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                                                                    Exhibit 99.1


FOR IMMEDIATE RELEASE:  Monday April 2, 2001

CONTACT:  Hollis Taylor, President and Chief Executive Officer
          Pancho's Mexican Buffet, Inc.
          (817) 831-0081

          Shirley Thompson, President
          Bevo Beaven, Senior Account Executive
          Carl Thompson Associates
          (800) 959-9677


PANCHO'S MEXICAN BUFFET, INC. ANNOUNCES DEFINITIVE AGREEMENT
               TO MERGE WITH PANCHO'S RESTAURANTS, INC.

Fort Worth, Texas - Pancho's Mexican Buffet, Inc. (Nasdaq: PAMX) today
announced that it has signed a definitive agreement to merge with Pancho's
Restaurants, Inc., an affiliate of Stephen Oyster of Austin, Texas.

Pursuant to the merger agreement, each share of Pancho's common stock will be
converted into the right to receive $4.60 cash per share. Pancho's currently has
approximately 1.5 million shares outstanding, and outstanding options to
purchase approximately 175,000 shares.

Pancho's Board of Directors has unanimously approved the merger. Wells Fargo Van
Kasper is serving as financial advisor to the Company.

Consummation of the merger is subject to certain closing conditions, including
the acquiring company's obtaining a commitment letter from its lender, pursuant
to which its lender commits, subject to the terms and conditions contained in
the commitment letter, to provide an aggregate of up to $6 million in cash as a
senior secured credit facility.  The terms of the senior secured credit facility
must be reasonably satisfactory to the Company.  In addition, the acquiring
company must have entered into a commitment letter with Mr. Oyster, pursuant to
which Mr. Oyster commits to provide an amount equal to the aggregate amount of
the merger consideration and all other fees and expenses required to be paid by
the acquiring company in connection with the transactions contemplated by Merger
Agreement, less the amount committed by the lender. The aggregate cash amount to
be provided under these commitment letters must be sufficient to pay the
aggregate merger consideration and to make all other necessary payments of fees
and expenses of the acquiring company in connection with the merger.

Because the acquiring company has not received the commitment letters from its
lender or from Mr. Oyster, the transaction remains subject to review by the
acquiring company's lenders and Mr. Oyster. Consequently, there can be no
assurance that the merger will occur or, if it occurs, that the price per share
will be $4.60.

In addition, the Company may terminate the Merger Agreement if the Company has
not received the written opinion of Wells Fargo Van Kasper on or before May 18,
2001, or such other date as the parties may agree
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upon, to the effect that the merger consideration is fair to the Company's
stockholders from a financial point of view.

     The acquiring company may terminate the Merger Agreement if, (i) the
working capital of the Company as of the end of the calendar month immediately
prior to the filing of the Company's definitive proxy statement with the
Securities and Exchange Commission in connection with the meeting of
stockholders to be held to consider the approval of the Merger Agreement,
including all expenses of the Company in connection with the transactions
contemplated by the Merger Agreement, is less than - (negative) $3,880,000; or
(ii) aggregate same-store sales for the period from the beginning of fiscal year
2001 of the Company through the end of the calendar month immediately prior to
filing date of the definitive proxy statement with the Securities and Exchange
Commission compared with the aggregate same store sales for the corresponding
period of the preceding fiscal year has decreased by more than 10%; or (iii)
prior to the filing of the definitive proxy statement, the acquiring company is
not able to obtain and deliver the commitment letter from its lender or lenders

The merger is expected to be completed by the end of the second quarter of 2001,
and is subject to approval by the Company's stockholders and certain other
customary conditions. A special meeting of the Company's stockholders will be
scheduled in connection with seeking the approval of the Company's stockholders.

"The Merger Agreement is the culmination of the efforts of our investment
bankers, Wells Fargo Van Kasper, working closely with our Board of Directors to
find strategic financial alternatives for the Company to maximize stockholder
value," said Hollis Taylor, President and Chief Executive Officer of the
Company. "The Company's Board of Directors concluded that the cash transaction
with Mr. Oyster's affiliated companies offered the best financial alternative
for the Company's stockholders."

Stephen "Duffy" Oyster, President of Pancho's Restaurants Inc. in commenting
upon the approximately $7 million agreement to acquire the Company, said "The
$4.60 per share offer is an exceptional deal for the stockholders in that it
represents an 84% premium over Friday's (March 30) closing price of $2.50 per
share."  He further stated: "The employees of Pancho's are dedicated and
committed individuals working in outdated facilities. The new company plans to
remodel most of the existing stores along with a strategic focus on superior
food and service."

Stephen Oyster is a former partner of Foodmaker, Inc., where he served as
Executive Vice President, and President of Foodmaker Realty Corp. He has been an
investor in real estate and restaurants in Austin, Texas since 1988. Mr. Oyster
expects American Commercial Capital LLC to provide approximately $6 million in
connection with the financing of the transaction and that his investment company
will provide the balance of the purchase price, plus working capital and
remodeling funds.

Based in Fort Worth, Pancho's Mexican Buffet, Inc. is the only publicly-held
company offering all-you-can-eat Mexican food in a buffet-style format. The
Company operates 48 restaurants in Texas, Arizona, Louisiana, New Mexico and
Oklahoma.

Cautionary Note Regarding Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the
Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995.
Such statements are based on the current expectations and beliefs of management
of Pancho's, Mr. Oyster, and the acquiring company and are subject to a number
of factors and uncertainties that could cause actual results to differ
materially from those described

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in the forward-looking statements. In particular, the following factors, among
others, could cause actual results to differ materially from those described in
the forward-looking statements: failure of the transaction to close due to the
failure to obtain the requisite financing; the failure of Pancho's to obtain a
fairness opinion; a decrease in the merger consideration amount per share of
$4.60; the failure to obtain regulatory or other approvals; the failure of
Pancho's stockholders to approve the merger; and those risks detailed from time
to time in Pancho's reports filed with the SEC, including the report on Form 10-
Q for the period ended December 31, 2000.

Additional Information

Pancho's Mexican Buffet, Inc. will file a proxy statement describing the
proposed merger with the United States Securities and Exchange Commission (SEC).
We urge investors in Pancho's common stock to review the proxy statement and
other information to be filed with the SEC because they will contain important
information. These documents, when filed, will be available without charge on
the SEC's web site at www.sec.gov or from the Corporate Secretary of Pancho's at
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3500 Noble Avenue, Fort Worth, Texas 76111 (telephone at 817/831-0081).
Investors should read the proxy statement carefully before making any voting or
investment decisions.

Pancho's and its executive officers and directors may be deemed to be
participants in the solicitation of proxies from stockholders of Pancho's with
respect to the transactions contemplated by the merger agreement. Information
regarding such officers and directors will be included in Pancho's Proxy
Statement for its Special Meeting of Stockholders to be filed with SEC. When
filed, this document will be available at the SEC's website at
http://www.sec.gov and from the Company.

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