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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                      ------------------------------------

                                    FORM 10-Q

                      ------------------------------------


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

                  For the quarterly period ended March 31, 1997

                                       OR

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

                      ------------------------------------

                         Commission File Number 33-66392

                        HOULIHAN'S RESTAURANT GROUP, INC.
               Incorporated pursuant to the Laws of Delaware State

                      ------------------------------------

        Internal Revenue Service - Employer Identification No. 43-0913506

             Two Brush Creek Boulevard, Kansas City, Missouri 64112
                                (816) 756-2200

                      ------------------------------------

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  requirements
for the past 90 days. Yes  x   No

Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court. Yes  x   No

Number of shares of common stock outstanding as of May 7, 1997:  9,998,012

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<PAGE>



                HOULIHAN'S RESTAURANT GROUP, INC. AND SUBSIDIARY

                                      INDEX


                                                                           Page
                                                                           ----
PART I            FINANCIAL INFORMATION

 Item 1.  Consolidated Financial Statements
                Consolidated Balance Sheets.............................      3
                Consolidated Statements of Income.......................      4
                Consolidated Statements of Cash Flows...................      5
                Notes to Consolidated Financial Statements..............      6

 Item 2.  Management's Discussion and Analysis of Financial Condition...      9


PART II           OTHER INFORMATION

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

 Signatures.............................................................     15

                                        2

<PAGE>



                HOULIHAN'S RESTAURANT GROUP, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                (Dollars in thousands, except per share amounts)

                                                            March 31,  Dec. 30,
                                                              1997       1996
                                                            --------   --------
                                                           (Unaudited) (Audited)
                         ASSETS
Current assets:
   Cash and cash equivalents.............................   $ 14,851   $ 15,620
   Receivables ..........................................      1,257      1,252
   Inventories ..........................................      2,402      2,455
   Other current assets .................................      2,853      2,971
   Deferred income taxes ................................      3,132      3,011
                                                            --------   --------
       Total current assets .............................     24,495     25,309
Property, equipment and leaseholds, net .................    104,072    105,481
Reorganization value in excess of amounts allocable to
   identifiable assets, net .............................     57,545     58,458
Deferred debt issuance costs, net .......................       --          218
Other assets, net .......................................      6,164      6,209
                                                            --------   --------
       Total assets .....................................   $192,276   $195,675
                                                            ========   ========

           LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt and capitalized
       lease obligations ................................   $  3,652   $  8,135
   Accounts payable .....................................      5,380      7,317
   Accrued interest .....................................         68        590
   Accrued liabilities ..................................     14,646     15,449
                                                            --------   --------
       Total current liabilities ........................     23,746     31,491
Long-term debt, including capitalized lease obligations,
   less current portion .................................     74,674     71,594
Other liabilities .......................................     13,025     12,284
Deferred income taxes ...................................      4,477      4,917
                                                            --------   --------
       Total liabilities ................................    115,922    120,286
                                                            --------   --------
Stockholders' equity:
   Common stock-par value $.01 per share, 20,000,000
       shares authorized, 9,998,012 shares issued and
       outstanding.......................................        100        100
   Additional paid-in capital............................     59,900     59,900
   Retained earnings ....................................     16,354     15,389
                                                            --------   --------
       Total stockholders' equity .......................     76,354     75,389
                                                            --------   --------
       Total liabilities and stockholders' equity........   $192,276   $195,675
                                                            ========   ========

          See accompanying notes to consolidated financial statements.

                                        3

<PAGE>



                HOULIHAN'S RESTAURANT GROUP, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)

                                                        Thirteen Weeks Ended
                                                    ----------------------------
                                                      March 31,       March 25,
                                                        1997            1996
                                                    ------------    ------------

Net sales ......................................    $    67,070     $    66,974

Cost of sales:
   Food and bar costs ..........................         19,550          19,528
   Labor costs .................................         21,770          21,351
   Operating expenses (exclusive of depreciation
     and amortization shown separately) ........         14,712          15,829
                                                    ------------    ------------
       Total cost of sales .....................         56,032          56,708
                                                    ------------    ------------
       Gross profit ............................         11,038          10,266
Depreciation and amortization ..................          3,995           3,784
General and administrative expenses ............          4,635           4,419
Loss on disposition of properties, net .........             42             139
Other (income), net ............................         (1,367)         (1,279)
Interest expense................................          1,864           1,840
                                                    ------------    ------------
       Income before taxes .....................          1,869           1,363
Income tax provision ...........................            904             691
                                                    ------------    ------------
       Net income ..............................    $       965     $       672
                                                    ============    ============


Earnings per common and common equivalent share.    $      0.10     $      0.07
                                                    ============    ============

Weighted average common and common equivalent
 shares.........................................     10,022,836       9,998,012
                                                    ============    ============


          See accompanying notes to consolidated financial statements.

                                        4

<PAGE>



                HOULIHAN'S RESTAURANT GROUP, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

                                                           Thirteen Weeks Ended
                                                           ---------------------
                                                           March 31,   March 25,
                                                             1997        1996
                                                           ---------   ---------
Cash flows from operating activities:
   Net income ..........................................   $    965    $    672
   Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization ...................      3,995       3,784
       Amortization of deferred debt issuance costs ....        218          27
       Loss on disposition of properties, net ..........         42         139
       Deferred income tax benefit .....................       (561)       (316)
       Changes in operating assets and liabilities:
         Receivables ...................................         (5)        153
         Inventories ...................................         53         134
         Other current assets ..........................        118         677
         Accounts payable ..............................     (1,937)     (1,942)
         Accrued interest ..............................       (522)         15
         Accrued liabilities ...........................       (803)         (1)
       Other assets ....................................         56         138
       Other liabilities ...............................        741         614
                                                           ---------   ---------
         Net cash provided by operating activities .....      2,360       4,094
                                                           ---------   ---------
Cash flows from investing activities:
   Capital expenditures, excluding capital leases ......     (1,727)     (3,863)
   Proceeds from disposition of properties .............          1          66
                                                           ---------   ---------
         Net cash used for investing activities ........     (1,726)     (3,797)
                                                           ---------   ---------
Cash flows from financing activities:
   Net proceeds from issuance of long-term debt,
     excluding capitalized lease obligations............      4,152       5,000
   Payments on long-term debt, including capitalized
      lease obligations.................................     (5,555)        (48)
                                                           ---------   ---------
         Net cash provided by (used for) financing
           activities...................................     (1,403)      4,952
                                                           ---------   ---------
Net increase (decrease) in cash and cash equivalents ...       (769)      5,249
Cash and cash equivalents at beginning of period .......     15,620      10,314
                                                           ---------   ---------
Cash and cash equivalents at end of period .............   $ 14,851    $ 15,563
                                                           =========   =========

Supplemental Disclosures of Cash Flow Information:
Cash paid (received) during the period for:
   Interest ............................................   $  2,168    $  1,798
                                                           =========   =========
   Income taxes ........................................   $    670    $   (663)
                                                           =========   =========

Disclosure of Accounting Policy:
   For  purposes  of the  consolidated  statements  of cash  flows,  the Company
considers all highly liquid debt instruments  purchased with a maturity of three
months or less to be cash equivalents.

          See accompanying notes to consolidated financial statements.

                                        5

<PAGE>



                HOULIHAN'S RESTAURANT GROUP, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      For the Quarter Ended March 31, 1997
                                   (Unaudited)


1.       Basis of Presentation

The consolidated  financial statements of Houlihan's  Restaurant Group, Inc. and
its wholly-owned subsidiary,  Houlihan's Restaurants,  Inc. and its subsidiaries
(the  "Company")  included in this Form 10-Q have been  prepared  without  audit
(except  that the balance  sheet  information  as of December  30, 1996 has been
derived from consolidated financial statements which were audited) in accordance
with the  rules and  regulations  of the  Securities  and  Exchange  Commission.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed  or omitted  pursuant  to such rules and  regulations.  The
Company  believes  that the  disclosures  are  adequate to make the  information
presented not misleading.  The accompanying  consolidated  financial  statements
should be read in conjunction  with the audited  financial  statements and notes
thereto  included in the Company's Annual Report on Form 10-K for the year ended
December 30, 1996.

Company management  believes that the information  furnished herein reflects all
adjustments,  consisting only of normal recurring  adjustments,  necessary for a
fair presentation of the results of the interim periods  presented.  The results
of operations for the interim periods  presented are not necessarily  indicative
of those to be expected for the full year.

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

The Company owns and operates full service casual dining  restaurants  under the
names  of  "Houlihan's",   "Darryl's",  "Bristol",  "Braxton",  "Chequers",  "J.
Gilbert's", "Charley's Place", "Phineas" and the "Buena Vista Cafe".

2.       Earnings Per Common and Common Equivalent Share

Earnings  per  common  and  common  equivalent  share are based on the  weighted
average  number of shares  outstanding  and the assumed  exercise of outstanding
dilutive  stock options  issued under the Company's  stock option plans less the
number of treasury  shares  assumed to be purchased  from the proceeds using the
average market price of the Company's common stock. At March 31, 1997,  warrants
to purchase up to 47,740  shares of common  stock at a price of $37.92 per share
were  outstanding.  Additional shares of common stock issuable upon the exercise
of these  warrants  have not been  considered in the  calculation  as the effect
would be antidilutive.

                                        6

<PAGE>

3.       Long-Term Debt

Long-term debt,  including  capitalized lease  obligations,  is comprised of the
following (in thousands):

                                               March 31,          December 30,
                                                 1997                 1996
                                           ----------------      ---------------
Bank debt:
    Term Loan                              $         23,612      $        29,112
    Real Estate Loan                                 40,000               40,000
    Revolving Credit Loan                            12,102                7,950
Capitalized lease obligations                         2,612                2,667
                                           ----------------      ---------------
                                                     78,326               79,729
Less:  Current portion                                3,652                8,135
                                           ----------------      ---------------
                                           $         74,674      $        71,594
                                           ================      ===============

During March 1997,  the Company  borrowed a total of $4,152,000 on its Revolving
Credit  Facility to fund the  drawdown  of two  outstanding  standby  letters of
credit by the beneficiaries. The letters of credit were scheduled to expire upon
the maturity of the Revolving Credit Facility on March 31, 1997. The Bank Credit
Agreement  was amended (the "Fifth  Amendment")  on March 31, 1997 to extend the
maturity  date of all  outstanding  bank debt to May 15, 1997.  The new maturity
date allowed for the closing of a new $90 million  secured credit  facility (see
Note 5).  Additionally,  the Fifth  Amendment  revised the required fixed charge
coverage ratio for the fourth quarter of 1996. The Company also made a scheduled
principal payment of $5,500,000 on the Term Loan on March 31, 1997. As a result,
the  Company  remains  in  compliance  with all  covenants  of its  bank  credit
agreement as amended.

4.       Contingencies and Commitments

Severance Agreements

In prior years,  the Company entered into agreements with certain officers which
provide for severance  payments in the event the  employment of such officers is
terminated  upon  a  change  of  control  of  the  Company,  as  defined  in the
agreements.  As of March 31, 1997, the contingent liability under the agreements
for all participants was approximately $1,700,000.

5.       Subsequent Event

The  Company  made a Net Cash  Proceeds  payment  (as defined in the Bank Credit
Agreement)  of $129,000 on April 4, 1997.  Then on April 15,  1997,  the Company
signed a new bank credit agreement and obtained a new $90,000,000 secured credit
facility.  The proceeds from the new credit facility of $75,000,000,  along with
$585,000 of the Company's  existing  unrestricted  cash,  were used to repay and
permanently  retire  $75,585,000 of the existing bank  indebtedness at April 15,
1997.


                                        7

<PAGE>



The new credit  facility  consists  of a senior  bank term loan  facility  and a
senior bank  revolving  credit  facility.  The term loan facility  consists of a
five-year  tranche A term loan in the  principal  amount  of  $20,000,000  and a
seven-year  tranche B term loan in the  principal  amount  of  $55,000,000.  The
tranche A loan requires annual amortization of $4,000,000 and the tranche B loan
requires  annual   amortization  of  $550,000  for  the  first  five  years  and
$26,125,000 in the sixth and seventh years.  All  amortization on the term loans
is to be paid in equal quarterly installments.

The new credit facility also contains a five-year  revolving  credit facility in
the  principal  amount of  $15,000,000  that  includes  a  $5,000,000  swingline
facility.  The  revolving  credit  facility will be available to provide for the
working capital  requirements and general corporate  purposes of the Company and
provides for letters of credit up to $10,000,000. At April 30, 1997, the Company
had $10,314,000 available to it under the new revolving credit facility, reduced
by $4,686,000 of outstanding standby letters of credit.

Substantially  all of the Company's  assets are pledged as collateral  under the
new bank credit  agreement.  In addition,  borrowings under the new facility are
guaranteed  by the  parent  company  and by  each  of  its  active  wholly-owned
subsidiaries.  This guarantee is secured by a pledge of all of the capital stock
of Houlihan's  Restaurants,  Inc., and the guarantees of the active wholly-owned
subsidiaries are  collateralized  by security  interests in all of the assets of
each such subsidiary.

The new  credit  facility  allows the  Company  to enter  into a sale  leaseback
transaction  involving certain of its owned restaurant  properties.  The Company
signed a letter  of  intent on April 23,  1997 to  complete  the sale  leaseback
transaction.  The letter  provides for the sale leaseback of up to 25 properties
for  proceeds of  approximately  $30,000,000  subject to appraised  values.  The
transaction  is to be  completed  as soon as  practicable.  The  Company has not
determined   the  number  of  properties  to  include  in  the  sale   leaseback
transaction, and therefore, cannot make a determination of the gain or loss that
will result upon the completion of the  transaction.  The Company intends to use
the  proceeds  from this  transaction  to either  (i)  repurchase  shares of the
Company's common stock not owned by the Glazer Group for an aggregate repurchase
price of not in excess of $8.00 per share or $21,400,000 in aggregate value (the
"Repurchase"), (ii) prepay the new credit facility term loans or (iii) construct
or acquire  additional new  restaurants.  If the Company decides to complete the
Repurchase,  the  Repurchase is expected to be completed as soon as  practicable
after  the  closing  of the  sale  leaseback  transaction,  but in any  event by
November 15, 1997.




                                        8

<PAGE>



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


The  following  discussion  and  analysis  should  be read in  conjunction  with
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations" presented in the Company's Annual Report on Form 10-K for the fiscal
year ended December 30, 1996. The information  contained herein includes certain
forward looking information  regarding restaurant  openings,  operating margins,
capital  requirements,  cash flow from operations and assumptions  regarding the
availability of new credit facilities. This forward looking information could be
affected by changes in monetary and fiscal policies,  laws and regulations,  and
social and economic  conditions,  such as  inflation  or a recession,  increased
competition in the restaurant  industry,  the current trend towards "dining out"
and the amount, type and cost of financing available to the Company.

General

The Company  operates full service casual dining  restaurants  in 23 states.  At
March 31,  1997,  it operated  101  restaurants,  including  62  Houlihan's,  28
Darryl's,  four upscale  Seafood  restaurants  and seven  specialty  restaurants
comprised  of four  dinnerhouses,  two upscale  steakhouses  and the Buena Vista
Cafe. At that date,  the Company also  franchised 30 Houlihan's  restaurants  in
twelve states and the Commonwealth of Puerto Rico.

Results of Operations

The  following  table  sets  forth   information   derived  from  the  Company's
Consolidated Statements of Income expressed as a percentage of net sales.

                                                          Quarter Ended
                                                 -------------------------------
                                                    March 31,        March 25,
                                                      1997              1996
                                                 -------------    --------------

Net sales                                           100.0    %        100.0    %
Cost of sales:
     Food and bar costs                              29.1              29.2
     Labor costs                                     32.5              31.9
     Operating expenses                              21.9              23.6
                                                 -------------    --------------
         Total cost of sales                         83.5              84.7
                                                 -------------    --------------
           Gross profit                              16.5              15.3
Depreciation and amortization                         6.0               5.6
General and administrative expense                    6.9               6.6
Loss on disposition of properties, net                0.1               0.2
Other (income), net                                  (2.0)             (1.8)
Interest expense                                      2.8               2.7
                                                 -------------    --------------
         Income before income taxes                   2.7               2.0
Income tax provision                                  1.3               1.0
                                                 -------------    --------------
         Net income                                   1.4    %          1.0    %
                                                 =============    ==============

                                        9

<PAGE>




Net Sales.  Net sales for the first quarter  increased to  $67,070,000,  0.1% up
from  $66,974,000  generated  for the same  quarter of 1996.  The  increase  was
primarily  due to sales  generated by five new  restaurants  opened during 1996,
consisting of three Houlihan's, one Seafood restaurant and one J. Gilbert's. The
increase was partially offset by a 1.8% decrease in comparable  restaurant sales
during the first quarter.

"Comparable  restaurants" are restaurants open throughout  fiscal years 1996 and
1997. The increases  (decreases) in comparable restaurant sales, by concept, for
the first quarter of 1997 versus 1996 were as follows:

                                       First Quarter
                             -----------------------------------
                               Food          Bar         Total
                             ---------    ---------    ---------

Houlihan's                   (1.7)   %    (7.9)   %    (3.2)   %
Darryl's                      0.9          1.3          1.0
Seafood                       6.0          0.8          5.0
Specialty                    (3.9)        (2.1)        (3.3)

Total Company                (0.7)   %    (5.6)   %    (1.8)   %

Cost of Sales.  Cost of sales as a percentage of net sales decreased  during the
first quarter of 1997 from the same period of 1996. Cost of sales is composed of
three major items: food and bar costs, labor costs and operating expenses.

Combined  food and bar costs as a  percentage  of net sales  decreased  to 29.1%
during the first  quarter of 1997 from  29.2% for the same  period in 1996.  The
decrease  was the result of  increased  efficiencies  gained over the prior year
when a new menu was  implemented in all of the Company's  Darryl's  restaurants.
The new menu, which emphasizes  quality  wood-fired  steaks,  resulted in higher
food  costs  due to the  shift in the menu mix to higher  priced  items  such as
steak.

Labor costs as a percentage  of net sales  increased to 32.5% in 1997 from 31.9%
in 1996.  Labor costs were  impacted by an increase in  management  labor due to
increases  in base pay made in order to remain  competitive  in the industry and
retain  quality  managers.  The  increase  was also  due in part to lower  sales
experienced during the first quarter by the Company's comparable  restaurants as
management salaries are predominantly a fixed cost.

Operating  expenses  decreased  from  23.6% of net sales in the 1996  quarter to
21.9%  of net  sales  in the  1997  quarter  due  primarily  to a  reduction  in
promotional  expenses  during the first quarter in comparison to the prior year.
During  the first  quarter  of 1996,  the  Company  tested  various  advertising
promotions in selected markets using radio, print, billboard and television.

Depreciation and Amortization Expense.  Depreciation and amortization expense as
a percentage  of net sales  increased  during the first quarter due to increased
capital expenditures from the five

                                       10

<PAGE>



new  restaurants  that  were  opened  in  1996,  as well as  ongoing  restaurant
renovation and replacements.

General and Administrative  Expenses.  General and administrative  expenses as a
percent of net sales  increased  during the first quarter of 1997 as compared to
the same period of 1996.  The  increase is due  primarily to the creation of two
new  regional  vice  president  positions in the  Houlihan's  concept to provide
additional oversight  responsibilities to both Company-owned restaurants as well
as franchise  restaurants.  Additionally,  general and  administrative  expenses
increased  during  the  quarter  due  to  severance   payments  related  to  the
centralization  of  the  Company's   restaurant   bookkeeping  efforts  for  the
Houlihan's  concept.   Staffing   efficiencies  were  made  possible  by  a  new
point-of-sale  management  information system that was implemented in all of the
Company's restaurants during 1995 and the first quarter of 1996.

Other Income. Other income as a percentage of net sales increased primarily as a
result of a 16.8%  increase in franchise  revenues over the prior period.  As of
the end of the quarter,  the Company  franchised 30  restaurants  and had signed
agreements with 20 franchise development groups providing for the development of
an aggregate of 77 additional Houlihan's over a five to six year period.

Interest Expense.  Interest expense increased slightly in the 1997 first quarter
to 2.8% of net sales compared to 2.7% of net sales for the same quarter of 1996.
The increase was primarily  attributable  to interest on two new  borrowings the
Company made on its Revolving Credit Facility in March 1997.

Income  Taxes.  The Company's  effective  income tax rate was 48.4% for the 1997
first  quarter,  compared  to 50.7%  for the same  period  of  1996.  The  lower
effective  rate was a result of the increase in pretax income in relation to the
fixed amortization of the reorganization value in excess of amounts allocable to
identifiable assets.

Net Income.  Net income for the first quarter of 1997 increased to $965,000,  or
$0.10 per share,  from $672,000,  or $0.07 per share,  from the first quarter of
1996. The increase is  attributable  to an increase in net sales for the quarter
as well as the decline in certain operating expenses mentioned above.

Liquidity and Capital Resources

At March 31, 1997, the Company had cash and cash  equivalents of $14,851,000 and
excess  working  capital  of  $749,000.  The  Company  relies  principally  upon
internally  generated  funds to finance its  restaurant  operations  and to fund
working  capital  expenditures.  Historically,  the  Company has  operated  with
working  capital  deficiencies.  The  Company's  ability  to  operate  with such
deficiencies  is due to the nature of the  restaurant  business,  which does not
require significant  investments in accounts receivable or inventories and which
generally allows the procurement of food and supplies on trade credit.


                                       11

<PAGE>



At  March  31,  1997,  the  Company  had  $307,000  available  to it  under  the
$12,500,000 Revolving Credit Facility,  reduced by a $91,000 outstanding standby
letter of credit and a  $12,102,000  outstanding  loan.  During March 1997,  two
outstanding standby letters of credit were drawn by the beneficiaries, resulting
in the Company borrowing  $676,646 on March 18, 1997 and $3,475,000 on March 24,
1997 on its Revolving Credit Facility. The borrowings under the Revolving Credit
Facility, as well as all other outstanding bank debt was subsequently refinanced
(see "New Credit Facility").

Capital  expenditures  totalled  $1,727,000  for  the  quarter  as  compared  to
$3,863,000  for  the  same  period  in  1996.  A  majority  of  the  amount  was
attributable to ongoing  remodeling  projects and normal restaurant  renovations
and  replacements  in the Company's  restaurants.  The Company  expects to incur
capital  expenditures of  approximately  $9,200,000 for the remainder of 1997, a
majority  of which will be  continued  to be used for  remodeling  projects  and
maintenance, as well as the opening of one Seafood restaurant.

On March 31, 1997, the Bank Credit  Agreement was amended to extend the maturity
date of all outstanding bank debt to May 15, 1997. The new maturity date allowed
for the closing of a new $90 million  secured  credit  facility (see "New Credit
Facility").  The Company also made two payments on the Term Loan consisting of a
scheduled  principal  payment  of  $5,500,000  on March 31,  1997 and a Net Cash
Proceeds payment (as defined in the Bank Credit  Agreement) of $129,000 on April
4, 1997. As a result,  the Company  remains in compliance  with all covenants of
its current bank credit agreement as amended.

New Credit Facility

The Company  signed a new bank credit  agreement and obtained a new  $90,000,000
secured  credit  facility on April 15, 1997.  The  proceeds  from the new credit
facility  of  $75,000,000,   along  with  $585,000  of  the  Company's  existing
unrestricted  cash, were used to repay and permanently retire $75,585,000 of the
existing bank indebtedness at April 15, 1997.

The new credit  facility  consists  of a senior  bank term loan  facility  and a
senior bank  revolving  credit  facility.  The term loan facility  consists of a
five-year  tranche A term loan in the  principal  amount  of  $20,000,000  and a
seven-year  tranche B term loan in the  principal  amount  of  $55,000,000.  The
tranche A loan requires annual amortization of $4,000,000 and the tranche B loan
requires  annual   amortization  of  $550,000  for  the  first  five  years  and
$26,125,000 in the sixth and seventh years.  All  amortization on the term loans
is to be paid in equal quarterly installments.

The new credit facility also contains a five-year  revolving  credit facility in
the  principal  amount of  $15,000,000  that  includes  a  $5,000,000  swingline
facility.  The  revolving  credit  facility will be available to provide for the
working capital  requirements and general corporate  purposes of the Company and
provides for letters of credit up to $10,000,000. At April 30, 1997, the Company
had $10,314,000 available to it under the new revolving credit facility, reduced
by $4,686,000 of outstanding standby letters of credit.

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Substantially  all of the Company's  assets are pledged as collateral  under the
new bank credit  agreement.  In addition,  borrowings under the new facility are
guaranteed  by the  parent  company  and by  each  of  its  active  wholly-owned
subsidiaries.  This guarantee is secured by a pledge of all of the capital stock
of Houlihan's  Restaurants,  Inc., and the guarantees of the active wholly-owned
subsidiaries are  collateralized  by security  interests in all of the assets of
each such subsidiary.

The new  credit  facility  allows the  Company  to enter  into a sale  leaseback
transaction  involving certain of its owned restaurant  properties.  The Company
signed a letter  of  intent on April 23,  1997 to  complete  the sale  leaseback
transaction.  The letter  provides for the sale leaseback of up to 25 properties
for  proceeds of  approximately  $30,000,000  subject to appraised  values.  The
transaction  is to be  completed  as soon as  practicable.  The  Company has not
determined   the  number  of  properties  to  include  in  the  sale   leaseback
transaction, and therefore, cannot make a determination of the gain or loss that
will result upon the completion of the  transaction.  The Company intends to use
the  proceeds  from this  transaction  to either  (i)  repurchase  shares of the
Company's common stock not owned by the Glazer Group for an aggregate repurchase
price of not in excess of $8.00 per share or $21,400,000 in aggregate value (the
"Repurchase"), (ii) prepay the new credit facility term loans or (iii) construct
or acquire  additional new  restaurants.  If the Company decides to complete the
Repurchase,  the  Repurchase is expected to be completed as soon as  practicable
after  the  closing  of the  sale  leaseback  transaction,  but in any  event by
November 15, 1997.

Impact of Inflation

In the past,  the Company has been able to recover  inflationary  cost increases
through increased food and beverage menu prices.  There have been, and there may
be in the  future,  delays  in  implementing  such  menu  price  increases,  and
competitive  pressures  may limit the  Company's  ability to  recover  such cost
increases  in their  entirety.  Historically,  the effects of  inflation  on the
Company's net income have not been materially adverse.

A majority of the  Company's  employees are paid hourly rates related to federal
and state minimum wage and tip credit laws.  An increase in the federal  minimum
wage was  effective  October 1,  1996,  and other  minimum  wage  increases  are
currently  proposed by various state  governments.  Although the Company has and
will  continue to attempt to pass along any  increased  labor costs through food
and beverage price increases,  there can be no assurance that all such increased
labor  costs can be  reflected  in its prices or that  increased  prices will be
absorbed by consumers  without  diminishing to some degree consumer  spending at
the restaurants.  However, the Company has not experienced to date a significant
reduction  in gross  profit  margins as a result of  changes  in such laws,  and
management  does not  anticipate any related  future  significant  reductions in
gross profit margins.

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                           PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K

(a)  The Exhibits listed on the accompanying  Exhibit Index are filed as part of
     this report.

(b)  No reports on Form 8-K were filed  during the quarter for which this report
     is filed.



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                                   SIGNATURES


Pursuant to the  requirements  of Section 13 or 15(d) of the  Securities  Act of
1934,  the  registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.


                                               HOULIHAN'S RESTAURANT GROUP, INC.
                                               (Registrant)

Date:    May 7, 1997                           By:     /s/    Frederick R. Hipp
       --------------------------------               --------------------------
                                               Frederick R. Hipp
                                               President/Chief Executive Officer

Date:    May 7, 1997                           By:     /s/    Paul R. Geist
       --------------------------------               --------------------------
                                               Paul R. Geist
                                               Vice President/Controller
                                               (Principal Accounting Officer)


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                        HOULIHAN'S RESTAURANT GROUP, INC.

                                  EXHIBIT INDEX


  Exhibit
    No.                         Description of Exhibit
----------    ------------------------------------------------------------------


    27        Financial Data Schedule (filed with EDGAR version)




                                       16

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