UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

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

MAIN STREET RESTAURANT GROUP, INC.

(Exact name of registrant as specified in its charter)

(602) 852-9000

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.001 par value

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  ý  No  o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ý

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes  o  No  ý

At June 28, 2004, the last business day of the registrant’s second fiscal quarter, there were outstanding 14,642,000 shares of the registrant’s common stock, $.001 par value.  The aggregate market value of common stock held by nonaffiliates of the registrant (8,414,237 shares) based on the last reported sale price of the common stock as reported on the Nasdaq National Market on June 28, 2004, ($2.05 per share) was $17,249,186.  For purposes of this computation, all officers, directors, and 10% beneficial owners of the registrant are deemed to be affiliates.  Such determination should not be deemed an admission that such officers, directors, or 10% beneficial owners are, in fact, affiliates of the registrant.

Documents incorporated by reference: Portions of the registrant’s Proxy Statement for the 2005 Annual Meeting of Stockholders are incorporated by reference into Part III.

MAIN STREET RESTAURANT GROUP, INC.

ANNUAL REPORT ON FORM 10-K

FISCAL YEAR ENDED DECEMBER 27, 2004

TABLE OF CONTENTS

Statement Regarding Forward-Looking Statements

The statements contained in this Report on Form 10-K that are not purely historical are forward-looking statements within the meaning of applicable securities laws.  Forward-looking statements include statements regarding our “expectations,” “anticipation,” “intentions,” “beliefs,” or “strategies” regarding the future.  Forward-looking statements also include statements regarding revenue, margins, expenses, asset impairment charges, and earnings analysis for fiscal 2005 and thereafter; future restaurant operations and new restaurant acquisitions or development or dispositions; the restaurant industry outlook in general; and liquidity and anticipated cash needs and availability.  All forward-looking statements included in this Report are based on information available to us as of the filing date of this Report, and we assume no obligation to update any such forward-looking statements.  Our actual results could differ materially from the forward-looking statements in this Report.  A variety of factors could cause our actual results to differ materially from the forward-looking statements, including the factors discussed in Item 1, “Business – Special Considerations.”

PART I

ITEM 1.     BUSINESS

General Overview

We are the world’s largest franchisee of TGI Friday’s restaurants, currently owning 52 TGI Friday’s restaurants.  In addition, we own and operate 13 Bamboo Club “Asian Bistro” restaurants. We also own four Redfish Seafood Grill and Bar restaurants and operate an Alice Cooper’stown restaurant in Cleveland, Ohio, pursuant to a license agreement with Celebrity Restaurants, L.L.C., the owner of the exclusive rights to operate Alice Cooper’stown restaurants. Our sales in 2004 were approximately $224 million, and we operate in 14 states.

TGI Friday’s restaurants are full-service, casual dining establishments featuring a wide selection of freshly prepared, popular foods and beverages served by well-trained, friendly employees in relaxed settings.  Bamboo Club “Asian Bistro” restaurants are full-service, casual plus restaurants that feature an extensive and diverse menu of innovative and tantalizing Pacific Rim cuisine.  Redfish Seafood Grill and Bar restaurants are full-service, casual dining restaurants that feature a broad selection of New Orleans style fresh seafood, Creole and seafood cuisine, and traditional southern dishes, as well as a “Voodoo” style lounge, all under one roof.  Alice Cooper’stown restaurants are rock and roll and sports themed and feature a connection to the music celebrity Alice Cooper.

We own the exclusive rights to develop additional TGI Friday’s restaurants in Southern California, Nevada, Arizona, New Mexico, and El Paso, Texas and own TGI Friday’s restaurants in the metropolitan areas of Kansas City, Kansas, and Kansas City, Missouri. We own the Bamboo Club and Redfish brands.  Our strategy is to:

•                  Capitalize on the brand-name recognition and goodwill associated with TGI Friday’s restaurants;

•                  Expand our restaurant operations through:

•                  the development of an additional 16 TGI Friday’s restaurants by 2009 in our existing development territories,

•                  the limited development of additional Bamboo Club restaurants in certain key markets in  the United States when our development capital allows, and

•                  the possible acquisition or development of restaurants operating under other restaurant concepts; and

•                  Improve our profitability by continuing to enhance the dining experience of our guests and improving operating efficiency at all of our restaurant brands;

•                  Reduce our long-term debt; and

•                  Sell non-core assets or restaurants in non-core markets.

We may explore opportunities to franchise Bamboo Club and Redfish concepts to third parties in the future.

We were incorporated in December 1988.  On July 15, 2004, we changed our name from Main Street and Main Incorporated to Main Street Restaurant Group, Inc. We maintain our principal executive offices at 5050 North 40th Street, Suite 200, Phoenix, Arizona 85018, and our telephone number is (602) 852-9000.  Our website is located at www.mainandmain.com. Through our website, we make available free of charge our annual report on Form 10-K, our quarterly reports on Form 10-Q, our current reports on

1

Form 8-K, our proxy statements, and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.  These reports are available as soon as reasonably practicable after we electronically file those reports with the Securities and Exchange Commission.  We also post on our website the charters of our Audit Committee, Compensation Committee, and Nominations and Governance Committee; our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and Code of Ethics for the CEO and Senior Financial Officers, and any amendments or waivers thereto; and any other corporate governance materials contemplated by SEC or NASDAQ regulations.  These documents are also available in print to any stockholder requesting a copy from our corporate secretary at our principal executive offices.  As used in this Report, the terms “we,” “our,” “us,” the  “Company”, our company, and “Main Street” refers to Main Street Restaurant Group, Inc. and its subsidiaries and operating divisions.

Operations

The TGI Friday’s Concept

The TGI Friday’s concept is franchised by TGI Friday’s Inc., a wholly owned subsidiary of Carlson Restaurants Worldwide, Inc., a wholly owned subsidiary of Carlson Companies Inc., which is a diversified company with business interests in the restaurant and hospitality industries.  The first TGI Friday’s restaurant was opened in 1965 in New York City.  TGI Friday’s Inc. and its predecessors have conducted a business since 1972 that is substantially similar to the business currently conducted by its franchisees.  As of December 27, 2004, TGI Friday’s Inc., had 267 franchisor-operated and 492 franchised TGI Friday’s restaurants operating worldwide.  On December 27, 2004, TGI Friday’s Inc. owned 53,016 shares, or approximately 0.036%, of our outstanding common stock.  Holders of our common stock do not have any financial interest in TGI Friday’s Inc., and TGI Friday’s Inc. has no responsibility for the contents of this report.

TGI Friday’s restaurants are full-service, casual dining establishments featuring a wide selection of high-quality, freshly prepared popular foods and beverages, including a number of innovative and distinctive menu items, such as menu items featuring “Jack Daniel’s” sauces.    The restaurants feature quick, efficient, and friendly table service designed to minimize customer-waiting time and facilitate table turnover.

 Our restaurants generally are open seven days a week between the hours of approximately 11:00 a.m. and 1:00 a.m.  We have three locations that have curbside service in Chandler, Arizona, our Desert Ridge location (North Phoenix, Arizona), and Ontario, California. We believe that the design and operational consistency of all TGI Friday’s restaurants enable us to benefit significantly from the name recognition and goodwill associated with TGI Friday’s restaurants.

The TGI Friday’s System

TGI Friday’s restaurants are developed and operated pursuant to a specified system.  TGI Friday’s Inc. maintains detailed standards, specifications, procedures, and operating policies to facilitate the success and consistency of all TGI Friday’s restaurants.  To ensure that the highest degree of quality and service is maintained, each franchisee of TGI Friday’s Inc., including our company, must operate each TGI Friday’s restaurant in strict conformity with these methods, standards, and specifications.  The TGI Friday’s system includes:

•                  distinctive exterior and interior design, decor, color scheme, and furnishings;

•                  uniform specifications, procedures for operations, formal training, and standardized menus featuring special recipes and menu items;

2

•                  advertising and promotional programs;

•                  requirements for quality and uniformity of products and services offered; and

•                  requirements that franchisees purchase or lease from approved suppliers equipment, fixtures, furnishings, signs, inventory, recorded music, ingredients, and other products and materials that conform with the standards and specifications of TGI Friday’s Inc.

The TGI Friday’s system is identified by means of certain trade names, service marks, trademarks, logos, and emblems, including the marks TGI Friday’s® and Friday’s®.  We believe the support as well as the standards, specifications, and operating procedures of TGI Friday’s Inc. are important elements to our restaurant operations.  Our policy is to execute these specifications, procedures, and policies to the highest level of standards of TGI Friday’s Inc.

Menu

We attempt to capitalize on the innovative and distinctive menu items that have been an important attribute of TGI Friday’s restaurants.  The menu consists of more than 85 food items, including the following:

•                  appetizers, such as buffalo wings, stuffed potato skins, quesadillas, spinach dip, cheese sticks, and pot stickers;

•                  a variety of soups, salads, sandwiches, burgers, and pasta;

•                  southwestern, oriental, and American specialty items;

•                  beef, seafood, and chicken entrees, including Jack Daniel’s®, grill items;

•                  a series of appetizers and entrees that are Atkins approved and low in carbohydrates;

•                  a children’s menu; and

•                  desserts.

Beverages include a full bar featuring wines, beers, classic and specialty cocktails, after dinner drinks, soft drinks, milk, milk shakes, malts, hot chocolate, coffee, tea, frozen fruit drinks known as Friday’s Smoothies™, and sparkling fruit juice combinations known as Friday’s Flings®.

Menu prices range from $9 to $20 for beef, chicken, and seafood entrees; $9 to $13 for pasta and oriental and southwestern specialty items; $4 to $9 for salads, sandwiches, and burgers; and $6 to $13 for appetizers and soups.  Each restaurant offers a separate children’s menu with food entrees ranging from $2 to $3.  Alcoholic beverage sales currently account for approximately 25% of total revenue.

Restaurant Layout

Each of our TGI Friday’s restaurants is similar in terms of exterior and interior design.  Each restaurant features a distinctive decor accented by red-and-white striped awnings, brass railings, stained glass, and eclectic memorabilia.  Each restaurant has interior dining areas and bar seating. In 2004, TGI Friday’s rolled out an updated design prototype that modified the exterior and interior designs for TGI Friday’s restaurants. The updated designs provide a more modern look to the TGI Friday’s concept. We plan to use this new design in all of our new restaurant construction and for all of our remodels. TGI Friday’s Inc. has indicated that it will mandate future remodel requirements for all TGI Friday’s restaurants to incorporate these new design features.

Most of our TGI Friday’s restaurants are located in free-standing buildings.  These restaurants normally contain between 5,500 and 9,000 square feet of space and average approximately 7,000 square

3

feet.  Most of our restaurants developed since 2001, however, contain 6,400 to 6,800 square feet of space.  Our TGI Friday’s restaurants contain an average of 60 dining tables, seating an average of 210 guests, and a bar area seating an average of approximately 30 additional guests.

Construction Economics

We estimate that our total cost of opening a new TGI Friday’s restaurant currently ranges from $2,475,000 to $2,825,000, exclusive of annual operating expenses and assuming that we obtain the underlying real estate under a lease arrangement.  These costs include approximately (a) $1,650,000 to $2,000,000 for building, improvements, and permits, including liquor licenses, (b) $600,000 for furniture, fixtures, and equipment, (c) $175,000 in pre-opening expenses, including hiring expenses, wages for managers and hourly employees, and supplies, and (d) $50,000 for the initial franchise fee.  Actual costs, however, may vary significantly depending upon a variety of factors, including the site and size of the restaurant and conditions in the local real estate and employment markets.

The Bamboo Club “Asian Bistro” Concept

Bamboo Club “Asian Bistro” restaurants are full-service, casual plus restaurants that feature an extensive and diverse menu of innovative and tantalizing Pacific Rim cuisine.  Bamboo Club restaurants use fresh ingredients and premium herbs and spices in creative combinations to serve high-quality food and beverages that deliver a unique combination of delicious taste, eye-appealing color, appetizing aroma, and delightful texture.  The Bamboo Club concept has been designed to deliver a consistent and enjoyable dining experience to each guest in an elegant, casual/plus atmosphere.  The restaurants feature a modern décor that provides a dramatic yet comfortable impression, with food and beverages prepared and served by a highly trained and skilled staff.

Bamboo Club restaurants are open for lunch and dinner, with hours from 11:00 a.m. to 11:00 p.m. Monday through Thursday, 11:00 a.m. to midnight on Friday and Saturday, and 11:00 a.m. to 10:00 p.m. on Sunday.  The kitchen remains open until 11:00 p.m. Monday through Thursday, until midnight on Friday and Saturday to accommodate guests who prefer to dine late, and until 10:00 p.m. on Sunday.  Bamboo Club restaurants take reservations and can serve large parties or groups.

Menu

Bamboo Club restaurants feature a menu of more than 60 items inspired by the diverse and exotic cuisines found in locations such as Bangkok, Canton, Singapore, Seoul, Hong Kong, Indonesia, Hawaii, Saigon, Thailand, Japan and other Pacific Rim cities and provinces.  Each Bamboo Club restaurant also features a full-service bar that serves a variety of popular drinks and liquors, such as martinis and tropical drinks, as well as traditional mixed beverages, fine wines, and a wide selection of popular Asian and domestic beers.

Menu prices range from $8 to $10 for salads; $3 to $12 for appetizers; and $9 to $19 for entrees. Alcoholic beverage sales account for approximately 23% of total revenue.  Take-out orders represent approximately 4%-5% of total revenue.  In addition, sales through a third-party delivery service in Phoenix, Arizona, represent approximately 5% of total Phoenix revenue.

Restaurant Layout

Bamboo Club restaurants have been designed to create a dramatic impression in an atmosphere that is both spacious and intimate.  The restaurants’ décor features artful lighting, dramatic murals, an eclectic mix of background music, and a general color theme of black, copper, and bamboo to create a “hip,” exotic feeling of warmth and color.

4

The restaurants also feature an “exhibition kitchen” adjacent to the seating area, where diners can watch highly skilled wok chefs prepare the restaurants’ appetizers and entrees.  Most dishes are prepared and served within five to ten minutes from the time when the order is placed.

The 13 Bamboo Club restaurants are located in high-traffic retail shopping environments.  Each restaurant contains approximately 6,600 square feet of space in leased facilities, excluding patio areas.  Each of these restaurants features indoor seating and bar area seating for a total of approximately 240 guests, which does not include outdoor patio seating at some locations.

Bamboo Club “Asian Bistro” restaurants have developed an extensive program to train and motivate restaurant employees.  The Bamboo Club serving staff is professional, friendly, highly skilled, and knowledgeable about the restaurant’s cuisine and menu selections.  Servers are trained to make suggestions or recommendations for new or different menu items or combinations that patrons might try, which helps each guest to enjoy a memorable dining experience.

We originally acquired two operating Bamboo Club restaurants in Phoenix and Scottsdale, Arizona, and since have opened a total of 11 Bamboo Club restaurants, one each in Wellington, Tampa, and Aventura, Florida; one each in Tempe, Tucson, and Desert Ridge (North Phoenix), Arizona; one in Newport, Kentucky; one in King of Prussia, Pennsylvania; one in Novi (Detroit), Michigan; one in Raleigh/Durham, North Carolina; and one which opened in 2004, in Fairfax, Virginia.

Construction Economics

After opening 11 mall-based Bamboo Club restaurants, our total cost of opening a new mall-based location ranges between $1,350,000 and $2,150,000, exclusive of annual operating expenses.  These costs include approximately (a) $600,000 to $1,300,000, net of a reduction for landlord’s contribution, for building improvements and permits, including liquor licenses, (b) $600,000 to $650,000 for furniture, fixtures, and equipment, and (c) $150,000 to $200,000 in pre-opening expenses, including hiring expenses, wages for managers and hourly employees, and supplies.   Our total cost of opening our first free-standing Bamboo Club was approximately $3,000,000, exclusive of annual operating expenses. These costs included approximately (a) $2,250,000 for building improvements and permits, including liquor licenses, (b) $610,000 for furniture, fixtures, and equipment, and (c) $140,000 in pre-opening expenses, including hiring expenses, wages for managers and hourly employees, and supplies. These costs were affected by the following factors: (i) this was our first free-standing unit and therefore we had increased design and architects fees, (ii) the site has a balcony for seating, (iii) pre-opening expenses were reduced by virtue of the location being in Phoenix where our company is headquartered, and (iv) delay related costs associated with the construction of this project.

Our Redfish Seafood Grill and Bar Restaurants

Redfish Seafood Grill and Bar restaurants are full-service, casual dining restaurants that feature a broad selection of seafood, steaks, and French Quarter cuisine.  Our four restaurants offer unique, freshly prepared food that is served quickly and efficiently in a fun-filled New Orleans atmosphere.  Each Redfish restaurant’s Voodoo lounge features a unique atmosphere decorated with an eclectic collection of authentic New Orleans artifacts, signs, and antiques.  Some locations have local bands and, occasionally, national touring acts present live rhythm and blues music on weekends.  Redfish restaurants are open for lunch and dinner seven days a week. Hours of operation are usually from 11:00 a.m. until midnight Monday through Thursday and 11:00 a.m. until 1:00 a.m. on weekends.

Menu

We have developed a menu of more than 65 items for our Redfish restaurants.  Signature dishes include blackened redfish, Bourbon Street jambalaya, crab stuffed salmon, and shrimp brochette.  The

5

menu also features a selection of appetizers, including Looziana egg rolls, Maryland-style crab cakes, Captain Morgan® ribs and chicken, and crab and artichoke dip.  Our Redfish menu also features a variety of fresh seafood, steaks, ribs, pastas, fresh seasonal salads, sandwiches, and tempting desserts, such as bananas foster, chocolate bread pudding, and our signature key lime pie.  The spacious Voodoo lounge offers a wide selection of the finest beers on tap, a full wine list, and an extensive specialty drink list.

Menu prices range from $7 to $20 for an entrée and $5 to $10 for salads and appetizers.  Alcohol sales currently account for approximately 36% of total revenue.

Restaurant Layout

We developed the Redfish restaurant layout to provide a refined southern roadhouse atmosphere.  Each of our Redfish restaurants is decorated with nostalgic mementos of the South, together with decorative elements that are derived from the individual restaurant’s locale.  The décor generally creates a tribute to the legends of American music that created the blues, as well as to the regions that developed the classic Creole, Cajun, and American cuisine served in our Redfish restaurants.

Most of our Redfish restaurants are located in high-traffic urban office environments.  These restaurants contain between 6,000 and 7,300 square feet of space and average approximately 7,000 square feet.  Our Redfish restaurants contain an average of 60 dining tables, seating an average of 250 guests, and a bar area seating an average of approximately 25 additional guests.  We have developed a prototype for use in developing Redfish restaurants in the future.  We constructed two restaurants using this prototype in Scottsdale and Chandler, Arizona. We developed this prototype in order to standardize the construction process and to reduce costs. However, we do not currently plan to build any new Redfish restaurants in the foreseeable future.

Construction Economics

We estimate that our total cost of opening a new Redfish restaurant currently ranges from $2,400,000 to $2,600,000, exclusive of annual operating expenses and assuming that we obtain the underlying real estate under a lease arrangement.  These costs include approximately (a) $1,650,000 to $1,850,000 for building, improvements, and permits, including liquor licenses, (b) $600,000 for furniture, fixtures, and equipment, and (c) $150,000 in pre-opening expenses, including hiring expenses, wages for managers and hourly employees, and supplies.  Actual costs, however, may vary significantly depending upon a variety of factors, including the site and size of the restaurant and conditions in the local real estate and employment markets.

Our Alice Cooper’stown Restaurant

The Alice Cooper’stown concept was developed by Celebrity Restaurants, L.L.C. and is rock and roll and sports themed, featuring a connection to Alice Cooper. We own no interest in Celebrity Restaurants, L.L.C., and it owns no interest in us. Celebrity Restaurants operates one Alice Cooper’stown restaurant, which opened in December 1998 in Phoenix, Arizona.  Our Alice Cooper’stown restaurant opened in April 2002 in a location formerly occupied by a Redfish Seafood Grill and Bar restaurant in Cleveland, Ohio. The Cleveland location’s proximity to Jacobs Field, the home of the Cleveland Indians, and the fact that Cleveland is the home of the Rock and Roll Hall of Fame, resulted in our decision to convert the location into an Alice Cooper’stown. Our Alice Cooper’stown restaurant is a full-service, casual dining establishment featuring a wide selection of high-quality, freshly prepared popular foods and beverages, including a number of innovative and distinctive menu items, such as menu items that are sports and rock and roll themed.  In addition, the restaurant sells sports and rock and roll memorabilia. The restaurant features quick, efficient, and friendly table service designed to minimize customer-waiting time and facilitate table turnover.  Our Alice Cooper’stown restaurant benefits significantly from the

6

name recognition of Alice Cooper and the proximity to Jacobs Field, the home of the Cleveland Indians, and the Rock and Roll Hall of Fame.

Menu

Our menu in Cleveland includes salads and sandwiches, pizzas and burgers, and tempting appetizers and desserts.

Menu prices range from $4 to $9 for appetizers and desserts, $5 to $18 for entrées, and $6 to $11 for pizzas and burgers.

Restaurant Layout and Staffing

Our Alice Cooper’stown restaurant was designed to feature a rock and roll and sports theme, featuring the connection to rock and roll legend Alice Cooper. The general décor is rock and roll and sports memorabilia. The logo reads “Where Rock and Roll and Sports Collide”. The restaurant features a video wall in the bar and a large screen video in the dining room. In keeping with its sports bar theme, there are more than 35 TV screens in the restaurant. Some of our former Cleveland Redfish staff, including management personnel, are involved in the operation of this restaurant.

Construction Economics

Our construction costs to convert this location were approximately $400,000, and pre-opening expenses were approximately $191,000.

Future Site Selection All Concepts

When evaluating whether and where to seek expansion of our restaurant operations, we analyze a restaurant’s profit potential.  We consider the location of a restaurant to be one of the most critical elements of the restaurant’s long-term success.  Accordingly, we expend significant time and effort in investigating and evaluating potential restaurant sites.  In conducting the site selection process, we obtain and examine detailed demographic information, such as population characteristics, density, and household income levels; evaluate site characteristics, such as visibility, accessibility, and traffic volume; consider the proposed restaurant’s proximity to demand generators, such as shopping malls, lodging, and office complexes; and analyze potential competition.  Our senior corporate management evaluates and approves each restaurant site for all of our brands prior to acquisition after extensive consultation with all levels of our operations group.  TGI Friday’s Inc. provides site selection guidelines and criteria as well as site selection counseling and assistance for our TGI Friday’s restaurant sites.  We also must obtain TGI Friday’s Inc.’s consent before we enter into definitive agreements for a TGI Friday’s restaurant site.

We have entered into an exclusive, renewable one-year brokerage agreement with Staubach Retail Services-West, LLC, a nationally known commercial brokerage company, to provide us with real estate and site selection consulting services. The individual who managed our account left Staubach and became associated with a commercial brokerage company headquartered in Phoenix, Arizona.  However,  this individual will continue to manage our account through Staubach.

7

2004 Restaurant Openings and Closures

During 2004, we opened one Bamboo Club “Asian Bistro” restaurant, in Fairfax, Virginia. We did not open any new TGI Friday’s restaurants in 2004. Also during 2004, we elected not to exercise lease renewal options in Salinas and Oakland, California and closed our TGI Friday’s restaurants located in those areas.

2004 Restaurant Openings and Closures

* Subsequent to the year ended December 27, 2004, we completed negotiations and entered into an agreement with the landlord of the Bamboo Club in Aventura, Florida to terminate the lease and close this restaurant on February 24, 2005.  Additionally, we completed negotiations and entered into an agreement with the landlord of the Bamboo Club in Newport, Kentucky to terminate the lease and close this restaurant on May 31, 2005.

Current Restaurants

The following table sets forth information relating to each restaurant we owned as of March 1, 2005.

8

9

Restaurants by State

10

Restaurant Operations

TGI Friday’s, Bamboo Club, Redfish, and Alice Cooper’stown Operations

Once a restaurant is integrated into our operations, we provide a variety of corporate services to assure the operational success of the restaurant. Our executive management continually monitors restaurant operations, inspects individual restaurants to assure the quality of products and services and the maintenance of facilities, institutes procedures to enhance efficiency and reduce costs, and provides centralized support systems.

We also maintain quality assurance procedures designed to assure compliance with the high quality of products and services mandated by our company and, for our TGI Friday’s restaurants, by TGI Friday’s Inc. We respond to and investigate inquiries and complaints, initiate on-site resolution of deficiencies, and consult with each restaurant’s staff to assure that proper action is taken to correct any deficiency.  Our personnel, and the third-party quality assurance professionals that we occasionally retain, make unannounced visits to restaurants to evaluate the facilities, products, and services.  We believe that our quality review program and executive oversight enhance restaurant operations, reduce operating costs, improve customer satisfaction, and facilitate the highest level of compliance with the TGI Friday’s system.

We maintain a zero tolerance policy for discrimination of any type towards both our employees and customers and, to this end, constantly enforce this policy through our training of new employees, our policy and training manuals, and periodic re-enforcement programs.

Restaurant Management

Our TGI Friday’s regional and restaurant management personnel are responsible for complying with TGI Friday’s Inc.’s and our operational standards.  Our Executive Vice President of Operations is responsible for the operation of all of our brands.  In our TGI Friday’s and Redfish divisions, assisting our Executive Vice President, we have a Vice President of Operations for TGI Friday’s and Redfish restaurants. Assisting this position we have two Senior Regional Managers and four Regional Managers, who are each responsible for between eight and 11 of our restaurants within their region.  We have one Director of Operations who is responsible for the Alice Cooper’stown restaurant. This individual has signed an agreement wherein he purchased a net profit participation in this operation equal to 20% of a defined level of profits over a certain earnings before interest, taxes, depreciation, and amortization (EBITDA) as defined.

We have a Director of Operations and two Regional Managers for the Bamboo Club “Asian Bistro” restaurants, one responsible for six restaurants and one responsible for seven restaurants in the manager’s territory, who report to the Director of Operations for Bamboo Club restaurants, who in turn reports to the Executive Vice President of Operations.

The Executive Vice President of Operations reports to our CEO and President, who has the ultimate responsibility for our TGI Friday’s, Redfish, Bamboo Club, and Alice Cooper’stown operations.

Restaurant managers are responsible for day-to-day restaurant operations, including customer relations, food preparation and service, cost control, restaurant maintenance, and personnel relations.  We typically staff our restaurants with an on-site general manager, two or three assistant managers, and a kitchen manager. Our TGI Friday’s restaurants average between 80 and 90 hourly employees.  Our Redfish restaurants average approximately 65 hourly employees and our Bamboo Club restaurants average approximately 72 hourly employees. Our Alice Cooper’stown restaurant averages 50 hourly employees. We support these operational personnel with personnel involved in financial planning, research and development, and training.

11

We have established a program of appointing multi-location senior general managers in geographic areas having locations close enough to each other to support this concept.  We currently have seven multi-location senior general managers. In addition to improving efficiency, this program allows us to promote and compensate key general managers and create a position that improves our ability to retain key employees in our company.

Recruitment and Training

We attempt to hire employees who are committed to the standards maintained by our company and, for our TGI Friday’s restaurants, by TGI Friday’s Inc.  We also believe that our high unit sales volume, the image and atmosphere of the TGI Friday’s, Bamboo Club, Redfish, and Alice Cooper’stown concepts, and our career advancement and employee benefit programs enable us to attract high quality management and restaurant personnel.

Our TGI Friday’s restaurant personnel participate in continuing training programs maintained by TGI Friday’s Inc. and our company.  In addition, we supplement those programs by hiring personnel devoted solely to employee training.  Each TGI Friday’s restaurant general and assistant manager completes a formal training program conducted by our company.  This program provides our TGI Friday’s restaurant managers 14 weeks of training.  The training covers all aspects of management philosophy and overall restaurant operations, including supervisory skills, operating and performance standards, accounting procedures, and employee selection and training necessary for restaurant operations. We employ personnel who are involved exclusively in training for both initial new store openings and continued re-training.

Our Bamboo Club and Redfish restaurant managers and personnel participate in extensive training programs consistent with our operating standards.  Many of our Redfish restaurant managers are experienced TGI Friday’s managers who have accepted positions in our Redfish operations.  We have implemented all of our policies and training programs in order to operate the Alice Cooper’stown restaurant with the same high standards we have established for our other brands.

Maintenance and Improvement of Restaurants

We maintain our restaurants and all associated fixtures, furnishings, and equipment in conformity with the TGI Friday’s system or standards we have developed for our Bamboo Club and Redfish restaurants.  We also make necessary additions, alterations, repairs, and replacements to our TGI Friday’s restaurants as required by TGI Friday’s Inc., including periodic repainting or replacement of obsolete signs, furnishings, equipment, and decor.  We are required, subject to certain limitations, to modernize our restaurants to the now current standards and specifications reflected in its new prototype design of TGI Friday’s Inc.  In the past few years, we have developed a plan that we refer to as a “pop out” in four of our existing TGI Friday’s restaurants that expands the restaurants by approximately 950 to 1,200 square feet. In 2004, we completed a major renovation in our San Diego (Mission Valley), California, and commenced a renovation in our Palm Desert, California TGI Friday’s restaurants and will complete additional renovations in 2005.

We have developed plans to construct improvements for some of our TGI Friday’s locations to develop a take-out program, which program could be used in the future with our other brands.

 We are developing a standard prototype that we plan to use on future Bamboo Club restaurants.  Our Desert Ridge (Phoenix, AZ) location was our first fully free-standing Bamboo Club restaurant.

12

Information Systems

We have devoted considerable resources to develop and implement management information systems that improve the quality and flow of information throughout our company.  We use five to seven touch-screen computer registers (point of sale terminals) located conveniently throughout each of our restaurants.  Servers enter guest orders by touching the appropriate sections of the register’s computer screen, which transfers the information electronically to the kitchen and bar for preparation.  These registers also are connected to a computer in the restaurant office and to our corporate information system by frame relay.  Management receives detailed comparative reports on each restaurant’s sales and expense performance daily, weekly, and monthly.

  During 2004, we completed the installation of the Aloha Technologies Point of Sales System (POS) and back office systems at all of our restaurants and implemented a new Human Resources and Payroll system using the Lawson ERP system.  Our conversion to the new ERP system for our financial modules (including general ledger, accounts payable, and fixed assets) began in late 2004. We anticipate the ERP implementation will be completed by the middle of 2005. Hosting and support of the new corporate ERP system has been outsourced to netASPx, Inc.

We are in the process of converting the data connection of our restaurants from a frame-relay technology to an Internet-based technology allowing us, among other things, to have a more stream-lined technology communication process including more productive bandwidth and higher speed capacity.  We expect this will more than double the speed of our up and down path of information, enabling more efficient support, quicker communication, faster email access, less down time, and an overall savings as it relates to less time our restaurant managers spend “in the office”.  We recently completed our test phase and are currently in the process of rolling out this new technology to all restaurants.  We expect this project to be completed by the end of our second quarter 2005.

We believe that our management information systems enable us to increase the speed and accuracy of order taking and pricing, better assist guest preferences, efficiently schedule labor to better serve guests, quickly and accurately monitor food and labor costs, assist in product purchasing and product movement analysis, to promptly access financial and operating data, and improve the accuracy and efficiency of store-level information and reporting.

Supply, Purchasing, and Distribution

We purchase or lease, on a short-term basis, all fixtures, furnishings, equipment, signs, recorded music, food products, supplies, inventory, and other products and materials required for the development and operation of our TGI Friday’s restaurants from suppliers approved by TGI Friday’s Inc. In order to be approved as a supplier, a prospective supplier must demonstrate to the reasonable satisfaction of TGI Friday’s Inc. its ability to meet the then-current standards and specifications of TGI Friday’s Inc. for such items, possess adequate quality controls, and have the capacity to provide supplies promptly and reliably.  We are not required to purchase supplies from any specified suppliers, but the purchase or lease of any items from an unapproved supplier requires the prior approval of TGI Friday’s Inc.

TGI Friday’s Inc. maintains a list of approved suppliers and a set of the TGI Friday’s system standards and specifications.  TGI Friday’s Inc. receives no commissions on direct sales to its franchisees, but may receive rebates and promotional discounts from manufacturers and suppliers, some of which are passed on proportionately to our company.  TGI Friday’s Inc. is an approved supplier of various kitchen equipment and store fixtures, decorative memorabilia, and various paper goods, such as menus and in-store advertising materials and items.  We are not, however, required to purchase such items from TGI Friday’s Inc.  If we elect to purchase such items from TGI Friday’s Inc., TGI Friday’s Inc. may derive revenue as a result of such purchases.

13

We have an agreement with U.S. Foodservice, a national food distribution service company, to serve substantially all of our TGI Friday’s restaurants in California, Arizona, and Nevada and for all of our Bamboo Club and Redfish restaurants. We have an agreement with Performance Food Group in Missouri, Kansas, and New Mexico for all of our TGI Friday’s restaurants located in those states.  Orders are sent electronically to the supplier.  Our suppliers have comprehensive warehouse and delivery outlets servicing each of our markets. We believe that our purchases from our primary suppliers enable us to maintain a high level of quality, achieve dependability in the receipt of our supplies, avoid the costs of maintaining a large purchasing department, and attain cost advantages as the result of volume purchases. We believe, however, that all essential products are available from other national suppliers as well as from local suppliers in the cities in which our restaurants are located in the event we determine to purchase our supplies from other suppliers.

Advertising and Marketing

TGI Friday’s Restaurants

We participate in the national marketing and advertising programs conducted by TGI Friday’s Inc.  The programs use network and cable television and national publications and feature new menu innovations and various promotional programs.  In addition, from time to time, we supplement the marketing and advertising programs conducted by TGI Friday’s Inc. through local radio, newspaper, and magazine advertising media and sponsorship of community events.  In conjunction with TGI Friday’s Inc., we maintain a “frequent diner” program that includes awards of food, merchandise, and travel to frequent diners based upon points accumulated through purchases.

As a franchisee of TGI Friday’s Inc., we are able to utilize the trade names, service marks, trademarks, emblems, and indicia of origin of TGI Friday’s Inc., including the marks TGI Friday’s® and Friday’s®.  We advertise in various media utilizing these marks to attract new customers to our restaurants.

Each franchise agreement also requires us to spend at least 4% of gross sales on local marketing and to contribute to a national marketing pool which is administered by TGI Friday’s Inc.  The national marketing pool funds are used to develop national advertising campaigns (creative material) and buy national, spot, and local advertising.  All funds contributed to the national advertising fund are credited against the local advertising requirement.  TGI Friday’s Inc. required us, as well as all other franchisees, to contribute to a marketing fund. The marketing fund contributions were 2.7%, 3.25%, and 3.5% in 2002, 2003, and 2004 respectively.  TGI Friday’s Inc. has increased the marketing fund contributions to 4.0% for 2005.  Marketing fund contributions totaled $6,573,000 during fiscal 2004, $6,153,000 during fiscal 2003, and $5,250,000 during fiscal 2002.

Bamboo Club and Redfish Restaurants

Our in-house marketing department develops advertising and marketing programs for our Bamboo Club and Redfish restaurants.  We develop these programs with an emphasis on building awareness of the “Bamboo Club” and “Redfish” brands in the communities in which we operate Bamboo Club and Redfish restaurants and generate sales for those restaurants.  Advertising and marketing campaigns have included radio and print advertising, as well as point-of-sale marketing promotions.  We conduct a comprehensive advertising and public relations campaign in advance of each Bamboo Club and Redfish restaurant grand opening.

14

Alice Cooper’stown Restaurant

Our in-house marketing department has developed advertising and marketing programs for our Alice Cooper’stown restaurant. We will emphasize the sports and rock and roll connection and feature Alice Cooper.

Expansion of Operations

We plan to expand our restaurant operations through the development of additional TGI Friday’s restaurants in our existing development territories and the development of additional Bamboo Club restaurants in suitable locations as our financial capabilities permit. See “Liquidity and Capital Resources” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information regarding our financial condition.

Leasing Activity

The following table summarizes the leasing activity for 2004 which represents negotiated and signed leases but where the restaurant is not yet opened.  Once a restaurant is opened, the lease is removed from this table.

(a) Subsequent to December 27, 2004, we completed negotiations for termination of the lease in Columbus, Ohio, for a one time lease termination fee of $375,000, which was accrued at year end and paid in February 2005.

New Restaurant Openings in 2005

Pursuant to our development agreement with TGI Friday’s Inc. we expect to open three to four new locations in 2005. Our location in Surprise, Arizona (Northwest Phoenix area) will open in the first half of 2005 and the remaining two to three are expected to open in the second half of 2005.

We currently are considering other sites for additional restaurants, but have not entered into leases or purchase agreements for such sites.  We do not know how many sites will materialize, as that depends on a variety of factors and economic conditions.

The opening of new restaurants also may be affected by increased construction, utility, and labor costs, delays resulting from governmental regulatory approvals, strikes, or work stoppages, adverse weather conditions, and acts of God.  Newly opened restaurants may operate at a loss for a period following their opening.  The length of this period will depend upon a number of factors, including the time of year the restaurant is opened, sales volume, and operating costs.

There can be no assurance that we will be successful in achieving our expansion goals through the development or acquisition of additional restaurants or that any additional restaurants that are

15

developed or acquired will be profitable.  In addition, the opening of additional restaurants in an existing market may have the effect of drawing customers from, and reducing the sales volume of, our existing restaurants in those markets.

Restaurant Closures and Lease Terminations

Generally when we close a location due to underperformance or other reasons that management deems appropriate, our first priority is to transfer useable assets to other locations.  Other assets that are not transferable, including leasehold improvements and certain kitchen equipment, are written off at the time of closure, or when the formal decision to close or not renew the lease is made.  At the time of closure, allocated goodwill is also written off.

Development Agreements

We are a party to two development agreements entered into in early 2004 with TGI Friday’s Inc. one covering Southern California and the other covering Arizona, Nevada, and New Mexico. Our new 2004 development agreements obligate us to open at least 16 new TGI Friday’s restaurants through 2009. In the past, we were unable to meet the terms of development agreements with TGI Friday’s Inc.  In each instance, TGI Friday’s Inc. waived our non-compliance. Each development agreement grants us the right to develop additional TGI Friday’s restaurants in a specified territory and obligates us to develop additional TGI Friday’s restaurants in that territory in accordance with a specified development schedule.  We own the exclusive rights to develop additional TGI Friday’s restaurants in territories encompassing the southern portion of California, and most of the counties in the states of Arizona, Nevada, New Mexico and El Paso, Texas. We plan to develop additional TGI Friday’s restaurants in our existing development territories.

The following table sets forth information regarding our minimum requirements to open new TGI Friday’s restaurants under our current development agreements, as well as the number of existing restaurants in each of our development territories.

(1)   Consists of Southern California. Agreement expires at the end of 2009.

(2)   Consists of the states of Arizona and Nevada, and most of the state of New Mexico and El Paso, Texas.  Agreement expires at end of 2009.

(3)   Former development territory consisting of metropolitan Kansas City, Kansas and Kansas City, Missouri.  Agreement terminated in first quarter of 2004.

Each development agreement gives TGI Friday’s Inc. certain remedies in the event that we fail to comply in a timely manner with our schedule for restaurant development, if we otherwise default under the development agreement or any franchise agreement relating to a restaurant within that development territory as described above, or if our officers or directors breach the confidentiality or non-compete

16

provisions of the development agreement.  The remedies available to TGI Friday’s Inc. include (a) the termination of our exclusive right to develop restaurants in the related territory; and (b) the termination of the development agreement.  None of these remedies would adversely affect our ability to continue to operate our then-existing TGI Friday’s restaurants.

In 2004, we entered into a Development Incentive agreement with TGI Friday’s Inc. that provides royalty and development cost relief for our California operations, if certain conditions and development performances are met. The amount of such cost relief in 2004 was not material to our financial results.

TGI Friday’s Restaurant Re image and Improvement Program

TGI Friday’s Inc. has developed specific plans and prototype examples of a restaurant remodel and improvement program to enhance the restaurants and brand’s overall appeal and position in the marketplace. TGI Friday’s Inc. has required franchisees to remodel each location as soon as financially practicable.  The cost of remodeling a location can vary greatly, from $150,000 to $600,000, depending on numerous factors, including the age and state of repair of the restaurant, local construction code requirements and changes, the possibility of additional expansion of existing facilities, and compliance with such laws as the Americans with Disabilities Act.

We believe we have 50 restaurants that will require remodeling to one degree or another and have scheduled to complete three in 2005.

Franchise Agreements

We enter into or assume a separate franchise agreement with respect to each TGI Friday’s restaurant that we acquire or develop pursuant to a development agreement.  Each franchise agreement grants us an exclusive license to operate a TGI Friday’s restaurant within a designated geographic area, which generally is a three-mile radius from each restaurant, and obligates us to operate such restaurant in accordance with the requirements and specifications established by TGI Friday’s Inc. relating to food preparation and quality of service as well as general operating procedures, advertising, records maintenance, and protection of trademarks.  The franchise agreements restrict our ability to transfer our interest in our TGI Friday’s restaurants without the consent of TGI Friday’s Inc.

Each franchise agreement requires us to pay TGI Friday’s Inc. an initial franchise fee of $50,000. We currently have entered into an agreement with TGI Friday’s Inc. where we only pay $25,000 for new Southern California franchises, which agreement has a term equal to the Southern California Development Agreement.  In addition, we are obligated to pay TGI Friday’s Inc. a royalty of generally 4% of gross revenue as defined in the franchise agreement for each restaurant, although we have entered into a California Development Incentive Agreement which will reduce a portion of these fees. Royalty expense under these agreements totaled $7,172,000 during fiscal 2004, $7,510,000 during fiscal 2003, and $7,477,000 during fiscal 2002.

As previously discussed, each franchise agreement also requires us to spend at least 4% of gross sales on local marketing and to contribute to a national marketing pool that is administered by TGI Friday’s Inc.

A default under one of our franchise agreements will not constitute a default under any of our other franchise agreements.  A default under the franchise agreement for a restaurant in a development territory may, however, constitute a default under the development agreement for that development territory.

17

License Agreements

Our license agreement with Celebrity Restaurants, L.L.C., allows us to operate the Alice Cooper’stown restaurant in Cleveland, Ohio. The agreement grants us the right to use Celebrity Restaurants’ exclusive rights to Alice Cooper’s likeness and its trademarks and trade names to operate a sports and rock and roll themed restaurant featuring Alice Cooper.

 The license agreement requires us to pay Celebrity Restaurants a royalty fee in the amount of 1% of gross sales for food and beverage sales up to the amount of gross sales derived in 2001 in each location through its existing operations; 2.5% from that point to $3,500,000; and 3% over $3,500,000. For the sale of merchandise products, such as logo and memorabilia, we pay a royalty of 20% of gross sales.

 We paid approximately $28,000 during 2004, $32,000 during 2003, and $41,000 during 2002 in royalties under this license agreement.

Government Regulation

Each of our restaurants is subject to licensing and regulation by state and local departments and bureaus of alcohol control, health, sanitation, and fire and to periodic review by the state and municipal authorities for areas in which the restaurants are located.  In addition, we are subject to local land use, zoning, building, planning, and traffic ordinances and regulations in the selection and acquisition of suitable sites for constructing new restaurants.  Delays in obtaining, or denials of, or revocation or temporary suspension of, necessary licenses or approvals could have a material adverse impact on our development of restaurants.

We also are subject to regulation under the Fair Labor Standards Act, which governs such matters as working conditions and minimum wages.  An increase in the minimum wage rate or the cost of workers’ compensation insurance, both of which recently occurred in California, or changes in tip-credit provisions, employee benefit costs (including costs associated with mandated health insurance coverage), or other costs associated with employees could adversely affect our company.

In addition, we are subject to the Americans with Disabilities Act of 1990, or ADA, and similar state statutes in California.  The ADA and California statutes may require us to make certain installations in new restaurants or renovations to existing restaurants to meet federally and state mandated requirements.  To our knowledge, we are in compliance in all material respects with all applicable federal, state, and local laws affecting our business, with the exception of renovations to restaurants existing at the time of passage of the ADA and the California statutes.

Competition

The restaurant business is highly competitive with respect to price, service, food type, and quality.  In addition, restaurants compete for the availability of restaurant personnel and managers.  Our restaurants compete with a large number of other restaurants, including national and regional restaurant chains and franchised restaurant systems, many of which have greater financial resources, more experience, and longer operating histories than we possess.  We also compete with locally owned, independent restaurants.

Our casual dining business also competes with various types of food businesses, as well as other businesses, for restaurant locations.  We believe that site selection is one of the most crucial decisions required in connection with the development of restaurants.  As the result of the presence of competing restaurants in our development territories, our management devotes great attention to obtaining what we believe will be premium locations for new restaurants, although we can provide no assurance that we will be successful in these efforts.

18

Employees

We employ approximately 6,070 persons of whom approximately 60 are corporate management and staff personnel, 332 are restaurant area directors, managers, or trainees, and 5,677 are employees in non-management restaurant positions.  None of our employees are covered by a collective bargaining agreement with us.  We have never experienced a major work stoppage, strike, or labor dispute.  We consider our relations with our employees to be good.

Executive Officers

The following table sets forth certain information regarding our executive officers:

William G. (Bill) Shrader has served as our Chief Executive Officer since April 2004 and as our President and a director since June 2001. Prior to that, he was our Chief Operating Officer. Mr. Shrader served as our Executive Vice President and Chief Operating Officer from March 1999 until June 2001.   Mr. Shrader was Senior Vice President of Marketing for Tosco Marketing Company from February 1997 to March 1999.  From August 1992 to February 1997, Mr. Shrader served in several capacities at Circle K Stores, Inc., including President of the Arizona Region, President of the Petroleum Products/Services Division, Vice President of Gasoline Operations, and Vice President of Gasoline Marketing.  Mr. Shrader began his career in 1976 at The Southland Corporation and departed in 1992 as National Director of Gasoline Marketing.

Michael Garnreiter has served as our Executive Vice President, Treasurer, and Chief Financial Officer since April 2002.  Prior to joining our company, Mr. Garnreiter served as a general partner of the international accounting firm of Arthur Andersen.  Mr. Garnreiter began his career in public accounting with the Los Angeles office of Andersen in 1974 after graduating with a Bachelor of Science degree in accounting from California State University at Long Beach.  In 1986, he transferred to their Tucson, Arizona office to become its Office Managing Partner.  Mr. Garnreiter’s career as an accounting and audit partner spanned many different industries but focused on the entrepreneurial, public company.  Mr. Garnreiter is a Certified Public Accountant in California and Arizona and retired from Andersen in March 2002.

Stuart S. Gee has served as our Executive Vice President for Restaurant Operations since November 2004. Prior he was our Senior Vice President-Restaurant Operations-Bamboo Club since July 2003. Mr. Gee worked for Sam Seltzer’s Steakhouse restaurant chain as an operating partner from October 2002 to May 2003. Prior to that, Mr. Gee worked in various capacities for Brinker International-Romano’s Macaroni Grill, the last as Vice President of Operations, from March 1993 to March 2002. Mr. Gee was a general manager for Darden Restaurants-Red Lobster from March 1987 to February 1993.

Michael J. Herron has served as our General Counsel since March 2001, as our Secretary since June 2001, and as a Vice President since June 2003. Prior to joining us, Mr. Herron was actively engaged in the private practice of law in Aspen, Colorado from February 1985 until February 2001 and in Miami Beach, Florida from October 1965 to August 1984. While practicing in Florida, he served as outside General Counsel for a restaurant franchisor known as the Orange Bowl, a restaurant concept exclusively

19

located in regional shopping centers through the United States. Mr. Herron is a former President of the Miami Beach, Florida, Bar Association and was a member of the Florida Bar Association’s standing Ethics Committee.

Cynthia A. Ward has served as our Vice President-Accounting since November 2004 and as our Controller since July 2001. Prior to that, she was the Controller for Auer Precision Mfg., Inc. from August 1997 to April 2001. Ms. Ward was Controller for Knight Transportation from March 1995 to August 1997, starting as an Accounting Manager, and was an Accounting Manager for Swift Transportation from January of 1993 to March 1995. In addition, Ms. Ward worked as an auditor for the Office of Auditor General from June 1991 to January 1993. Ms. Ward holds a Bachelor of Science Degree in Accounting from Arizona State University and is a Certified Public Accountant.

Stephanie Barbini has served as our Vice President of Human Resources and Training since September 2002.  Ms. Barbini held a variety of senior level HR positions with Conoco/ Phillips from 1994 to September 2002.  During her eight-year tenure with Conoco/Phillips, she provided strategic human resource support to retail operations, corporate headquarters, petroleum refining and distribution through five separate multi-billion dollar acquisitions. Ms. Barbini holds a BA in Psychology from Oklahoma University and a Master’s in Organizational Psychology from Columbia University.

20

Risk Factors

You should carefully consider the following factors, in addition to the other information in this Report, in evaluating our company and our business.

We face risks associated with changes in general economic and political conditions that affect consumer spending.

Adverse economic conditions and any related decrease in discretionary spending by our customers have an adverse affect on our revenues and operating results. When the economy struggles, our customers may become more apprehensive about the economy and reduce their level of discretionary spending.  We believe that a decrease in discretionary spending could impact the frequency with which our customers choose to dine out or the amount they spend on meals while dining out, thereby decreasing our revenues.  Additionally, military and governmental responses to future terrorist attacks and the prospect of future wars may exacerbate the then current economic conditions, and may lead to weakening in the economy.

We depend on TGI Friday’s Inc.

Our success depends, to a significant extent, on the continued vitality of the TGI Friday’s restaurant concept and the overall success of the TGI Friday’s system. We have no control over the management or operation of TGI Friday’s Inc. or other TGI Friday’s franchisees.  A variety of factors affecting TGI Friday’s Inc. or the TGI Friday’s concept could have a material adverse effect on our business.  These factors include the following:

•                  any business reversals that TGI Friday’s Inc. may encounter;

•                  a failure by TGI Friday’s Inc. to promote the TGI Friday’s name or restaurant concept;

•                  the inability or failure of TGI Friday’s Inc. to support its franchisees, including our company;

•                  the failure to operate successfully the TGI Friday’s restaurants that TGI Friday’s Inc. itself owns; and

•                  negative publicity with respect to TGI Friday’s Inc. or the TGI Friday’s name.

The future results of the operations of our restaurants will not necessarily reflect the results achieved by TGI Friday’s Inc. or its other franchisees, but will depend upon such factors as the effectiveness of our management team, the locations and markets of our restaurants, and the operating results of those restaurants.

Our franchise agreements with TGI Friday’s Inc. require substantial payments.

Our franchise agreement with TGI Friday’s Inc. for each TGI Friday’s restaurant that we own generally requires us to pay an initial franchise fee of $50,000, although currently the fee is $25,000 in Southern California, pay royalties of generally 4% of the restaurant’s gross sales, although we have entered into a California Development Incentive Agreement which will reduce a portion of these fees, and spend up to 4% of the restaurant’s gross sales on advertising, which may include contributions to a national marketing pool administered by TGI Friday’s Inc.

TGI Friday’s Inc. requires us and its other franchisees to contribute a percentage of gross sales to the national marketing pool, which has been set at 4.0% for 2005. We must pay or accrue these amounts regardless of whether or not our restaurants are profitable.

21

If we fail to satisfy these requirements or otherwise default under the franchise agreements, we could be subject to potential damages for breach of contract and could lose our franchise rights for some or all of our TGI Friday’s restaurants.  We also could lose our rights to develop additional TGI Friday’s restaurants.

Our development agreements with TGI Friday’s Inc. require us to open additional TGI Friday’s restaurants.

Our development agreements with TGI Friday’s Inc. require us to open additional TGI Friday’s restaurants. We may not be able to secure sufficient restaurant sites that we believe are suitable or we may not be able to develop restaurants on terms and conditions that we consider favorable in order to satisfy the requirements of the development agreements.  The development agreements give TGI Friday’s Inc. certain remedies in the event that we fail to comply with the development schedule in a timely manner or if we breach the confidentiality or non-compete provisions of the development agreements.  These remedies include, under certain circumstances, the right to reduce the number of restaurants we may develop in the related development territory or to terminate our exclusive right to develop restaurants in the related development territory. In the past, we have negotiated waivers from TGI Friday’s Inc. of the obligations we have not fulfilled.  However, we can provide no assurance that we will successfully fulfill these obligations in the future or, if we do not, that we will be able to obtain waivers.

Our assets may become impaired due to changing and adverse economic conditions.

Our assets may become impaired due to changing economic conditions. When we encounter a “triggering” event, decide to close a restaurant, or perform a periodic review of our marginally performing locations (particularly in the fourth quarter of each year), we record appropriate asset impairment charges if necessary.  The amount of impairment charges and the allocation of goodwill, if any, is based upon assessments of current and future economic conditions and their estimated impact on our ability to recover our investment in long-lived assets.  Even in strong economic conditions, there can be conditions or local situations that might require the recording of asset impairment charges.  In 2004, we recorded impairment write-downs and lease termination charges of $1.4 million.  We will continue to perform periodic asset impairment tests and it is likely that we will record future asset impairment charges.

We have significant debt, and we may be unable to continue to meet debt covenants.

We have incurred significant indebtedness in connection with our growth strategy. As of December 27, 2004, we had long-term debt of approximately $46.1 million (including current portion of $3.9 million), and a working capital deficit of $19.7 million.  Our borrowings include financial covenants, which have been amended and revised from time to time, generally based on EBITDA, which limits the amount we can borrow. These debt agreements require us to measure our compliance with financial covenants each fiscal quarter.  If we fail to meet any financial covenants, our lenders could call their loans immediately.  There can be no assurance we will continue to meet these covenants in the future. Currently, the assets of all of our restaurants are pledged directly or indirectly to secure our debt obligations.

Our borrowings involve substantial interest expense.

Our borrowings will result in interest expense of approximately $4.0 million in 2005 and $3.5 million in 2006, based on currently prevailing interest rates and assuming outstanding and contemplated indebtedness is paid in accordance with the existing payment schedules without any prepayments or additional borrowings. Additionally, current interest rates are at historically low levels.  If interest rates were to increase, our interest costs would also increase, since approximately 19% of our debt, after

22

consideration of the impact of our swap agreements, is variable interest rate debt. We must make these interest payments regardless of our operating results.

We depend on a key food product distributor.

We depend on U.S. Foodservice, a national food distribution service company, to serve substantially all of our restaurants in California, Arizona, and Nevada and for all of our Bamboo Club and Redfish restaurants. U.S. Foodservice is a subsidiary of Royal Ahold, which in early 2003 announced a major financial restatement to its 2001 and earlier financial statements.  The inability of U.S. Foodservice to continue providing us with a high level of quality and dependability in the receipt of our supplies, at the cost advantages resulting from our volume purchases, could have a material impact on our business.

We believe that all essential products are available from other national suppliers as well as from local suppliers in the cities in which our restaurants are located in the event we must purchase our products from other suppliers; however, there can be no assurance that we will be able to match quality, price, or dependability of supply.

We face risks associated with the expansion of our operations.

The success of our business depends on our ability to expand the number of our restaurants, either by developing or acquiring additional restaurants.  Our success also depends on our ability to operate and manage successfully our growing operations.  Our ability to expand successfully will depend upon a number of factors, including the following:

•                  the availability and cost of suitable restaurant locations for development;

•                  the availability of restaurant acquisition opportunities;

•                  the hiring, training, and retention of additional management and restaurant personnel;

•                  the availability of adequate financing;

•                  the continued development and implementation of management information systems;

•                  competitive factors; and

•                  general economic and business conditions.

Increased construction costs and delays resulting from governmental regulatory approvals, strikes, or work stoppages, adverse weather conditions, and various acts of God may also affect the opening of new restaurants.  Newly opened restaurants may operate at a loss for a period following their initial opening.  The length of this period will depend upon a number of factors, including the time of the year the restaurant is opened, the sales volume, and our ability to control costs.

We may not successfully achieve our expansion goals.  Additional restaurants that we develop or acquire may not be profitable.  In addition, the opening of additional restaurants in an existing market may have the effect of drawing customers from and reducing the sales volume of our existing restaurants in those markets.

We will need additional capital for expansion, which may or may not be available.

We will need additional funds to develop new restaurants, including funds for construction, tenant improvements, furniture, fixtures, equipment, training of employees, permits, initial franchise fees, and other expenditures.  We have no additional borrowing capacity under our credit agreements. However, we believe our cash flows from operations in 2005 will be sufficient to fund all of our planned capital expansion, which includes opening three or four new restaurants.  However, we will require funds

23

to develop additional TGI Friday’s and Bamboo Club restaurants after 2005 and to pursue any additional restaurant development or restaurant acquisition opportunities that may arise and to comply with our required minimum restaurant openings in accordance with our development agreements with TGI Friday’s Inc.

In the future, we may seek additional equity or debt financing to provide funds so that we can develop or acquire additional restaurants and to pay down debt.  Such financing may not be available or may not be available on satisfactory terms.  If financing is not available on satisfactory terms, we may be unable to satisfy our obligations under our development agreements with TGI Friday’s Inc. or otherwise to expand our restaurant operations.  While debt financing will enable us to add more restaurants than we otherwise would be able to add, debt financing increases expenses and is limited as to availability due to our past financial results, and we must repay the debt regardless of our operating results.  Future equity financings will likely result in dilution to our stockholders, and that dilution could be significant.

We will be subject to the risks associated with franchising operations if we begin franchising the Redfish or Bamboo Club concepts.

We do not have any immediate plans to begin franchising. However, we will be subject to the risks associated with franchising if we begin franchising activities in the future.  If we develop a franchising program, our success as a franchisor will depend upon our ability to develop and implement a successful system of concepts and operating standards and to attract and identify suitable franchisees with adequate business experience and access to sufficient capital to enable them to open and operate restaurants in a manner consistent with our concepts and operating standards. We cannot provide assurance that we would be able to successfully meet these challenges as a franchisor.  In addition, as a franchisor we would be subject to a variety of federal and state laws and regulations, including Federal Trade Commission regulations, governing the offer and sale of franchises. These laws and regulations could result in significant increased expenses and potential liabilities for our company in the event we engage in franchising activities in the future.

We face risks that affect the restaurant industry in general.

A variety of factors over which we have no control may affect the ownership and operation of restaurants.  These factors include adverse changes in national, regional, or local economic or market conditions; increased costs of labor or food products; fuel, utility, and energy and other price increases; competitive factors; the number, density, and location of competitors; and changing demographics, traffic patterns, and consumer tastes, habits, and spending priorities.

Third parties may file lawsuits against us based on discrimination, personal injury, claims for injuries or damages caused by serving alcoholic beverages to an intoxicated person or to a minor, or other claims.  As a multi-unit restaurant operator, our business could be adversely affected by publicity about food quality, illness, injury, or other health and safety concerns or operating issues at one restaurant or a limited number of restaurants operated under the same name, whether or not we actually own or manage the restaurants in question.  We cannot predict any of these factors with any degree of certainty.  Any one or more of these factors could have a material adverse effect on our business.

Employees may file claims or lawsuits against us based on discrimination or wrongful termination or based upon their rights created by the state laws wherein we do business. These claims or lawsuits could result in unfavorable publicity and could have a material adverse effect on our business.

We face rising insurance costs.

The cost of insurance (workers compensation insurance, general liability insurance, health insurance, and directors and officers liability insurance) has risen significantly in the past few years and is

24

expected to continue to increase in 2005.  In California, we face significantly higher benefits and costs for workers’ compensation claims as compared to other markets. We may be unable to make the improvements in our operations to mitigate the effects of increased frequency and higher costs.

We face intense competition.

The restaurant business is highly competitive with respect to price, service, and food type and quality.  Restaurant operators also compete for attractive restaurant sites and qualified restaurant personnel and managers.  Our restaurants compete with a large number of other restaurants, including national and regional restaurant chains and franchised restaurant systems, as well as with locally owned, independent restaurants.  Many of our competitors have greater financial resources, more experience, and longer operating histories than we possess.

We depend upon our senior management.

Our success depends, in large part, upon the services of our senior management.  The immediate loss of the services of any members of our senior management team, without a reasonable period of transition, could have a material adverse effect on our business. We do not maintain any life insurance on these senior executives.

We face risks associated with government regulation.

Various federal, state, and local laws affect our business.  The development and operation of restaurants depend to a significant extent on the selection and acquisition of suitable sites.  These sites are subject to zoning, land use, environmental, traffic, and other regulations of state and local governmental agencies.  City ordinances or other regulations, or the application of such ordinances or regulations, could impair our ability to construct or acquire restaurants in desired locations and could result in costly delays.

The delay or failure to obtain or maintain any licenses or permits necessary for operations could have a material adverse effect on our business.  In addition, an increase in the minimum wage rate, employee benefit costs, or other costs associated with employees could adversely affect our business.  We also are subject to the Americans with Disabilities Act of 1990 that, among other things, may require us to install certain fixtures or accommodations in new restaurants or to renovate existing restaurants to meet federally mandated requirements.

Sales of alcoholic beverages represent an important source of revenue for each of our restaurants.  The temporary suspension or permanent loss or the inability to maintain a liquor license for any restaurant would have an adverse effect on the operations of that restaurant.  We do not plan to open a restaurant in any location for which we believe we cannot obtain or maintain a liquor license.

We face increased expenditures of time and money associated with compliance with changing regulation of corporate governance and public disclosure.

Keeping abreast of, and in compliance with, changing laws, regulations, and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations, and Nasdaq National Market rules, has required an increased amount of management attention and external resources.  We remain committed to maintaining high standards of corporate governance and public disclosure.  As a result, we intend to invest all reasonably necessary resources to comply with evolving standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue generating activities to compliance activities.

25

Litigation could have a material adverse effect on our business.

We are from time to time the subject of complaints or litigation from guests alleging food-borne illness, injury, or other food quality, health, or operational concerns.  We may be adversely affected by publicity resulting from such allegations regardless of whether such allegations are valid or whether we are liable.  We are also subject to complaints or allegations from former or prospective employees from time to time.  A lawsuit or claim could result in an adverse decision against us that could have a material adverse effect on our business.

We are subject to state “dram shop” laws and regulations, which generally provide that a person injured by an intoxicated person may seek to recover damages from an establishment that wrongfully served alcoholic beverages to such person.  While we carry liquor liability coverage as part of our existing comprehensive general liability insurance, we may still be subject to a judgment in excess of our insurance coverage and we may not be able to obtain or continue to maintain such insurance coverage at reasonable costs, or at all.

The market price of our common stock has been highly volatile.

Historically, the market price of our common stock has been extremely volatile.  In the future, the market price of our common stock may be subject to wide fluctuations as a result of a variety of factors, including the following:

•                  quarterly variations in our operating results or those of other restaurant companies;

•                  changes in analysts’ estimates of our financial performance;

•                  changes in national and regional economic conditions, the financial markets, or the restaurant industry;

•                  natural disasters; and

•                  other developments affecting our business or other restaurant companies.

The trading volume of our common stock has been limited, which may increase the volatility of the market price for our stock.  In addition, the stock market has experienced extreme price and volume fluctuations in recent years.  This volatility has had a significant effect on the market prices of securities issued by many companies for reasons not necessarily related to the operating performances of these companies.

Our management controls a significant portion of the voting power of our common stock.

Our directors and executive officers currently own or control, directly or indirectly, approximately 6,227,763 shares, or 44.7%, of our outstanding common stock.  These directors and officers also hold options to purchase an aggregate of 2,678,500 shares of common stock at exercise prices ranging from $1.67 to $5.81 per share.  As a result, these persons voting together have significant voting power, including the election of directors and the approval of other corporate matters.

The existence of stock options may adversely affect the terms of future financings.

Stock options to persons other than directors or officers to acquire an aggregate of 632,001 shares of common stock currently are outstanding.  An additional 841,381 shares of common stock have been reserved for issuance upon exercise of options that may be granted under our existing stock option plans.  During the terms of those options, the holders of those securities will have the opportunity to profit from an increase in the market price of our common stock.  The existence of options may adversely affect the terms on which we can obtain additional financing in the future, and the holders of options

26

can be expected to exercise those options at a time when, in all likelihood, we would be able to obtain additional capital by offering shares of common stock on terms more favorable to us than those provided by the exercise of such options.

Sales of large numbers of shares could adversely affect the price of our common stock.

Sales of substantial amounts of common stock in the public market, or even the potential for such sales, could adversely affect prevailing market prices for our common stock and could adversely affect our ability to raise capital.  As of March 1, 2005, there were 14,641,928 shares of our common stock outstanding.  All of these shares are freely transferable without restriction under the securities laws, unless they are held by our “affiliates,” as that term is defined in the securities laws.  Affiliates also are subject to certain of the resale limitations of Rule 144.  Generally, under Rule 144, each person that beneficially owns restricted securities with respect to which at least one year has elapsed since the later of the date the shares were acquired from us or one of our affiliates may, every three months, sell in ordinary brokerage transactions or to market makers an amount of shares equal to the greater of 1% of our then-outstanding common stock or the average weekly trading volume for the four weeks prior to the proposed sale of such shares.

We do not anticipate that we will pay dividends.

We have never paid any cash or stock dividends on our common stock, and we do not anticipate that we will pay dividends in the foreseeable future.  We intend to apply any earnings to the expansion and development of our business.  In addition, the terms of our credit facilities limit our ability to pay dividends on our common stock.

ITEM 2.     PROPERTIES

In January 2003, we entered into a 10-year lease renewal and modification agreement for our corporate offices. This agreement increased the size of the existing space, allowing us to combine our three office locations into one contiguous space. This resulted in a reduction in total space leased and provided a reduction in annual rent expense. We believe that the leased space is adequate for our current and reasonably anticipated future needs.

We also lease space for all of our restaurants.  The initial lease terms range from 10 to 20 years and usually contain renewal options for up to 20 years.  The leases typically provide for a fixed rental payment plus a percentage of our revenue in excess of a specified amount.

ITEM 3.     LEGAL PROCEEDINGS

From time to time, we are subject to routine contract, negligence, employment related, and other litigation in the ordinary course of business.

We have been served with two lawsuits filed on behalf of current employees, seeking damages, under California law, for both missed breaks and missed meal breaks the employees allege they did not receive. These lawsuits seek to establish a class action relating to our California operations. We intend to vigorously defend these lawsuits, both on the merits of the employees’ cases and the issues relating to class action status.

The state of California initiated a sales tax audit of our restaurants and determined that the optional 15% gratuity added to checks for parties of eight or more should have been subject to sales tax and, as such, has assessed taxes and related penalties of initially approximately $900,000, but which have since been reduced to approximately $484,000.  We have vigorously contested this assessment. The first of various appeal conferences was held on November 13, 2003.  In February 2004, we were notified that

27

our appeal was denied by the appeals officer.  We are in the process of preparing a second appeal to the full state of California Franchise Tax Board. We are unable to predict the outcome of this proceeding.

Other than those proceedings, we are not subject to any pending litigation that we believe will have a material adverse effect on our business, financial condition, results of operations, or liquidity.

ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

PART II

ITEM 5.            MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock has been quoted on the Nasdaq National Market under the symbol “MAIN”. The following table sets forth the quarterly high and low sales prices of our common stock for the periods indicated as reported by the Nasdaq National Market.

On March 1, 2005, there were 816 holders of record of our common stock and the closing sale price of our common stock on the Nasdaq National Market was $2.28 per share.

We have never declared or paid any cash dividends.  We intend to retain any earnings to fund the growth of our business and do not anticipate paying any cash dividends in the foreseeable future.  In addition, our existing debt obligations limit our ability to pay cash dividends.

ITEM 6.     SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial data for our company for the periods indicated.  The selected consolidated financial data for each of the five fiscal years in the period ended December 27, 2004, has been derived from our consolidated financial statements, as restated, which have been audited by (1) Arthur Andersen LLP, our former independent accountants, for each of the two fiscal years in the period ended December 25, 2000 (not included herein), (2) KPMG, LLP, our former independent accountants, for the fiscal year ended December 31, 2001 (not included herein), and (3) Mayer Hoffman McCann P.C., our current independent accountants, for each of the three fiscal years in the period ended December 27, 2004.

28

This data should be read in conjunction with, and are qualified by reference to, our consolidated financial statements and the notes thereto and Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Report.

(1)   Fiscal 2004, 2003, 2002, and 2000 include a charge of $80,000, $270,000, $46,000, and $16,000 respectively, for early extinguishment of debt.

(2)          Fiscal 2002 includes a full valuation allowance against deferred tax assets.

(3)          Amounts have been adjusted as a result of the restatement discussed in the footnotes to the financial statements.

Quarterly Results of Operations (Unaudited)

The following table presents unaudited consolidated statements of operations data for each of the eight quarters in the period ended December 27, 2004.  We believe that all necessary adjustments have been included to present fairly the quarterly information when read in conjunction with our consolidated financial statements.  The operating results for any quarter are not necessarily indicative of the results for any subsequent quarter.

29

(1)   Fourth quarter fiscal 2004, 2003, and 2002 include asset impairment charges and other and estimated lease termination fees of $1,385,000, $3,069,000, and $6,337,000, respectively, including an allocation of goodwill in fiscal 2003 and 2002 of $455,000 and $860,000, respectively.

(2)   Third quarter fiscal 2003 and 2002 include asset impairment charges and other of $2,460,000 and $1,206,000, respectively, and a write-down in the value of land held for sale of $350,000 and $400,000, respectively.

(3)   Amounts have been adjusted as a result of the restatement as discussed in the footnotes to the financial statements.

ITEM 7.            MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE SUMMARY

Background

We commenced our restaurant operations in May 1990 with the acquisition of four TGI Friday’s restaurants in Arizona and Nevada.  During the past 14 years, we have grown through acquisitions and development of new restaurants.  We currently own 70 restaurants.

  We opened six new restaurants in 2002, including one TGI Friday’s and one Redfish in Chandler, Arizona; three Bamboo Clubs in Tucson, Arizona, Newport, Kentucky, and King of Prussia, Pennsylvania; and one Alice Cooper’stown in Cleveland, Ohio in the location formally occupied by an under-performing Redfish restaurant that we closed. In addition, we closed an underperforming Redfish restaurant in San Diego, California and subleased the premises to a local San Diego nightclub operator. We also closed underperforming TGI Friday’s restaurants in Kansas City, Missouri and in El Paso, Texas.

During 2002, we recorded charges for (i) the write-down of land held for sale of $400,000 and (ii) impairment charges and other of $1,206,000, including asset impairment for an under-performing restaurant location that was closed, an allocation of $300,000 of goodwill, and $95,000 in lease cancellation charges related to this closure.

30

We opened five new restaurants in 2003, including one TGI Friday’s in the Desert Ridge Mall, in Arizona and four Bamboo Club “Asian Bistro” restaurants in Novi (Detroit), Michigan; Aventura Mall (North Miami), Florida; Desert Ridge Mall, Arizona; and Raleigh/Durham, North Carolina. We sold three TGI Friday’s restaurants in Northern California, and we entered into an agreement canceling the management of four TGI Friday’s in California that we managed. We closed an under-performing Redfish Seafood Grill and Bar in Denver, Colorado and sub-leased the location to a third party.

During 2003, we recorded charges for (i) a write-down in the value of land we hold for sale of $350,000, (ii) impairment charges and other of $2,850,000, including asset impairments for underperforming restaurant locations, one of which was closed during 2003, (iii) an allocation of $905,000 of goodwill and franchise area goodwill for a restaurant we closed in 2003 and a restaurant that we closed in October 2004, (iv) $500,000 in lease cancellation charges related to a restaurant that we closed in October 2004, (v) a provision of $800,000 for the termination of a management agreement of four restaurants we managed in Northern California, (vi) a $300,000 provision for the retirement on March 31, 2004 of our former CEO, and (vii) a write-off of $201,000 for deferred financing fees associated with an early debt refinancing.

During 2004, we opened one new Bamboo Club “Asian Bistro” restaurant in Fairfax, Virginia.  We closed two California TGI Friday’s locations, Oakland and Salinas, where we made the decision not to renew the lease.   In addition, we recorded charges in the fourth quarter for (i) the further write-down of the value of land held for sale in El Paso, Texas by $200,000, (ii) the impairment of assets in the amount of $310,000, and the estimated one-time lease termination fees of $875,000 covering three Bamboo locations, two of which have operating restaurants, Newport, Kentucky and Aventura, Florida, and one lease in Columbus, Ohio where we did not build a restaurant.

Subsequent to year end, we paid $575,000 in lease termination fees on two of these locations, and closed the Bamboo Club restaurant in Aventura, Florida.  We plan to terminate the lease and close the Newport, Kentucky Bamboo Club location on May 31, 2005.

Economic Overview

We conduct business in the casual dining restaurant industry and the operating performance of our restaurants is directly and heavily influenced by the overall state of the national and local economies where our restaurants are located.  When overall economic conditions negatively impact the financial performance of an individual restaurant, we periodically consider all of the factors influencing that restaurant, such as operational efficiencies, local demographic changes, local construction activity, competition, and other related factors. We then assess the prospect that we can improve both the short-term and long-term financial results, at least to a level sufficient to recover our investment in the leasehold improvements and equipment assets.  There have been and likely will continue to be situations where we will make the decision that an asset is impaired and a write-down is required even when the overall economic conditions are strong.

Same Store Sales

We measure and report same store sales only on a full company basis, for stores that have been open for at least 18 months. Our same store sales increases or (decreases) by quarter are as follows:

31

Same Store Sales