U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549 Form 10-Q xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the period ended March 31, 2001 o TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) THE 
SECURITIES EXCHANGE ACT Commission file number 0-25366 AUSTINS STEAKS &
SALOON, INC.(Exact name of small business issuer as specified in its
charter) Delaware
  86-0723400(State or other jurisdiction of
  (I.R.S. EmployerIncorporation or organization)
  Identification No.)
  317 Kimball Avenue, NW
Roanoke, VA  24016
(Address of principal executive office) (540) 345-3195(Issuers telephone number) Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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.  YesxNoo  As of April 17, 2001, there were 12,079,000
shares of the issuers common stock outstanding.   AUSTINS STEAKS & SALOON,
INC.

Form 10-Q Index
Three Months Ended March 31, 2001



PART
  I.
  FINANCIAL
  INFORMATIONItem
  1.Financial Statements (unaudited)Consolidated
  Balance Sheets  March 31, 2001 and December 31, 
  2000Consolidated
  Statements of Operations  Three Months Ended March 31,
  2001 and 2000Consolidated
  Statement of Changes in Stockholders Equity  Three   Months Ended March 31, 2001Consolidated
  Statements of Cash Flows  Three Months Ended   March 31, 2001 and 2000Notes to
  Consolidated Financial StatementsItem
  2.  Managements Discussion and
  Analysis of FinancialCondition
  and Results of OperationsPART II.
  OTHER INFORMATIONItem
  1.  Legal ProceedingsItem
  2.  Change in Securities and Use of
  ProceedsItem
  3.  Defaults Upon Senior SecuritiesItem
  4.  Submission of Matters to a Vote of
  Security HoldersItem
  5.  Other InformationItem
  6.  Exhibits and Reports on Form 8-K


PART 1. FINANCIAL INFORMATION Item 1. Financial
Statements AUSTINS STEAKS &
SALOON, INC. Consolidated Balance Sheets March 31, 2001 and December 31, 2000  March
  31,
  December
  31,Assets
  2001
  2000Current
  assets:
  (Unaudited)Cash and cash equivalents
  $894,654
  $1,467,985Trade accounts receivable, net of
  allowance for doubtful accounts of$219,820 in 2001 and $192,465 in 2000
  1,002,794
  1,065,496Current installments of notes receivable
  65,649
  88,232Other receivables
  295,085
  582,002Inventories
  285,999
  702,065Prepaid expenses
  499,397
  258,398Income taxes refundable
  943,661
  943,661Deferred income taxes
  287,817
  287,817Total current assets
  4,275,056
  5,395,656Notes receivable, less
  allowance for doubtful accounts of $41,180 in 2001and $53,535 in 2000, excluding current
  installments
  42,794
  92,775Property and
  equipment, net
  8,138,965
  8,618,654Franchise royalty
  contracts, net of accumulated amortization of $4,409,439in 2001 an $4,569,641 in 2000
  4,887,418
  5,044,992Goodwill, net of
  accumulated amortization of $2,172,411 in 2001 and$2,058,661 in 2000
  4,651,391
  4,765,121Favorable lease
  rights, net of accumulated amortization of $129,418 in 2001and $106,150 in 2000
  424,415
  447,683Financing costs, net
  of accumulated amortization of $4,049 in 2001 and$47,068 in 2000
  139,186
  143,235Deferred income taxes
  999,748
  999,748Other assets, net
  362,585
  413,880$23,921,558
  $25,921,744Liabilities and Stockholders' EquityCurrent liabilities:Bank overdraft
  $0
  $239,155Credit line note payable to bank
  498,000
  494,321Current installments of long-term debt
  2,041,129
  931,395Accounts payable
  3,439,901
  4,386,819Accrued expenses and other
  1,060,441
  3,132,156Total current liablilities
  7,039,471
  9,183,846Long-term debt,
  excluding current installments
  5,032,379
  5,073,724Total liabilities
  12,071,850
  14,257,570Stockholders' equity:Common stock; $.01 par value.  Authorized 20,000,000 shares; issued andoutstanding 12,079,900 and 12,103,824
  shares in 2001 and 2000
  120,799
  120,799Additional paid-in capital
  8,625,150
  8,625,150Retained earnings
  3,103,759
  2,918,225Total stockholders' equity
  11,849,708
  11,664,174Commitments and
  contingencies$23,921,558
  $25,921,744See accompanying notes
  to consolidated financial statements. AUSTINS STEAKS &
SALOON, INC.



Consolidated Statements of Operations



(Unaudited)


Three
  MonthsEnded
  March 31,2001
  2000Revenues:Company-operated
  stores
  $9,867,323
  $9,663,156Franchise operations
  1,513,935
  1,334,059Other
  99,547
  126,223Total revenues
  11,480,805
  11,123,438Costs and expenses:Cost of company-operated stores
  6,914,762
  6,616,020Cost of franchise operations
  467,774
  554,226Other cost of operations
  74,723
  93,699Restaurant operating expenses
  1,451,382
  1,143,773General and administrative
  1,485,552
  1,474,254Depreciation and amortization
  578,665
  633,881Total costs and expenses
  10,972,858
  10,515,853Income from operations
  507,947
  607,585Other income
  (expense):Interest expense
  (175,235)
  (206,658)Interest income
  1,675
  8,788Other
  (21,803)
  (134,254)(195,363)
  (332,124)Income before income taxexpense
  312,584
  275,461Income tax expense
  127,050
  106,670Net Income
  $185,534
  $168,791Earnings per share:Basic
  0.01
  0.01Diluted
  0.01
  0.01See
  accompanying notes to consolidated financial statements.AUSTINS STEAKS & SALOON,
INC.Consolidated
Statement of Changes in Stockholders' Equity
Three Months Ended March 31, 2001
(Unaudited)

AdditionalCommon
  Stock
  
  Paid-in
  
  RetainedShares
  
  Dollars
  
  Capital
  
  Earnings
  
  TotalBalances,
  December 31, 2000
  
  
  
  12,079,900
  
  $120,799
  
  $8,625,150
  
  $2,918,225
  
  $11,664,174Net
  income
  
  
  
  
  --
  
  --
  
  --
  
  185,534
  
  185,534Balances,
  March 31, 2001
  
  
  
  12,079,900
  
  $120,799
  
  $8,625,150
  
  $3,103,759
  
  $11,849,708PART 1. FINANCIAL INFORMATION



Item 1. Financial
Statements



AUSTINS STEAKS & SALOON, INC.



Consolidated
Balance Sheets



March
31, 2001 and December 31, 2000






March
  31,
  December
  31,Assets
  2001
  2000Current
  assets:
  (Unaudited)Cash and cash equivalents
  $894,654
  $1,467,985Trade accounts receivable, net of
  allowance for doubtful accounts of$219,820 in 2001 and $192,465 in 2000
  1,002,794
  1,065,496Current installments of notes receivable
  65,649
  88,232Other receivables
  295,085
  582,002Inventories
  285,999
  702,065Prepaid expenses
  499,397
  258,398Income taxes refundable
  943,661
  943,661Deferred income taxes
  287,817
  287,817Total current assets
  4,275,056
  5,395,656Notes receivable, less
  allowance for doubtful accounts of $41,180 in 2001and $53,535 in 2000, excluding current
  installments
  42,794
  92,775Property and
  equipment, net
  8,138,965
  8,618,654Franchise royalty
  contracts, net of accumulated amortization of $4,409,439in 2001 an $4,569,641 in 2000
  4,887,418
  5,044,992Goodwill, net of
  accumulated amortization of $2,172,411 in 2001 and$2,058,661 in 2000
  4,651,391
  4,765,121Favorable lease
  rights, net of accumulated amortization of $129,418 in 2001and $106,150 in 2000
  424,415
  447,683Financing costs, net
  of accumulated amortization of $4,049 in 2001 and$47,068 in 2000
  139,186
  143,235Deferred income taxes
  999,748
  999,748Other assets, net
  362,585
  413,880$23,921,558
  $25,921,744Liabilities and Stockholders' EquityCurrent liabilities:Bank overdraft
  $0
  $239,155Credit line note payable to bank
  498,000
  494,321Current installments of long-term debt
  2,041,129
  931,395Accounts payable
  3,439,901
  4,386,819Accrued expenses and other
  1,060,441
  3,132,156Total current liablilities
  7,039,471
  9,183,846Long-term debt,
  excluding current installments
  5,032,379
  5,073,724Total liabilities
  12,071,850
  14,257,570Stockholders' equity:Common stock; $.01 par value.  Authorized 20,000,000 shares; issued andoutstanding 12,079,900 and 12,103,824
  shares in 2001 and 2000
  120,799
  120,799Additional paid-in capital
  8,625,150
  8,625,150Retained earnings
  3,103,759
  2,918,225Total stockholders' equity
  11,849,708
  11,664,174Commitments and
  contingencies$23,921,558
  $25,921,744See accompanying notes
  to consolidated financial statements.AUSTINS STEAKS & SALOON, INC.



Consolidated
Statements of Operations



(Unaudited)


Three
  MonthsEnded
  March 31,2001
  2000Revenues:Company-operated
  stores
  $9,867,323
  $9,663,156Franchise operations
  1,513,935
  1,334,059Other
  99,547
  126,223Total revenues
  11,480,805
  11,123,438Costs and expenses:Cost of company-operated stores
  6,914,762
  6,616,020Cost of franchise operations
  467,774
  554,226Other cost of operations
  74,723
  93,699Restaurant operating expenses
  1,451,382
  1,143,773General and administrative
  1,485,552
  1,474,254Depreciation and amortization
  578,665
  633,881Total costs and expenses
  10,972,858
  10,515,853Income from operations
  507,947
  607,585Other income
  (expense):Interest expense
  (175,235)
  (206,658)Interest income
  1,675
  8,788Other
  (21,803)
  (134,254)(195,363)
  (332,124)Income before income taxexpense
  312,584
  275,461Income tax expense
  127,050
  106,670Net Income
  $185,534
  $168,791Earnings per share:Basic
  0.01
  0.01Diluted
  0.01
  0.01See accompanying notes
  to consolidated financial statements.AUSTINS STEAKS & SALOON, INC.



Consolidated
Statement of Changes in Stockholders' Equity



Three
Months Ended March 31, 2001



(Unaudited)






AdditionalCommon
  Stock
  Paid-in
  RetainedShares
  Dollars
  Capital
  Earnings
  TotalBalances, December 31,
  2000
  12,079,900
  $120,799
  $8,625,150
  $2,918,225
  $11,664,174Net income
  --
  --
  --
  185,534
  185,534Balances, March 31,
  2001
  12,079,900
  $120,799
  $8,625,150
  $3,103,759
  $11,849,708AUSTINS STEAKS & SALOON, INC.



Consolidated
Statements of Cash Flows



Three
Months Ended March 31, 2001 and 2000



(Unaudited)




March
  31,2001
  2000Cash flows from
  operating activities:Net Income
  $185,534
  $168,791Adjustments to reconcile net income to
  net cash provided byoperating activities:Depreciation and amortization of
  property and equipment
  278,157
  334,013Amortization of franchise royalty
  contracts, goodwill,financing costs and other assets
  300,508
  299,868Provision for bad debts
  15,000(Increase) decrease in:Trade accounts receivable
  62,702
  (47,326)Notes receivable
  57,564
  22,406Other receivables
  286,917
  9,321Inventories
  416,066
  (4,388)Prepaid expenses
  (240,999)
  (145,486)Other assets
  51,295
  (2,814)Increase (decrease) in:Accounts payable
  (948,118)
  (278,210)Accrued expenses
  (2,071,715)
  (44,161)Net cash provided by (used
  in) operating activities
  (1,607,089)
  312,014Cash flows from
  investing activities:Additions to property and equipment
  --
  (117,456)Net cash used in investing activities
  0
  (117,456)Cash flows from
  financing activities:Net decrease in bank overdraft
  (239,155)
  (149,305)Net increase in credit line note payable
  3,679
  53,861Proceeds from additional notes
  1,410,000Payments on long-term debt and capital
  leases
  (140,766)
  (357,883)Net cash provided by (used
  in) financing activities
  1,033,758
  (453,327)Net decrease in cash and cash
  equivalents
  (573,331)
  (258,769)Cash and cash
  equivalents at beginning of period
  1,467,985
  510,833Cash and cash
  equivalents at end of period
  $894,654
  $252,064See accompanying notes
  to consolidated financial statements.AUSTINS STEAKS & SALOON, INC.

Notes
to Consolidated Financial Statements

March
31, 2001 and 2000

(Unaudited)

(1)Summary of Significant Accounting Policies

(a)Basis of PresentationThe
accompanying unaudited consolidated financial statements have been prepared by
Austins Steaks & Saloon, Inc. (Austins or the Company) in accordance
with accounting principles generally accepted in the United States of American
for interim financial reporting information and the instructions to Form 10-Q
and Article 10 of Regulation S-X. 
Accordingly, they do not include all of the information and notes
required by accounting principles generally accepted in the United States of
America for complete financial statements. 
In the opinion of management, all material reclassifications and adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation of the results of operations, financial position and cash flows
for each period shown have been included. 
Operating results for interim periods are not necessarily indicative of
the results for the full year.  The
unaudited consolidated financial statements and notes are presented as
permitted by Form 10-Q and do not contain certain information included in the
Companys annual consolidated financial statements and notes.  For further information, refer to the
consolidated financial statements and notes thereto included in the Companys
annual consolidated financial statements and notes thereto included in the
Companys Annual Report on Form 10-KSB for the year ended December 31, 2000(b)ReclassificationsCertain
reclassifications have been made to 2000 financial statement amounts to conform
to the 2001 presentation.(2)Business Combination

Effective
July 1, 1999, Austins Steaks & Saloon, Inc. (Austins), a Delaware
corporation, merged with The WesterN SizzliN Corporation (Western SizzliN), a
Tennessee corporation, located in Roanoke, Virginia.  The assets and business of Western SizzliN are now owned by a
wholly owned subsidiary of Austins, The WesterN SizzliN Corporation, a Delaware
corporation.  As a result of the merger,
Austins six moderately priced, casual dining, full service restaurants located
in Arizona, Nebraska and New Mexico have been combined with WesterN SizzliN.Effective
June 30, 1999, each of the outstanding 2,700,406 shares of common stock were
split 1 for 3.135, leaving a total of 861,374 Austins shares outstanding prior
to the merger.  Upon completion of the
merger, the Austins shareholders own approximately 7 percent of the outstanding
equity and the WesterN SizzliN shareholders own approximately 93 percent of the
outstanding equity of the combined company.Pursuant
to the merger, each share of WesterN SizzliN common and series B convertible
preferred stock (4,339,000 and 874,375 shares, respectively) were converted
into two shares of Austins common stock. 
Also effective with the merger, each WesterN SizzliN common stock
warrant (371,250 warrants) was also converted into two shares of Austins
common stock.The
business combination has been accounted for as a reverse acquisition using the
purchase method of accounting.  In the
acquisition, the shareholders of the acquired company, WesterN SizzliN,
received the majority of the voting interest in the surviving consolidated
company.   Therefore, Western SizzliN
was deemed to be the acquiring company for financial reporting purposes and
accordingly, all of the assets and liabilities of Austins have been recorded at
fair value and the operations of Austins have been reflected in the operations
of the combined company from July 1, 1999, the date of acquisition.The
purchase price of the business combination was determined based on the market
price of Austins securities over a reasonable period of time before and after
the two companies reached an agreement on the purchase price and the proposed
transaction was announced.  On February
23, 1999, Austins and WesterN SizzliN signed a letter of intentagreeing
on the purchase price and announced the proposed transaction.  The average closing market price for the
five business day period beginning February 19, 1999 and ending February 25,
1999 for Austins was $1.2695.  Applying
this price per share to the Austins presplit common shares issued, and
including the estimated direct costs incurred as a result of the acquisition of
$570,813, resulted in a deemed purchase price of $3,999,081.The
aggregate purchase price of the acquisition was allocated based upon
managements best estimate of the fair values of identifiable assets and
liabilities of Austins at the date of acquisition as follows:Current assets
(including cash of
  $10,431)
  $204,675Property
  and equipment, net
  2,672,361Other
  assets
  380,615Favorable
  lease rights
  553,833Goodwill

  925,372Trademarks

  76,283Deferred
  tax assets
  1,344,184Long-term
  debt
  (1,204,264)Current liabilities
  (684,050)Note
  payable to shareholder
  (269,928)Total
  $3,999,081

Goodwill
resulting from the acquisition is being amortized on a straight-line basis over
15 years.(3)Legal Settlement and Private Placement of Common StockOn
September 10, 1999, the Company completed its settlement agreement with David
K. Wachtel, Jr. with respect to long-standing litigation initiated in February
1995.  Under the terms of the settlement
agreement, Austins paid Mr. Wachtel $1,000,000 in settlement of all claims he
had in the litigation, which was included in other expense for the nine-month
period ended September 30, 1999.  Additionally,
Mr. Wachtel withdrew his notice to dissent from the merger between Austins and
the WesterN SizzliN with respect to the 684,000 WesterN SizzliN shares
(premerger) owned by him, and Austins repurchased these shares for the sum of
$3,420,000.In
order to obtain the funds with which to pay Mr. Wachtel under the settlement
agreement, the Company conducted a private placement of its common stock at
prices ranging from $2.25 to $2.50 per share to qualified shareholders,
principally former Western SizzliN stockholders.  On the closing date of September 10, 1999, the Company had
received approximately $2.9 million of proceeds which it used, along with
approximately $1.5 million of bank and other financing to complete the
settlement with Mr. Wachtel.As
a part of the private placement, Austins issued 1,286,200 shares of its common
stock to the qualified investors-purchasers. 
The holders of a majority of the stock ultimately acquired in theprivate
placement have the right, for the one-year period commencing March 15, 2000, to
request Austins to file a registration statement with the Securities and
Exchange Commission to permit the resale of the stock.  The registration must remain effective for
45 days and Austins must cover the costs of the registration.  If any investor sells all of his or her
share in a single three-month period utilizing Rule 144, then the registration
rights will not apply to that investor.(4)Earnings Per Share

Basic
earnings per share excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number of common
shares outstanding for the period. 
Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the Company. 
Stock options for shares of common stock were not included in computing
diluted earnings per share for the three and nine-month periods ended September
30, 2000 because these effects are anti-dilutive.  Common stock warrants are not included in computing diluted
earnings per share, prior to their conversion in connection with the reverse
merger acquisition, since the conditions for their issuance, such as an initial
public offering or registration of the Companys common stock, had not taken
place.The following is a reconciliation of the
numerators and denominators of the basic and diluted earnings per share
computations for the periods indicated:

WeightedAverage
  
  EarningsIncome
  
  Shares
  
  Per Share(Numerator)
  
  (Denominator)
  
  AmountThree months ended March 31, 2001Net income - basic and diluted
  
  
  $
  185,534
  
  12,079,900
  
  0.01Three months ended March 31, 2000Net income  basic and diluted
  
  
  
  $
  168,791
  
  12,103,824
  
  0.01(5)Reportable Segments

The
Company has defined two reportable segments: 
Company-operated restaurants and franchising.  The Company-operated restaurant segment consists of the
operations of all Company-operated restaurants and derives its revenues from
the operations of WesterN SizzliN Steakhouse, Great American Steak &
Buffet, WesterN SizzliN Wood Grill and Austins Steaks & Saloon.  The franchising segment consists of
franchise sales and support activities and derives its revenues from sales of
franchise and development rights and collection of royalties from franchisees.Generally,
the Company evaluates performance and allocates resources based on income from
operations before income taxes and eliminations.  Administrative and capital costs are allocated to segments based
upon predetermined rates or actual or estimated resource usage.  The Company accounts for intercompany sales
and transfers as if the sales or transfers were with third parties and
eliminates the related profit in consolidation.Reportable
segments are business units that provide different products or services.  Separate management of each segment is
required because each business unit is subject to different operational issues
and strategies.  Through March 31, 2001,
all revenues for each business segment were derived from business activities conducted
with customers located in the United States. 
No single external customer accounted for 10 percent or more to the
Companys consolidated revenues.The following table
summarizes reportable segment information:Three MonthsEnded March
  31,2001
  
  2000Revenues from reportable segments:Restaurants
  $
  9,867,323
  
  9,663,156Franchise and other
  
  
  
  
  
  1,613,482
  
  1,460,282Total revenues
  $
  11,480,805
  
  11,123,438Depreciation and amortization:Restaurants
  
  
  
  
  
  389,816
  
  450,393Franchising and other
  
  
  
  
  
  188,849
  
  183,488Total depreciation and amortization
  $
  578,665
  
  633,881Interest expense:Restaurants
  
  
  
  
  
  150,926
  
  167,145Franchising and other
  
  
  
  
  
  24,309
  
  39,513Total interest expense
  $
  175,235
  
  206,658Interest income:Restaurants
  
  
  
  
  
  1,675
  
  6,426Franchising and other
  
  
  
  
  
  --
  
  2,362Total interest income
  $
  1,675
  
  8,788Income (loss) before income taxes:Restaurants
  
  
  
  
  
  (332,097)
  
  59,382Franchising and other
  
  
  
  
  
  644,681
  
  216,079Total income  before income taxes
  $
  312,584
  
  275,461

March 31,
  
  
  March 31,2001
  
  
  2000Gross fixed assets:Restaurants
  
  11,795,680
  
  
  11,661,568Franchising and other
  
  1,393,970
  
  
  1,395,164Total gross fixed assets
  $
  13,189,650
  
  
  13,056,732Expenditures for fixed assets(including acquisition):Restaurants
  
  0
  
  
  98,719Franchising and other
  
  0
  
  
  18,737Total expenditures for fixed assets
  $
  0
  
  
  117,456Item 2.  Managements Discussion and Analysis of Financial Condition and
Results of Operations

Overview

Austins
Steaks & Saloon, Inc. (the Company) underwent a reverse merger acquisition,
effective July 1, 1999, with the WesterN SizzliN Corporation (WSC).  A further description of the transaction is
provided in note 2 to the consolidated financial statements included in this
quarterly report.The
Company currently operates and franchises a total of 261 restaurants located in
24 states, including 21 company-owned and 240 franchise restaurants.  The restaurants include a family steakhouse
concept, a steak and buffet concept, and the casual dining steakhouse concept.During
June 2000, the Company negotiated a short-term lease agreement with Franchise
Finance Corporation of America (FFCA). 
The lease agreement with FFCA was entered into by Western Sizzlin Stores
of Virginia (WSSVA), an entity which was formed for the sole purpose of
entering into this agreement.  Under the
short-term lease agreement, the Company leased and operated 97 Quincy
Steakhouses, owned by FFCA.  The
restaurants operating results, including all revenues and expenses, were
included in the Companys consolidated financial statements for the quarter
ended March 31, 2001.  At the end of the
first quarter, no Quincy Steakhouses remained as company-owned restaurants.From
time to time, the Company may publish forward-looking statements relating to
certain matters, including anticipated financial performance, business
prospects, the future opening of Company-operated and franchised restaurants,
anticipated capital expenditures, and other matters.  All statements other than statements of historical fact contained
in the Form 10-Q or in any other report of the Company are forward-looking
statements.  The Private Securities
Litigation Reform Act of 1995 provided a safe harbor for forward-looking
statements.  In order to comply with the
terms of that safe harbor, the Company notes that a variety of factors,
individually or in the aggregate, could cause the Companys actual results and
experience to differ materially from the anticipated results or other expectations
expressed in the Companys forward-looking statements including, without
limitation, the following:  the ability
of the Company or its franchises to obtain suitable locations for restaurant  development; consumer spending trends and
habits; competition in the restaurant segment with respect to price, service,
location, food quality and personnel resources; weather conditions in the
Companys operating regions; laws and government regulations; general business
and economic conditions; availability of capital; success of operating
initiatives and marketing and promotional efforts; and changes in accounting
policies.  In addition, the Company
disclaims any intent or obligation to update those forward-looking statements.Results of OperationsNet
income for the three month period ended March 31, 2001 was $185,534 as compared
to $168,791 for the three period ended March 31, 2000.  Net income was affected by lost sales due to
winter weather, increased costs associated by sales building initiatives and
the remaining losses incurred with the Quincy operations of (41,026).The
following table sets forth for the periods presented the percentage
relationship to total revenues of certain items included in the consolidated
statements of operations and certain restaurant data for the periods presented:Three MonthsEnded March
  31,2001
  
  2000Revenues:Company-operated stores
  
  
  
  
  
  85.9
  %
  86.9
  %Franchise royalties and fees
  
  
  
  
  
  13.2
  
  12.0Other sales
  
  
  
  
  
  0.9
  
  1.1Total revenues
  
  
  
  
  
  100.0
  
  100.0Costs and expenses:Cost of company-operated stores
  
  
  
  
  
  60.2
  
  59.5Cost of franchise operations
  
  
  
  
  
  4.1
  
  5.0Other cost of operations
  
  
  
  
  
  0.7
  
  0.8Restaurant operating expenses
  
  
  
  
  
  12.6
  
  10.3General and administrative
  
  
  
  
  
  12.9
  
  13.3Depreciation and amortization
  
  
  
  
  
  5.0
  
  5.7Total costs and expenses
  
  
  
  
  
  95.5
  
  94.6Income from operations
  
  
  
  
  
  4.5
  
  5.4Other income (expense)
  
  
  
  
  
  (1.7)
  
  (3.0)Income (loss) before income tax expense
  
  
  
  
  
  2.8
  
  2.4Income tax expense (benefit)
  
  
  
  
  
  1.1
  
  0.9Net income (loss)
  
  
  
  
  
  1.7
  %
  1.5
  %

Three MonthsEnded March
  31,2001
  
  2000Restaurant DataNumber of Company-Operated Restaurants:Beginning of period
  
  
  
  
  
  23
  
  26Opened
  
  
  
  
  
  
  0
  
  0Closed
  
  
  
  
  
  
  2
  
  0End of Period
  
  
  
  
  
  
  21
  
  26Number of Quincy-operated Restaurants:Beginning of period
  
  
  
  
  
  53
  
  --Opened
  
  
  
  
  
  
  
  --Closed
  
  
  
  
  
  10
  
  --Franchised
  
  
  
  
  
  43
  
  --End of period
  
  
  
  
  
  0
  
  --Number of U.S. Franchised Restaurants:Beginning of period
  
  
  
  
  
  198
  
  210Opened
  
  
  
  
  
  43
  
  0Closed
  
  
  
  
  
  1
  
  1End of period
  
  
  
  
  
  240
  
  209

Quarter Ended March 31, 2001
Compared to Quarter Ended March 31, 2000Total
revenues increased 3.2 percent to $11.5 million for the three-months ended
March 31, 2001 as compared to $11.1 million for the comparable three-month
period ended March 31, 2000.  The three
month increase is primarily attributable to the consolidation of the Quincy
operations, which had revenue of approximately $1.6 million for the three
months ended March 31, 2001.  The
remaining deficit from the previous quarter is attributable to five less
company stores for the quarter ended March 31, 2001.Costs and ExpensesCost
of company-operated stores, consisting of food, beverage, and employee costs
increased $300,000 for the three months ended March 31, 2000 from $6.6 million
in 2000 to $6.9 million in 2001 and as a percentage of total revenues from
59.5% in 2000, to 60.2% in 2001.  The
increase is due to the addition of the Quincy operations.  The primary reason for the increase in the
percentage of total revenues is the costs of the Quincy stores, whose operating
margins were significantly less than the Companys other operated restaurants.Cost
of franchise operations and other cost of operations decreased from 4.0% to
$468,000 for the three months ended March 31, 2001 from 5.0% to $554,000 in
2000.  The addition of the Quincy units
did not effect these costs, but due to the increased sales did effect the
percentages.Restaurant
operating expenses, which include utilities, insurance, maintenance and other
such costs of the company-operated stores increased $308,000 for the three
months ended March 31, 2001.  The
majority of this increase is due to the operation of the Quincy stores.  These expenses as a percentage of total
revenues increased to 12.6% in 2001 compared to 10.3% in 2000 as the operating
costs for the Quincy units were higher as a percentage of total revenue than
the Companys other operated restaurants.General
and administrative expenses decreased as a percentage of total revenues from
13.3% in 2000 to 12.9% in 2001 for the three months ended March 31.  This decrease is due to the fact that while
significant revenues were added with the Quincy stores, the Companys
administrative function was able to handle the additional workload without
incurring significant additional incremental costs.Depreciation
and amortization expense is comparable for the three months ended March 31,
2001 and 2000.Other Income (Expense)Interest
expense for the three-month period ended March 31, 2001 and 2000 is comparable
and attributable to the companys continued paydown of debt.  Interest income fluctuates according to the
levels of available and investable cash balances.  The Company employs a cash management system whereby available
balances are invested on an overnight basis.Income
tax expense is directly affected by the levels of pretax income.  The Companys effective tax rate of
approximately 40.6 percent in 2001 is comparable to the annualized rate of 38.8
percent for 2000.Liquidity and Capital ResourcesAs
is customary in the restaurant industry, the Company has operated with negative
working capital.  Historically, the
Company has leased the majority of its restaurants and through a strategy of
controlled growth has financed expansions from operating cash flow, proceeds from
the sale of common stock, the utilization of the Companys line of credit and
long-term debt provided by various lenders.Cash
flows from operations were the primary source of capital expenditures and debt
repayments during the periods.  In
addition, the Company utilizes its existing line of credit to provide
additional short-term funding. 
Management is actively reviewing available financing alternatives to
provide cash for future expansion, restructure existing debt, and provide
additional working capital; however, no final agreements have been reached.Impact of InflationThe
impact of inflation on the costs of food and beverage products, labor and real
estate can affect the Companys operations. 
Over the past few years, inflation had had a lesser impact on the
Companys operations due to the lower rates of inflation in the nations
economy and economic conditions in the Companys  market areas.Management
believes the Company has historically been able to pass on increased costs
through certain selected menu price increases and has offset increased costs by
increased productivity and purchasing efficiencies, but there can be no
assurance that the Company will be able to do so in the future.  Management anticipates that the average cost
of restaurant real estate leases and construction cost could increase in the
future which could affect the Companys ability to expand.  In addition, mandated health care or
additional increases in the federal or state minimum wages could significantly
increase the Companys costs of doing business.PART II. OTHER INFORMATION





Item 1.            Legal Proceedings  N/AItem
2.            Change in Securities and
Use of Proceeds  N/AItem
3.            Defaults Upon Senior
Securities  N/AItem
4.            Submission of Matters to
a Vote of Security Holders  N/AItem 5.            Other Information  N/AItem
6.            Exhibits and Reports on
form 8-K:(a)         Exhibits:
None(b)        Reports on Form 8-K
NoneSIGNATURES



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 hereunto
duly authorized.

Austins
  Steaks & Saloon, Inc.Date:
  
  
  By:Robyn B. MabeChief Financial Officer