Casa Ole Restaurants, Inc. Announces Third Quarter Results.

HOUSTON--(BUSINESS WIRE)--Nov. 5, 1996--Casa Ole Restaurants, Inc. (NASDAQ: CASA) today announced results for the 12 weeks ended Oct. 4, 1996.

For the 12 weeks ended Oct. 4, 1996, the company reported net income of $445,057, or $0.12 per share, as compared to pro forma net income of $395,495, or $0.14 per share, for the comparable quarter a year ago. This represents a 12.5 percent increase in net income over pro forma net income. For the purpose of calculating earnings per share, weighted average shares outstanding were 3.7 million for the current quarter, as compared to 2.8 million in the prior year quarter. This increase in weighted average shares was the result of the company's initial public offering of common stock earlier in the year, combined with the subsequent redemption of certain shares. Actual net income for the prior year quarter, without pro forma adjustments, was $421,224. Pro forma adjustments to prior year net income relate to certain compensation and related party expenses, as well as an adjustment to effectively report income taxes at 37 percent.

Revenues for the current 12 weeks were $4.3 million, up from revenues of $4.1 million for the comparable period a year ago. Sales at restaurants operating in both fiscal quarters (same-store sales) were up 7.0 percent over sales in the same quarter last year. Commenting on same-store sales, President and COO Pat Morris said, "Our two-week television campaign during the third quarter in the Houston market helped to make our sales comps one of the stronger in the industry."

For the 40 weeks ended Oct. 4, 1996, the company reported net income of $1,423,132, as compared to $1,041,711 for the same period last year. On a pro forma basis, net income for the current year-to-date period was $1,374,410, or $0.42 per share, as compared to $1,089,745, or $0.39 per share, for the same period a year ago. Weighted average number of shares for the current year-to-date were up by 511,000 shares due to the initial public offering earlier in the year.

Late in the quarter, the company implemented an approximate 3 percent price increase to counter the impact of higher ingredient costs and increased labor costs related to the Oct. 1 minimum wage change. Experience to date indicates that customers have accepted the menu price changes.

The first remodel of one of the company's older units was completed during the quarter. The cost of the remodel was approximately $135,000, including the cost of upgrading from a cash register system to a point of sale system. Customer response thus far has been positive. The combination of advertising in the Houston market and the remodel have created double-digit sales increases over the same period a year ago in this unit. The next remodel will be in our Waco, Texas restaurant, and is anticipated to be complete prior to the holiday shopping season.

At the end of the quarter, the company was under construction on two sites -- Copperas Cove and Bellmead. Copperas Cove opened with strong sales on Oct. 28. Bellmead is scheduled for opening in early December. The company owns real estate in two other communities in Texas. Construction permitting is under way on both units. Anticipated opening dates are in the first and second fiscal quarters of 1997. In October, the company purchased the Corpus Christi Casa Ole restaurant from its franchisee. The franchisee expressed an interest in selling the restaurant and the company was interested in buying the unit because it would allow the company to gain control of a viable three- to four-store market. The company intends to develop the area or assign the area to a market partner or franchisee.

At the end of the quarter, a new franchised location opened in Houston. There are currently three additional franchised units under construction -- two in Louisiana and one in Terre Haute, Ind. -- all of which are anticipated to open before the end of the year. By the end of the year, it is anticipated that there will be a total of 46 restaurants in the Casa Ole system -- 16 company-owned and 30 franchised.

The company recently announced its market partner program, and it now has its first signed territorial development agreement for markets in Idaho and Utah. The program gives the company the potential for accelerated growth by attracting local entrepreneurs with multi-unit restaurant experience as operating partners. In return, this market partner will have a 10 percent interest in the cash flow of each restaurant that is opened. The first opening under the market partner program is expected during the first half of 1997. Casa Ole Restaurants, Inc. operates and franchises Mexican-theme family dining restaurants featuring certain elements associated with the casual dining experience. The first Casa Ole Restaurant was opened in Pasadena, Texas in 1973, and today the company operates 15 restaurants and franchises 27 additional restaurants in various communities across Texas and Louisiana. -0-

                    CASA OLE' RESTAURANTS, INC.
                   COMBINED STATEMENTS OF INCOME
                             (Unaudited)

                         40-Week Periods Ended   12-Week Periods Ended
                          10/6/95     10/4/96     10/6/95     10/4/96
                        ----------- ----------- ----------- -----------
 Revenues:
  Restaurant sales      $12,780,576 $13,122,072 $ 3,798,108 $ 4,031,790
  Franchise fees            686,686     741,656     268,434     269,648
  Other                      41,158      49,658      17,534       2,401
                        ----------- ----------- ----------- -----------
                         13,508,420  13,913,386   4,084,076   4,303,839
                        ----------- ----------- ----------- -----------

 Costs and expenses:
  Cost of sales           3,214,175   3,296,137     978,789   1,012,382
  Restaurant operating
   expenses               7,537,789   7,230,063   2,194,407   2,215,251
  General and
   administrative         1,480,796   1,581,590     412,179     483,593
  Depreciation and
   amortization             202,720     133,353      55,799      39,459
                        ----------- ----------- ----------- -----------
                         12,435,480  12,241,143   3,641,174   3,750,685
                        ----------- ----------- ----------- -----------
    Operating income      1,072,940   1,672,243     442,902     553,154

 Other income (expense):
  Interest                  (31,947)    174,742      (6,877)    109,064
  Other, net                 57,991     172,889       2,515      32,199
                        ----------- ----------- ----------- -----------
                             26,044     347,631      (4,362)    141,263

 Income before income
  tax expense             1,098,984   2,019,874     438,540     694,417
 Income tax expense          57,273     596,742      17,316     249,360
                        ----------- ----------- ----------- -----------

    Net income          $ 1,041,711 $ 1,423,132 $   421,224 $   445,057
                        =========== =========== =========== ===========

 Pro forma income statement data:
  Net income
   as reported          $ 1,041,711 $ 1,423,132 $   421,224 $   445,057
  Pro forma adjustments:
    Compensation and
     related party
     expense arrangements   630,770     161,700     189,231          --
    Provision for
     income taxes          (582,736)   (210,422)   (214,960)         --
                        ----------- ----------- ----------- -----------
  Pro forma net income  $ 1,089,745 $ 1,374,410 $   395,495 $   445,057
                        =========== =========== =========== ===========

  Pro forma net income
   per share                  $0.39       $0.42       $0.14       $0.12
                              -----       -----       -----       -----

  Pro forma weighted average
   number of shares       2,793,116   3,303,874   2,793,116   3,713,280
                        =========== =========== =========== ===========

CONTACT: Stacy M. Riffe, chief financial officer,

Casa Ole Restaurants, Inc., 713/943-7574.