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

                                   FORM 10-Q



(Mark One)

[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934

For the quarterly period ended April 4, 1999

                                       OR

[  ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934


                        Commission File Number:  0-20716



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

            DELAWARE                       74-2201241
(State or other jurisdiction of         (I.R.S. Employer
 incorporation or organization)      Identification Number)

                          8918 Tesoro Drive, Suite 200
                           San Antonio, Texas   78217
                    (Address of principal executive offices)

                        Telephone Number (210) 804-0990
              (Registrant's telephone number, including area code)





          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 of each of the issuer's classes of
     common stock, as of the latest practicable date:

                 Class          Outstanding at May 3, 1999
              Common Stock          13,384,450 shares





                             1





                               TACO CABANA, INC.

                                     INDEX


                                                          Page
                                                         Number

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements  (Unaudited)

   Condensed Consolidated Balance Sheets at                3
     April 4, 1999 and January 3, 1999

   Condensed Consolidated Statements of Income for         4
     the Thirteen Weeks Ended April 4, 1999 and
     March 29, 1998

   Condensed Consolidated Statements of Cash Flows         5
     for the Thirteen Weeks Ended April 4, 1999
     and March 29, 1998

   Notes to Condensed Consolidated Financial               6
     Statements


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


PART II.  OTHER INFORMATION

Items 1 through 5 have been omitted since the registrant has no reportable
events in relation to the items

Item 6.  Exhibits and Reports on Form 8-K                 15

Signature                                                 16

















                             2






                               TACO CABANA, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

                                           January 3,   April 4,
                                              1999        1999    
                                           ----------   ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents.................   $ 719,000   $ 897,000
Receivables, net..........................     438,000     337,000
Inventory.................................   2,273,000   2,311,000
Prepaid expenses..........................   3,128,000   3,286,000
Federal income taxes receivable...........     200,000     200,000
                                            ---------- -----------
Total current assets......................   6,758,000   7,031,000

PROPERTY AND EQUIPMENT, net...............  72,250,000  75,963,000
NOTES RECEIVABLE..........................     258,000     297,000
INTANGIBLE ASSETS, net....................  10,724,000  10,578,000
OTHER ASSETS..............................     212,000     235,000
                                           ----------- -----------
TOTAL..................................... $90,202,000 $94,104,000
                                           =========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable..........................  $5,362,000  $4,692,000
Accrued liabilities.......................   5,265,000   5,629,000
Current maturities of long-term debt
and capital leases........................   5,704,000   3,238,000
Line of credit............................   3,550,000   1,540,000
                                           ----------- -----------
Total current liabilities.................  19,881,000  15,099,000

LONG-TERM OBLIGATIONS, net of current maturities:

Capital leases............................   2,140,000   2,082,000
Long-term debt............................  18,930,000  24,905,000
                                           ----------- -----------
Total long-term obligations...............  21,070,000  26,987,000

ACQUISITION AND CLOSED RESTAURANT
LIABILITIES...............................   7,713,000   7,556,000
DEFERRED LEASE PAYMENTS...................     761,000     725,000
STOCKHOLDERS' EQUITY:
Common stock..............................     159,000     134,000
Additional paid-in capital................  98,056,000  84,383,000
Retained deficit.......................... (43,544,000)(40,780,000)
Treasury stock, at cost (2,576,937
shares at January 3, 1999)................ (13,894,000)          -
                                          ------------ -----------
  Total stockholders' equity..............  40,777,000  43,737,000
                                          ------------ -----------
TOTAL.....................................$ 90,202,000 $94,104,000
                                          ============ ===========

           See Notes to Condensed Consolidated Financial Statements.



                              3




                               TACO CABANA, INC.

                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                                  (UNAUDITED)


                                       For the Thirteen Weeks Ended   
                                       ----------------------------
                                           March 29,    April 4,
                                           1998          1999    
                                       --------------  ------------
REVENUES:
Restaurant sales..........................$32,322,000   $36,836,000
Franchise fees and royalty income.........     85,000        74,000
                                          -----------   -----------
  Total revenues.......................... 32,407,000    36,910,000
                                          -----------   -----------

COSTS AND EXPENSES:
Restaurant cost of sales..................  9,792,000    10,927,000
Labor.....................................  8,672,000    10,127,000
Occupancy.................................  1,907,000     2,010,000
Other restaurant operating costs..........  6,002,000     6,251,000
General and administrative................  1,912,000     2,050,000
Depreciation, amortization and
restaurant opening costs..................  1,868,000     2,229,000
                                          -----------   -----------
  Total costs and expenses................ 30,153,000    33,594,000
                                          -----------   -----------
INCOME FROM OPERATIONS....................  2,254,000     3,316,000
                                          -----------   -----------
INTEREST EXPENSE, NET.....................   (397,000)     (552,000)
                                          -----------   -----------
INCOME BEFORE INCOME TAXES................  1,857,000     2,764,000

INCOME TAX EXPENSE........................          -             -
                                          -----------   -----------
NET INCOME................................ $1,857,000    $2,764,000      
                                          ===========   ===========
BASIC EARNINGS PER SHARE..................  $    0.13      $   0.21
                                          ===========   ===========
BASIC WEIGHTED SHARES OUTSTANDING......... 14,826,138    13,350,840
                                          ===========   ===========
DILUTED EARNINGS PER SHARE................  $    0.12      $   0.20
                                          ===========   ===========
DILUTED WEIGHTED SHARES OUTSTANDING....... 15,028,731    13,714,176
                                          ===========   ===========



           See Notes to Condensed Consolidated Financial Statements.






                             4




                               TACO CABANA, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (UNAUDITED)

                                        For the Thirteen Weeks Ended
                                        ----------------------------
                                           March 29,    April 4,
                                             1998        1999    
                                        -------------  ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income...............................$  1,857,000  $2,764,000
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization.........  1,668,000   2,057,000
    Capitalized interest..................    (52,000)    (62,000)
    Changes in operating working
      capital items....................... (1,666,000)   (693,000)
                                          -----------  ----------
Net cash provided by operating activities   1,807,000   4,066,000
                                          -----------  ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment........ (5,075,000) (5,984,000)
Proceeds from sales of property and
  equipment...............................  1,251,000     459,000
                                          -----------  ----------
Net cash used for investing activities.... (3,824,000) (5,525,000)
                                          -----------  ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable
  and draws on line of credit.............  2,611,000   8,404,000
Principal payments under long-term debt...   (639,000) (6,911,000)
Principal payments under capital leases...    (44,000)    (52,000)
Purchase of treasury stock................    (44,000)          -
Exercise of stock options.................    153,000     196,000
                                          -----------  ----------
Net cash provided by financing activities   2,037,000   1,637,000
                                          -----------  ----------
NET INCREASE IN CASH......................     20,000     178,000
       
CASH AND CASH EQUIVALENTS, beginning
  of period...............................    339,000     719,000
                                          -----------  ----------
CASH AND CASH EQUIVALENTS, end of period..  $ 359,000    $897,000
                                          ===========  ==========



           See Notes to Condensed Consolidated Financial Statements.








                             5




                               TACO CABANA, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.  Basis of Presentation

Principles of Consolidation -  The consolidated financial statements  include
all accounts  of Taco  Cabana, Inc.  and its  wholly-owned subsidiaries  (the
Company).  All significant intercompany  balances and transactions have  been
eliminated.

The  unaudited  Condensed  Consolidated  Financial  Statements  include   all
adjustments, consisting of normal, recurring adjustments and accruals,  which
the Company considers necessary for  fair presentation of financial  position
and the results of operations for the periods presented. Certain  information
and footnote disclosures normally  included in financial statements  prepared
in  accordance  with  generally  accepted  accounting  principles  have  been
condensed or  omitted. The  interim financial  statements should  be read  in
conjunction with the Company's Annual Report on Form 10-K for the year  ended
January 3, 1999.

2.   Stockholders' Equity

The Company's Board of Directors previously  approved plans to repurchase  up
to a  total of  4,000,000 shares  of the  Company's Common  Stock. Since  the
inception of the stock purchase program, the Company has repurchased a  total
of 2,585,000 shares at an aggregate  cost of $13.9 million. During the  first
quarter of  1999,  the Company  retired  all of  the  common shares  held  in
treasury. The cost of the reacquired shares  in excess of par value has  been
charged to additional paid in capital. The timing, price, quantity and manner
of any future purchases will be made at the discretion of management and will
depend upon market conditions.

3.  Earnings per Share

Basic earnings per share was computed by dividing income available to  common
stockholders by the weighted average number of common shares outstanding  for
the reporting  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.   Outstanding  stock
options issued by the Company represent the only dilutive effect reflected in
diluted weighted average shares.














                             6





The following table sets forth the computation of basic and diluted  earnings
per share:

                                            Thirteen Weeks Ended
                                      ------------------------------
                                       March 29, 1998   April 4, 1999
                                      ---------------  ------------- 
                                         (Unaudited)    (Unaudited)

    Numerator for basic and diluted
    earnings per share - net income        $1,857,000     $2,764,000
    Denominator:
       Denominator for basic earnings -
          per share weighted-
          average shares                   14,826,138     13,350,840
       Effect of dilutive securities -
          Employee stock options              202,593        363,336
                                          -----------    -----------
    Denominator for diluted earnings
       per share - adjusted weighted-
       average and assumed conversions     15,028,731     13,714,176
                                          ===========    ===========
    Basic earnings per share                $    0.13     $     0.21
                                          ===========    ===========
    Diluted earnings per share              $    0.12     $     0.20
                                          ===========    ===========


4.   Supplemental Disclosure of Cash Flow Information


                                        Thirteen Weeks Ended
                                       ---------------------
                                    March 29, 1998  April 4, 1999
                                    -------------  ------------
                                      (Unaudited)  (Unaudited)

    Cash paid for interest ...........  $ 385,000   $ 562,000
    Interest capitalized on
    construction costs ...............     52,000      62,000





















                             7




                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Introduction

The Company commenced  operations in  1978 with the  opening of  the first  Taco
Cabana restaurant in San Antonio, Texas.  As of May 3, 1999, the Company had 106
Company-owned restaurants and 10 franchised restaurants.  The Company's revenues
are derived primarily  from sales by  Company-owned restaurants, with  franchise
fees and royalty income currently contributing less than 1% of total revenues.

The Company opened two and closed one Company-owned restaurants during the first
quarter of 1999 for a total of 103 company-owned and 10 franchised  restaurants.
Subsequent to April 4, 1999, three  Company-owned restaurants were opened for  a
current systemwide total of 116 restaurants.









































                             8




The following  table  sets  forth  for  the  periods  indicated  the  percentage
relationship to total  revenues, unless otherwise  indicated, of certain  income
statement data.   The  table also  sets forth  certain restaurant  data for  the
periods indicated.


                                   Thirteen Weeks Ended
                                 ------------------------
                                 March 29,     April 4,
                                   1998         1999               
                                 ---------   ---------
Income Statement Data:
REVENUES:
    Restaurant sales               99.7%        99.8%
    Franchise fees and
    royalty income                  0.3          0.2
                                  -----        -----
    Total revenues                100.0%       100.0%
                                  =====        =====
COSTS AND EXPENSES:

    Restaurant cost of sales (1)   30.3         29.7
    Labor (1)                      26.8         27.5
    Occupancy (1)                   5.9          5.5
    Other restaurant
    operating costs (1)            18.6         17.0
    General and administrative
    costs                           5.9          5.6
    Depreciation, amortization
    and restaurant opening costs    5.8          6.0
                                  -----        -----
INCOME FROM OPERATIONS              7.0          9.0

INTEREST EXPENSE                   (1.2)        (1.5)
                                  -----        -----         
INCOME  BEFORE INCOME TAXES         5.7          7.5

INCOME TAX EXPENSE                    -            -
                                  -----        -----     
NET INCOME                          5.7%         7.5%
                                  =====        =====


Restaurant Data:

COMPANY OWNED RESTAURANTS:
    Beginning of period             98         102
    Opened                           3           2
    Closed                          (2)         (1)
                                  ----        ----
    End of period                   99         103
          
FRANCHISED RESTAURANTS (2):         11          10
                                  ----        ----
TOTAL RESTAURANTS:                 110         113
                                  ====        ====


(1) Percentage is calculated based upon restaurant sales.
(2) Excludes Two Pesos licensed restaurants.
                            
                                 9




The Thirteen Weeks Ended April 4, 1999 Compared to the Thirteen Weeks Ended
March 29, 1998

Restaurant Sales.  Restaurant sales increased by $4.5 million, or 14%, to  $36.8
million for the first quarter of 1999  from $32.3 million for the first  quarter
in 1998.   The increase is  due primarily to  an increase in  sales at  existing
restaurants.  Comparable store  sales, defined as  Taco Cabana restaurants  that
have been open  18 months or  more at the  beginning of  the quarter,  increased
6.5%.  Management attributes  the increase to several  factors including a  more
consistent marketing  program, increased  media  expenditures, a  commitment  to
increased staffing levels at existing  restaurants, the ongoing reimage  program
and the continued opening of higher than average volume restaurants.  Sales from
restaurants opened  after March  29,  1998 accounted  for  an increase  of  $2.5
million. This increase was  offset by sales from  restaurants which were  closed
after March 29, 1998 of $626,000.

Restaurant Cost of Sales.  Restaurant cost of sales, calculated as a  percentage
of restaurant sales, decreased to 29.7% in the first quarter of 1999 from  30.3%
for the  first quarter  of 1998.  The  decrease was  due  primarily to  a  price
increase of approximately 2% taken in  December 1998 and continued  improvements
in the  management  of  food costs  through  utilizing  increased  controls  and
improved purchasing programs.   The  Company recently  completed negotiation  of
favorable fajita  meat and  cheese purchase  contracts. Management  expects  the
favorable cost of sales trends to continue during 1999.

Labor.  Labor costs calculated as a percentage of restaurant sales increased  to
27.5% during the first quarter of 1999 from  26.8% for the same period in  1998.
The increase  in labor  costs is  due to  management's continued  commitment  to
increase staffing  levels  at  the  restaurant  level  in  order  to  provide  a
consistent guest experience as well as  higher than normal labor costs at  newer
restaurants.  New restaurants generally have higher than normal labor costs  for
the first four to six months of operations.  Management expects labor costs as a
percentage of sales to be flat to slightly up during all of 1999.

Occupancy.  Occupancy costs  increased by $103,000 during  the first quarter  of
1999 compared to the first quarter  of 1998.  The  increase is primarily due  to
the opening of new restaurants. As  a percentage of restaurant sales,  occupancy
costs decreased to 5.5%  in the first quarter  of 1999 compared  to 5.9% in  the
first quarter of 1998.  Management expects the dollar amount to increase in 1999
due to  new openings,  although it  should  continue to  show improvement  as  a
percentage of sales.

Other Restaurant Operating Costs.  Other restaurant operating costs increased to
$6.3 million in the first quarter of 1999 compared to $6.0 million in the  first
quarter of 1998. As a percentage of restaurant sales, other restaurant operating
costs decreased to 17.0% for the first quarter of 1999 compared to 18.6% for the
first quarter of 1998.  The decrease is due to the leverage from higher  average
sales as the  dollar amount  of other operating  costs per  store open  remained
relatively flat.  Management expects this  amount, as a percentage of sales,  to
be slightly lower during the remainder of 1999.







                             10




General and Administrative.   General and  administrative expenses increased  to
$2.1 million for the first quarter of  1999 from $1.9 million in the  comparable
period of 1998. As  a percentage of sales,  general and administrative  expenses
decreased to  5.6% for  the first  quarter  of 1999  compared  to 5.9%  for  the
comparable period  in  1998.   Management  expects this  amount  to be  flat  or
increase slightly, as a dollar amount, but continue to decrease as a  percentage
of sales during 1999.

Depreciation,  Amortization  and  Restaurant   Opening  Costs.     Depreciation,
amortization and restaurant opening costs consisted of the following:

                                       Thirteen Weeks Ended
                                      ----------------------
                                   March 29, 1998  April 4, 1999
                                   --------------  -------------
                                     (Unaudited)  (Unaudited)

    Depreciation of property and     
    equipment .......................$ 1,531,000  $ 1,911,000
    Amortization of intangible          
    assets ..........................    137,000      146,000
    Restaurant opening costs ........    200,000      172,000


Depreciation expense increased by approximately  $380,000 for the quarter  ended
April 4, 1999 compared to the  quarter ended March 29,  1998.  The increase  was
due to the addition of new restaurants since March 28, 1999, which accounted for
$125,000 of the increase, as well as continued capital improvements to  existing
restaurants.

Interest Expense,  net.    Interest expense,  net  of  interest  capitalized  on
construction costs, increased  to $552,000  in the  first quarter  of 1999  from
$397,000 in  the first  quarter of  1998, primarily  as a  result of  additional
borrowings under  the Company's  debt facilities,  offset by  a lower  borrowing
rate. In addition, the  Company capitalized $62,000 of  interest related to  new
restaurant construction in the  most recent quarter  compared to $52,000  during
the first quarter of 1998.

Income Taxes.  Income  tax expense was zero  for the first  quarter of 1999  and
1998 due to the recognition of previously reserved deferred tax assets.

Net Income and Earnings Per Share.   Net income increased to $2,764,000 for  the
first quarter of 1999 from $1,857,000 for the  same period in 1998.  Net  income
was 7.5% of total revenues for the first quarter in 1999 compared to 5.7% in the
first quarter of  1998.   Diluted earnings  per share  was $0.20  for the  first
quarter of 1999 compared to $0.12 in the same  period of 1998.  The increase  in
net income recorded during the first quarter of fiscal 1999 compared to the same
quarter last year is due to higher sales at existing restaurants, the opening of
nine new restaurants during 1998 and continued strong cost controls.

Year 2000 Issue

Description.  The  Company relies to  a large extent  on computer technology  to
carry out its day-to-day operations.  Many software products in the  marketplace
are only able to recognize a two digit year date and therefore will recognize  a
date using "00"  as the  year 1900 instead  of the  year 2000  (the "Year  2000
Issue").  This problem  could  result in  a  system failure  or  miscalculations
causing disruptions of  operations, including, among  other things, a  temporary
inability  to  process  transactions  or  engage  in  similar  normal   business
activities.



                           11






State Of Readiness.  The Company has  established a plan to prepare its  systems
for the  Year 2000  Issue as  well as  to reasonably  assure that  its  critical
business  partners  are  prepared.  To  date,  the  Company  has  completed  its
assessment of all internal systems that  could be significantly affected by  the
Year 2000 Issue. Based upon its  assessment, the Company determined that it  was
required to  modify  or  replace  portions  of  its  software  supporting  Human
Resources, Payroll,  Accounting, Labor  Analysis and  the Point  of Sale.    The
Company believes  that  with modifications  or  replacements of  the  identified
software programs,  the Year  2000 Issue  can  be mitigated.   However,  if  all
additional phases of the Year 2000 plan are not completed on time, the Year 2000
Issue could have a material impact on the operations of the Company.

As of May 3,  1999, the Company has  substantially completed the remediation  of
the identified  systems  and  expects to  complete  software  reprogramming  and
replacement no later than October  1, 1999.  Systems  continue to be tested  for
integration with all significant systems scheduled  to be completed by June  30,
1999. Many  hardware upgrades  were  made as  part  of the  Company's  continued
efforts to upgrade its technology, but no further hardware replacement has  been
identified as a  result of  the Year 2000  Issue. As  such, the  Company is  not
currently remediating additional  hardware. However, the  existence of  embedded
technology is by nature more difficult to identify.  While the Company  believes
that all  significant systems  are Year  2000 compliant,  the Company  plans  to
continue testing its operating equipment.

The Company has deferred other information  technology projects due to the  Year
2000 Issue. The deferral of  these projects is not  expected to have a  material
effect on the Company's financial position or results of operations.

Significant Third  Parties.   The  Company's  significant third  party  business
partners consist of suppliers,  banks, and service providers.   The Company  has
significant system interfaces with banks, credit card processors and tax  filing
services. An initial inventory of significant third party business partners  has
been completed and letters mailed requesting information regarding each parties'
Year 2000  compliance  status.  Additionally, the  Company  has  identified  key
suppliers and distributors which it intends to meet with and discuss their  Year
2000 readiness.  The Company is currently developing contingency plans for third
party business partners that  appear to have  substantial Year 2000  operational
risks, which may include the change of some suppliers to minimize such risks.










                             12




Costs.  The Company will use both internal and external resources to  reprogram,
or replace, and test software for Year 2000 Issue modifications. The total  cost
of the Year  2000 Issue project  is estimated to  be approximately $600,000,  of
which the  Company  has  incurred  $500,000 relating  to  the  purchase  of  new
software.  The costs relating to the Year 2000 Issue are being financed  through
operating  cash  flows  and  borrowings  from  the  Company's  available  credit
facilities.  Of  the total  project cost, the  majority is  attributable to  the
purchase of new  software, which  will be  capitalized.   The remaining  amount,
which will be expensed as incurred over the next year, is not expected to have a
material effect on the results  of operations.  To  date, the costs the  Company
has incurred and expensed relating to the assessment of, and preliminary efforts
in connection with,  its Year 2000  Issue and the  development of a  remediation
plan have not had a material effect on the results of operations.

Risks And Contingency Plans.   Management believes it  has an effective plan  in
place to resolve the  Year 2000 Issue in  a timely manner.  However, due to  the
forward-looking nature and lack of historical experience with Year 2000 Issues,
it is difficult to  predict with certainty what  will happen after December  31,
1999.  Despite the Year 2000 remediation  efforts being made, it is likely  that
there will  be disruptions  and unexpected  business problems  during the  early
months of 2000.  The Company plans to  make diligent efforts to assess the  Year
2000 readiness of its significant business partners and will develop contingency
plans for all critical systems where it believes its exposure to Year 2000  risk
is the  greatest.   However, despite  the Company's  efforts, it  may  encounter
unanticipated third party failures, public infrastructure failures or a  failure
to successfully conclude its remediation efforts  as planned.  If the  remaining
Year 2000 plan is  not completed timely, in  addition to the implications  noted
above, the  Company may  be required  to utilize  manual processing  of  certain
otherwise automated processes.  Any one of these unforeseen events could have  a
material adverse  impact  on  the Company's  results  of  operations,  financial
condition, or cash flows in 1999 and beyond.

Liquidity and Capital Resources

Historically, the  Company has  financed business  and expansion  activities  by
using funds generated  from operating activities,  build-to-suit leases,  equity
financing, short and long-term  debt and capital  leases. The Company  maintains
credit facilities totaling  $40.0 million,  including a  $5.0 million  unsecured
revolving line of credit. As of May 3,  1999, $32.4 million had been used  under
these commitments.

Net cash provided  by operating  activities was  $4.1 million  for the  thirteen
weeks ended April 4, 1999, and $1.8  million for the thirteen weeks ended  March
29, 1998.  Management attributes much of  the increase to higher net income  and
less cash being  utilized in  the reduction  of accrued,  acquisition and  store
closure liabilities.

Net cash used in  investing activities was $5.5  million for the thirteen  weeks
ended April 4, 1999, representing primarily capital expenditures of $6.0 million
for  the  construction   of  new  restaurants   and  improvements  to   existing
restaurants. This  was offset  by  the sale  of  assets generating  $459,000  in
proceeds. This compares to $3.8 million in net cash used in investing activities
for the  thirteen weeks  ended March  29, 1998,  representing primarily  capital
expenditures for  the  construction  of  new  restaurants  and  improvements  to
existing restaurants, offset by  the sale of assets  generating $1.3 million  in
proceeds.

                             13




Net cash provided  by financing  activities was  $1.6 million  for the  thirteen
weeks ended April 4, 1999, and $2.0  million for the thirteen weeks ended  March
29, 1998,  representing  primarily  net  borrowings  under  the  Company's  debt
facilities.

The special charges recorded in 1997 and 1995 included accruals of approximately
$10.2 million to record  the estimated monthly lease  payments, net of  expected
sublease receipts, associated with certain  restaurants which have been  closed.
Cash requirements for this accrual were approximately $182,000 during the  first
quarter of  1999.   During the  first  quarter of  1999,  the Company  sold  one
property relating to the special charges which resulted in proceeds of $459,000,
and approximated the carrying value of  the assets sold.  The Company  currently
has two closed restaurant properties for sale which were covered by the  special
charges.  Although there can  be no assurance of  the particular price at  which
such properties will be sold, the Company  expects to receive funds equal to  or
in excess of the carrying value upon the actual disposition of these properties.
In addition,  certain acquisition  and accrued  liabilities related  to the  Two
Pesos acquisition were reduced by payments  of approximately $72,000 during  the
first quarter of 1999.

The  Company  believes  that  existing  cash  balances,  funds  generated   from
operations, its ability to borrow, and the possible use of lease financing  will
be sufficient to meet the Company's capital requirements through 1999, including
the  planned  opening  of  ten  restaurants  and  the  reimaging  of  30  to  35
restaurants.    Total  capital  expenditures  related  to  new  restaurants  are
estimated  to  be  $12.0  to  $15.0  million.    The  total  for  other  capital
expenditures, including the cost of the  reimagings, is estimated to be $6.0  to
$8.0 million.  Total capital expenditures  for 1999 are expected to  approximate
$18.0 to $23.0 million.

Impact of Inflation

Although increases  in labor,  food or  other  operating costs  could  adversely
affect the Company's operations, management does not believe that inflation  has
had a material adverse effect on the Company's operations to date.

Seasonality and Quarterly Results

The Company's sales fluctuate seasonally.   Historically, the Company's  highest
sales and  earnings  occur in  the  second and  third  quarters.   In  addition,
quarterly results  are affected  by the  timing of  the opening  and closing  of
stores. Therefore, quarterly results cannot be used to indicate the results  for
the entire year.














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Forward-Looking Statements

Statements in this quarterly report, including those contained in the  foregoing
discussion  and  other  items  herein  concerning  the  Company  which  are  (a)
projections of revenues, costs, capital  expenditures or other financial  items,
(b) statements of plans and objectives for future operations, (c) statements  of
future economic  performance,  or (d)  statements  of assumptions  or  estimates
underlying or supporting the foregoing are forward-looking statements within the
meaning of Section  27A of the  Securities Act of  1933 and Section  21E of  the
Securities Act of 1934.  The ultimate accuracy of forward-looking statements  is
subject to a  wide range  of business risks  and changes  in circumstances,  and
actual results  and outcomes  often differ  from expectations.   Any  number  of
important factors could cause actual results to differ materially from those  in
the forward-looking statements herein, including the following:  the timing  and
extent of changes in prices; actions of our customers and competitors; state and
federal environmental, economic, safety and other policies and regulations,  any
changes therein, and any legal or regulatory delays or other factors beyond  the
Company's control;  execution of  planned capital  projects; weather  conditions
affecting the Company's operations or the areas in which the Company's  products
are marketed;  natural  disasters  affecting operations;  and  adverse  rulings,
judgments, or settlements in  litigations or other legal  matters.  The  Company
undertakes no obligation to publicly release the result of any revisions to  any
such  forward-looking  statements  that  may  be  made  to  reflect  events   or
circumstances  after  the  date   hereof  or  to   reflect  the  occurrence   of
unanticipated events.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

The Company has filed the following exhibits with this report:

    27.   Financial Data Schedules

No reports on Form 8-K were filed during the period covered by this report.























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Signature

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.


Dated:  May 18, 1999     Taco Cabana, Inc.




                         /s/David G. Lloyd

                         David G. Lloyd
                         Senior Vice President, Chief
                         Financial Officer,
                         Secretary and Treasurer




                         Signing on behalf of the registrant
                         and as the principal financial and
                         accounting officer
































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