarter.
The Company's price increases have been close to the inflation rate.

RESTAURANT  COSTS. As a percentage of restaurant  sales,  total restaurant costs
decreased  to 84.4% for the  second  quarter  of 1998 from  86.9% for the second
quarter of 1997.  Food costs as a percentage  of restaurant  sales  decreased to
32.0% from  33.5%,  due  primarily  to a reduction  in the cost of various  meat
products; and labor costs remained constant at 29.4%. Direct and occupancy costs
decreased as a  percentage  of  restaurant  sales to 23.0% in 1998 from 24.0% in
1997, due to decreases in various restaurant costs.

SELLING,   GENERAL   AND   ADMINISTRATIVE   EXPENSES.   Selling,   general   and
administrative expenses as a percentage of restaurant sales increased to 6.6% in
the  second  quarter  of 1998  from 5.7% in the  second  quarter  of 1997.  Such
expenses  in  absolute  terms  increased  25.1% to $13.6  million for the second
quarter of 1998 from $10.8 million for the comparable period of 1997,  primarily
due to a increase in advertising expense in the 1998 quarter. The Company

                                        7

<PAGE>

is anticipating  doubling its marketing  spending in 1998 versus the prior year,
to  approximately  $18.0  million  which  includes the  development  of four new
television commercials which started airing in March of 1998.

INCOME  TAXES.  Income taxes were 38.5% of earnings  before income taxes for the
1998 quarter and 39.0% in the 1997 quarter.

TWENTY-EIGHT WEEKS ENDED JULY 15, 1998
--------------------------------------

RESTAURANT  SALES. For the first  twenty-eight  weeks of 1998,  restaurant sales
increased 7.0% to $461.4  million from $431.3 million in 1997,  primarily due to
sales  generated by new  restaurants,  and comparable  sales  increased by 2.8%.
Seven  new  restaurants  opened in the first  half of 1998,  compared  to 12 new
restaurants  opened in the first  half of 1997.  The  average  weekly  sales per
restaurant in the 1998 period increased by 2.7% to $45,312 from $44,139 in 1997.

RESTAURANT  COSTS.  Restaurant  costs for the first  twenty-eight  weeks in 1998
increased to $395.6  million  from $382.2  million in 1997.  As a percentage  of
restaurant  sales,  the 1998 period  costs were 85.7% and the 1997 period  costs
were 88.6%. Food costs decreased to 32.5% from 34.2% for the comparable periods;
and labor costs remained constant at 30.1%. Direct and occupancy costs decreased
to 23.1% in the first  twenty-eight  weeks of 1998 from 24.3% in the  comparable
period  in  1997,  due  to  decreases  in  various  restaurant  costs  including
janitorial and repair and maintenance expenses.

SELLING,  GENERAL AND ADMINISTRATIVE  EXPENSES. For the first twenty-eight weeks
of 1998, selling, general and administrative expenses increased to $31.5 million
from $24.1  million in 1997.  This  increase was  primarily due to a increase in
advertising  expense in 1998.  As a percentage  of sales,  selling,  general and
administrative  expenses  increased  to 6.8% in the 1998 period from 5.6% in the
1997 period.  This increase was attributable to higher  advertising costs, which
for the first  twenty-eight weeks of 1998 were 1.9% of restaurant sales compared
to .7% in the comparable 1997 period.

INCOME  TAXES.  Income taxes were 38.5% of earnings  before income taxes for the
1998 period and 39.0% for the 1997 period.

LIQUIDITY AND CAPITAL RESOURCES
       The Company's  restaurants  generate cash immediately  through sales. New
restaurants are generally profitable shortly after opening. The Company does not
have significant assets in the form

                                        8

<PAGE>



of trade  receivables or inventory,  and often  receives  several weeks of trade
credit  from food and supply  purveyors;  therefore,  the  Company's  operations
generate  substantial  cash  which is  available  to fund new  restaurants.  The
investment of cash flow from operations in restaurant property and equipment may
result in a "working capital deficit"  (current  liabilities  exceeding  current
assets) which, to a considerable extent, represents interest-free financing from
trade creditors that the Company intends to continue to utilize.

       The Company currently has an unsecured  revolving line of credit of up to
$50  million  with  interest  payable  at  the  option  of the  Company,  at the
applicable  "eurodollar rate",  "certificate of deposit rate", or the "reference
rate" of the bank at the time of the  advance.  The Company is also  required to
pay a commitment fee equal to 1/4 of 1% per annum of the unused balance, payable
quarterly in arrears. On July 1, 1999,  providing no default or event of default
has  occurred  and is  continuing,  the line of  credit is  convertible,  at the
Company's  option,  to a three-year  term loan,  maturing on July 1, 2002. As of
July 15, 1998, the Company had no borrowings outstanding under this credit line.

     In 1995,  HomeTown Buffet,  Inc., a wholly-owned  subsidiary of the Company
("HomeTown"),  issued  $41.5  million  in  aggregate  principal  amount  of 7.0%
subordinated  convertible  notes due on  December  1, 2002.  Interest is payable
semi-annually  on June 1 and December 1,  commencing June 1, 1996. The notes are
convertible  into shares of the Company's  common stock at a conversion price of
$11.67,  subject  to  adjustment  under  certain  conditions,  at any time until
maturity.  The notes are  subordinated  in right of payment to all  existing and
future senior indebtedness of the Company.  The notes are redeemable in whole or
in part, at the option of the Company, at any time on or after December 2, 1998.

     The Company continues to require substantial amounts of capital to fund its
growth. On June 30, 1998 the Company completed the acquisition of eleven Country
Harvest  restaurants from Country Harvest Buffet  Restaurants,  Inc. The Company
anticipates  that  most of these  restaurants  will be  converted  to one of the
Company's other existing restaurant concepts.

     The  Company  currently  expects  to  open  an  additional  12  to  14  new
restaurants in 1998 and convert two  restaurants,  principally  from Old Country
Buffets  to  Country  Roadhouse  Buffet and  Grills,  with nine new  restaurants
already opened  (excluding the Country Harvest  acquisitions) and one conversion
completed on August 5, 1998.


                                        9

<PAGE>



     On  May  12,  1998,  the  Company's  Board  of  Directors   authorized  the
expenditure of up to $40 million for the purchase of  outstanding  shares of the
Company's  common stock, to be effected from time to time in transactions on the
Nasdaq  National  Market  or  otherwise.  To  date,  no such  transactions  have
transpired,  and there is currently no certainty that such purchases will occur,
or at what level.

     The  Company  expects to spend an  aggregate  of  approximately  $40 to $45
million  during 1998 on its  restaurants  being opened in 1998  depending on the
level of  contributions  obtained from landlords for leasehold  improvements and
the  amount  of land  purchased  for  freestanding  buildings,  and the start of
construction at a new corporate office located in Eagan, Minnesota. It will also
incur  costs in  remodeling  and  converting  the 11  acquired  Country  Harvest
Restaurants,  although  those  costs are not  currently  estimable.  The Company
anticipates  that,  as  it  further  pursues  the  development  of  freestanding
locations,  the cost per location and related cash  requirements  will  increase
substantially  over  prior  years  and that  these  costs  will not be offset by
landlord  contributions  that  typically  have been  associated  with strip mall
locations.  The capital expenditure required for a freestanding  location can be
over  100%  greater  than  for a  mall  location.  The  Company  estimates  that
approximately  50% of 1998 new locations will be freestanding  units, and of the
freestanding  restaurants virtually all will be ground leased rather than owned.
Sources of capital for  restaurant  development  projects are  anticipated to be
funds provided by operations,  credit  received from trade  suppliers,  landlord
contributions to leasehold improvements and current bank financing.  The Company
believes  that these  sources will be adequate to finance  operations,  purchase
shares  of the  Company's  common  stock  and  the  additional  restaurants  and
restaurant  conversions included in the Company's  restaurant  development plans
for at least  through  fiscal  1998 and  fiscal  1999,  subject  to the  factors
described below in the section captioned "Forward-looking Information." In order
to remain prepared for further  significant  growth in future years, the Company
will continue to evaluate its  financing  needs and seek  additional  funding if
appropriate.

NON-PERFORMING RESTAURANTS
        The Company  evaluates  impairment  of individual  restaurants  whenever
events or changes in circumstances  indicate the carrying amount of a restaurant
may not be recoverable.  If individual restaurant sales during the third quarter
do not meet management's  expectations,  it is reasonably  possible although not
currently  quantifiable  that the Company  will incur  impairment  charges.  The
Company has reviewed all  underperforming  locations and is considering  options
for these locations including expanding advertising or conversion to a different
brand or concept.

                                       10

<PAGE>



YEAR 2000 COMPLIANCE
        All major  internal  information  systems have been  replaced due to the
Company's  growth in the last four years.  Year 2000 issues were  addressed when
selecting and  implementing  these systems.  All hardware,  software,  phone and
security systems have been reviewed for year 2000  compliance.  The Company will
continue to invest in technology to  accommodate  the Company's  future  growth.
Compliance with year 2000 is a byproduct of these upgrades.

ACCOUNTING PRONOUNCEMENT
        In June 1997, the Financial  Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 131,  "Disclosures about Segments
of an Enterprise  and Related  Information,"  which is effective for the Company
beginning  January 1, 1998.  SFAS No. 131 redefines  how operating  segments are
determined  and  requires  disclosures  of  certain  financial  and  descriptive
information about a company's operating  segments.  The adoption of SFAS No. 131
will result in the Company  continuing  to operating in one segment,  the casual
dining restaurant segment.

FORWARD-LOOKING INFORMATION
        Certain statements in this Quarterly Report (which are summarized below)
and in the  Company's  press  releases and oral  statements  made by or with the
approval of the  Company's  executive  officers  constitute  or will  constitute
"forward-looking  statements." All forward-looking  statements involve risks and
uncertainties,  and actual  results may be materially  different.  The following
factors are among those that could cause the Company's  actual results to differ
materially from those set forth in such forward-looking statements.

        The ability of the Company to open new  restaurants,  and the allocation
of new restaurants among the Company's  currently available and future concepts,
depends on a number of factors, including its ability to find suitable locations
and negotiate  acceptable leases and land purchases,  its ability to attract and
retain a sufficient  number of qualified  restaurant  managers,  the comparative
potential return and risk associated with the particular restaurant concept, and
the  availability  of capital.  The proportion of new  restaurants  that will be
freestanding units,  either owned or leased,  rather than in-line mall locations
will depend upon the availability and cost of suitable mall locations. The costs
of  restaurant  development  and  conversion  will  depend  upon  the  level  of
contributions  from landlords for leasehold  improvements,  the actual number of
freestanding  sites utilized in such  development and whether such sites involve
land purchases, the cost of building supplies and general construction risks and
costs.



                                       11

<PAGE>



        The ultimate level of television  advertising  expenditures in 1998 will
be contingent upon the  effectiveness of the  commercials,  the availability and
cost of advertising air time, and changes in the Company's marketing priorities.
The  Company's  ability to generate  revenue as currently  expected,  unexpected
expenses  and  the  need  for  additional  funds  to  react  to  changes  in the
marketplace,  including  unexpected increases in personnel costs and food supply
costs,  may impact whether the Company has sufficient cash resources to fund its
restaurant and corporate office development and restaurant  conversion plans for
1998 and early 1999 and purchase  outstanding shares of the Company's stock. The
prospect of future  restaurant  conversions is contingent  upon the costs of the
conversions,  the financial return  anticipated with such  conversions,  and the
availability of viable alternative  concepts.  The Company  periodically reviews
the  operating  results of  individual  restaurants  to determine if  impairment
charges on  underperforming  assets are  necessary,  and the need for restaurant
closings, and it is reasonable to expect that such actions will be required from
time to time in the  future.  There is no  certainty  that  currently  available
sources of cash will remain available to the Company over time.

        Other  factors that could cause actual  results of the Company to differ
materially from those contained in any such  forward-looking  statements include
general  economic  conditions,  the actions of existing and future  competitors,
weather  factors,  the  success  of  conversions,  unforseen  health  and safety
developments regarding restaurant operations,  and regulatory  constraints.  The
Company assumes no obligation to publicly release the results of any revision or
updates  to  these  forward-looking  statements  to  reflect  future  events  or
unanticipated occurrences.


PART II.       OTHER INFORMATION

 Item 1.            Legal Proceedings IN RE BUFFETS, INC. SECURITIES LITIGATION,
               United  States  District  Court for the  District  of  Minnesota,
               Master No.  3-94-1447.  This  action is a  consolidation  of four
               separate  lawsuits.  The first lawsuit was commenced by ZSA Asset
               Allocation Fund and ZSA Equity Fund on or about November 7, 1994.
               Three other  substantially  similar  actions  were filed  shortly
               thereafter  by alleged  shareholders  Marc  Kushner,  Trustee for
               Service Lamp Corp. Profit Sharing Plan,  Jerrine  Fernandes,  and
               John J.  Nuttall.  By  Pretrial  Order  No. 1,  entered  in early
               January 1995,  the District  Court ordered that the four lawsuits
               be   consolidated   into  the  single  pending  action  and  that
               plaintiffs serve and file a Consolidated Amended

                                       12

<PAGE>



               Class Action Complaint (the "Complaint"),  which was served on or
               about  January 31, 1995.  The Court  ordered the dismissal of the
               Complaint upon motion by the defendants,  but granted  plaintiffs
               leave  to  replead.   Plaintiffs   filed  their  Second  Amended,
               Consolidated  Class Action Complaint (the "Second  Complaint") on
               December  11,  1995.  Defendants  moved  to  dismiss  the  Second
               Complaint.  On September 11, 1996, the District  Court  dismissed
               the Second Complaint without prejudice,  with leave to plaintiffs
               to replead.  On November  8, 1996,  plaintiffs  filed their Third
               Amended,   Consolidated   Class  Action   Complaint  (the  "Third
               Complaint").  Defendants moved to dismiss the Third Complaint. By
               Memorandum  Opinion  and Order  filed on  January  6,  1998,  the
               District   Court  denied   defendants'   motion  to  dismiss  the
               plaintiff's Corrected,  Third Amended,  Consolidated Class Action
               Complaint.

                    The Third  Complaint  is against  the Company and several of
               its  current  and former  officers  and  directors.  In the Third
               Complaint,   plaintiffs   seek  to  represent  a  putative  class
               consisting of all persons and entities (excluding  defendants and
               certain  others) who  purchased  shares of the  Company's  Common
               Stock  during the period  commencing  October 26, 1993 and ending
               October  25,  1994 (the  "Class  Period").  The  Third  Complaint
               alleges that the defendants made misrepresentations and omissions
               of  material  fact during the Class  Period  with  respect to the
               Company's operations and restaurant development activities,  as a
               result of which the price of the  Company's  stock  allegedly was
               artificially   inflated  during  the  Class  Period.   The  Third
               Complaint  further alleges that certain  defendants made sales of
               Common  Stock of the  Company  during the Class  Period  while in
               possession  of  material   undisclosed   information   about  the
               Company's operations and restaurant development  activities.  The
               Third Complaint alleges that the defendants' conduct violated the
               Securities Exchange Act of 1934 and seeks compensatory damages in
               an  unspecified  amount,  prejudgment  interest,  and an award of
               attorneys' fees, costs and expenses.

                    Management  of the  Company  believes  that  the  action  is
               without merit and intends to defend it  vigorously.  Although the
               outcome of this  proceeding  cannot be predicted with  certainty,
               the Company's management believes that while the outcome may have
               a material effect on earnings in a particular period, the outcome
               should not have a material  effect on the financial  condition of
               the Company.

                                       13

<PAGE>



 Item 2.       Changes in Securities

               None

 Item 3.       Defaults upon Senior Securities

               None

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

               The Annual Meeting of Shareholders of the Company was held on May
               12,  1998.  At the meeting the number of directors of the Company
               was set at six, six directors were elected,  the two stock option
               matters were  approved and the  appointment  of Deloitte & Touche
               LLP as the  Company's  independent  auditors for the current year
               was approved, by the following votes:

               ELECTION OF DIRECTORS       FOR        WITHHOLD    NONVOTES
               ---------------------    ----------    --------    --------
               Walter R. Barry, Jr.     40,006,854    250,069        0
               Marvin W. Goldstein      40,006,364    250,559        0
               Roe H. Hatlen            40,007,854    249,069        0
               Alan S. McDowell         40,007,464    249,459        0
               C. Dennis Scott          40,007,689    249,234        0
               Michael T. Sweeney       40,006,864    250,059        0

                                        FOR         AGAINST   ABSTAIN   NONVOTES
                                     ----------   ----------  -------   --------
               Amending the Buffets, 30,090,251   10,095,528   71,143      1
               Inc. 1995 Stock 
               Option Plan

                                        FOR         AGAINST   ABSTAIN   NONVOTES
                                     ----------    ---------  -------   --------
               Approval of Buffets,  36,961,005    3,144,838   51,079      1
               Inc. Non-Employee
               Director Stock Option
               Plan

                                        FOR         AGAINST   ABSTAIN   NONVOTES
                                     ----------     -------   -------   --------
               Approval of auditors  40,175,354      33,875    47,694      0

 Item 5.       Other Information

               None

 Item 6.       Exhibits and reports on Form 8-K

           a)  Exhibits
               3(a)        Composite Amended and Restated Articles of
                           Incorporation (1)
               3(b)        By-laws of the Company (2)

                                       14

<PAGE>


               4(a)        Form of Rights Agreement,  dated as of October 24,
                           1995  between the Company and the  American  Stock
                           Transfer and Trust Company, as Rights Agent (3)
               27          Financial Data Schedule


           b)  Reports on 8-K

               None




(1)  Incorporated by reference to Exhibit 4.1 to Registration  Statement on Form
     S-3 dated June 2, 1993 (Registration No. 33- 63694).
(2)  Incorporated  by reference to Exhibit 3(b) to Annual Report on Form 10-K 
     for the fiscal year ended December 29, 1993. 
(3)  Incorporated by reference to Exhibit 1 to Report on Form 8-K dated October 
     24, 1995.



                                       15

<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.



                                          BUFFETS, INC.
                                          (Registrant)


August 6, 1998
                                          /S/ ROE H. HATLEN
                                          --------------------------------------
                                          Roe H. Hatlen
                                          Chairman of the Board,
                                          Chief Executive Officer
                                          (Principal Executive Officer)


                                           /S/ CLARK C. GRANT
                                          --------------------------------------
                                          Clark C. Grant
                                          Executive Vice President of
                                          Finance and Administration
                                          and Treasurer
                                          (Principal Financial Officer)













                                       16

<PAGE>










                                  EXHIBIT INDEX


       EXHIBITS                                                 PAGE

       3(a)       Composite Amended and Restated
                  Articles of Incorporation............Incorporated by Reference

       3(b)       By-laws of the Company...............Incorporated by Reference

       4(a)       Form of Rights Agreement, dated as of 
                  October 24, 1995 between the Company
                  and the American Stock Transfer and 
                  Trust Company, as Rights Agent.......Incorporated by Reference

       27         Financial Data Schedule..............Filed Electronically