Santa Barbara Restaurant Group, Inc., reported financial results for its third fiscal quarter ended October 4, 2001.

Third quarter 2001 net income was $982,000, or $.07 per diluted share for the twelve weeks ended October 4, 2001, as compared to a net loss of $2,062,000, or $.12 per diluted share, during the prior-year period. The current year results include an $808,000 tax benefit related to a tax adjustment, partially offset by a $455,000 tax expense to reflect the company’s 42 percent effective tax rate on a year-to-date basis, and a $318,000 gain, net of taxes, related to the company’s equity investments. Exclusive of these adjustments, third quarter net income was $311,000, or $.02 per diluted share. The prior year period included a $1.2million pre-tax gain related to the

Same-store sales for the Company’s La Salsa Fresh Mexican Grill restaurants continued to grow with a 3.0 percent increase during the third quarter of fiscal 2001, on top of a 4.5 percent increase during the third quarter of fiscal 2000.

Same-store sales for La Salsa restaurants increased by 4 percent during the forty-week period ended October 4, 2001, which is in addition to a 7.5 percent increase during the same period of fiscal 2000.

The company entered into two new La Salsa franchise development agreements during the third quarter, representing the addition of 6 new La Salsa Fresh Mexican Grills over the next four years. The company now has a total of 79 franchised restaurants open or under contract to open. The company reports it is continuing to pursue additional development agreements throughout the country.

In addition to the growth in franchise operations, the company has opened eight new company-operated La Salsa restaurants this year and plans to open two more La Salsa restaurants in Southern California by the end of 2001. The company anticipates opening an additional ten or twelve company-operated La Salsa restaurants in California during 2002.

Ted Abajian, president and chief executive officer of SBRG, said, “I am very excited about the continued same-store sales increases at La Salsa. Our management team has done a great job managing the existing business as we increase our company store count by over 20 percent in 2001.”

SBRG operates 49 La Salsa Fresh Mexican Grill restaurants, as well as 25 Timber Lodge Steakhouse restaurants and five Green Burrito restaurants. The Company also franchises 40 La Salsa Fresh Mexican Grill restaurants, one Timber Lodge Steakhouse restaurant, 35 Green Burrito stand-alone restaurants and 197 dual-concept restaurants for a total of 352 restaurants controlled by SBRG.