RUBIOS RESTAURANTS INC, S-1/A, 1999-05-14

RUBIOS RESTAURANTS INC
S-1/A, 1999-05-14
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1999

REGISTRATION NO. 333-75087
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-1

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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RUBIO'S RESTAURANTS, INC.

(Exact Name of Registrant as Specified in its Charter)

<TABLE>
<S> <C> <C>
DELAWARE 5812 33-0100303
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
Incorporation or Organization) Number)
</TABLE>

1902 WRIGHT PLACE, SUITE 300
CARLSBAD, CALIFORNIA 92008
(760) 929-8226

(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)

MR. RALPH RUBIO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RUBIO'S RESTAURANTS, INC.
1902 WRIGHT PLACE, SUITE 300
CARLSBAD, CALIFORNIA 92008
(760) 929-8226
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
------------------------

COPIES TO:

CRAIG S. ANDREWS, ESQ. JEFFREY D. SAPER, ESQ.
FAYE H. RUSSELL, ESQ. J. ROBERT SUFFOLETTA, ESQ.
BROBECK, PHLEGER & HARRISON LLP WILSON, SONSINI, GOODRICH & ROSATI,
550 WEST C STREET, SUITE 1300 P.C.
SAN DIEGO, CALIFORNIA 92101 650 PAGE MILL ROAD
(619) 234-1966 PALO ALTO, CALIFORNIA 94304
(650) 493-9300

------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / _________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _________

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / _________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. / /
------------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO
SECTION 8(A), MAY DETERMINE.

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SUBJECT TO COMPLETION, DATED MAY 14, 1999

THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY CHANGE
WITHOUT NOTICE. WE AND THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES
UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
3,150,000 Shares

[LOGO]

Rubio's Restaurants, Inc.

Common Stock
------------------

This is an initial public offering of shares of common stock of Rubio's
Restaurants, Inc. We are offering 2,250,000 shares in this offering and the
selling stockholders are selling an additional 900,000 shares. No public market
currently exists for our common stock. We anticipate that the initial public
offering price for our shares will be between $9.00 and $11.00 per share.

We have applied to have our common stock listed on the Nasdaq National Market
under the symbol "RUBO."

Investing in our common stock involves a high degree of risk. Please see "Risk
Factors" starting on page 7 to read about risks that you should consider
carefully before buying shares of our common stock.

<TABLE>
<CAPTION>
Per Share Total
---------- ----------
<S> <C> <C>
Public offering price..................................................................... $ $
Underwriting discounts and commissions.................................................... $ $
Proceeds to us............................................................................ $ $
Proceeds to selling stockholders.......................................................... $ $
</TABLE>

The underwriters have an option to purchase 472,500 additional shares of common
stock from us and from the selling stockholders named under the caption "Selling
Stockholders" at the initial public offering price to cover any over-allotments
of shares. We will not receive any of the proceeds from the sale of shares by
the selling stockholders.

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.

Thomas Weisel Partners LLC
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated
U.S. Bancorp Piper Jaffray

Prospectus dated , 1999
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INSIDE FRONT COVER

Photograph of the exterior of one of our restaurants, along with a map of
the southwestern United States, showing markets in which we do business, as well
as the number of restaurants in each market. Restaurants that we plan to open in
1999 are enclosed in parentheses.

FRONT GATEFOLD:

Photograph of a scene from the Baja peninsula, overlaid with pictures of our
restaurant interiors and exteriors, as well as pictures of a fish taco, shrimp
quesadilla and carne asada burrito and grilled chicken taco combination from our
menu, with captions identifying the name of each product.

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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SOME OF THE INFORMATION FOUND IN GREATER DETAIL
ELSEWHERE IN THIS PROSPECTUS. IN ADDITION TO THIS SUMMARY, WE URGE YOU TO READ
THE ENTIRE PROSPECTUS CAREFULLY, ESPECIALLY THE RISKS OF INVESTING IN OUR COMMON
STOCK DISCUSSED UNDER "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL STATEMENTS
BEFORE YOU DECIDE TO BUY OUR COMMON STOCK.

RUBIO'S RESTAURANTS

Rubio's Restaurants, Inc. owns and operates 67 high-quality, quick-service
Mexican restaurants under the name "Rubio's Baja Grill" located principally in
the southwest region of the United States. Our restaurants offer a distinctive
blend of high-quality, traditional Mexican cuisine combined with fresh seafood
fare indicative of the Baja region of Mexico. Our menu contains appealing
Mexican offerings with distinctive taste profiles prepared from fresh
ingredients. Our traditional menu items such as tacos and burritos feature
marinated, chargrilled meats and other high-quality ingredients. Adhering to an
overall emphasis on freshness, we prepare our menu items on-site and
made-to-order, with each location preparing its own chips, salsa and guacamole
fresh every day. Our menu also features our signature Baja-style fish taco, and
is accentuated by seasonal offerings including our lobster burrito and tequila
shrimp burrito. Most of our restaurants also offer a selection of Mexican and
domestic beers. Prices range from $1.79 for a Baja-style fish taco to $5.69 for
a Cabo Combo, which includes a shrimp burrito, fish taco, chips and beans. We
strive to provide superior service in a setting designed to promote a casual,
relaxed and fun experience for our guests. We design our Rubio's restaurant
decor to be reminiscent of an authentic Baja beach setting. Most of our
restaurants feature saltwater aquariums, surfboards and outdoor patio seating
beneath traditional palm-thatched umbrellas, or palapas.
We seek to differentiate our restaurants by combining the high-quality
Mexican food expected in casual sit-down restaurants with the convenient counter
service of quick-service restaurants. In this respect, we believe the "Rubio's
Baja Grill" concept is uniquely positioned between the quick-service and casual
dining segments of the restaurant industry. The critical components of our
concept include:
- providing distinctive, flavorful Mexican cuisine;
- creating a fun and relaxed atmosphere with authentic personality; and
- offering our guests excellent dining value.
We believe that our restaurant concept has broad national appeal and that,
as a result, we have significant opportunities to expand our operations and
generate attractive returns. Our business objective is to become the leading
high-quality, quick-service Mexican restaurant brand nationwide. Key to our
expansion plans and success at the restaurant-level is our business strategy to:
- create a distinctive concept and brand;
- achieve attractive restaurant-level economics;
- execute disciplined expansion; and
- ensure a high-quality guest experience.

We believe that our restaurants provide attractive restaurant-level
economics. In 1998, the 43 units open the entire year generated average sales of
$901,000, average operating income of $148,000, or 16.4% of sales, and average
cash flow of $183,000, or 20.3% of sales. Comparable restaurant sales increased
10.4% in 1998, following an 18.0% increase in 1997. Net income for 1998 was
$915,000, which compares to a net loss for 1997 of $1.0 million. Net income for
fiscal year 1998 was favorably impacted by the reversal of a $452,000 deferred
tax asset allowance that was previously provided for in fiscal year 1997. We
currently have 12 units located outside California. Of these, three units have
over 12 months of operating results. These units generated average sales of
$972,000 for the most recent 12 months, average operating income of $149,000, or
15.0% of sales, and average cash flow of $200,000, or

3
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20.5% of sales. We opened eight stores in 1996, 12 in 1997 and 16 in 1998. Our
current expansion plan calls for us to open 28 restaurants in 1999, of which
eight have opened to date, and 36 restaurants in 2000. Four of the 20 units we
plan to open in the balance of 1999 are currently under construction, and the
remaining 16 have signed leases. We intend to continue to develop restaurants
that will require, on average, a total cash investment of approximately
$380,000, including pre-opening expenses of $20,000.
The Rubio's Baja Grill concept successfully evolved from the original
"Rubio's, Home of the Fish Taco" concept, which our co-founder Ralph Rubio first
developed following his college spring break trips to the Baja peninsula of
Mexico in the mid-1970s. Ralph opened the first Rubio's restaurant with his
father, Rafael, over 16 years ago in the Mission Bay area of San Diego.

We were incorporated in California in May 1985, and reincorporated in
Delaware in October 1997. We have a wholly owned subsidiary, Rubio's Restaurants
of Nevada, Inc., which was incorporated in Nevada in 1997. Our principal
executive offices are located at 1902 Wright Place, Suite 300, Carlsbad,
California 92008. Our telephone number at that location is (760) 929-8226.
Information contained on our Web site, www.rubios.com, does not constitute part
of this prospectus.

THE OFFERING

<TABLE>
<S> <C>
Common stock offered by us.............................. 2,250,000 shares
Common stock offered by selling stockholders............ 900,000 shares
Common stock outstanding after this offering............ 8,601,624 shares
Use of proceeds......................................... For development of new
restaurants, repayment of term
loan debt and working capital and
other general corporate purposes.
Please see "Use of Proceeds" for
more information regarding our
planned use of the proceeds from
this offering.
Proposed Nasdaq National Market symbol.................. RUBO
</TABLE>

In addition to the 8,601,624 shares of common stock to be outstanding after
this offering, there are:
- 379,376 shares issuable upon the exercise of options outstanding at a
weighted average exercise price of $3.89 per share;
- 45,000 shares issuable upon the exercise of an outstanding warrant at an
exercise price of $7.20 per share; and

- 244,562 shares available for issuance under our stock option plans. Since
March 28, 1999, we have granted options exercisable into 192,000 shares at
a weighted average exercise price of $10.00 per share. For a description
of our stock option plans, please see "Management--Benefit Plans."

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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
(IN THOUSANDS, EXCEPT SHARE AND SELECTED OPERATING DATA)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL --------------------------
---------------------------------------------------------- MARCH 29, MARCH 28,
1994 1995 1996 1997 1998 1998 1999
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<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Sales......................... $ 11,837 $ 14,811 $ 19,523 $ 29,704 $ 44,699 $ 9,217 $ 14,383
Operating income (loss)....... (108) 9 85 (764) 596 (254) 72
Total other income
(expense)................... (146) 55 16 (137) 253 87 3
Income (loss) before income
taxes....................... (254) 64 101 (901) 849 (167) 75
Net income (loss)............. (155) 16 72 (1,000) 915 (180) 45
Net income (loss) attributable
to common stockholders...... $ (155) $ (39) $ 3 $ (1,095) $ 568 $ (267) $ (41)
Net income (loss) per share
Basic....................... $ (0.15) $ (0.04) $ -- $ (1.08) $ 0.55 $ (0.26) $ (0.04)
Diluted..................... (0.15) (0.04) -- (1.08) 0.14 (0.26) (0.04)
Shares used in computing net
income (loss) per share
Basic....................... 1,000 1,000 1,008 1,010 1,033 1,013 1,050
Diluted..................... 1,000 1,000 1,026 1,010 6,418 1,013 1,050
Pro forma net income per
share, basic and diluted.... $ 0.14 $ 0.01
Shares used in computing pro
forma net income per share
Basic....................... 6,334 6,350
Diluted..................... 6,455 6,616
SELECTED OPERATING DATA:
Number of restaurants at end
of period................... 17 23 31 43 59 46 67
Comparable restaurant sales
increase (decrease)......... 11.0% 5.3% (3.6)% 18.0% 10.4% 7.6% 13.7%
Average restaurant volume of
units open for entire
period...................... $ 767,695 $ 786,489 $ 728,234 $ 825,741 $ 900,870
</TABLE>

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<TABLE>
<CAPTION>
MARCH 28, 1999
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ACTUAL AS ADJUSTED
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<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents......................................... $ 1,124 $ 19,678
Total assets...................................................... 25,435 43,989
Long-term debt, including current portion......................... 1,671 --
Redeemable convertible preferred stock............................ 17,782 --
Total stockholders' equity........................................ 141 38,148
</TABLE>

- ------------------------
Please see note 1 to the consolidated financial statements for an
explanation of the determination of the number of shares used in computing pro
forma net income per share.
Comparable restaurant sales are determined based on sales for stores which
were in operation for the previous 15 months.
The as adjusted balance sheet data listed above reflects the sale of
2,250,000 shares of common stock offered at an assumed initial public offering
price of $10.00 per share after deducting the estimated underwriting discount
and estimated offering expenses payable by us. Please see "Use of Proceeds" for
information regarding our anticipated use of the proceeds of this offering and
"Capitalization" for information regarding our capitalization following this
offering.
Fiscal years 1994 and 1995 ended on December 31. In 1996, we began using a
52- or 53-week fiscal year ending on the Sunday nearest December 31. Fiscal
years 1996, 1997 and 1998 each consisted of 52 weeks. The three-month periods
each consisted of 13 weeks.
Net income (loss) attributable to common stockholders includes the effect of
the accretion on the redeemable convertible preferred stock which reduces net
income (loss) attributable to common stockholders for the related periods. Net
income attributable to common stockholders for the fiscal 1998 diluted earnings
per share calculation is $915,000. The difference from the basic calculation is
due to the reversal of the accretion on the redeemable convertible preferred
stock as such stock is assumed to be converted to common stock for purposes of
the diluted calculation.
Net income for fiscal year 1998 was favorably impacted by the reversal of a
$452,000 deferred tax asset allowance that was previously provided for in fiscal
year 1997. We eliminated the valuation allowance in 1998 due to our belief that
current year activity made realization of such benefit more likely than not.

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RISK FACTORS

AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE FOLLOWING INFORMATION ABOUT THESE RISKS, TOGETHER WITH
THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, BEFORE YOU DECIDE WHETHER TO
BUY OUR COMMON STOCK. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR
BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION WOULD LIKELY SUFFER. IN
ANY SUCH CASE, THE MARKET PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU MAY
LOSE ALL OR PART OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK. ADDITIONAL RISKS
AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY DEEM IMMATERIAL
MAY ALSO IMPAIR OUR BUSINESS, RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

RISKS RELATED TO OUR BUSINESS

OUR PLANNED EXPANSION INTO NEW GEOGRAPHIC AREAS INVOLVES A NUMBER OF RISKS
WHICH COULD DELAY OR PREVENT THE OPENING OF PLANNED NEW RESTAURANTS.

Almost all of our current restaurants are located in the southwest region of
the United States. Our planned expansion into geographic areas outside the
Southwest involves a number of risks, including:

- uncertainties related to local demographics, tastes and preferences;

- local custom, wages, costs and other legal and economic conditions
particular to new regions;

- the need to develop relationships with local distributors and suppliers
for fresh produce, fresh tortillas and other ingredients;

- potential difficulties related to management of operations located in a
number of broadly dispersed locations; and

- lack of market awareness or acceptance of our restaurant concept in new
geographic areas.

We may not be successful in addressing these risks. We also may not be able
to open our planned new operations on a timely basis, or at all in these new
areas. Delays in opening or failure to open planned new restaurants outside the
Southwest could have a material adverse effect on our business and results of
operations. We currently anticipate that our new restaurants will take several
months to reach planned operating levels due to inefficiencies typically
associated with expanding into new regions, such as lack of market awareness,
acceptance of our restaurant concept and inability to hire sufficient staff.

IF WE ARE NOT ABLE TO SUCCESSFULLY PURSUE OUR RAPID EXPANSION STRATEGY, OUR
BUSINESS AND RESULTS OF OPERATIONS MAY BE ADVERSELY IMPACTED.

We intend to continue to pursue a rapid expansion strategy. Since 1996, we
have opened 36 restaurants, 12 of which were opened outside of Southern
California. We intend to open an additional 28 restaurants in 1999, eight of
which have been opened to date. Approximately 13 of those additional restaurants
are outside Southern California. We intend to open an additional 36 restaurants
in 2000. Our ability to successfully achieve our expansion strategy will depend
on a variety of factors, many of which are beyond our control. These factors
include:

- our ability to locate suitable restaurant sites or negotiate acceptable
lease terms;

- our ability to obtain required local, state and federal governmental
approvals and permits related to construction of the sites, food and
alcoholic beverages;

- our dependence on contractors to construct new restaurants in a timely
manner;

- our ability to attract, train and retain qualified and experienced
restaurant personnel and management;

- our ability to operate our restaurants profitably;

- our need for additional capital and our ability to obtain such capital on
favorable terms or at all;

- our ability to respond effectively to the intense competition in the
quick-service restaurant industry; and

- general economic conditions.

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If we are not able to successfully address these factors, we may not be able
to expand at a rate currently contemplated by our strategy, and our business and
results of operations may be adversely impacted.

OUR OPERATING RESULTS MAY FLUCTUATE SIGNIFICANTLY DUE TO SEASONALITY AND
OTHER FACTORS, WHICH COULD HAVE A NEGATIVE EFFECT ON THE PRICE OF OUR COMMON
STOCK.

Our business is subject to seasonal fluctuations. Historically, sales in
most of our restaurants have been higher during the second and third quarters of
each fiscal year. As a result, we expect our highest earnings to occur in the
second and third quarters of each fiscal year.

In addition to seasonality, our quarterly and annual operating results and
comparable unit sales may fluctuate significantly as a result of a variety of
factors, including:

- labor costs for our hourly and management personnel, including increases
in federal or state minimum wage requirements;

- fluctuations in food costs, particularly the cost of chicken, beef, fish,
cheese and produce;

- the timing of new restaurant openings and related expenses;

- the amount of sales contributed by new and existing restaurants;

- our ability to achieve and sustain profitability on a quarterly or annual
basis;

- consumer confidence;

- changes in consumer preferences;

- the level of competition from existing or new competitors in the
quick-service restaurant industry;

- factors associated with closing a unit, including payment of the base rent
for the balance of the lease term;

- impact of weather on revenues and costs of food; and

- general economic conditions.

Accordingly, results for any one quarter are not necessarily indicative of
results to be expected for any other quarter or for any year. Comparable unit
sales for any particular future period may decrease. Please see "Management's
Discussion and Analysis of Financial Condition and Results of Operations" for a
discussion of factors which have historically affected our operating results.

THE RESTAURANT INDUSTRY IS INTENSELY COMPETITIVE AND WE MAY NOT HAVE THE
RESOURCES TO COMPETE ADEQUATELY.

The restaurant industry is intensely competitive. There are many different
segments within the restaurant industry that are distinguished by types of
service, food types and price/value relationships. We position our restaurants
in the high-quality, quick-service Mexican food segment of the industry. In this
segment, our direct competitors include Baja Fresh, La Salsa and Chipotle. We
also compete indirectly with full-service Mexican restaurants including Chevy's,
Chi Chi's and El Torito, and fast food restaurants, particularly those focused
on Mexican food such as Taco Bell and Del Taco. Competition in our industry
segment is based primarily upon food quality, price, restaurant ambiance,
service and location. Although we believe we compete favorably with respect to
each of these factors, many of our direct and indirect competitors are
well-established national, regional or local chains and have substantially
greater financial, marketing, personnel and other resources than we do. We also
compete with many other retail establishments for site locations.

The performance of individual units may also be affected by factors such as
traffic patterns, demographic considerations and the type, number and proximity
of competing restaurants. In addition, factors such as inflation, increased
food, labor and employee benefit costs and the availability of experienced
management and hourly employees may also adversely affect the restaurant
industry in general and our units in particular.

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THE ABILITY TO ATTRACT AND RETAIN HIGHLY QUALIFIED PERSONNEL TO OPERATE AND
MANAGE OUR RESTAURANTS IS EXTREMELY IMPORTANT AND OUR FAILURE TO DO SO COULD
ADVERSELY AFFECT US.

Our success and the success of our individual restaurants depend upon our
ability to attract and retain highly motivated, well-qualified restaurant
operators and other management personnel, as well as a sufficient number of
qualified employees, including guest service and kitchen staff, to keep pace
with our expansion schedule. Qualified individuals needed to fill these
positions are in short supply in some geographic areas. Our inability to recruit
and retain such individuals may delay the planned openings of new restaurants or
result in higher employee turnover in existing restaurants, which could have a
material adverse effect on our business or results of operations. We also face
significant competition in the recruitment of qualified employees. In addition,
we are heavily dependent upon the services of our officers and key management
involved in restaurant operations, marketing, finance, purchasing, expansion,
human resources and administration. The loss of any of these individuals could
have a material adverse effect on our business and results of operations. We
currently do not have employment agreements with any of our employees.

OUR RESOURCES MAY BE STRAINED IN IMPLEMENTING OUR BUSINESS STRATEGY.

Our growth strategy will place a strain on our management, financial and
other resources. To manage our growth effectively, we must maintain the level of
quality and service at our existing and future restaurants. We must also
continue to enhance our operational, financial and management systems and
locate, hire, train and retain experienced and dedicated operating personnel,
particularly managers. We may not be able to effectively manage any one or more
of these or other aspects of our expansion. Failure to do so could have a
material adverse effect on our business and results of operations.

WE MAY BE UNABLE TO FUND OUR SUBSTANTIAL WORKING CAPITAL REQUIREMENTS AND
MAY NEED ADDITIONAL FUNDING SOONER THAN WE ANTICIPATE.

- changes in our operating plans;

- acceleration of our expansion plans;

- lower than anticipated sales of our menu offerings;

- increased food and/or labor costs; and

- potential acquisitions.

Additional financing may not be available on acceptable terms, or at all. If
we fail to get additional financing as needed, our business and results of
operations would likely suffer. Please see "Management's Discussion and Analysis
of Financial Condition and Results of Operations" for a discussion of our
expected capital needs and current resources available.

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UNANTICIPATED COSTS OR DELAYS IN THE DEVELOPMENT OR CONSTRUCTION OF OUR
RESTAURANTS COULD PREVENT OUR TIMELY AND COST-EFFECTIVE OPENING OF NEW
RESTAURANTS.

We depend on contractors and real estate developers to construct our
restaurants. Many factors may adversely affect the cost and time associated with
the development and construction of our restaurants, including:

- labor disputes;

- shortages of materials and skilled labor;

- adverse weather;

- unforeseen engineering problems;

- environmental problems;

- construction or zoning problems;

- local government regulations;

- modifications in design; and

- other unanticipated increases in costs.

Any of these factors could give rise to delays or cost overruns which may
prevent us from developing additional restaurants within our anticipated budgets
or time periods. Any such failure could have a material adverse effect on our
business and results of operations.

OUR RESTAURANTS ARE CONCENTRATED IN THE SOUTHWEST REGION OF THE UNITED
STATES, AND THEREFORE, OUR BUSINESS IS SUBJECT TO FLUCTUATIONS IF ADVERSE
BUSINESS CONDITIONS OCCUR IN THAT REGION.

All but two of our existing restaurants are located in the southwest region
of the United States. Accordingly, we are susceptible to fluctuations in our
business caused by adverse economic or other conditions in this region,
including natural or other disasters. Our significant investment in, and
long-term commitment to, each of our units limits our ability to respond quickly
or effectively to changes in local competitive conditions or other changes that
could affect our operations. In addition, some of our competitors have many more
units than we do. Consequently, adverse economic or other conditions in a
region, a decline in the profitability of several existing units or the
introduction of several unsuccessful new units in a geographic area could have a
more significant effect on our results of operations than would be the case for
a company with a larger number of restaurants or with more geographically
dispersed restaurants.

OUR FAILURE OR INABILITY TO ENFORCE OUR TRADEMARKS AND TRADE NAMES COULD
ADVERSELY AFFECT OUR EFFORTS TO ESTABLISH BRAND EQUITY.

Our ability to successfully expand our concept will depend on our ability to
establish and maintain "brand equity" through the use of our trademarks, service
marks, trade dress and other proprietary intellectual property, including our
name and logos. We currently hold three trademarks and have seven service marks
relating to our brand. Some or all of the rights in our intellectual property
may not be enforceable, even if registered, against any prior users of similar
intellectual property or our competitors who seek to utilize similar
intellectual property in areas where we operate or intend to conduct operations.
If we fail to enforce any of our intellectual property rights, we may be unable
to capitalize on our efforts to establish brand equity. It is also possible that
we will encounter claims from prior users of similar intellectual property in
areas where we operate or intend to conduct operations. Claims from prior users
could limit our operations and possibly cause us to pay damages or licensing
fees to a prior user or registrant of similar intellectual property.

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IF WE ARE NOT ABLE TO ANTICIPATE AND REACT TO OUR FOOD AND LABOR COSTS, OUR
PROFITABILITY COULD BE ADVERSELY AFFECTED.

Our restaurant operating costs principally consist of food and labor costs.
Our profitability is dependent on our ability to anticipate and react to changes
in food and labor costs. Various factors beyond our control, including adverse
weather conditions and governmental regulation, may affect our food costs. We
may not be able to anticipate and react to changing food costs, whether through
our purchasing practices, menu composition or menu price adjustments in the
future. In the event that food or labor price increases cause us to increase our
menu prices, we face the risk that our guests will choose to patronize
lower-cost restaurants. Failure to react to changing food costs or to retain
guests if we are forced to raise menu prices could have a material adverse
effect on our business and results of operations. For more information regarding
our food supply sources and buying practices, please see "Business--Purchasing."

A substantial number of our employees are subject to various minimum wage
requirements. Many of our employees work in restaurants located in California
and receive salaries equal to or slightly greater than the California minimum
wage. Effective March 1, 1998, the minimum wage in California increased to $5.75
per hour from $5.15. Similar proposals may come before legislators or voters in
other jurisdictions in which we operate or seek to operate. Such minimum wage
increases could have a material adverse effect on our business and results of
operations. Please see "Business--Operations" for more information on the number
of and the benefits we provide to our employees.

AS A RESTAURANT SERVICE PROVIDER, WE COULD BE SUBJECT TO ADVERSE PUBLICITY
OR CLAIMS FROM OUR GUESTS.

We may be the subject of complaints or litigation from guests alleging
food-related illness, injuries suffered on the premises or other food quality,
health or operational concerns. Adverse publicity resulting from such
allegations may materially adversely affect us and our restaurants, regardless
of whether such allegations are true or whether we are ultimately held liable.
We may also be the subject of complaints or allegations from current, 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 and results of operations.

WE MAY NOT BE ABLE TO OBTAIN AND MAINTAIN STATE AND LOCAL PERMITS NECESSARY
TO OPERATE OUR UNITS.

The failure to maintain necessary licenses, permits or approvals, including
food and alcoholic beverage licenses, or to comply with other government
regulations could have a material adverse effect on our business and results of
operations. In addition, difficulties or failures in obtaining required licenses
and approvals will result in delays in, or cancellation of, the opening of new
units. Restaurants are subject to licensing and regulation by state and local
health, environmental, labor relations, sanitation, building, zoning, safety,
fire and other departments. Our activities are also subject to the Federal
Americans With Disabilities Act and related regulations, which prohibit
discrimination on the basis of disability in public accommodations and
employment. We are also 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. Given the location of many of our restaurants, even if our
operation of those restaurants is in strict compliance with the requirements of
the Immigration and Naturalization Service, our employees may not all meet
federal citizenship or residency requirements, which could lead to disruptions
in our work force. If we are not in compliance with these requirements, we could
be subject to financial penalties. In addition, we could be forced to terminate
employees who do not meet these requirements. These consequences could adversely
affect our business. The development and construction of additional units will
also be subject to compliance with applicable zoning, land use and environmental
regulations. There can be no assurance that we will be able to obtain necessary
variances or other approvals on a cost-effective and timely basis in order to
construct and develop units in the future. Changes in any or all of these laws
or regulations, such as government-imposed paid leaves of absence or mandated
health benefits, could have a material adverse effect on our business and
results of operations. For a more complete description of the governmental
regulations to which our business is subject, please see "Business--Government
Regulation."

11
<PAGE>
OUR CURRENT INSURANCE MAY NOT PROVIDE ADEQUATE LEVELS OF COVERAGE AGAINST
CLAIMS.

There are types of losses we may incur that may be uninsurable or that we
believe are not economically insurable, such as losses due to earthquakes and
other natural disasters. In view of the location of many of our existing and
planned units, our operations are particularly susceptible to damage and
disruption caused by earthquakes. In the event of an earthquake or other natural
disaster affecting the geographic area of our operations, we could suffer a loss
of the capital invested in, as well as anticipated earnings from, the damaged or
destroyed properties. Further, we do not currently maintain any insurance
coverage for employee-related litigation or the effects of adverse publicity. In
addition, punitive damage awards are generally not covered by insurance. We may
also be subject to litigation which, regardless of the outcome, could result in
adverse publicity and damages. Such litigation, adverse publicity or damages
could have a material adverse effect on our business and results of operations.

WE MAY FAIL TO BE YEAR 2000 COMPLIANT.

We have not fully completed tests to assure that our systems will function
properly in the year 2000. Our restaurant information systems may need to be
upgraded in order to prevent system failure or miscalculation resulting from the
year 2000 that could disrupt our normal business activities.

We estimate that we have incurred costs of less than $25,000 to date in
connection with our year 2000 plan. We currently estimate the total costs of
completing our year 2000 plan, including costs incurred to date, to be less than
$50,000. Until our testing is complete and our vendors and providers are
contacted, we will not be able to completely evaluate whether our information
technology systems or non-information technology systems will need to be revised
or replaced. If our efforts to address year 2000 risks are not successful, or if
suppliers or other third parties with whom we conduct business do not
successfully address such risks, it could have a material adverse effect on our
business and results of operations. Please see "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Year 2000 Readiness
Disclosure" for detailed information on our state of readiness, potential risks
and contingency plans regarding the year 2000 issue.

IF WE ADOPT A FRANCHISING STRATEGY, WE MAY BE UNSUCCESSFUL IN EXECUTING A
FRANCHISING PROGRAM.

We may use a franchise strategy in selected markets. If we adopt a
franchising strategy, our failure to successfully execute a franchising program
could adversely affect our business and results of operations. We have not used
franchising to date and may not be successful in implementing a franchise
program in the future. We have not yet established any criteria to evaluate
prospective franchisees. We may be unable to identify and attract franchisees
that have the business abilities or access to financial resources necessary to
open our restaurants, or to successfully develop or operate our restaurants in
their franchise areas in a manner consistent with our standards.

RISKS RELATED TO THIS OFFERING

THE LARGE NUMBER OF SHARES ELIGIBLE FOR PUBLIC SALE AFTER THIS OFFERING
COULD CAUSE OUR STOCK PRICE TO DECLINE.

The market price of our common stock could decline as a result of sales by
our existing stockholders of a large number of shares of our common stock in the
market after this offering or the perception that such sales could occur. These
sales also might make it more difficult for us to sell equity securities in the
future at a time and at a price that we deem appropriate. Please see "Shares
Eligible for Future Sale" for a description of sales that may occur in the
future.

12
<PAGE>
OUR COMMON STOCK MAY NOT DEVELOP AN ACTIVE, LIQUID TRADING MARKET.

We cannot predict the extent to which investor interest in us will lead to
the development of an active trading market or the level of trading volume that
will exist for our common stock after the offering. Low trading volumes may
adversely affect your ability to sell your shares quickly at the current market
price. The initial public offering price for the shares will be determined by
negotiations among us, the selling stockholders and the representatives of the
underwriters. This initial price may not be indicative of prices that will
prevail in the trading market. Please see "Underwriting" for more information
regarding our arrangement with the underwriters and the factors considered in
setting the initial public offering price.

THE MARKET PRICE OF OUR STOCK MAY BE ADVERSELY AFFECTED BY MARKET
VOLATILITY.

The stock market has experienced extreme price and volume fluctuations. The
trading price of our common stock could be subject to wide fluctuations in
response to a number of factors, including:

- fluctuations in our quarterly or annual results of operations;

- changes in published earnings estimates by analysts and whether our
earnings meet or exceed such estimates;

- additions or departures of key personnel; and

- changes in overall stock market conditions, including the stock prices of
other restaurant companies.

In the past, companies that have experienced volatility in the market price
of their stock have been the object of securities class action litigation. If we
were subject to securities class action litigation, it could result in
substantial costs and a diversion of our management's attention and resources.

THE INTERESTS OF OUR CONTROLLING STOCKHOLDERS MAY CONFLICT WITH YOUR
INTERESTS.

We anticipate that the executive officers, directors and entities affiliated
with them will, in the aggregate, beneficially own approximately 55.0% of our
outstanding common stock following the completion of this offering. These
stockholders will be able to exercise control over all matters requiring
approval by our stockholders, including the election of directors and approval
of significant corporate transactions. This concentration of ownership may also
have the effect of delaying or preventing a change in control of our company.
Please see "Management" and "Principal Stockholders" for detailed information on
the beneficial ownership of our executive officers, directors and their
affiliates.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD
MAKE A THIRD-PARTY ACQUISITION OF US DIFFICULT.

The anti-takeover provisions in our certificate of incorporation, our bylaws
and Delaware law could make it more difficult for a third party to acquire us.
As a result of these provisions, we could delay, deter or prevent a takeover
attempt or third party acquisition that our stockholders consider to be in their
best interest, including a takeover attempt that results in a premium over the
market price for the shares held by our stockholders. Please see "Description of
Securities" for more information on these anti-takeover provisions.

FORWARD-LOOKING STATEMENTS

This prospectus may contain forward-looking statements based on our current
expectations, assumptions, estimates and projections about us and our industry.
These forward-looking statements involve risks and uncertainties. Our actual
results could differ materially from those anticipated in these forward-looking
statements as a result of factors more fully described in the "Risk Factors"
section and elsewhere in this prospectus. We are not obligated to update or
revise these forward-looking statements to reflect new events or circumstances.

13
<PAGE>

CONVENTIONS WHICH APPLY TO THIS PROSPECTUS

This offering is for 3,150,000 shares; however, the underwriters have a
30-day option to purchase up to 472,500 additional shares from us and from the
selling stockholders to cover over-allotments. Some of the disclosures in this
prospectus would be different if the underwriters exercise the option. Unless we
tell you otherwise, the information in this prospectus assumes that the
underwriters will not exercise the option.

Unless we tell you otherwise, all information in this prospectus relating to
our capitalization presented on an as adjusted or pro forma basis reflects:

- the automatic conversion of each share of our preferred stock into one
share of our common stock upon the closing of this offering;

- an increase in our authorized common stock to 75,000,000 shares and an
increase in our undesignated preferred stock to 5,000,000 shares effective
immediately prior to the closing of this offering; and

- the issuance of 37,677 shares of common stock upon the exercise of
warrants which terminate immediately upon this offering.

Our registered trademarks and service marks include
Rubio's-Registered Trademark-, Baja Grill-Registered Trademark-, Home of the
Fish Taco-Registered Trademark-, HealthMex-Registered Trademark- and
Pesky-Registered Trademark-. Each other trademark, trade name or service mark
appearing in this prospectus belongs to its holder.

USE OF PROCEEDS

We estimate that the net proceeds from the sale of the 2,250,000 shares
offered by us will be approximately $20.2 million, assuming an initial public
offering price of $10.00 per share and after deducting the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us. If our portion of the underwriters' over-allotment option is exercised in
full, we estimate that such net proceeds will be approximately $22.0 million.

We intend to use approximately $18.0 million of the net proceeds of this
offering for development of new restaurants, approximately $1.7 million for
repayment of term loan debt and the remainder for working capital and other
general corporate purposes. Our term loan agreement with BankBoston, N.A. was
amended on April 1, 1999, and now bears interest at the lesser of (1) the London
InterBank Offered Rate, also known as LIBOR, adjusted by the statutory reserve
rate plus 3.0%, or (2) the greater of the bank's base rate plus 0.75% or the
Federal Funds Effective Rate plus 1.5%. Pending any such use, as described
above, we intend to invest the net proceeds in interest-bearing instruments. We
will not receive any proceeds from the sale of shares by the selling
stockholders. Please see "Selling Stockholders" for a description of the number
of shares which may be sold by selling stockholders in this offering.

DIVIDEND POLICY

We have never declared or paid any cash dividends on our capital stock. Our
term loan agreement with BankBoston requires us to obtain the bank's consent
prior to making any distribution or declaring any dividends. We do not expect to
pay any cash dividends for the foreseeable future. We currently intend to retain
future earnings, if any, to finance the expansion of our business. Any future
determination to pay cash dividends will be at the discretion of our board of
directors and will be dependent on financial condition, operating results,
capital requirements and other factors that our board deems relevant.

14
<PAGE>
DILUTION

Our net tangible book value as of March 28, 1999, after giving effect to the
automatic conversion of all outstanding shares of preferred stock into common
stock, was $17,922,782, or $2.82 per share of common stock. Net tangible book
value per share is equal to the amount of our total tangible assets less total
liabilities, divided by the number of shares of common stock outstanding as of
March 28, 1999. Assuming the sale by us of the 2,250,000 shares offered at an
assumed initial public offering price of $10.00 per share and after deducting
underwriting discounts and estimated offering expenses, and the application of
the estimated net proceeds therefrom, our pro forma net tangible book value as
of March 28, 1999 would have been $38,147,782, or $4.43 per share of common
stock. This represents an immediate increase in net tangible book value of $1.61
per share to existing stockholders and an immediate dilution in pro forma net
tangible book value of $5.57 per share to new investors. The following table
illustrates this per share dilution:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $ 10.00
---------
Net tangible book value per share before this offering............ $ 2.82
---------
Increase attributable to new investors............................ 1.61
---------
Pro forma net tangible book value per share after this offering..... 4.43
---------
Pro forma dilution per share to new investors....................... $ 5.57
---------
---------
</TABLE>

The following table summarizes, on a pro forma basis as of March 28, 1999,
the total number of shares of common stock purchased from us, the total
consideration paid to us and the average price per share paid by existing
stockholders and by new investors:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
----------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------- ----------- -----------------
<S> <C> <C> <C> <C> <C>
Existing stockholders........................... 6,351,624 73.8% $ 18,304,015 44.9% $ 2.88
New investors................................... 2,250,000 26.2 22,500,000 55.1 10.00
---------- ----- ------------- -----
Total......................................... 8,601,624 100.0% $ 40,804,015 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>

The tables and calculations above assume no exercise of outstanding options
or warrants unless otherwise set forth in this prospectus. On March 28, 1999,
there were:

- 379,376 shares issuable upon the exercise of options outstanding at a
weighted average exercise price of $3.89 per share;

- 45,000 shares issuable upon the exercise of an outstanding warrant at an
exercise price of $7.20 per share; and

To the extent that these options or warrants are exercised, there will be
further dilution to new investors. Please see "Management--Benefit Plans" for a
discussion of our stock option plans.

15
<PAGE>
CAPITALIZATION

The following table sets forth our capitalization as of March 28, 1999 on an
actual basis and as adjusted to give effect to the receipt by us of the
estimated net proceeds from the sale of 2,250,000 shares offered at an assumed
initial public offering price of $10.00 per share. This information should be
read in conjunction with our consolidated financial statements and the notes
relating to such statements appearing elsewhere in this prospectus. This
information is based on the number of shares of common stock outstanding on
March 28, 1999. It excludes:

- 379,376 shares of common stock issuable upon the exercise of options
outstanding at a weighted average exercise price of $3.89 per share;

- 45,000 shares of common stock issuable upon the exercise of an outstanding
warrant at an exercise price of $7.20 per share; and

- 244,562 shares available for issuance under our stock option plans.

<TABLE>
<CAPTION>
MARCH 28, 1999
----------------------
ACTUAL AS ADJUSTED
--------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt, less current portion.................................... $ 928 $ --
--------- -----------
Redeemable convertible preferred stock:
$0.001 par value, 3,410,242 shares authorized on an actual basis;
3,338,138 shares issued and outstanding on an actual basis; and no
shares authorized, issued and outstanding on an as adjusted basis... 17,782 --
Stockholders' equity:
Convertible preferred stock, $0.001 par value, 1,973,395 shares
authorized on an actual basis; 1,924,747 shares issued and
outstanding on an actual basis; no shares authorized, issued and
outstanding on an as adjusted basis................................. 2 --
Preferred stock, $0.001 par value, no shares authorized, issued and
outstanding on an actual basis; 5,000,000 shares authorized on an as
adjusted basis; no shares issued and outstanding on an as adjusted
basis............................................................... -- --
Common stock, $0.001 par value, 7,298,725 shares authorized on an
actual basis; 1,051,062 shares issued and outstanding on an actual
basis; 75,000,000 shares authorized on as adjusted basis; 8,601,624
shares issued and outstanding on an as adjusted basis............... 1 9
Additional paid-in capital............................................ 3 38,004
Deferred compensation................................................. 39 39
Accumulated other comprehensive income................................ 11 11
Retained earnings..................................................... 85 85
--------- -----------
Total stockholders' equity.......................................... 141 38,148
--------- -----------
--------- -----------
Total capitalization................................................ $ 18,851 $ 38,148
--------- -----------
--------- -----------
</TABLE>

16
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements and the notes to such
statements and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this prospectus. The statement of
operations data for the years ended December 29, 1996, December 28, 1997 and
December 27, 1998, and the consolidated balance sheet data at December 28, 1997
and December 27, 1998 are derived from our consolidated financial statements
which have been audited by Deloitte & Touche LLP, independent auditors, and are
included elsewhere in this prospectus. The statement of operations data for the
two years ended December 31, 1994 and 1995, and the consolidated balance sheet
data at December 31, 1994 and 1995 and December 29, 1996 are derived from
audited consolidated financial statements not included in this prospectus. The
consolidated statement of operations data for the three months ended March 29,
1998 and March 28, 1999 and the consolidated balance sheet data at March 28,
1999 have been derived from the unaudited financial statements included
elsewhere in this prospectus that have been prepared on the same basis as the
audited consolidated financial statements and, in our opinion, contain all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the financial position and results of operations for such
periods. Historical results are not necessarily indicative of the results to be
expected in the future and results for interim periods are not necessarily
indicative of results for the entire year.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL --------------------------
------------------------------------------------------------ MARCH 29, MARCH 28,
1994 1995 1996 1997 1998 1998 1999
---------- ---------- ---------- --------- ---------- ------------ ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Sales.................................. $ 11,837 $ 14,811 $ 19,523 $ 29,704 $ 44,699 $ 9,217 $ 14,383
Costs and expenses:
Cost of sales........................ 2,988 3,587 5,068 8,659 13,074 2,671 4,247
Restaurant labor, occupancy and
other.............................. 6,535 8,141 10,441 15,639 22,616 4,895 7,254
General and administrative
expenses........................... 2,073 2,596 3,176 4,253 6,148 1,428 2,075
Depreciation and amortization........ 349 478 735 1,259 1,946 426 641
Pre-opening expenses................. -- -- 18 271 319 51 94
Loss on asset impairment............. -- -- -- 387 -- -- --
---------- ---------- ---------- --------- ---------- ------------ ------------
Operating income (loss)................ (108) 9 85 (764) 596 (254) 72
Other income (expense):
Interest income (expense), net....... (109) (58) 17 (75) 268 79 7
Miscellaneous income (expense)....... 63 111 1 (6) (10) 2 --
Gain (loss) on disposal/sale of
property........................... (100) 2 (2) (56) (5) 6 (4)
---------- ---------- ---------- --------- ---------- ------------ ------------
Total other income (expense)....... (146) 55 16 (137) 253 87 3
---------- ---------- ---------- --------- ---------- ------------ ------------
Income (loss) before income taxes...... (254) 64 101 (901) 849 (167) 75
Income tax benefit (expense)........... 99 (48) (29) (99) 66 (13) (30)
---------- ---------- ---------- --------- ---------- ------------ ------------
Net income (loss)...................... $ (155) $ 16 $ 72 $ (1,000) $ 915 $ (180) $ 45
---------- ---------- ---------- --------- ---------- ------------ ------------
---------- ---------- ---------- --------- ---------- ------------ ------------

Net income (loss) attributable to
common stockholders.................. $ (155) $ (39) $ 3 $ (1,095) $ 568 $ (267) $ (41)
---------- ---------- ---------- --------- ---------- ------------ ------------
---------- ---------- ---------- --------- ---------- ------------ ------------
Net income (loss) per share
Basic................................ $ (0.15) $ (0.04) $ -- $ (1.08) $ 0.55 $ (0.26) $ (0.04)
Diluted.............................. (0.15) (0.04) -- (1.08) 0.14 (0.26) (0.04)
Shares used in computing net income
(loss) per share
Basic................................ 1,000 1,000 1,008 1,010 1,033 1,013 1,050
Diluted.............................. 1,000 1,000 1,026 1,010 6,418 1,013 1,050
Pro forma net income per share, basic
and diluted.......................... $ 0.14 $ 0.01
Shares used in computing pro forma net
income per share
Basic................................ 6,334 6,350
Diluted.............................. 6,455 6,616
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
FISCAL ------------
------------------------------------------------------------ MARCH 28,
1994 1995 1996 1997 1998 1999
---------- ---------- ---------- --------- ---------- ------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>

CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 53 $ 1,004 $ 633 $ 866 $ 786 $ 1,124
Total assets........................................... 3,799 7,813 13,375 23,054 25,752 25,435
Long-term debt, including current portion.............. 1,285 1,923 2,483 2,562 1,856 1,671
Redeemable convertible preferred stock................. -- 3,171 7,550 17,003 17,695 17,782
Total stockholders' equity (deficit)................... 1,130 4,317 8,474 (141) 196 141
</TABLE>

- ------------------------

Please see the consolidated financial statements and related notes appearing
elsewhere in this prospectus for the determination of number of shares used in
computing basic and diluted net income (loss) per share.

Net income (loss) attributable to common stockholders includes the effect of
the accretion on the redeemable convertible preferred stock which reduces net
income (loss) attributable to common stockholders for the related periods. Net
income attributable to common stockholders for the fiscal 1998 diluted earnings
per share calculation is $915,000. The difference from the basic calculation is
due to the reversal of the accretion on the redeemable convertible preferred
stock as such stock is assumed to be converted to common stock for purposes of
the diluted calculation.

Net income for fiscal year 1998 was favorably impacted by the reversal of a
$452,000 deferred tax asset allowance that was previously provided for in fiscal
year 1997. We eliminated the valuation allowance in 1998 due to our belief that
current year activity made realization of such benefit more likely than not.

18
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS SHOULD BE READ IN CONJUNCTION WITH OUR CONSOLIDATED FINANCIAL
STATEMENTS AND NOTES APPEARING ELSEWHERE IN THIS PROSPECTUS.

OVERVIEW

We opened our first high-quality, quick-service Mexican restaurant in 1983,
and grew steadily through 1994, at which time we operated 17 units. We
accelerated the number of restaurant openings in recent years, going from six
new restaurants opened in 1995 to 16 in 1998. We continue to accelerate the
number of restaurant openings, with 20 additional units to be opened in 1999 and
36 new units planned in 2000. We have opened eight new restaurants so far in
1999.

As a result of our rapid expansion, period to period comparisons of our
financial results may not be meaningful. When a new unit opens, it will
typically incur higher than normal levels of food and labor costs until new
personnel gain experience. Hourly labor schedules are gradually adjusted
downward during the first three months of a restaurant opening, in order to
reach operating efficiencies similar to those at established units. In
calculating comparable restaurant sales, we introduce a restaurant into our
comparable restaurant base once it has been in operation for 15 calendar months.

Throughout our history, we have sought to evolve our concept and menu in
order to meet the changing needs and taste preferences of our guests. From
January through April 1997, we modified our restaurant concept to include a
broader menu selection and updated our restaurant decor. To reflect these
additions and improvements in our concept, we changed our name to "Rubio's Baja
Grill, Home of the Fish Taco" from "Rubio's, Home of the Fish Taco." During this
time we added and deleted various menu items, upgraded other menu items and
increased prices on selected items. We believe that this concept modification
was a critical factor influencing the comparable restaurant sales increases of
18.0% reported in 1997 and 10.4% reported in 1998. Since the spring of 1997, our
sales and costs reflect these higher quality, higher cost and higher priced menu
items and may not be comparable to historical comparable period results.

In conjunction with the modification of our restaurant concept, we increased
our marketing expenditures from $515,000 in 1996 to $1.1 million in 1997 and
$1.4 million in 1998. In particular, we increased media spending and, we
believe, used this medium more efficiently to augment growth in our sales base.
We believe our restaurant sales are favorably impacted by radio and television
advertising and that this advertising helped to contribute to the comparable
restaurant sales increases in both 1997 and 1998.

Sales represents gross sales less sales taxes, coupons and other discounts.
Cost of sales is composed of food, beverage and paper supply expenses.
Components of restaurant labor, occupancy and other expenses include direct
hourly and management wages, bonuses, fringe benefit costs, rent and other
occupancy costs, advertising and promotion, operating supplies, utilities,
maintenance and repairs and other operating expenses.

General and administrative expenses include all corporate and administrative
functions that support existing operations and provide infrastructure to
facilitate our future growth. Components of this category include management,
supervisory and staff salaries and employee benefits, travel, information
systems, training, corporate rent and professional and consulting fees.

Pre-opening costs, which are expensed as incurred, consist of the costs of
hiring and training the initial workforce, travel, the cost of food used in
training, the cost of the initial stocking of operating supplies and other
direct costs related to the opening.

19
<PAGE>
We have leased all of our facilities, except for one building, in order to
minimize the cash investment associated with each unit. The majority of our
leases are for 10-year terms and include options to extend the terms. The
majority of our leases also include both fixed rate and percentage-of-sales rent
provisions.

We use a 52- or 53-week fiscal year ending on the Sunday nearest December
31. Fiscal years 1996, 1997 and 1998 each consisted of 52 weeks. The three-month
periods ended March 29, 1998 and March 28, 1999 each consisted of 13 weeks.

RESULTS OF OPERATIONS

Our operating results, expressed as a percentage of sales, were as follows:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
FISCAL ------------------------
------------------------------- MARCH 29, MARCH 28,
1996 1997 1998 1998 1999
--------- --------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sales...................................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales............................................ 26.0 29.2 29.2 29.0 29.5
Restaurant labor, occupancy and other.................... 53.5 52.6 50.6 53.1 50.4
General and administrative expenses...................... 16.3 14.3 13.8 15.5 14.4
Depreciation and amortization............................ 3.8 4.2 4.4 4.6 4.5
Pre-opening expenses..................................... 0.1 0.9 0.7 0.6 0.7
Loss on asset impairment................................. -- 1.3 -- -- --
--------- --------- --------- ----- -----
Operating income (loss).................................... 0.3 (2.5) 1.3 (2.8) 0.5
Other income (expense):
Interest income (expense), net........................... 0.1 (0.3) 0.6 0.9 --
Miscellaneous income (expense)........................... -- -- -- -- --
Gain (loss) on disposal/sale of property................. -- (0.2) -- 0.1 --
--------- --------- --------- ----- -----
Total other income (expense)........................... 0.1 (0.5) 0.6 1.0 --
--------- --------- --------- ----- -----
Income (loss) before income taxes.......................... 0.4 (3.0) 1.9 (1.8) 0.5
Income tax (expense) benefit............................... -- (0.3) 0.1 (0.1) (0.2)
--------- --------- --------- ----- -----
Net income (loss).......................................... 0.4% (3.3)% 2.0% (1.9 )% 0.3%
--------- --------- --------- ----- -----
--------- --------- --------- ----- -----
</TABLE>

QUARTER ENDED MARCH 28, 1999 COMPARED TO THE QUARTER ENDED MARCH 29, 1998

Results of operations reflect a full quarter of operations for 59
restaurants and 43 restaurants for the quarters ended March 28, 1999 and March
29, 1998, respectively. Results of operations also reflect a partial quarter of
operations for five and three restaurants for the quarters ended March 28, 1999
and March 29, 1998, respectively. Net income for the three months ended March
31, 1999 was $45,000 as compared to a net loss of $180,000 in the same period in
1998. Net loss attributable to common stockholders for the first quarter of 1999
was $41,000 as compared to a net loss of $267,000 in the same period during
1998. The factors contributing to these results are discussed below.

SALES. Sales increased $5.2 million, or 56.5%, to $14.4 million in the
first quarter of 1999 from $9.2 million in the first quarter of 1998. This
increase was principally due to the realization of a full quarter of operations
from the 16 units opened in 1998 resulting in sales of $3.5 million in the first
quarter of 1999 and $608,000 in sales derived from the five units opened in
1999, along with a comparable unit sales increase of $1.1 million, or 13.7%. The
comparable unit sales increase was driven by the success of a 99-cent fish taco
radio promotion in the first quarter of 1999, combined with slightly

20
<PAGE>
weaker sales in 1998 as a result of poor weather related to El Nino. We also
introduced a price increase of approximately 1.5% at the beginning of 1999.

COST OF SALES. Cost of sales as a percentage of sales increased to 29.5% in
1999 from 29.0% in 1998 primarily due to increases in the cost of food items.

RESTAURANT LABOR, OCCUPANCY AND OTHER. Restaurant labor, occupancy and
other decreased as a percentage of sales to 50.4% in 1999 from 53.1% in 1998.
This reduction was due primarily to lower labor, minimum rent and other fixed
unit operating expenses as a result of the efficiencies associated with
increased unit sales.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $2.1 million in the first quarter of 1999 from $1.4 million in the
first quarter of 1998. The increase is principally due to $182,000 in accrued
executive bonus expense resulting from our strong first quarter performance,
$131,000 in salaries and benefits related to the hiring of additional corporate
employees and field management personnel required to support and manage unit
expansion, $93,000 in management recruiting costs, and $242,000 in other
corporate level expenses related to our business growth. General and
administrative expenses decreased as a percentage of sales to 14.4% in the first
quarter of 1999 from 15.5% in the first quarter of 1998 primarily due to our
expanding revenue base.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$641,000 in the first quarter of 1999 from $426,000 in 1998. The increase was
primarily due to the additional depreciation on the new units opened during 1998
and during the first quarter of 1999.

PRE-OPENING EXPENSES. Pre-opening expenses increased to $94,000 in the
first quarter of 1999 from $51,000 in the first quarter of 1998 primarily due to
the increase in unit openings to five in the first quarter of 1999 compared to
three in the first quarter of 1998.

INTEREST INCOME (EXPENSE), NET. Net interest income decreased to $7,000 in
the first quarter of 1999 from $79,000 in net interest income in the first
quarter of 1998. This decrease is primarily due to a decrease in cash available
for investing, which resulted in a decline of interest income to $63,000 in the
first quarter of 1999 from $137,000 in the first quarter of 1998. The decrease
in cash available to generate interest income resulted from the use of these
funds for the development of new restaurants.

INCOME TAXES. The provision for income taxes in the first quarter of 1999
and 1998 is based on the annual effective tax rate applied to the respective
quarter's pretax book income (loss). The 40% tax rate applied in the first
quarter of 1999 comprises the federal and state statutory rates based on the
estimated annual effective rate for 1999. The 7.8% tax rate applied in the first
quarter of 1998 is primarily a result of the recognition of 1997 net deferred
tax assets previously valued, due to fiscal 1998 net income and the future
realizability of such net deferred tax assets.

YEAR ENDED DECEMBER 27, 1998 COMPARED TO YEAR ENDED DECEMBER 28, 1997

Results of operations reflect a full year of operations of 43 restaurants
and 31 restaurants for the years ended December 27, 1998 and December 28, 1997,
respectively. Results of operations also reflect partial year of operations of
16 restaurants and 12 restaurants for the years ended December 27, 1998 and
December 28, 1997, respectively. Net income in 1998 was $915,000 as compared to
a net loss of $1,000,000 in 1997. Net income attributable to common stockholders
for 1998 was $568,000 as compared to a net loss of $1,095,000 in 1997. Net
income for fiscal year 1998 was favorably impacted by the reversal of a $452,000
deferred tax asset allowance that was previously provided for in fiscal year
1997. The factors contributing to these results are discussed below.

SALES. Sales increased $15.0 million, or 50.5%, to $44.7 million in 1998
from $29.7 million in 1997. This increase was principally due to $6.4 million in
sales generated by a full year of operations from 12

21
<PAGE>
units opened in 1997 and $5.7 million in sales derived from the 16 units opened
in 1998, along with a comparable unit sales increase of $2.8 million, or 10.4%.
The comparable unit sales increase was driven both by the momentum generated by
the Baja Grill concept, as well as the success of the lobster burrito promotion,
which took place from June through September 1998. We also introduced a price
increase of approximately 1.5% at the beginning of 1998.

COST OF SALES. Cost of sales as a percentage of sales remained constant at
29.2% in 1998 and 1997.

RESTAURANT LABOR, OCCUPANCY AND OTHER. Restaurant labor, occupancy and
other decreased as a percentage of sales to 50.6% in 1998 from 52.6% in 1997.
This reduction was due primarily to lower labor, minimum rent and other fixed
unit operating expenses as a percentage of sales as a result of the efficiencies
associated with increased unit sales. In addition, there were non-recurring
expenses incurred in 1997, related to the modification of our restaurant
concept. These one-time expenses included higher levels of hourly employee
training and operating supplies, resulting in higher 1997 total expenses in this
category.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $6.1 million in 1998 from $4.3 million in 1997, primarily due to
$1.0 million in salary and benefits related to the hiring of additional
corporate employees and field management required to support and manage unit
expansion, $296,000 related to a senior management bonus expense incurred in
1998 which was not incurred in 1997, and $586,000 in other corporate level
expenses related to our business growth. General and administrative expenses
decreased as a percentage of sales to 13.8% in 1998 from 14.3% in 1997 primarily
due to our expanding revenue base.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$1.9 million in 1998 from $1.3 million in 1997. The increase was primarily due
to the additional depreciation on the 16 new units opened during 1998.

PRE-OPENING EXPENSES. Pre-opening expenses increased to $319,000 in 1998
from $271,000 in 1997 primarily due to the increase in unit openings in 1998 to
16 from 12 in the prior period.

LOSS ON ASSET IMPAIRMENT. There was no loss on asset impairment in 1998.
Loss on asset impairment of $387,000 in 1997 reflects the difference between the
carrying value and the estimated fair value of the assets of one restaurant
location.

INTEREST INCOME (EXPENSE), NET. Net interest income increased to $268,000
in 1998 from $75,000 in net interest expense in 1997. This increase was
primarily due to an increase in interest income from $188,000 in 1997 to
$521,000 in 1998 resulting from interest and other investment income associated
with the investment of the net proceeds from our $10.1 million preferred stock
private placement in November 1997.

INCOME TAXES. The provision (benefit) for income taxes in 1998 and 1997 is
based on the approximate tax rate applied to the respective year's pre-tax book
income (loss). The 7.8% tax benefit applied in 1998 is primarily a result of the
recognition of prior year net deferred tax assets previously valued, due to the
current year net income and the future realizability of such net deferred tax
assets.

YEAR ENDED DECEMBER 28, 1997 COMPARED TO YEAR ENDED DECEMBER 29, 1996

Results of operations reflect a full year of operations of 31 restaurants
and 23 restaurants for the years ended December 28, 1997 and December 29, 1996,
respectively. Results of operations also reflect a partial year of operations of
12 restaurants and eight restaurants for the years ended December 28, 1997 and
December 29, 1996, respectively. Net loss in 1997 was $1,000,000 as compared to
net income

22
<PAGE>

of $72,000 in 1996. Net loss attributable to common stockholders for 1997 was
$1,095,000 as compared to net income of $3,000 in 1996. The factors contributing
to these results are discussed below.

SALES. Sales increased $10.2 million, or 52.1%, to $29.7 million in 1997
from $19.5 million in 1996. This increase was principally due to $3.1 million in
sales generated by a full year of operations from eight units opened in 1996 and
$3.9 million in sales derived from the 12 units opened in 1997, along with a
comparable unit sales increase of $3.2 million or 18.0% driven primarily by the
modification to the Baja Grill concept and related promotional campaigns.

COST OF SALES. Cost of sales as a percentage of sales increased to 29.2% in
1997 from 26.0% in 1996, primarily due to the modification to the Baja Grill
concept. The new menu items offered with the Baja Grill menu, particularly those
containing chargrilled chicken and steak, reflect higher food cost percentages
than items replaced or retained from the previous menu.

RESTAURANT LABOR, OCCUPANCY AND OTHER. Restaurant labor, occupancy and
other decreased as a percentage of sales to 52.6% in 1997 from 53.5% in 1996.
This reduction was due primarily to a decrease in unit minimum rent as a
percentage of sales resulting from our expanding revenue base.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased to $4.3 million in 1997 from $3.2 million in 1996, primarily due to
$697,000 in salaries and benefits related to the hiring of additional corporate
employees and field management personnel required to support and manage unit
expansion and $384,000 in other corporate level expenses related to our business
growth. General and administrative expenses decreased as a percentage of sales
to 14.3% in 1997 from 16.3% in 1996 due primarily to our expanding revenue base.

DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased to
$1.3 million in 1997 from $735,000 in 1996. This $524,000 increase was primarily
due to the additional depreciation on the 12 new units opened during 1997 as
well as the depreciation of the fixed assets purchased in conjunction with the
modification to the Baja Grill concept.

PRE-OPENING EXPENSES. Pre-opening expenses increased to $271,000 in 1997
from $18,000 in 1996 primarily due to the increase in unit openings in 1997 to
12 from eight in the prior period. Prior to the third quarter of 1996, we did
not report pre-opening expenses separately from recurring restaurant expense
categories on our income statement.

LOSS ON ASSET IMPAIRMENT. Loss on asset impairment of $387,000 in 1997
reflects the difference between the carrying value and the estimated fair value
of the assets of one restaurant location.

GAIN (LOSS) ON DISPOSAL/SALE OF PROPERTY. The $56,000 loss on the sale of
property in 1997 resulted primarily from the disposal of assets in conjunction
with the modification of units to the Baja Grill concept.

INTEREST INCOME (EXPENSE), NET. Net interest expense increased to $75,000
in 1997 from $17,000 in net interest income in 1996. This decrease was primarily
due to less cash invested in short-term instruments. This net reduction in
interest was offset by an increase in borrowing related to the new restaurant
financings.

INCOME TAXES. The provision for income taxes in 1997 and 1996 is based on
the approximate tax rate applied to each year's pretax book income. The 1997
provision for income tax was adjusted by a valuation allowance equal to the net
deferred tax asset due to uncertainty as to its realization.

23
<PAGE>
QUARTERLY RESULTS

The following tables set forth unaudited quarterly information for the last
nine quarters. This quarterly information has been prepared on a basis
consistent with the audited consolidated financial statements and, we believe,
includes all adjustments, consisting of normal recurring adjustments, necessary
for a fair presentation of the information shown. Our quarterly operating
results may fluctuate significantly as a result of a variety of factors and
operating results for any quarter are not necessarily indicative of results for
a full fiscal year.
<TABLE>
<CAPTION>
FISCAL 1997
--------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT NUMBER OF RESTAURANTS)
<S> <C> <C> <C> <C>
Sales................................. $ 6,143 $ 7,449 $ 8,162 $ 7,950
Costs and expenses:
Cost of sales....................... 1,761 2,208 2,341 2,349
Restaurant labor, occupancy and
other............................. 3,361 3,906 4,032 4,340
General and administrative
expenses.......................... 1,003 1,149 1,036 1,065
Depreciation and amortization....... 235 312 332 380
Pre-opening expenses................ 26 40 47 158
Loss on asset impairment............ -- -- -- 387
----------- ----------- ----------- -----------
Operating income (loss)........... (243) (166) 374 (729)
Other income (expense):
Interest income (expense), net...... (1) (31) (42) (1)
Miscellaneous income (expense)...... -- -- (3) (3)
Gain (loss) on disposal/sale of
property.......................... (45) (11) 1 (1)
----------- ----------- ----------- -----------
Total other income (expense)........ (46) (42) (44) (5)
----------- ----------- ----------- -----------
Income (loss) before income taxes..... (289) (208) 330 (734)
Income tax benefit (expense).......... (31) (23) 36 (81)
----------- ----------- ----------- -----------
Net income (loss)................... $ (320) $ (231) $ 366 $ (815)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------

Number of restaurants at end of
period.............................. 33 35 38 43

<S> <C> <C> <C> <C> <C>
Sales................................. $ 9,217 $ 10,907 $ 12,935 $ 11,640 $ 14,383
Costs and expenses:
Cost of sales....................... 2,671 3,180 3,832 3,390 4,247
Restaurant labor, occupancy and
other............................. 4,895 5,433 6,217 6,071 7,254
General and administrative
expenses.......................... 1,428 1,488 1,674 1,558 2,075
Depreciation and amortization....... 426 482 495 543 641
Pre-opening expenses................ 51 42 80 146 94
Loss on asset impairment............ -- -- -- -- --
------ ----------- ----------- ----------- -----------
Operating income (loss)........... (254) 282 637 (68) 72
Other income (expense):
Interest income (expense), net...... 79 51 54 83 7
Miscellaneous income (expense)...... 2 (9) (1) (2) --
Gain (loss) on disposal/sale of
property.......................... 6 (2) (2) (7) (4)
------ ----------- ----------- ----------- -----------
Total other income (expense)........ 87 40 51 74 3
------ ----------- ----------- ----------- -----------
Income (loss) before income taxes..... (167) 322 688 6 75
Income tax benefit (expense).......... (13) 25 54 -- (30)
------ ----------- ----------- ----------- -----------
Net income (loss)................... $ (180) $ 347 $ 742 $ 6 $ 45
------ ----------- ----------- ----------- -----------
------ ----------- ----------- ----------- -----------
Number of restaurants at end of
period.............................. 46 49 52 59 64
</TABLE>

Our operating results for the nine fiscal quarters expressed as a percentage
of sales were as follows:
<TABLE>
<CAPTION>
FISCAL 1997
--------------------------------------------------
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales................................. 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales....................... 28.7 29.6 28.7 29.5
Restaurant labor, occupancy and
other............................. 54.7 52.4 49.4 54.6
General and administrative
expenses.......................... 16.3 15.4 12.7 13.4
Depreciation and amortization....... 3.8 4.2 4.1 4.8
Pre-opening expenses................ 0.4 0.5 0.6 2.0
Loss on asset impairment............ -- -- -- 4.9
----- ----- ----- -----
Operating income (loss)............. (3.9) (2.1) 4.5 (9.2)
Other income (expense):
Interest income (expense), net...... -- (0.4) (0.5) --
Miscellaneous income (expense)...... -- -- -- --
Gain (loss) on disposal/sale of
property.......................... (0.7) (0.1) -- --
----- ----- ----- -----
Total other income (expense)........ (0.7) (0.5) (0.5) --
----- ----- ----- -----
Income (loss) before income taxes..... (4.6) (2.6) 4.0 (9.2)
Income tax benefit (expense).......... (0.5) (0.3) 0.4 (1.0)
----- ----- ----- -----
Net income (loss)..................... (5.1)% (2.9 )% 4.4% (10.2)%
----- ----- ----- -----
----- ----- ----- -----

<CAPTION>
FISCAL 1998 FISCAL 1999
----------------------------------------------------- -----------
FIRST SECOND THIRD FOURTH FIRST
QUARTER QUARTER QUARTER QUARTER QUARTER
------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sales................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Costs and expenses:
Cost of sales....................... 29.0 29.2 29.6 29.1 29.5
Restaurant labor, occupancy and
other............................. 53.1 49.8 48.1 52.2 50.4
General and administrative
expenses.......................... 15.5 13.6 12.9 13.4 14.4
Depreciation and amortization....... 4.6 4.4 3.8 4.7 4.5
Pre-opening expenses................ 0.6 0.4 0.6 1.2 0.7
Loss on asset impairment............ -- -- -- -- --
----- ----- ----- ----- -----
Operating income (loss)............. (2.8) 2.6 5.0 (0.6) 0.5
Other income (expense):
Interest income (expense), net...... 0.9 0.5 0.4 0.7 --
Miscellaneous income (expense)...... -- (0.1) -- -- --
Gain (loss) on disposal/sale of
property.......................... 0.1 -- -- -- --
----- ----- ----- ----- -----
Total other income (expense)........ 1.0 0.4 0.4 0.7 --
----- ----- ----- ----- -----
Income (loss) before income taxes..... (1.8) 3.0 5.4 0.1 0.5
Income tax benefit (expense).......... (0.1) 0.2 0.4 -- (0.2)
----- ----- ----- ----- -----
Net income (loss)..................... (1.9 )% 3.2% 5.8% 0.1% 0.3%
----- ----- ----- ----- -----
----- ----- ----- ----- -----
</TABLE>

24
<PAGE>
Historically, we have experienced seasonal variability in our quarterly
operating results with higher sales per restaurant in the second and third
quarters than in the first and fourth quarters. The higher sales in the second
and third quarters affect profitability by reducing the impact of our
restaurants' fixed and semi-fixed costs, as well as through increased revenues.
This seasonal impact on our operating results is expected to continue.

INFLATION

Components of our operations subject to inflation include food, beverage,
lease and labor costs. Our leases require us to pay taxes, maintenance, repairs,
insurance and utilities, all of which are subject to inflationary increases. We
believe inflation has not had a material impact on our results of operations in
recent years.

LIQUIDITY AND CAPITAL RESOURCES

We have funded our capital requirements in recent years through cash flow
from operations, private placements of preferred stock and bank debt. We
generated $4.2 million in cash flow from operating activities in 1998, $2.0
million in 1997 and $1.4 million in 1996. From 1995 through 1997, we raised
approximately $16.8 million, net of financing costs, from the sale of preferred
stock. We have also financed our capital requirements through bank borrowings.
As of March 28, 1999, the balance outstanding under our term loan agreement with
BankBoston, N.A. was approximately $1.7 million. On April 1, 1999 the loan
agreement was amended to provide for the outstanding balance to bear interest at
the lesser of (1) LIBOR adjusted by the statutory reserve rate plus 3.0%, or (2)
the greater of the bank's base rate plus 0.75% or the Federal Funds Effective
Rate plus 1.5%. In addition, we have a $7.5 million line of credit agreement
with BankBoston, which bears interest at the same rate as the term loan. As of
April 9, 1999, there was approximately $1.0 million outstanding under this
agreement.

Our principal financial needs arise from the development and opening of new
units. We incurred capital expenditures of approximately $6.9 million during
1998, of which $6.6 million was for new unit openings. In 1997 we incurred
approximately $6.4 million in capital expenditures, of which $5.0 million was
for new unit openings and $1.0 million for the modification to the Baja Grill
concept. In 1996, we incurred $3.0 million in capital expenditures, of which
$2.6 million was for new unit openings.

Total capital expenditures in 1999 are expected to be approximately $11.7
million, of which approximately $10.0 million is expected to be invested in the
opening of new restaurants. Approximately $2.6 million of this was incurred in
the first quarter. We plan to open 28 units in 1999, and 36 units in 2000. We
expect that future locations will generally cost approximately $360,000 per unit
net of landlord allowances and excluding pre-opening expenses. Pre-opening
expenses are expected to average approximately $20,000 per restaurant.

We lease restaurant and office facilities and real property under operating
leases expiring through 2013. As of the date of this prospectus, our future
minimum lease payments for our headquarters and restaurants are as follows: $4.4
million in 1999, $5.0 million in 2000, $5.0 million in 2001, $4.9 million in
2002, and $4.9 million in 2003 and $19.4 million thereafter.

We believe that the proceeds from this offering, together with anticipated
cash flow from operations and funds anticipated to be available from a credit
facility, will be sufficient to satisfy our working capital and capital
expenditure requirements for at least the next 12 months. We plan to incur
substantial costs over the near term in connection with our expansion program.
Changes in our operating plans, acceleration of our expansion plans, lower than
anticipated sales, increased expenses, potential acquisitions or other events
may cause us to seek additional financing sooner than anticipated. Additional
financing may not be available on acceptable terms, or at all. Failure to obtain
additional financing as needed could have a material adverse effect on our
business and results of operations.

25
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risk exposures are related to our cash, cash equivalents and
investments. We invest our excess cash in highly liquid short-term investments
with maturities of less than one year and U.S. Treasury notes and
mortgage-backed securities with maturities in excess of one year. We do not feel
these are a significant market risk.

YEAR 2000 READINESS DISCLOSURE

Historically, most computer databases, as well as embedded microprocessors
in computer systems and industrial equipment, were designed with date data using
only two digits of the year. Most computer programs, computers and embedded
microprocessors controlling equipment were programmed to assume that all two
digit dates were preceded by "19," causing "00" to be interpreted as the year
1900. This formerly common practice now could result in a computer system or
embedded microprocessor which fails to recognize properly a year that begins
with "20," rather than "19." This in turn could result in computer system
miscalculations or failures, as well as failures of equipment controlled by date
sensitive microprocessors, and is generally referred to as the "year 2000"
issue.

OUR STATE OF YEAR 2000 READINESS

We have reviewed both our information technology and our non-information
technology systems to determine whether they are year 2000 compliant. We have
not identified any material systems which are not year 2000 compliant. We have
initiated formal communications with all significant supplier and service
providers to determine the extent to which we are vulnerable to those third
parties' failures to solve their year 2000 problem. We have received written
assurances of year 2000 compliance from a majority of the third parties with
whom we have relationships, including our point-of-sale, payroll, and credit
card service providers. Testing and replacement of all systems is scheduled to
be completed by July 1, 1999. We intend to continue to make efforts to ensure
that third parties with whom we have relationships are year 2000 compliant.

THE COSTS TO ADDRESS OUR YEAR 2000 ISSUES

We estimate that we have incurred costs of less than $25,000 to date in
connection with our year 2000 plan. We currently estimate the total costs of
completing our year 2000 plan, including costs incurred to date, to be less than
$50,000. This estimate is based on currently available information and will be
updated as we continue our assessment of third-party relationships, proceed with
our testing and implementation and design contingency plans.

THE RISKS OF OUR YEAR 2000 ISSUES

If any information technologies or embedded microprocessor technology
systems critical to our operations have been overlooked, there could be a
material adverse effect on our business or results of operations of a magnitude
which we have not yet fully analyzed. If the vendors of most important goods and
services or the suppliers of our necessary energy, telecommunications and
transportation needs, fail to provide us with:

- the materials and services which are necessary to produce, distribute and
sell our products;

- the electrical power and other utilities necessary to sustain our
operations; or

- reliable means of transporting supplies to our restaurants, such failure
could affect our ability to sell product which could have a material
adverse effect on our business or results of operations.

26
<PAGE>
OUR CONTINGENCY PLAN

We are in the initial stages of developing a business contingency plan to
address both unavoided and unavoidable year 2000 risks. This plan currently
includes developing and maintaining relationships with several suppliers of
services and products to mitigate a "worst case" scenario in which one or more
of our suppliers are not year 2000 compliant. Although we expect to have the
plan well-developed and costs of the plan estimated by July 31, 1999,
enhancements and revisions will be continuously considered and implemented as
appropriate.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including derivative instruments embedded
in other contracts, and for hedging activities. SFAS No. 133 is effective for
all fiscal quarters of fiscal years beginning after June 15, 1999. We have not
yet assessed the effect of this standard on our current reporting and
disclosures.

In April 1998, Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" was issued by the Accounting Standards Executive Committee.
SOP 98-5 provides guidance on the financial reporting of start-up costs and
organization costs. It requires costs of start-up activities and organization
costs to be expensed as incurred, and is effective for fiscal years beginning
after December 15, 1998. We chose to early adopt this SOP for the fiscal year
ended December 28, 1997. The adoption of this SOP did not have a material effect
on our operations.

27
<PAGE>
BUSINESS

THIS PROSPECTUS MAY CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. OUR ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS
DISCUSSED IN ANY FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS."

We own and operate high-quality, quick-service Mexican restaurants that
offer traditional Mexican cuisine combined with fresh seafood indicative of the
Baja region of Mexico. Our restaurants are located predominately in the
southwest region of the United States.

RUBIO'S BAJA GRILL CONCEPT

The Rubio's Baja Grill concept successfully evolved from the original
"Rubio's, Home of the Fish Taco" concept, which our co-founder Ralph Rubio first
developed following his college spring break trips to the Baja peninsula of
Mexico in the mid-1970s. Ralph opened the first Rubio's restaurant with his
father, Rafael, over 16 years ago in the Mission Bay area of San Diego. Building
on the success of our original "fish taco" concept, we later expanded our menu
offerings and upgraded our store layout to appeal to a broader customer base. We
seek to differentiate our restaurants by providing high-quality Mexican food in
a quick-service environment. We believe the "Rubio's Baja Grill" concept is
uniquely positioned between the quick-service and casual dining segments of the
restaurant industry. The critical elements of our market positioning are as
follows:

- DISTINCTIVE, FRESH, HIGH-QUALITY FOOD. We seek to differentiate ourselves
from other quick-service and fast food Mexican restaurants by offering
high-quality products made-to-order using authentic regional Baja Mexican
recipes. We have experienced a high degree of success to date developing
distinctive and flavorful offerings that generate strong customer loyalty
and are often described as "craveable." Our signature items include our
Baja-style fish tacos as well as limited time promotions such as our
lobster burrito and tequila shrimp burrito. Our menu is served at both
lunch and dinner. It features a variety of other freshly prepared items,
including tacos and burritos made with chargrilled chicken, steak, mahi
mahi and shrimp, as well as grilled quesadillas. Freshly prepared salsas
are offered at our complimentary salsa bar. Our menu also includes reduced
fat "Healthmex" offerings and "Kid Pesky" meals designed for children.

- CASUAL, FUN DINING EXPERIENCE. We strive to promote an enjoyable overall
customer experience by creating a fun and relaxed setting in each of our
restaurants. Unlike the generic decor of a typical fast food restaurant,
our restaurants are designed to create an authentic personality capturing
the relaxed, beach-like atmosphere of the Baja region of Mexico. Our
design elements include colorful Mexican tiles, saltwater aquariums with
tropical fish, Baja beach photos and tropical prints, surfboards on the
walls and authentic palm-thatched patio umbrellas, or palapas, in most
existing locations.

- EXCELLENT DINING VALUE. Our restaurants offer guests high-quality food
typically associated with sit-down, casual dining restaurants at
quick-service prices. In addition to favorable prices, we offer the
convenience and rapid delivery of a traditional quick-service format. We
provide guests a clean and comfortable environment in which to enjoy their
meal on site. We also offer guests the convenience of take-out service. We
believe the strong value we deliver to our customers is critical to
building strong repeat business and customer loyalty.

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<PAGE>
OUR BUSINESS STRATEGIES

Our business objective is to become the leading high-quality, quick-service
Mexican restaurant brand nationwide. In order to achieve our business objective,
we have developed the following strategies:

- CREATE A DISTINCTIVE CONCEPT AND BRAND. Our restaurants provide guests
with a distinctive dining experience which, we believe, helps promote
frequent visiting patterns and strong customer loyalty. We continue to
focus on several key initiatives designed to enhance the performance of
our existing restaurants and strengthen our brand identity. These
initiatives include developing and expanding proprietary menu offerings
such as the Baja-style fish taco, lobster burrito and "Baja Bowl," a
flavorful combination of chargrilled steak or chicken served over rice and
beans with fresh tomatoes, onions and cilantro. In addition, we focus on
securing high-visibility, high-traffic store locations and promoting the
awareness of our brand through comprehensive regional and local media
campaigns. As a result of these initiatives, we experienced comparable
store sales increases of 10.4% in 1998 and 18.0% in 1997.

- ACHIEVE ATTRACTIVE RESTAURANT-LEVEL ECONOMICS. We believe that we have
been able to achieve attractive operating results due to the broad appeal
of our concept, careful site selection and cost-effective development,
consistent application of our management and training programs and
favorable product costs. We utilize centralized information and accounting
systems which allow our management to monitor and control labor, food and
other direct operating expenses, and provide them with timely access to
financial and operating data. We believe we achieve a lower-than-average
product cost compared to our competitors, due to the popularity of our
fish items versus higher-cost items such as chicken and steak. We also
believe that our culture and emphasis on training leads to a lower
employee turnover ratio, and therefore higher productivity, compared to
many of our competitors.

- EXECUTE DISCIPLINED EXPANSION STRATEGY. We believe that our restaurant
concept has broad national appeal and that, as a result, we have
significant opportunities to expand our operations and generate attractive
unit level economics. With the addition of selected senior management in
operations, development, marketing and finance in 1996, we implemented an
accelerated expansion strategy. Our current expansion plan calls for us to
open 28 restaurants in 1999 and 36 restaurants in 2000. Through our
rigorous site selection process and criteria developed by our real estate
committee, we principally target high-traffic, high-visibility locations
in urban and suburban markets with medium to high family income levels.

- ENSURE HIGH-QUALITY GUEST EXPERIENCE. We strive to provide a consistent,
high-quality guest experience in order to generate frequent visiting
patterns and brand loyalty. To achieve this goal, we focus on creating a
fun, team-like culture for our restaurant employees, which we believe
fosters a friendly and inviting atmosphere for our guests. Through
extensive training, experienced restaurant-level management and rigorous
operational controls, we seek to ensure prompt, friendly and efficient
service to our guests. Our commitment to making each guest's experience a
consistently positive one is evidenced by Rubio's list of "House Rules",
which is prominently displayed in each restaurant and defines the high
level of quality and service our guests can expect from us. Overall, we
design our concept to appeal to a broad variety of guests, including
families, and believe the cleanliness of our facilities provides an
additional advantage over many of our competitors.

29
<PAGE>
UNIT ECONOMICS

In 1998, the 43 units open the entire year generated on a per unit basis
average sales of $901,000, average operating income of $148,000, or 16.4% of
sales, and average cash flow of $183,000, or 20.3% of sales. Comparable
restaurant sales increased 10.4% in 1998, following an 18.0% increase in 1997.
In addition, comparable restaurant sales increased 13.7% in the first quarter of
1999, as compared to a 7.6% increase in the same period of 1998.

We currently have 12 units open outside California. Of these, three units
have over 12 months of operating results. These units generated average sales of
$972,000 for the most recent 12 months, average operating income of $149,000, or
15.0% of sales, and average cash flow of $200,000 or 20.5% of sales. These
results are not necessarily indicative of the results we will obtain in
connection with the other units currently open, or those we may open in the
future.

We currently lease all of our restaurant locations with the exception of one
owned building. We plan to continue to lease substantially all of our future
restaurant locations in order to minimize the cash investment associated with
each unit. Our site selection strategy is to locate our restaurants in
high-profile, high-traffic locations, preferably on an end-cap location in line
with other retail properties.

Historically, the size of our restaurants has generally ranged from 1,800 to
3,000 square feet, excluding our smaller, food court locations. We expect the
size of our future sites to range from 2,000 to 2,400 square feet. We intend to
continue to develop restaurants that will require, on average, a total cash
investment of approximately $380,000, including pre-opening expenses of $20,000.

30
<PAGE>
EXISTING AND PROPOSED LOCATIONS

The following table sets forth information about our existing and proposed
units. We currently operate 27 restaurants in San Diego county, 28 restaurants
in greater Los Angeles, which includes Los Angeles, Orange, San Bernardino and
Riverside counties, six restaurants in Phoenix, Arizona, four restaurants in Las
Vegas, Nevada and two restaurants in Denver, Colorado. In addition, we license
our concept to other restaurant operators for three non-traditional locations at
Qualcomm Stadium, the San Diego International Airport food court and the Del Mar
Thoroughbred Club. Four of the 20 units we plan to open in the balance of 1999
are under construction. We have signed leases for an additional 19 units. The
majority of our units are in high-traffic retail centers, and are not
stand-alone units.

<TABLE>
<CAPTION>
SQUARE
LOCATIONS DATE OPENED FOOTAGE
- ------------------------- ----------------- -----------
<S> <C> <C>
SAN DIEGO AREA
Mission Bay............ January 1983 1,800
San Diego State
University........... March 1986 1,300
Pacific Beach.......... August 1987 1,800
Point Loma............. March 1988 2,995
San Marcos............. July 1988 1,900
Chula Vista............ October 1988 2,262
Encinitas.............. October 1989 3,250
El Cajon............... July 1990 3,000
Kearny Mesa............ October 1990 2,900
University Towne
Centre............... April 1991 1,992
Solana Beach........... May 1992 2,207
Downtown San Diego..... August 1992 2,100
Carmel Mountain Ranch.. December 1993 2,262
Mission Valley......... August 1995 2,658
Grossmont.............. December 1995 2,914
La Jolla............... February 1996 2,350
San Diego Hall of
Justice (Food
Court)............... June 1996 619
Carlsbad............... October 1996 2,450
Hillcrest.............. December 1996 2,650
Vista.................. October 1997 2,000
Mission Gorge.......... December 1997 2,352
Rancho Bernardo........ March 1998 2,270
Fashion Valley Food
Court................ April 1998 870
Rancho Del Rey......... October 1998 2,000
Rancho San Diego....... January 1999 2,038
Parkway Plaza.......... February 1999 2,685
Del Mar................ April 1999 2,000
Under
Oceanside.............. construction 2,480
Scripps Ranch.......... Lease signed 2,000
San Marcos (Restaurant
Row)................. Lease signed 1,700
Ramona................. Lease signed 2,000
LOS ANGELES AREA
Tustin................. June 1991 2,397
Irvine................. August 1991 2,448
Temecula............... November 1994 2,916
Costa Mesa............. December 1994 2,201
Laguna Niguel.......... May 1995 2,418
Anaheim................ July 1995 2,985
Encino................. September 1995 2,673
Irvine Spectrum (Food
Court)............... December 1995 1,350
Manhattan Beach........ January 1996 3,600
Santa Ana.............. February 1996 2,400
Marina del Rey......... October 1996 2,027
La Habra............... December 1996 2,000
Cypress................ March 1997 2,070
Belmont Shore.......... March 1997 2,114
Mission Viejo.......... April 1997 2,322

<CAPTION>
SQUARE
LOCATIONS DATE OPENED FOOTAGE
- ------------------------- ----------------- -----------
<S> <C> <C>
LOS ANGELES AREA
(CONTINUED)
Cerritos............... August 1997 1,752
Torrance............... September 1997 2,500
Ontario................ October 1997 2,160
Rancho Cucamonga....... November 1997 2,235
San Clemente........... February 1998 2,154
Northridge............. March 1998 2,180
Villa Park............. April 1998 2,120
University of
California Los
Angeles (Food
Court)............... September 1998 960
Yorba Linda............ November 1998 1,996
The Block, Orange...... November 1998 2,000
Riverside.............. December 1998 2,000
Chino Hills............ December 1998 2,045
Monrovia............... April 1999 2,500
Under
Long Beach............. construction 1,372
Upland................. Lease signed 1,879
Brentwood.............. Lease signed 2,000
Placentia.............. Lease signed 2,100
West Covina............ Lease signed 2,000
Fountain Valley........ Lease signed 2,272
Oxnard................. Lease signed 2,000
Foothill Ranch Lease signed 2,008
PHOENIX AREA
Ahwatukee.............. April 1997 2,000
North Scottsdale....... September 1997 2,400
Gilbert................ May 1998 2,400
North Phoenix.......... August 1998 2,435
Agua Fria.............. November 1998 2,150
Chandler............... March 1999 2,100
Under
Tucson (Ina)........... construction 2,400
Tempe.................. Lease signed 2,000
Peoria................. Lease signed 2,000
Mesa................... Lease signed 2,200
Tucson (Campbell and
Glen)................ Lease signed 2,000
LAS VEGAS AREA
Henderson.............. December 1997 2,400
Summerlin.............. August 1998 2,100
The Lakes.............. December 1998 2,100
Tenaya................. January 1999 2,278
DENVER AREA
Lone Tree.............. March 1999 2,200
Belcaro................ April 1999 2,223
Northglenn............. Lease signed 2,300
Highlands Ranch Lease signed 2,300
SACRAMENTO, CALIFORNIA
Sacramento (Natomas)... Lease signed 2,000
Rocklin Lease signed 2,100
SALT LAKE CITY, UTAH
Under
Sugarhouse............. construction 2,500
Provo.................. Lease signed 2,236
</TABLE>

31
<PAGE>
EXPANSION AND SITE SELECTION

We plan to open 28 units during 1999, eight of which have opened to date,
and 36 units in 2000. Leases for 10 of the 36 units to be opened in 2000 have
been signed. We opened our first unit outside of California in Phoenix, Arizona
in April 1997. We currently operate a total of 12 units outside of California,
including six in Arizona, four in Las Vegas and two in Denver. We are
negotiating new leases in all of our current markets, in addition to Salt Lake
City, Sacramento and Minneapolis.

Our expansion strategy targets major metropolitan areas that have attractive
demographic characteristics. Once a metropolitan area is selected, we identify
viable trade areas that have high-traffic patterns, strong demographics, such as
high density of white collar families, medium to high family incomes, high
education levels, and density of both daytime employment and residential
developments, limited competition within the trade area and strong retail and
entertainment developments. Within a desirable trade area, we select sites that
provide specific levels of visibility, accessibility, parking, co-tenancy and
exposure to a large number of potential customers.

We believe that the quality of our site selection criteria is critical to
our continuing success. Therefore, our senior management team is actively
involved in the selection of each new market and specific site, personally
visiting all new markets and most sites or conducting a video site tour of all
sites prior to granting final approval. Each new market and site must be
approved by our Real Estate Site Acquisition Committee, which consists of
members of senior management. This process allows us to analyze each potential
location taking into account its effect on all aspects of our business.

In connection with our strategy to rapidly expand into selected markets, we
expect to evaluate the merits of initiating a franchising program. We are not
sure when or if we will decide to franchise our concept or how extensively we
will pursue such a strategy. Adopting a franchising strategy would require us to
devote management and financial resources to build the operational
infrastructure needed to support the franchise of our restaurants. If we
implemented a franchising program, we would earn revenue through initial
franchise fees payable to us by franchisees and through royalty income based on
a percentage of restaurant sales. Franchising programs typically involve
substantially lower initial cash investments compared to unit expansion
strategies where company-owned units are developed and leased. Franchising
programs involve risks. Please see "Risk Factors--If we adopt a franchising
strategy, we may be unsuccessful in executing a franchising program" for a
description of the risks associated with franchising programs.

Our menu features made-to-order burritos, soft-shell tacos, and quesadillas
made with marinated, chargrilled chicken breast and lean steak, as well as
seafood indicative of the Baja region of Mexico, such as chargrilled mahi mahi,
sauteed shrimp and our signature Baja-style fish taco. Side items including our
chips, beans and rice are all made fresh daily. Other ingredients, such as our
fresh, handmade guacamole, shredded natural cheeses and our zesty chipotle
sauce, also contribute to our quality image and distinctive flavor profiles. We
also offer a self-serve salsa bar where guests can choose from three different
salsas made fresh every day at each restaurant. Our prices range from $1.79 for
a Baja-style fish taco to $5.69 for a Cabo Combo, which includes a shrimp
burrito, fish taco, chips and beans. Most units also offer a selection of
imported Mexican and domestic beers.

To provide added variety, from time to time we introduce limited time
offerings such as our lobster burrito, tequila shrimp burrito, "killer" shark
tacos and Baja Bowls. Some of these items have been permanently added to the
menu, such as the Baja Bowl. Other items, such as the lobster burrito, are
offered seasonally due to limited availability.

Substantially all of our units include a HealthMex section on their menu and
Kid Pesky meals designed for children. Our HealthMex items are designed to have
less than 22% of their calories from

32
<PAGE>
fat, and include a chargrilled mahi mahi taco or a chargrilled chicken burrito
served on a whole wheat tortilla. The Kid Pesky meals consist of a choice of a
fish taco, chicken taquitos, quesadilla or a bean and cheese burrito, along with
a side dish, drink, churro dessert and toy surprise.

DECOR AND ATMOSPHERE

We believe that the decor and atmosphere of our restaurants is a critical
factor in our guests' overall dining experience. We strive to create the
relaxed, casual environment that is reminiscent of the Baja region of Mexico.
Our design elements include colorful Mexican tiles, saltwater aquariums with
tropical fish, Baja beach photos and tropical prints, surfboards on the walls
and authentic palm-thatched patio umbrellas, or palapas, in most existing
locations. We believe the decor and atmosphere of our restaurants appeal to a
broad variety of consumers, including families.

MARKETING

We utilize broadcast advertising as a marketing tool to increase our brand
awareness, attract new guests and build customer loyalty. Our advertising is
designed to portray ourselves as a high-quality, quick-service Mexican food
restaurant and to promote special offers to increase sales. Examples of these
offers include limited-time-only product introductions, such as our lobster
burrito or tequila shrimp burrito, as well as price promotions, such as our
99-cent fish taco special. Media used for these promotions include television,
radio, coupons and in-store merchandising materials. We believe word-of-mouth
advertising is also a key component in attracting new guests.

As part of our expansion strategy, we select target markets which we believe
will support multiple units and the efficient use of broadcast advertising. Upon
entry into each new market, we also hire local public relations firms to help
establish brand awareness for our restaurants as we build toward media
efficiency. In 1998, we spent approximately $1.4 million on marketing. We expect
our marketing expenditures to increase as we add new restaurants and expand into
new markets.

OPERATIONS

UNIT MANAGEMENT AND EMPLOYEES

Our typical restaurant employs one general manager, one to two assistant
managers and 22 to 25 hourly employees, approximately 60% of which are full-time
employees and approximately 40% of which are part-time employees. The general
manager is responsible for the day-to-day operations of the restaurant,
including food quality, service, staffing and purchasing. We seek to hire
experienced general managers and staff and to motivate and retain them by
providing opportunities for increased responsibilities and advancement, as well
as performance-based cash incentives. These performance incentives are tied to
sales, profitability and qualitative measures such as mystery shoppers, who
anonymously evaluate individual restaurants. We also grant general managers
options to purchase shares of our common stock when hired or promoted. All
employees working more than 20 hours per week are eligible for health benefits
and participation in our 401(k) plan.

We currently employ 11 district managers, each of whom reports either to a
regional manager or to the director of operations. These district managers
direct unit management in all phases of restaurant operations, as well as assist
in opening new units. We also grant district managers options to purchase shares
of our common stock when hired or promoted.

TRAINING

We strive to maintain quality and consistency in each of our units through
the careful training and supervision of personnel and the establishment of, and
adherence to, high standards relating to personnel performance, food and
beverage preparation and maintenance of facilities. We have

33
<PAGE>
implemented a training program that is designed to teach new managers the
technical and supervisory skills necessary to direct the operations of our
restaurants in a professional and profitable manner. Each manager must
successfully complete a five-week training course, which includes hands-on
experience in both the kitchen and dining areas. We have also prepared
operations manuals and videotapes relating to food and beverage handling,
preparation and service. In addition, we maintain a continuing education program
to provide our unit managers with ongoing training and support. We strive to
maintain a team-oriented atmosphere and instill enthusiasm and dedication in our
employees. We regularly solicit employee suggestions concerning the improvement
of our operations in order to be responsive to both them and our guests.

QUALITY CONTROLS

Our emphasis on excellent customer service is enhanced by our quality
control programs. We welcome comments on the quality of service and food at our
restaurants by maintaining a toll-free customer hotline and distributing
customer surveys. District managers are directly responsible for ensuring that
these comments are addressed to achieve a high level of customer satisfaction.
Our Director of Food and Beverage is also responsible for ensuring product
consistency and quality among our restaurants. Furthermore, we engage a
third-party service whereby an anonymous customer or mystery shopper evaluates
and reports to management key elements of the Rubio's experience, including
product quality, cleanliness and customer service.

HOURS OF OPERATIONS

Our units are generally open Sunday through Thursday from 10:30 a.m. until
10:00 p.m., and on Friday and Saturday from 10:30 a.m. until 11:00 p.m.

MANAGEMENT INFORMATION SYSTEMS

All of our restaurants use computerized point-of-sale systems, which are
designed to improve operating efficiency, provide corporate management timely
access to financial and marketing data, and reduce restaurant and corporate
administrative time and expense. These systems record each order and print the
food requests in the kitchen for the cooks to prepare. The data captured for use
by operations and corporate management include gross and sales amounts, cash and
credit card receipts, and quantities of each menu item sold. Sales and receipts
information is generally transmitted to the corporate office daily, where it is
reviewed and reconciled by the accounting department before being recorded in
the accounting system. The daily sales information is polled nightly to the
corporate office and distributed to management via electronic mail each morning.
The point-of-sale system also calculates daily ideal usage and cost for the top
10 food items which make up approximately 85% of total food cost. A monthly
trend report of actual food cost compared to ideal food cost is also prepared.
We are currently installing a back office system, including personal computers
in each of our restaurants, which will allow managers to compare actual food
cost to ideal food costs on a daily basis. As of the date of this prospectus,
this system is currently operational in over half of our restaurants, and is
expected to be installed in all of our restaurants by the end of 1999.

Our corporate systems provide management with operating reports that show
restaurant performance comparisons with budget and prior year results both for
the accounting period and year-to-date, as well as trend formats by both dollars
and percents of sales. These systems allow us to closely monitor restaurant
sales, cost of sales, labor expense and other restaurant trends on a daily,

34
<PAGE>
weekly, and monthly basis. We believe these systems will enable both unit and
corporate management to adequately manage the operational and financial
performance of the restaurants in support of our planned expansion.

PURCHASING

We strive to obtain consistently high-quality ingredients at competitive
prices from reliable sources. To attain operating efficiencies and to provide
fresh ingredients for our food products while obtaining the lowest possible
prices for the required quality, purchasing employees at the corporate office
control the purchasing of food items through buying from a variety of national,
regional and local suppliers at negotiated prices. Most food and other products
are shipped from a central distributor directly to the units two to four times
per week. Produce and tortillas are delivered daily from local suppliers to
ensure product freshness. We do not maintain a central food product warehouse or
commissary. As is typical in our industry, we do not have any long-term
contracts with our food suppliers. We have not experienced significant delays in
receiving our food and beverage inventories, restaurant supplies or equipment.

COMPETITION

The restaurant industry is intensely competitive. There are many different
segments within the restaurant industry that are distinguished by types of
service, food types and price/value relationships. We position our restaurants
in the high-quality, quick-service Mexican food segment of the industry. In this
segment, our direct competitors include Baja Fresh, La Salsa and Chipotle. We
also compete indirectly with full-service Mexican restaurants including Chevy's,
Chi Chi's and El Torito and fast food restaurants, particularly those focused on
Mexican food such as Taco Bell and Del Taco. Competition in our industry segment
is based primarily upon food quality, price, restaurant ambiance, service and
location. Although we believe we compete favorably with respect to each of these
factors, many of our direct and indirect competitors are well-established
national, regional or local chains and have substantially greater financial,
marketing, personnel and other resources than we do. We also compete with many
other retail establishments for site locations.

PROPERTIES

Our corporate headquarters are located in Carlsbad, California. We occupy
this facility under a lease which terminates in August 31, 2005, with options to
extend the lease for an additional 13 years. We lease each of our restaurant
facilities with the exception of the El Cajon unit, which is covered by a ground
lease. The majority of our leases are for 10-year terms and include options to
extend the terms. The majority of our leases also include both fixed rate and
percentage-of-sales rent provisions. The landlord of our San Diego State
University unit has the right to terminate the lease, with 60 days notice, in
the event a proposed redevelopment project commences work.

TRADEMARKS

Our registered trademarks and service marks include "Rubio's," "Baja Grill,"
"Home of the Fish Taco," "HealthMex" and "Pesky" with the United States Patents
and Trademark Office. We believe that our trademarks, service marks and other
proprietary rights have significant value and are important to the marketing of
our restaurant concept. We have in the past and expect to continue to vigorously
protect our proprietary rights. We cannot predict, however, whether steps taken
by us to protect our proprietary rights will be adequate to prevent
misappropriation of these rights or the use by others of restaurant features
based upon, or otherwise similar to, our concept. It may be difficult for us to
prevent others from copying elements of our concept and any litigation to
enforce our rights will likely be costly. In addition, other local restaurant
operations with names similar to those we use may try to prevent us from using
our marks in those locales.

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<PAGE>
EMPLOYEES

As of April 21, 1999, we had approximately 1,860 employees, including
approximately 40 employees located at our corporate headquarters.

GOVERNMENT REGULATION

Our restaurants are subject to licensing and regulation by state and local
health, sanitation, safety, fire and other authorities, including licensing and
regulation requirements for the sale of alcoholic beverages and food. To date,
we have not experienced an inability to obtain or maintain any necessary
licenses, permits or approvals, including restaurant, alcoholic beverage and
retail licensing. The development and construction of additional units will also
be subject to compliance with applicable zoning, land use and environmental
regulations. For a description of risks faced by us related to government
regulation, please see "Risk Factors--We may not be able to obtain and maintain
state and local permits necessary to operate our units."

LEGAL PROCEEDINGS

As of the date of this prospectus, we are not a party to any material
litigation.

36
<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS, KEY EMPLOYEES AND DIRECTORS

Our executive officers, key employees and directors, as of April 29, 1999,
are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION WITH US
- ---------------------------- --- ------------------------------------------------------------------------------
<S> <C> <C>
Rafael Rubio................ 69 Chairman of the Board and Director

Ralph Rubio................. 43 President, Chief Executive Officer and Director

Stephen J. Sather........... 51 Chief Operating Officer, Vice President of Operations

Joseph N. Stein............. 38 Chief Strategic and Financial Officer

Richard Rubio............... 35 Vice President of Real Estate Development

Bruce Frazer................ 39 Vice President of Marketing

Ted Frumkin................. 37 Director of Real Estate

Kyle A. Anderson(1)(2)...... 42 Director

Michael Dooling............. 54 Director

Jason M. Fish(1)(2)......... 41 Director

Kim Lopdrup(1)(2)........... 40 Director

Robert Rubio................ 37 Director

Timothy J. Ryan............. 59 Director
</TABLE>

- ------------------------

(1) Audit committee member.

(2) Compensation committee member.

RAFAEL RUBIO, a co-founder, has served as a Director and as Chairman of the
Board since our inception in January 1983. Prior to his current position with
Rubio's, Mr. Rubio held the positions of Executive Vice President and Vice
President of Manufacturing of Ornyte Xerxes-Proform Co., a fiberglass and
plastics manufacturer. He continues to serve as an international consultant to
various fiberglass and plastics manufacturers.

RALPH RUBIO, a co-founder, has served as President, Chief Executive Officer
and Director since our inception in January 1983. Prior to founding Rubio's, Mr.
Rubio was employed in restaurant management and in various other positions at
the Old Spaghetti Factory, Hungry Hunter and Harbor House restaurant chains. Mr.
Rubio has more than 20 years of experience in the restaurant industry.

STEPHEN J. SATHER has served as Chief Operating Officer since July 1998. He
has served as Vice President of Operations since February 1996. Prior to joining
us, Mr. Sather served as Vice President of New Concepts for Rally's Hamburgers,
Inc., a publicly held company, from December 1993 to February 1996. Prior to
that, Mr. Sather served as Senior Vice President of Operations for La Salsa
Holding Company, a privately held company, from December 1992 until November
1993. From April 1986 until November 1992, Mr. Sather was employed by Taco Bell
Corporation, a publicly held company, and served as Director of New Concepts
when he left. Mr. Sather has more than 25 years of experience in the restaurant
industry.

JOSEPH N. STEIN was elected Chief Strategic and Financial Officer in April
1999. Prior to joining us, Mr. Stein served as Executive Vice President and
Chief Administrative Officer of Checkers Drive-In Restaurants, Inc., a publicly
held company, from January 1997 to April 1999, and as Executive Vice President
and Chief Financial Officer of Rally's Hamburgers, Inc., a publicly held
company, from December 1997 to April 1999. From May 1995 to January 1997, Mr.
Stein was employed at CKE Restaurants, Inc., a publicly held company, serving as
Senior Vice President and Chief Financial Officer. From April 1990 to May 1995,
Mr. Stein held various executive positions at Fidelity National

37
<PAGE>
Title Insurance Company, a publicly held company, including Senior Vice
President and Director of National Agency Operations. Mr. Stein has more than 13
years of experience in the restaurant industry.

RICHARD RUBIO has served as Vice President of Real Estate Development since
November 1994. From October 1990 until November 1994, Mr. Rubio served as Vice
President of Construction, and has served in various other positions with us
since June 1983.

BRUCE FRAZER has served as Vice President of Marketing since June 1996.
Prior to joining us, Mr. Frazer served as Vice President of Food &
Beverage/Product Marketing at Family Restaurants, Inc. from May 1994 until May
1996. From December 1984 until April 1994, Mr. Frazer was employed at Foodmaker,
Inc., a publicly held company, serving as Vice President of Product Marketing
when he left. Mr. Frazer has more than 15 years of experience in the restaurant
industry.

TED FRUMKIN has served as Director of Real Estate since May 1996. Prior to
joining us, Mr. Frumkin served as Real Estate Manager at Office Depot Inc., a
publicly held company, from December 1994 until May 1996. From July 1991 until
December 1994, Mr. Frumkin served as Real Estate Manager at Wal-Mart Stores
Inc., a publicly held company. Prior to that, Mr. Frumkin served as Real Estate
Manager at Taco Bell Corporation, a publicly held company, from December 1985
until July 1991.

KYLE A. ANDERSON has served as a Director since January 1995. Mr. Anderson
is a founding member of Rosewood Capital Associates, LLC, the general partner of
Rosewood Capital, L.P., a consumer oriented private equity investment fund.
Prior to joining Rosewood in 1988, Mr. Anderson was a Vice President in the
mergers and acquisitions department at The First Boston Corporation. Mr.
Anderson serves on the board of directors of Gardenburger, Inc., a publicly held
company, and on a number of privately held companies.

MICHAEL DOOLING has served as a Director since April 1999. Mr. Dooling has
been a general partner of Jacaranda Partners, an investment partnership, since
1987. From August 1987 to November 1997, Mr. Dooling served as a member of the
board of directors of Mailboxes Etc., including as Vice Chairman from August
1988 to May 1990 and as Chairman of the Board from May 1990 to November 1997.
From November 1997 to June 1998, Mr. Dooling served as a director of U.S. Office
Products, a publicly held company, following its acquisition of Mailboxes Etc.
Mr. Dooling also serves as a director of a privately held company.

JASON M. FISH has served as a Director since December 1997. Mr. Fish has
been a managing member of Farallon Capital Management, L.L.C. and Farallon
Partners, L.L.C., since April 1996, when they were formed to serve as management
companies for funds affiliated with Farallon, and was a managing director of
their predecessor, FCMI, Inc., from January 1993 through April 1996. Mr. Fish
also served as a general partner of funds affiliated with Farallon during that
time period. Mr. Fish joined Farallon in 1990. Mr. Fish serves as a director of
Town Sports International, Inc., a health club management company and
Gardenburger, Inc., a publicly held company.

KIM LOPDRUP has served as a Director since January 1997. Mr. Lopdrup has
served in various positions at Allied Domecq PLC, a publicly held company whose
subsidiaries include Baskin Robbins, Dunkin Donuts and TOGO'S, since May 1985,
and has served in his current position as Chief Executive Officer of Allied
Domecq Retailing International since October 1998. Mr. Lopdrup serves as a
director of Baskin Robbins Japan, a publicly held company listed on the Tokyo
Stock Exchange.

ROBERT RUBIO has served as a Director since 1994. From August 1995 through
September 1998, Mr. Rubio served as Vice President of Market Development, and
from March 1993 until July 1995, he served as Vice President of Operations. Mr.
Rubio has served in various other positions at Rubio's since February 1986.

38
<PAGE>
TIMOTHY J. RYAN has served as a Director since April 1999. Mr. Ryan has
served as the President and Chief Executive Officer of Diedrich Coffee, Inc.
since November 1997. From December 1995 until his retirement in December 1996,
Mr. Ryan served as President of Sizzler U.S.A., a division of Sizzler
International, Inc., and as a director, of Sizzler International, Inc., of which
he was also a Senior Vice President. Sizzler International, Inc. filed for
bankruptcy protection in June 1996. From November 1988 to December 1993, Mr.
Ryan served as Senior Vice President of Marketing at Taco Bell Worldwide, and
from December 1993 to December 1995, he served as Senior Vice President of Taco
Bell's Casual Dining Division.

Our executive officers are appointed by the board and serve until their
successors are elected or appointed.

Ralph Rubio, Richard Rubio and Robert Rubio are the sons of Rafael Rubio.

CLASSIFIED BOARD

Our board currently has six members. Under our bylaws, beginning at our next
annual meeting of stockholders, our board will be divided into three classes of
directors serving staggered three-year terms, with one class of directors to be
elected at each annual meeting of stockholders. The first class of directors
whose term will expire in 2000 will include Michael Dooling and Timothy J. Ryan.
The second class of directors whose term will expire in 2001 will include Jason
Fish, Kim Lopdrup and Robert Rubio. The third class of directors whose term will
expire in 2002 will include Ralph Rubio, Kyle A. Anderson and Rafael Rubio.

BOARD COMMITTEES

AUDIT COMMITTEE. The audit committee of the board of directors reviews,
acts on and reports to the board of directors with respect to various auditing
and accounting matters, including the recommendation of our auditors, the scope
of the annual audits, fees to be paid to the auditors, the performance of our
independent auditors and our accounting practices. The members of the audit
committee are Messrs. Anderson, Fish and Lopdrup.

COMPENSATION COMMITTEE. The compensation committee of the board of
directors recommends, reviews and oversees the salaries, benefits and stock
option plans for our employees, consultants, directors and other individuals
compensated by us. The compensation committee also administers our compensation
plans. The members of the compensation committee are Messrs. Anderson, Fish and
Lopdrup.

DIRECTOR COMPENSATION

Directors do not receive cash compensation for their service on our board of
directors. Non-employee directors are reimbursed for reasonable expenses
incurred in connection with serving as a director. In January 1997, we granted a
non-qualified stock option to purchase 25,000 shares of common stock to Mr.
Lopdrup, a non-employee director. The option granted to Mr. Lopdrup was fully
exercised by Mr. Lopdrup and is subject to a right of repurchase in our favor
which lapses over a period of five years from the date of grant. In April 1999,
we granted options to purchase 25,000 shares of our common stock to each of Mr.
Dooling and Mr. Ryan in connection with their election to our board of
directors. 15,000 shares are immediately vested, with the remaining 10,000
shares vesting over the next two years. Vesting of any options previously
granted to board members will automatically accelerate in the event of a sale,
acquisition or merger of Rubio's. Each individual who first becomes a
non-employee member of the board of directors at any time after the offering
will receive an option to purchase 25,000 shares of common stock on the date
such individual joins the board of directors, provided such individual has not
previously been employed by us or any parent or subsidiary corporation. In
addition, on the date of each annual stockholders' meeting beginning in 2000,
each

39
<PAGE>
non-employee member of the board of directors will automatically be granted an
option to purchase 5,000 shares of common stock, provided such individual has
served as a non-employee member of the board of directors for at least six
months. For a discussion of our automatic option grant program and accelerated
vesting of options under the 1999 Plan, please see "--Benefit Plans."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Our compensation committee currently consists of Messrs. Anderson, Fish and
Lopdrup. No member of the compensation committee has been an officer or employee
of us at any time. None of our executive officers serves as a member of the
board of directors or compensation committee of any other company that has one
or more executive officers serving as a member of our board of directors or
compensation committee.

EXECUTIVE COMPENSATION

The following table sets forth all compensation received during fiscal 1998
by our chief executive officer and four of our other executive officers whose
salary and bonus exceeded $100,000 in such fiscal year. Perquisites and other
personal benefits paid to officers in the table below are less than the minimum
reporting thresholds and are represented in the table below by "--." All other
compensation represents matching payments under our 401(k) plan.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL COMPENSATION ---------------
SECURITIES
--------------------- OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY BONUS COMPENSATION OPTIONS COMPENSATION
- ---------------------------------------------------- ---------- --------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Ralph Rubio......................................... $ 199,836 $ 39,967 -- -- $ --
President and Chief Executive Officer
Rafael Rubio........................................ 199,836 39,967 -- -- --
Chairman of the Board
Stephen J. Sather................................... 169,800 32,760 -- 8,000 340
Vice President of Operations and Chief Operating
Officer
James W. Stryker.................................... 141,500 27,300 -- 6,000 775
Vice President of Finance and Chief Financial
Officer
Bruce Frazer........................................ 135,840 26,208 -- 6,000 815
Vice President of Marketing
</TABLE>

Mr. Stryker served as our Vice President of Finance and Chief Financial
Officer from February 1996 through March 19, 1999.

STOCK OPTION INFORMATION

The following table sets forth information regarding options granted to the
executive officers listed in the Summary Compensation Table during fiscal 1998.
We have not granted any stock appreciation rights.

Each option represents the right to purchase one share of common stock. The
options shown in this table are all incentive stock options granted under our
stock option plans. The options vest on the following schedule: 20% of the
options vest after the completion of one year of service from the grant date and
the remainder of the options vest in equal monthly installments over the next 48
months of

40
<PAGE>
service. To the extent not already exercisable, these options may also
accelerate and become exercisable in the event of a merger in which we are not
the surviving corporation or upon the sale of substantially all of our assets.
Please see "--Benefit Plans" for more details regarding these options. In the
year ended December 27, 1998, we granted options to purchase an aggregate of
137,140 shares of common stock.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO OPTION TERM
OPTIONS EMPLOYEES EXERCISE EXPIRATION --------------------
NAME GRANTED IN 1998 PRICE DATE 5% 10%
- --------------------------------------------- ------------- --------------- ----------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ralph Rubio.................................. -- -- -- -- -- --
Rafael Rubio................................. -- -- -- -- -- --
Stephen J. Sather............................ 8,000 5.8% $ 2.00 01/30/08 $ 10,062 $ 25,500
James W. Stryker............................. 6,000 4.4 2.00 01/30/08 7,547 19,125
Bruce Frazer................................. 6,000 4.4 2.00 01/30/08 7,547 19,125
</TABLE>

The exercise price per share of each option was equal to the fair market
value of the common stock on the date of grant as determined by our board after
consideration of a number of factors, including, but not limited to, our
financial performance, market conditions and the price, preferred rights and
privileges of shares of equity securities sold to or purchased by outside
investors.

The potential realizable value at assumed annual rates of stock price
appreciation for the option term represents hypothetical gains that could be
achieved for the respective options if exercised at the end of the option term.
The 5% and 10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the SEC and do not represent our estimate or projection of
our future common stock prices. These amounts represent assumed rates of
appreciation in the value of our common stock from the fair market value on the
date of grant. Actual gains, if any, on stock option exercises are dependent on
the future performance of the common stock and overall stock market conditions.
The amounts reflected in the table may not necessarily be achieved.

AGGREGATED OPTION EXERCISES IN THE YEAR ENDED DECEMBER 27, 1998 AND YEAR-END
OPTION VALUES

The following table sets forth information concerning the number and value
of unexercised options held by each of the executive officers listed in the
Summary Compensation Table at December 27, 1998. None of these executive
officers exercised options to purchase common stock during fiscal 1998.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL 1998 OPTIONS AT FISCAL 1998
-------------------------- --------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Ralph Rubio..................................................... -- -- -- --
Rafael Rubio.................................................... -- -- -- --
Stephen J. Sather............................................... 26,050 26,950 $ 220,692 $ 225,808
James W. Stryker................................................ 13,967 16,033 118,167 133,833
Bruce Frazer.................................................... 11,633 13,367 98,333 111,167
</TABLE>

There was no public trading market for the common stock as of December 27,
1998. Accordingly, the value of unexercised in-the-money options listed above
has been calculated on the basis of the

41
<PAGE>
assumed initial public offering price of $10.00 per share, less the applicable
exercise price per share, multiplied by the number of shares underlying such
options.

BENEFIT PLANS

1999 STOCK INCENTIVE PLAN

Our 1999 Stock Incentive Plan is intended to serve as the successor equity
incentive program to our 1998 Stock Option/Stock Issuance Plan, 1995 Stock
Option/Stock Issuance Plan and 1993 Stock Option/Stock Issuance Plan. Our 1999
plan was adopted by our board and stockholders in March 1999. Our 1999 plan will
become effective on the date the underwriting agreement is signed in connection
with this offering of our common stock. All outstanding options under the
predecessor plans will be incorporated into our 1999 plan on the date this plan
is effective, and no further option grants will be made under the predecessor
plans after such date. The incorporated options will continue to be governed by
their existing terms, unless the plan administrator elects to extend one or more
features of our 1999 plan to those options. Except as otherwise noted below, the
incorporated options will have substantially the same terms as in effect for
grants made under the discretionary option grant program of our 1999 plan.

An initial reserve of 1,123,938 shares of common stock has been authorized
for issuance under our 1999 plan. Such share reserve consists of (1)
approximately the number of shares which will remain available for issuance
under the predecessor plans on the date our 1999 plan becomes effective,
including the shares subject to outstanding options thereunder, plus (2) an
additional increase of approximately 500,000 shares. The number of shares of
common stock reserved for issuance under our 1999 plan will automatically
increase on the first trading day in January each calendar year, beginning in
calendar year 2000, by an amount equal to 3% of the total number of shares of
common stock outstanding on the last trading day in December of the preceding
calendar year, but in no event will any such annual increase exceed 450,000
shares. In addition, no participant in our 1999 plan may be granted stock
options, separately exercisable stock appreciation rights and direct stock
issuances for more than 500,000 shares of common stock in the aggregate per
calendar year.

Our 1999 plan is divided into five separate components:

- the discretionary option grant program, under which eligible individuals
in our employ or service including officers, non-employee board members
and consultants may, at the discretion of the plan administrator, be
granted options to purchase shares of common stock at an exercise price
not less than 100% of the fair market value of those shares on the grant
date;

- the stock issuance program, under which such individuals may, in the plan
administrator's discretion, be issued shares of common stock directly,
through the purchase of such shares at a price not less than 100% of their
fair market value at the time of issuance or as a bonus tied to the
performance of services;

- the salary investment option grant program, which may, at the plan
administrator's sole discretion, be activated for one or more calendar
years and, if so activated, will allow executive officers and other highly
compensated employees the opportunity to apply a portion of their base
salary to the acquisition of special below-market stock option grants;

- the automatic option grant program, under which option grants will
automatically be made at periodic intervals to eligible non-employee board
members to purchase shares of common stock at an exercise price equal to
100% of the fair market value of those shares on the grant date; and

- the director fee option grant program, which may, in the plan
administrator's sole discretion, be activated for one or more calendar
years and, if so activated, will allow non-employee board

42
<PAGE>
members the opportunity to apply a portion of the annual retainer fee
otherwise payable to them in cash each year to the acquisition of special
below-market option grants.

The discretionary option grant program and the stock issuance program will
be administered by the compensation committee. The compensation committee as
plan administrator will have complete discretion to determine which eligible
individuals are to receive option grants or stock issuances under those
programs, the time or times when such option grants or stock issuances are to be
made, the number of shares subject to each such grant or issuance, the status of
any granted option as either an incentive stock option or a non-statutory stock
option under the federal tax laws, the vesting schedule to be in effect for the
option grant or stock issuance and the maximum term for which any granted option
is to remain outstanding. However, the board acting by disinterested majority
will have the exclusive authority to make any discretionary option grants or
stock issuances to members of the compensation committee. The compensation
committee will also have the exclusive authority to select the executive
officers and other highly compensated employees who may participate in the
salary investment option grant program in the event that program is activated
for one or more calendar years. Neither the compensation committee nor the board
will exercise any administrative discretion with respect to option grants under
the salary investment option grant program or under the automatic option grant
or director fee option grant program for the non-employee board members. All
grants under those latter three programs will be made in strict compliance with
the express provisions of each such program.

The exercise price for the shares of common stock subject to option grants
made under our 1999 plan may be paid in cash or in shares of common stock valued
at fair market value on the exercise date. The option may also be exercised
through a same-day sale program without any cash outlay by the optionee. In
addition, the plan administrator may provide financial assistance to one or more
optionees in the exercise of their outstanding options or the purchase of their
unvested shares by allowing such individuals to deliver a full-recourse,
interest-bearing promissory note in payment of the exercise price and any
associated withholding taxes incurred in connection with such exercise or
purchase.

The plan administrator will have the authority to cancel outstanding options
under the discretionary option grant program, including options incorporated
from the predecessor plans, in return for the grant of new options for the same
or different number of option shares with an exercise price per share based upon
the fair market value of our common stock on the new grant date.

Stock appreciation rights are authorized for issuance under the
discretionary option grant program. Such rights will provide the holders with
the election to surrender their outstanding options for an appreciation
distribution from us equal to the excess of (1) the fair market value of the
vested shares of common stock subject to the surrendered option over (2) the
aggregate exercise price payable for those shares. Such appreciation
distribution may be made in cash or in shares of common stock. None of the
incorporated options from the predecessor plans contain any stock appreciation
rights.

In the event that we are acquired by merger or asset sale, each outstanding
option under the discretionary option grant program which is not to be assumed
by the successor corporation will automatically accelerate in full, and all
unvested shares under the discretionary option grant and stock issuance programs
will immediately vest, except to the extent our repurchase rights with respect
to those shares are to be assigned to the successor corporation. The plan
administrator will have complete discretion to grant one or more options under
the discretionary option grant program which will become fully vested for all
the option shares in the event those options are assumed in the acquisition and
the optionee's service with us or the acquiring entity involuntarily terminates
within a designated period following such acquisition, not to exceed 18 months.
The vesting of outstanding shares under the stock issuance program may be
accelerated upon similar terms and conditions. The plan administrator

43
<PAGE>
will also have the authority to grant options which will immediately vest upon
an acquisition of us, whether or not those options are assumed by the successor
corporation.

The plan administrator is also authorized under the discretionary option
grant and stock issuance programs to grant options and to structure repurchase
rights so that the shares subject to those options or repurchase rights will
immediately vest in connection with a change in ownership or control of us,
whether by successful tender offer for more than 50% of the outstanding voting
stock or by a change in the majority of the board by reason of one or more
contested elections for board membership. Such accelerated vesting may occur
either at the time of such change or upon the subsequent involuntary termination
of the individual's service within a designated period following such change in
control, not to exceed 18 months.

The options incorporated from the predecessor plans may, in the plan
administrator's discretion, immediately vest in the event of the following
changes in control (1) our merger or consolidation, or (2) the acquisition by
another corporation or person of (a) all or substantially all of our assets or
(b) 50% or more of our then outstanding voting stock, unless those options are
assumed or substituted in the acquisition of us. Options incorporated from the
predecessor plans are subject to provisions providing for accelerated vesting
upon a change in control. The plan administrator will have the discretion to
extend the acceleration provisions of our 1999 plan to any or all of the options
outstanding under the predecessor plans.

In the event the plan administrator elects to activate the salary investment
option grant program for one or more calendar years, each of our executive
officers and other highly compensated employees selected for participation may
elect, prior to the start of the calendar year, to reduce his or her base salary
for that calendar year by a specified dollar amount not less than $10,000 nor
more than $50,000. Each selected individual who files such a timely election
will automatically be granted, on the first trading day in January of the
calendar year for which that salary reduction is to be in effect, a
non-statutory option to purchase that number of shares of common stock
determined by dividing the salary reduction amount by two-thirds of the fair
market value per share of common stock on the grant date. The option will be
exercisable at a price per share equal to one-third of the fair market value of
the option shares on the grant date. As a result, the fair market value of the
option shares on the grant date less the aggregate exercise price payable for
those shares will be equal to the amount of salary invested in that option. The
option will vest and become exercisable in a series of 12 equal monthly
installments over the calendar year for which the salary reduction is to be in
effect and will be subject to full and immediate vesting upon changes in the
ownership or control of us, as defined in the 1999 plan.

Under the automatic option grant program, each individual who first becomes
a non-employee board member at any time after the completion of this offering
will automatically receive an option grant for 25,000 shares on the date such
individual joins the board, provided such individual has not been in our prior
employ. In addition, on the date of each annual stockholders meeting held after
the completion of this offering, each non-employee board member who is to
continue to serve as a non-employee board member will automatically be granted
an option to purchase 5,000 shares of common stock, provided such individual has
served on our board for at least six months.

Each automatic grant will have a term of 10 years, subject to earlier
termination following the optionee's cessation of board service. The option will
be immediately exercisable for all of the option shares and will be immediately
vested.

Should the director fee option grant program be activated in the future,
each non-employee board member will have the opportunity to apply all or a
portion of any annual retainer fee otherwise payable in cash to the acquisition
of a below-market option grant. The option grant will automatically be made on
the first trading day in January in the year for which the retainer fee would
otherwise be payable in cash. The option will have an exercise price per share
equal to one-third of the fair market value of the

44
<PAGE>
option shares on the grant date, and the number of shares subject to the option
will be determined by dividing the amount of the retainer fee applied to the
program by two-thirds of the fair market value per share of common stock on the
grant date. As a result, the fair market value of the option shares on the grant
date less the aggregate exercise price payable for those shares will be equal to
the portion of the retainer fee invested in that option. The option will vest
and become exercisable for the option shares in a series of 12 equal monthly
installments over the calendar year for which the election is to be in effect.
However, the option will become immediately exercisable and vested for all the
option shares upon:

- changes in the ownership or control of us, as defined in the 1999 plan; or

- the death or disability of the optionee while serving as a board member.

The shares subject to each option under the salary investment option grant
and director fee option grant programs will immediately vest upon:

- an acquisition of us by merger or asset sale; or

- the successful completion of a tender offer for more than 50% of our
outstanding voting stock or a change in the majority of the board effected
through one or more contested elections for board membership.

Limited stock appreciation rights will automatically be included as part of
each grant made under the automatic option grant, salary investment option grant
and director fee option grant programs and may be granted to one or more of our
officers as part of their option grants under the discretionary option grant
program. Options with such a limited stock appreciation right may be surrendered
to us upon the successful completion of a hostile tender offer for more than 50%
of our outstanding voting stock. In return for the surrendered option, the
optionee will be entitled to a cash distribution from us in an amount per
surrendered option share equal to the excess of (1) the highest price per share
of common stock paid in connection with the tender offer over (2) the exercise
price payable for such share.

The board may amend or modify our 1999 plan at any time, subject to any
required stockholder approval. Our 1999 plan will terminate on the earliest of:

- March 17, 2009;

- the date on which all shares available for issuance under our 1999 plan
have been issued as fully-vested shares; or

- the termination of all outstanding options in connection with changes in
control or ownership of us, as defined in the 1999 plan.

1999 EMPLOYEE STOCK PURCHASE PLAN

Our 1999 Employee Stock Purchase Plan was adopted by our board and
stockholders in March 1999 and will become effective immediately upon the
execution of the underwriting agreement for this offering. Our employee stock
purchase plan is designed to allow our eligible employees to purchase shares of
common stock, at semi-annual intervals, through their periodic payroll
deductions under our employee stock purchase plan.

An initial reserve of 200,000 shares of common stock has been authorized for
issuance under our employee stock purchase plan. Our employee stock purchase
plan will be implemented in a series of successive offering periods, each with a
maximum duration for 24 months. However, the initial offering period will begin
on the execution date of the underwriting agreement and will end on the last
business day in July 2001. The next offering period will commence on the first
business day in August 2001, and subsequent offering periods will commence as
designated by the plan administrator.

45
<PAGE>
Individuals who are scheduled to work more than 20 hours per week for more
than five calendar months per year on the start date of any offering period may
enter our employee stock purchase plan on that start date or on any subsequent
semi-annual entry date. Entry dates are the first business day of February or
August each year. Individuals who become eligible employees after the start date
of the offering period may join our employee stock purchase plan on any
subsequent semi-annual entry date within that offering period.

Payroll deductions may not exceed 10% of the participant's cash earnings.
The accumulated payroll deductions of each participant will be applied to the
purchase of shares on his or her behalf on the last business day in January and
July each year at a purchase price per share equal to 85% of the lower of:

- the fair market value of the common stock on the participant's entry date
into the offering period; or

- the fair market value on the semi-annual purchase date.

In no event, however, may any participant purchase more than 1,500 shares on any
semi-annual purchase date nor may all participants in the aggregate purchase
more than 50,000 shares on any such semi-annual purchase date. The plan
administrator may require shares of common stock purchased under our employee
stock purchase plan to be held for one year before they may be sold or otherwise
transferred.

Should the fair market value per share of common stock on any purchase date
be less than the fair market value per share on the start date of the two-year
offering period, then that offering period will automatically terminate, and a
new two-year offering period will begin on the next business day, with all
participants in the terminated offering to be automatically transferred to the
new offering period.

In the event we are acquired by merger or asset sale, all outstanding
purchase rights will automatically be exercised immediately prior to the
effective date of such acquisition. The purchase price will be equal to 85% of
the lower of:

- the fair market value per share of common stock on the participant's entry
date into the offering period in which such acquisition occurs; or

- the fair market value per share of common stock immediately prior to such
acquisition.

Our employee stock purchase plan will terminate on the earlier of:

- the last business day of July 2009;

- the date on which all shares available for issuance under our employee
stock purchase plan shall have been sold; or

- the date on which all purchase rights are exercised in connection with an
acquisition of us by merger or asset sale.

The board may at any time alter, suspend or discontinue our employee stock
purchase plan. However, some amendments to our employee stock purchase plan may
require stockholder approval.

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<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

SALES OF SECURITIES

Since February 1995, we have issued the following securities in private
placement transactions:

- 1,092,007 shares of Series B preferred stock and common stock warrants
exercisable for 50,000 shares for an aggregate price of $3,500,003 in
February 1995;

- 793,640 shares of Series C preferred stock for an aggregate price of
$4,270,783 in March and June 1996;

- 1,403,843 shares of Series D preferred stock for an aggregate price of
$10,100,005 in November and December 1997; and

- an additional 48,648 shares of Series D preferred stock for an aggregate
price of $350,000 in June 1998.

The purchasers of more than $60,000 of such securities in the last four years
include, among others, the following executive officers, directors and holders
of more than 5% of our outstanding stock and their affiliates:

<TABLE>
<CAPTION>
PREFERRED STOCK
EXECUTIVE OFFICERS, DIRECTORS ------------------------------- TOTAL
AND 5% STOCKHOLDERS SERIES B SERIES C SERIES D CONSIDERATION
- -------------------------------------------------------- --------- --------- --------- -------------
<S> <C> <C> <C> <C>
Rosewood Capital, L.P................................... 936,005 743,321 347,486 $ 9,500,004
Funds affiliated with Farallon Partners, L.L.C.......... -- -- 952,111 $ 6,850,001
Trust for the benefit of Michael Dooling and his
family................................................ 46,800 -- -- $ 149,999
Bruce Frazer............................................ -- 9,291 6,950 $ 99,999
</TABLE>

For additional information regarding securities held by our executive
officers and directors and by stockholders of more than 5% of our outstanding
common stock and their affiliates, please see "Principal Stockholders."

Holders of 3,341,841 shares of common stock and 45,000 shares of common
stock issuable upon the exercise of warrants are entitled to registration
rights. For a description of these rights, please see "Description of
Securities--Registration Rights" and "Management--Director Compensation."

SERIES A PREFERRED STOCK REPURCHASE

In June 1998, we repurchased from the Rafael R. Rubio and Gloria G. Rubio
Family Trust 48,648 shares of Series A preferred stock for an aggregate
repurchase price of $350,000. Rafael Rubio, our Chairman of the Board and
Director, and his wife are co-trustees and beneficiaries of this trust. We then
issued 48,648 shares of Series D preferred stock to funds affiliated with
Farallon Partners, L.L.C. (Farallon Capital Partners, L.P., Farallon Capital
Institutional Partners, L.P., Farallon Capital Institutional Partners II,
Farallon Capital Institutional Partners III, L.P. and RR Capital Partners, L.P.)
holders of more than 5% of Series D Preferred Stock as of March 28, 1999.

47
<PAGE>
PRINCIPAL STOCKHOLDERS

- each person or group of affiliated persons who we know owns beneficially
5% or more of our common stock;

- each of our directors;

- our executive officers listed in the Summary Compensation Table; and

- all of our directors and executive officers as a group.

Percentage of ownership is calculated as required by Commission Rule
13d-3(d)(1). Except as indicated in the footnotes to this table, the persons
named in the table have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them, subject to community
property laws. The table below includes the number of shares underlying options
which are exercisable within 60 days from the date of this offering. The address
for those individuals for which an address is not otherwise indicated is 1902
Wright Place, Suite 300, Carlsbad, California 92008.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED PRIOR TO SHARES BENEFICIALLY OWNED AFTER THIS
THIS OFFERING NUMBER OF OFFERING
------------------------------------- SHARES -------------------------------------
NUMBER OF BEING NUMBER OF
NUMBER OF SHARES OFFERED IN NUMBER OF SHARES
SHARES UNDERLYING PERCENT THIS SHARES UNDERLYING PERCENT
BENEFICIAL OWNER OUTSTANDING OPTIONS (%) OFFERING OUTSTANDING OPTIONS (%)
- ---------------------------------------- ----------- ----------- ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Rosewood Capital, L.P................... 2,026,812 -- 31.9 300,000+ 1,726,812 -- 20.1
One Maritime Plaza, Suite 1330
San Francisco, California 94111
Funds affiliated with Farallon
Partners, L.L.C.(1)................... 952,111 -- 15.0 300,000+ 652,111 -- 7.6
One Maritime Plaza, Suite 1325
San Francisco, California 94111
Rafael Rubio(2)......................... 1,135,752 -- 17.9 300,000+ 835,752 -- 9.7
Ralph Rubio(3).......................... 1,184,100 -- 18.6 -- 1,184,100 -- 13.8
Kyle A. Anderson(4)..................... 2,026,812 -- 31.9 300,000+ 1,726,812 -- 20.1
Michael Dooling......................... 78,000 16,292 1.5 -- 78,000 16,292 1.1
Jason M. Fish(5)........................ 952,111 -- 15.0 300,000+ 652,111 -- 7.6
Kim Lopdrup............................. 35,000 -- * -- 35,000 -- *
Robert Rubio(3)......................... 150,133 -- 2.4 -- 150,133 -- 1.7
Timothy J. Ryan......................... -- 16,292 * -- -- 16,292 1.1
Stephen J. Sather....................... -- 35,565 * -- -- 35,565 *
James W. Stryker........................ 2,500 17,266 * -- 2,500 17,266 *
Bruce Frazer............................ 16,241 15,562 * -- 16,241 15,562 *
All directors and executive officers as 5,580,649 106,594 88.1 900,000 4,680,649 106,594 55.0
a group (12 persons)..................
</TABLE>

- ------------------------

* Less than 1% of total.

+ Rosewood Capital, L.P. may sell up to 200,000 additional shares, funds
affiliated with Farallon Partners, L.L.C. may sell up to 50,000 additional
shares and a trust for the benefit of Mr. Rubio or

48
<PAGE>
his family may sell up to 35,752 additional shares in connection with the
exercise of the over-allotment option.

(1) Includes 399,886 shares beneficially owned by Farallon Capital Partners,
L.P., 333,239 shares beneficially owned by Farallon Capital Institutional
Partners, L.P., 142,816 shares beneficially owned by Farallon Capital
Institutional Partners II, L.P., 38,085 shares beneficially owned by
Farallon Capital Institutional Partners III, L.P., and 38,085 shares
beneficially owned by RR Capital Partners, L.P. All of the foregoing
entities disclaim group attribution.

(2) Includes 835,752 shares held by the Rafael R. Rubio and Gloria G. Rubio
Family Trust and 300,000 shares held by the Rafael and Gloria Rubio
Irrevocable Trust. All 300,000 shares held by the Rafael and Gloria Rubio
Irrevocable Trust are being offered in this offering.

(3) All of the shares outstanding held by Ralph Rubio and Robert Rubio are held
in trust for the benefit of these individuals and/or their families.

(4) Includes 2,026,812 shares held by the Rosewood Capital, L.P. Mr. Anderson is
a founding member of Rosewood Capital Associates LLC, the general partner of
Rosewood Capital, L.P. Mr. Anderson disclaims beneficial ownership of such
shares.

(5) Includes 952,111 shares held by the funds affiliated with Farallon Partners,
L.L.C., as described in note (1) above. Mr. Fish is a managing member of
Farallon Partners, L.L.C. Mr. Fish disclaims beneficial ownership of such
shares.

49
<PAGE>
SELLING STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of our common stock as of April 29, 1999, and as adjusted to reflect
the sale of the shares of common stock offered in this offering by us and each
stockholder selling common stock in this offering. Rosewood Capital, L.P., may
sell up to 200,000 additional shares, funds affiliated with Farallon Partners,
L.L.C., may sell up to 50,000 additional shares and a trust for the benefit of
Mr. Rubio or his family may sell up to 35,752 additional shares in connection
with the exercise of the over-allotment option. For further information
regarding the selling stockholders' relationship with us during the last three
years, please see "Management--Executive Officers and Directors" and "Certain
Relationships and Related Transactions."

- ------------------------

* Less than 1% of total.

(3) Includes 2,026,812 shares held by the Rosewood Capital, L.P. Mr. Anderson is
a founding member of Rosewood Capital Associates LLC, the general partner of
Rosewood Capital, L.P. Mr. Anderson disclaims beneficial ownership of such
shares.

(4) Includes 952,111 shares held by the funds affiliated with Farallon Partners,
L.L.C., as described in note (1) above. Mr. Fish is a managing member of
Farallon Partners, L.L.C. Mr. Fish disclaims beneficial ownership of such
shares.

50
<PAGE>
DESCRIPTION OF SECURITIES

The following information describes our common stock and preferred stock and
provisions of our certificate of incorporation and our bylaws as in effect upon
the closing of this offering. This description is only a summary. You should
also refer to the certificate and bylaws which have been filed with the SEC as
exhibits to our registration statement, of which this prospectus forms a part.
The descriptions of the common stock and preferred stock reflect changes to our
capital structure that will occur upon the closing of this offering.

Upon the completion of the offering, our authorized capital stock will
consist of 75,000,000 shares of common stock, par value $0.001 per share, and
5,000,000 shares of preferred stock, par value $0.001 per share.

COMMON STOCK

As of March 28, 1999, there were 1,085,036 shares of common stock
outstanding and held of record by 23 stockholders, assuming the exercise of all
common stock warrants that must be exercised prior to this offering. There will
be 8,601,624 shares of common stock outstanding upon the closing of this
offering.

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
such dividends, if any, as may be declared by the board of directors out of
funds legally available for that purpose, subject to any preferential dividend
rights of any outstanding preferred stock. Holders of common stock have no
preemptive, subscription, redemption, liquidation or conversion rights. The
shares offered by us in this offering will be, when issued in consideration for
payment thereof, fully paid and nonassessable. The rights, preferences and
privileges of holders of common stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of preferred
stock which we may designate and issue in the future. Upon the closing of this
offering, there will be no shares of preferred stock outstanding. With respect
to restrictions on alienability of shares of our common stock held by some of
our stockholders, please see "Shares Eligible for Future Sale."

PREFERRED STOCK

As of March 28, 1999, there were 5,266,588 shares of convertible preferred
stock outstanding, assuming the exercise of all preferred stock warrants that
must be exercised prior to this offering. All outstanding shares of convertible
preferred stock will be converted into an aggregate of 5,266,588 shares of
common stock upon the closing of this offering and such shares of convertible
preferred stock will no longer be authorized, issued or outstanding.

Upon the closing of this offering, the board of directors will be
authorized, without further stockholder approval, to issue from time to time up
to an aggregate of 5,000,000 shares of preferred stock in one or more series and
to fix or alter the designations, powers, preferences, rights and any
qualifications, limitations or restrictions of the shares of each such series
thereof, including the dividend rights, dividend rates, conversion rights,
voting rights, terms of redemption including sinking fund provisions, redemption
price or prices, liquidation preferences and the number of shares constituting
any series or designations of such series. We have no present plans to issue any
shares of preferred stock. Please see "--Anti-Takeover Effects of Provisions of
Delaware Law and our Certificate of Incorporation and Bylaws" for information
regarding the potential anti-takeover effects of authorized but unissued
preferred stock.

51
<PAGE>
OPTIONS

As of March 28, 1999, options to purchase a total of 379,376 shares of
common stock were outstanding and, assuming the effectiveness of the 1999 Stock
Incentive Plan, options to purchase a total of 744,562 shares of common stock
will be available for future issuance under the 1999 Stock Incentive Plan. Since
March 28, 1999, we have granted options exercisable into 192,000 shares at a
weighted average exercise price of $10.00 per share. Please see
"Management--Benefit Plans" for a discussion of the 1999 Stock Incentive Plan
and "Shares Eligible for Future Sale" for information regarding the number of
options available for sale to the public after this offering.

COMMON STOCK WARRANT

We have an outstanding warrant to purchase 45,000 shares of common stock, at
an exercise price of $7.20. The warrant contains an anti-dilution provision
providing for adjustments of the exercise price and the number of shares
underlying the warrant upon the occurrence of events, including any
recapitalization, reclassification, stock dividend, stock split, stock
combination or similar transaction. This warrant expires on the earlier of the
business day preceding an acquisition or December 31, 2002.

REGISTRATION RIGHTS

As of March 28, 1999, under the terms of an investors' rights agreement
after the closing of this offering the holders of 3,341,841 shares of common
stock and up to 45,000 shares of common stock issuable upon exercise of a
warrant will be entitled to demand registration rights with respect to the
registration of their shares under the Securities Act of 1933. The holders of
50% of shares issued on conversion of the Series B preferred stock and Series C
preferred stock or the holders of 50% of such shares issued on conversion of the
Series D preferred stock have the right to demand that we register their shares
under the Securities Act subject to limitations described in the agreement. We
are not required to file more than two registrations under such demand
registration rights. In addition, after the closing of this offering these
holders will be entitled to piggyback registration rights with respect to the
registration of such shares of common stock under the Securities Act. In the
event that we propose to register any shares of common stock under the
Securities Act either for our account or for the account of other security
holders, the holders of shares having piggyback registration rights are entitled
to receive notice of such registration and to include their shares in any such
registration, subject to limitations described in the agreement. Further, at any
time after we become eligible to file a registration statement on Form S-3, the
holders of 3,341,841 shares of common stock and up to 45,000 shares of common
stock issuable upon exercise of a warrant may require us to file registration
statements under the Securities Act on Form S-3 with respect to their shares of
common stock. These registration rights are subject to conditions and
limitations described in the agreement, among them the right of the underwriters
of an offering to limit the number of shares of common stock held by such
security holders to be included in such registration. We are generally required
to bear all of the expenses of all such registrations, including the reasonable
fees of a single counsel acting on behalf of all selling holders, except
underwriting discounts and selling commissions. Registration of any of the
shares of common stock held by security holders with registration rights would
result in such shares becoming freely tradable without restriction under the
Securities Act immediately upon effectiveness of such registration.

ANTI-TAKEOVER EFFECTS OF PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF
INCORPORATION AND BYLAWS

GENERAL

Provisions of Delaware law and our certificate of incorporation and bylaws
could have the effect of making it more difficult for a third party to acquire,
or of discouraging a third party from acquiring, control of us. Such provisions
could limit the price that investors might be willing to pay in the future

52
<PAGE>
for shares of our common stock. These provisions of Delaware law and the
certificate of incorporation and bylaws may also have the effect of discouraging
or preventing transactions involving an actual or threatened change of control
of us, including unsolicited takeover attempts, even though such a transaction
may offer our stockholders the opportunity to sell their stock at a price above
the prevailing market price.

DELAWARE TAKEOVER STATUTE

We are subject to the "business combination" provisions of Section 203 of
the Delaware General Corporation Law. With limited exceptions, Section 203
prohibits a publicly held Delaware corporation from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person became an interested
stockholder, unless:

- the transaction is approved by the board of directors prior to the date
the interested stockholder obtained interested stockholder status;

- upon consummation of the transaction that resulted in the stockholder's
becoming an interested stockholder, the stockholder owned at least 85% of
our voting stock outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding
those shares owned by (a) persons who are directors and also officers and
(b) employee stock plans in which employee participants do not have the
right to determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or

- on or subsequent to the date the business combination is approved by the
board and authorized at an annual or special meeting of stockholders by
the affirmative vote of at least 66 2/3% of the outstanding voting stock
that is not owned by the interested stockholder.

A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the interested stockholder.
Subject to exceptions described in the Delaware code, an "interested
stockholder" is a person who, together with affiliates and associates, owns, or
within three years did own, 15% or more of the corporation's voting stock. This
statute could prohibit or delay the accomplishment of mergers or other takeover
or change in control attempts with respect to us and, accordingly, may
discourage attempts to acquire us.

In addition, provisions of our certificate of incorporation and bylaws
summarized in the following paragraphs may be deemed to have an anti-takeover
effect and may delay, defer or prevent a tender offer or takeover attempt that a
stockholder might consider in its best interest, including those attempts that
might result in a premium over the market price for the shares held by
stockholders.

BOARD OF DIRECTORS VACANCIES

Our bylaws authorize the board of directors to fill vacant directorships or
increase the size of the board of directors. This may deter a stockholder from
removing incumbent directors and simultaneously gaining control of the board of
directors by filling the vacancies created by such removal with its own
nominees.

CLASSIFIED BOARD

Our bylaws provide that our board will be classified into three classes of
directors beginning at the next annual meeting of stockholders. Please see
"Management--Classes of the Board" for more information regarding the classified
board.

53
<PAGE>
STOCKHOLDER ACTION; SPECIAL MEETING OF STOCKHOLDERS

Our certificate of incorporation provides that stockholders may act only at
duly called annual or special meetings of stockholders, not by written consent.
Our bylaws further provide that special meetings of our stockholders may be
called only by the President, Chief Executive Officer or Chairman of the board
of directors or a majority of the board of directors.

ADVANCE NOTICE REQUIREMENTS FOR STOCKHOLDER PROPOSALS AND DIRECTOR
NOMINATIONS

Our bylaws provide that stockholders seeking to bring business before our
annual meeting of stockholders, or to nominate candidates for election as
directors at our annual meeting of stockholders, must provide timely notice
thereof in writing. To be timely, a stockholder's notice must be delivered to,
or mailed and received at, our principal executive offices not less than 120
days prior to the first anniversary of the date of notice of annual meeting
provided with respect to the previous year's annual meeting of stockholders;
provided, that if no annual meeting of stockholders was held in the previous
year or the date of the annual meeting of stockholders has been changed to be
more than 30 calendar days earlier than such anniversary, notice by the
stockholder, to be timely, must be received a reasonable time before the
solicitation is made. The bylaws also specify requirements as to the form and
content of a stockholder's notice. These provisions may preclude stockholders
from bringing matters before our annual meeting of stockholders or from making
nominations for directors at our annual meeting of stockholders.

AUTHORIZED BUT UNISSUED SHARES

Our authorized but unissued shares of common stock and preferred stock are
available for future issuance without stockholder approval, subject to
limitations imposed by the Nasdaq National Market. These additional shares may
be utilized for a variety of corporate purposes, including future public
offerings to raise additional capital, corporate acquisitions and employee
benefit plans. The existence of authorized but unissued and unreserved common
stock and preferred stock could render more difficult or discourage an attempt
to obtain control of us by means of a proxy contest, tender offer, merger or
otherwise.

Delaware law provides generally that the affirmative vote of a majority of
the shares entitled to vote on any matter is required to amend a corporation's
certificate of incorporation or bylaws, unless a corporation's certificate of
incorporation or bylaws, as the case may be, requires a greater percentage.

LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS

Our certificate of incorporation provides that, except to the extent
prohibited by Delaware law, our directors shall not be personally liable to us
or our stockholders for monetary damages for any breach of fiduciary duty as our
directors. Under Delaware law, the directors have a fiduciary duty to us which
is not eliminated by this provision of the certificate and, in appropriate
circumstances, equitable remedies such as injunctive or other forms of
nonmonetary relief will remain available. In addition, each director will
continue to be subject to liability under Delaware law for breach of the
director's duty of loyalty to us for acts or omissions which are found by a
court of competent jurisdiction to be not in good faith or which involve
intentional misconduct, or knowing violations of law, for actions leading to
improper personal benefit to the director, and for payment of dividends or
approval of stock repurchases or redemptions that are prohibited by Delaware
law. This provision does not affect the directors' responsibilities under any
other laws, such as the Federal securities laws or state or Federal
environmental laws.

Section 145 of the Delaware General Corporation Law empowers a corporation
to indemnify its directors and officers and to purchase insurance with respect
to liability arising out of their capacity or status as directors and officers,
provided that this provision shall not eliminate or limit the liability of a
director for the following:

- any breach of the director's duty of loyalty to us or our stockholders;

- acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;

- unlawful payments of dividends or unlawful stock purchases or redemptions;
or

- for any transaction from which the director derived an improper personal
benefit.

54
<PAGE>
Delaware law provides further that the indemnification permitted thereunder
shall not be deemed exclusive of any other rights to which the directors and
officers may be entitled under our bylaws, any agreement, a vote of stockholders
or otherwise. The certificate eliminates the personal liability of directors to
the fullest extent permitted by Delaware law. In addition, the certificate
provides that we may fully indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by reason of the fact that such person is or was one of our
directors or officers or is or was serving at our request as a director of or
officer of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, against expenses including attorney's fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding.

We have also entered into agreements to indemnify our directors and
executive officers, in addition to the indemnification provided for in our
bylaws. We believe that these provisions and agreements are necessary to attract
and retain qualified directors and executive officers. Our bylaws also permit us
to secure insurance on behalf of any officer, director, employee or other agent
for any liability arising out of his or her actions, regardless of whether
Delaware law would permit indemnification. We have applied for liability
insurance for our officers and directors.

At present, there is no pending litigation or proceeding involving any
director, officer, employee or agent as to which indemnification will be
required or permitted under the certificate of incorporation. We are not aware
of any threatened litigation or proceeding that may result in a claim for such
indemnification.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock is U.S. Stock Transfer
Corporation.

55
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

The market price of our common stock could decline as a result of sales of a
large number of shares of our common stock in the market after this offering, or
the perception that such sales could occur. Such sales also might make it more
difficult for us to sell equity securities in the future at a time and price
that we deem appropriate. After this offering, 8,601,624 shares of common stock
will be outstanding. Of these shares, the 3,150,000 shares being offered in the
offering are freely tradable. This leaves 5,451,624 shares eligible for sale in
the public market as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES DATE
- ----------------- -----------------------------------------------------------------------------------------------
<S> <C>
33,974 After the date of this prospectus
571,376 Upon the filing of a registration statement to register for resale shares of common stock
issuable upon the exercise of options granted under our stock option plans
5,417,650 At various times after 180 days from the date of this prospectus, subject, in some cases, to
volume limitations
</TABLE>

In general, under Rule 144, as currently in effect, an affiliate of Rubio's
or a person or persons whose shares are required to be aggregated and who has
beneficially owned shares for at least one year is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of (1)
approximately 86,016 shares immediately after this offering or (2) the average
weekly trading volume in the common stock during the four calendar weeks
preceding the date on which notice of such sale is filed, subject to restriction
under Rule 144. In addition, a person who is not deemed to have been our
affiliate at any time during the 90 days preceding a sale, and who has
beneficially owned the shares proposed to be sold for at least two years, would
be entitled to sell such shares under Rule 144(k) without regard to the
requirements described above. To the extent that shares were acquired from one
of our affiliates, such person's holding period for the purpose of effecting a
sale under Rule 144 commences on the date of transfer from the affiliate.

As of the date of this prospectus, options to purchase a total of 571,376
shares of common stock are outstanding, of which 161,134 shares are currently
vested and immediately exercisable. Upon the closing of this offering, we intend
to file a registration statement to register for resale the 1,123,938 shares of
common stock reserved for issuance under our stock option plans. We expect such
registration statement to become effective immediately upon filing. Shares
issued upon the exercise of stock options granted under our stock option plans
will be eligible for resale in the public market from time to time subject to
vesting and, in the case of options held by persons who have signed lock-up
agreements referred to below, the expiration of the lock-up agreements.

Our directors, officers and stockholders who hold 5,040,718 shares in the
aggregate have entered into lock-up agreements under which they have agreed that
they will not sell, directly or indirectly, any shares of common stock without
the prior written consent of Thomas Weisel Partners LLC for a period of 180 days
from the date of this prospectus. In addition, stockholders who hold 376,932
shares in the aggregate have entered into similar lock-up agreements with us.

Holders of approximately 3,341,841 shares of common stock and up to 45,000
shares of common stock issuable upon exercise of a warrant, have the right,
subject to conditions and limitations described in the investors rights
agreement, to include their shares in registration statements relating to our
securities. By exercising their registration rights and causing a large number
of shares to be registered and sold in the public market, these holders may
cause the price of the common stock to fall. In addition, any demand to include
such shares in our registration statements could have an adverse effect on our
ability to raise needed capital. Please see "Description of
Securities--Registration Rights" for a description of the registration rights of
our stockholders and "Risk Factors--The large number of shares eligible for
public sale after this offering could cause our stock price to decline" for a
discussion of the risks associated with a large number of shares being available
for public sale.

56
<PAGE>
UNDERWRITING

GENERAL

Subject to the terms and conditions set forth in an agreement among the
underwriters and us, each of the underwriters named below, through their
representatives, Thomas Weisel Partners LLC, Dain Rauscher Wessels, a division
of Dain Rauscher Incorporated, and U.S. Bancorp Piper Jaffray, has severally
agreed to purchase from us the aggregate number of shares of common stock set
forth opposite its name below:

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
- --------------------------------------------------------------------------- -----------------
<S> <C>
Thomas Weisel Partners LLC.................................................
Dain Rauscher Wessels......................................................
U.S. Bancorp Piper Jaffray.................................................

-----------------
Total.................................................................... 3,150,000
-----------------
-----------------
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters are subject to various conditions, such as approval of legal
matters by counsel. The nature of the underwriters' obligations is such that
they are committed to purchase and pay for all of the shares of common stock
listed above if any are purchased.

The underwriting agreement provides that we and the selling stockholders
will indemnify the underwriters against liabilities specified in the
underwriting agreement under the Securities Act or will contribute to payments
that the underwriters may be required to make relating to these liabilities.

OVER-ALLOTMENT OPTION

We and the selling stockholders named under the caption "Selling
Stockholders" have granted a 30-day over-allotment option to the underwriters to
purchase up to an aggregate of 472,500 additional shares of our common stock
exercisable at the "public offering price" less the "underwriting discounts and
commissions," each as set forth on the cover page of this prospectus. If the
underwriters exercise such option in whole or in part, then each of the
underwriters will be severally committed, subject to conditions described in the
underwriting agreement, to purchase the additional shares of our common stock in
proportion to their respective purchase commitments set forth in the table
above.

COMMISSIONS AND DISCOUNTS

The underwriters propose to offer the shares of common stock directly to the
public at the "public offering price" set forth on the cover page of this
prospectus, and at such price less a concession not in excess of $ per share of
common stock to other dealers specified in a master agreement among underwriters
who are members of the National Association of Securities Dealers, Inc. The
underwriters may allow, and such dealers may reallow, concessions not in excess
of $ per share of common stock to these other dealers. After this offering, the
offering price, concessions and other selling terms may be changed by the
underwriters. Our common stock is offered subject to receipt and acceptance by
the underwriters and to other conditions, including the right to reject orders
in whole or in part.

57
<PAGE>
The following table summarizes the compensation to be paid to the
underwriters by us and the expenses payable by us:

<TABLE>
<CAPTION>
TOTAL
------------------------------
WITHOUT WITH
PER SHARE OVER-ALLOTMENT OVER-ALLOTMENT
--------------- -------------- --------------
<S> <C> <C> <C>
Underwriting discounts and commissions paid by us...................... $ $ $
Expenses payable by us................................................. $ $ $
</TABLE>

RESERVED SHARES

The underwriters, at our request, have reserved for sale at the initial
public offering price up to 94,500 shares of common stock to be sold in this
offering for sale to our employees and other persons designated by us. Michael
Dooling, one of our directors, has expressed interest in acquiring, directly or
through affiliates, 100,000 shares of common stock in this offering at the
initial public offering price. The number of shares available for sale to the
general public will be reduced to the extent that any reserved shares are
purchased. Any reserved shares not purchased in this manner will be offered by
the underwriters on the same basis as the other shares offered in the offering.

NO SALES OF SIMILAR SECURITIES

Our directors, officers and stockholders who hold 5,040,718 shares in the
aggregate, have agreed that they will not offer, sell, or agree to sell,
directly or indirectly, or otherwise dispose of any shares of common stock
without the prior written consent of Thomas Weisel Partners LLC for a period of
180 days from the date of this prospectus.

In addition, we have agreed that for a period of 180 days after the date of
this prospectus we will not, without the prior written consent of Thomas Weisel
Partners LLC, offer, sell or otherwise dispose of any shares of common stock
except for the shares of common stock offered in the offering, the shares of
common stock issuable upon exercise of outstanding options and warrants.

INFORMATION REGARDING THOMAS WEISEL PARTNERS LLC

Thomas Weisel Partners LLC, one of the representatives of the underwriters,
was organized and registered as a broker-dealer in December 1998. Since December
1998, Thomas Weisel Partners LLC has been named as a lead or co-manager on 24
filed public offerings of equity securities, of which eight have been completed,
and has acted as a syndicate member in an additional 10 public offerings of
equity securities. Thomas Weisel Partners LLC does not have any material
relationship with us or any of our officers, directors or controlling persons,
except with respect to its contractual relationship with us under the
underwriting agreement entered into in connection with this offering.

NASDAQ NATIONAL MARKET LISTING

Prior to this offering, there has been no public market for our common
stock. Consequently, the initial offering price for our common stock will be
determined by negotiations between us, the selling stockholders and
representatives of the underwriters. Some of the factors to be considered in
these negotiations will be our results of operations in recent periods,
estimates of our prospects and the industry in which we compete, an assessment
of our management, the general state of the securities markets at the time of
this offering and the prices of similar securities of generally comparable
companies. We have applied for approval for the quotation of our common stock on
the Nasdaq National Market, under the symbol "RUBO." We cannot assure you,
however, that an active or orderly trading market will develop for our common
stock or that our common stock will trade in the public markets subsequent to
this offering at or above the initial offering price. Please see "Risk
Factors--Our common stock may not develop an active, liquid trading market."

The underwriters do not expect to confirm sales of common stock to any
accounts over which they exercise discretionary authority to exceed 5% of the
number of shares being offered under this prospectus.

58
<PAGE>
MARKET STABILIZATION, SHORT POSITIONS AND PENALTY BIDS

In order to facilitate this offering, persons participating in this offering
may engage in transactions that stabilize, maintain or otherwise affect the
price of our common stock during and after this offering. Specifically, the
underwriters may over-allot or otherwise create a short position in our common
stock for their own account by selling more shares of common stock than we have
sold to them. The underwriters may elect to cover any short position by
purchasing shares of common stock in the open market or by exercising the
over-allotment option granted to the underwriters. In addition, the underwriters
may stabilize or maintain the price of the common stock by bidding for or
purchasing shares of common stock in the open market and may impose penalty
bids. Under these penalty bids, selling concessions that are allowed to
syndicate members or other broker-dealers participating in this offering are
reclaimed if shares of common stock previously distributed in this offering are
repurchased, usually in order to stabilize the market. The effect of these
transactions may be to stabilize or maintain the market price at a level above
that which might otherwise prevail in the open market. No representation is made
as to the magnitude or effect of any such stabilization or other transactions.
These transactions may be effected on the Nasdaq National Market or otherwise
and may be discontinued at any time after they are commenced.

59
<PAGE>
LEGAL MATTERS

The validity of the shares of common stock offered in the offering will be
passed upon for us by Brobeck, Phleger & Harrison LLP, San Diego, California.
Attorneys associated with Brobeck, Phleger & Harrison LLP own an aggregate of
76,288 shares of common stock. Legal matters in connection with this offering
will be passed upon for the underwriters by Wilson Sonsini Goodrich & Rosati,
P.C., Palo Alto, California.

EXPERTS

The consolidated financial statements as of December 28, 1997 and December
27, 1998 and for each of the three years in the period ended December 27, 1998
included in this prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report appearing herein, and are
included in reliance upon the report of such firm given upon their authority as
experts in accounting and auditing.

WHERE YOU CAN FIND MORE INFORMATION

We have filed with the SEC a registration statement on Form S-1, including
the exhibits, schedules and amendments to the registration statement, under the
Securities Act with respect to the shares of common stock to be sold in this
offering. This prospectus does not contain all the information set forth in the
registration statement. For further information with respect to our company and
the shares of common stock to be sold in this offering, reference is made to the
registration statement. Statements contained in this prospectus as to the
contents of any contract, agreement or other document referred to are not
necessarily complete, and in each instance reference is made to the copy of such
contract, agreement or other document filed as an exhibit to the registration
statement, each such statement being qualified in all respects by such
reference.

You may read and copy all or any portion of the registration statement or
any other information we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You can request copies of these documents,
upon payment of a duplicating fee, by writing to the SEC. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. Our SEC filings, including the registration statement, are also available
to you on the Commission's Web site, http://www.sec.gov.

As a result of this offering, we will become subject to the information and
reporting requirements of the Exchange Act, and, in accordance therewith, will
file periodic reports, proxy statements and other information with the SEC. Upon
approval of the common stock for the quotation on the Nasdaq National Market,
such reports, proxy and information statements and other information may also be
inspected at the offices of Nasdaq Operations, 1735 K Street, N.W., Washington,
D.C. 20006.

We intend to furnish our stockholders with annual reports containing audited
consolidated financial statements and with quarterly reports for the first three
quarters of each year containing unaudited interim consolidated financial
information.

60
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
RUBIO'S RESTAURANTS, INC. PAGE
---------
<S> <C>
Independent Auditors' Report......................................................... F-2

Consolidated Balance Sheets as of December 28, 1997 and December 27, 1998............ F-3

Consolidated Statements of Operations for the years ended December 29, 1996, December
28, 1997 and December 27, 1998..................................................... F-4

Consolidated Statements of Stockholders' Equity (Deficit) for the years ended
December 29, 1996, December 28, 1997 and December 27, 1998......................... F-5

Consolidated Statements of Cash Flows for the years ended December 29, 1996, December
28, 1997 and December 27, 1998..................................................... F-6

Notes to Consolidated Financial Statements........................................... F-7

Unaudited Consolidated Balance Sheets as of December 27, 1998 and March 28, 1999..... F-24

Unaudited Consolidated Statements of Operations for the three months ended March 29,
1998 and March 28, 1999............................................................ F-25

Unaudited Consolidated Statements of Cash Flows for the three months ended March 29,
1998 and March 28, 1999............................................................ F-26

Notes to Unaudited Consolidated Financial Statements................................. F-27
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of
Rubio's Restaurants, Inc.:

We have audited the accompanying consolidated balance sheets of Rubio's
Restaurants, Inc. and subsidiary (the "Company") as of December 28, 1997 and
December 27, 1998, and the related consolidated statements of operations,
stockholders' equity (deficit) and of cash flows for each of the three years in
the period ended December 27, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Rubio's Restaurants, Inc. and
subsidiary as of December 28, 1997 and December 27, 1998, and the results of its
operations and its cash flows for each of the three years in the period ended
December 27, 1998 in conformity with generally accepted accounting principles.

DELOITTE & TOUCHE LLP

San Diego, California
March 25, 1999

F-2
<PAGE>
RUBIO'S RESTAURANTS, INC.

CONSOLIDATED BALANCE SHEETS

DECEMBER 28, 1997 AND DECEMBER 27, 1998

<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................. $ 866,160 $ 786,493
Short-term investments.................................................... 4,758,475 2,721,894
Other receivables......................................................... 12,592 169,688
Income taxes receivable................................................... 3,315 99,478
Inventory................................................................. 254,210 359,755
Prepaid expenses.......................................................... 174,108 295,143
Deferred income taxes..................................................... -- 53,485
---------- ----------
Total current assets.................................................... 6,068,860 4,485,936
INVESTMENTS................................................................. 4,617,000 3,391,490
PROPERTY--net............................................................... 12,167,851 17,133,392
OTHER ASSETS................................................................ 200,294 346,765
DEFERRED INCOME TAXES....................................................... -- 393,914
---------- ----------
TOTAL....................................................................... $23,054,005 $25,751,497
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable.......................................................... $1,765,720 $2,942,970
Accrued expenses and other liabilities.................................... 1,226,754 2,150,424
Current portion of long-term debt......................................... 808,232 742,573
Income taxes payable...................................................... -- 105,235
---------- ----------
Total current liabilities............................................... 3,800,706 5,941,202
DEFERRED RENT............................................................... 637,579 805,054
LONG-TERM DEBT.............................................................. 1,753,842 1,113,860
---------- ----------
Total liabilities....................................................... 6,192,127 7,860,116
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 4)
REDEEMABLE CONVERTIBLE PREFERRED STOCK:
Series B redeemable ($4.04 per share liquidation preference),
actual--$.001 par value, 1,092,007 shares authorized, issued and
outstanding............................................................. 3,348,015 3,408,810
Series C redeemable ($6.27 per share liquidation preference),
actual--$.001 par value, 793,640 shares authorized, issued and
outstanding............................................................. 4,243,570 4,254,450
Series D redeemable ($7.77 per share liquidation preference),
actual--$.001 par value, 1,524,595 shares authorized, 1,403,843 issued
and outstanding in 1997 and 1,452,491 issued and outstanding in 1998.... 9,411,116 10,032,065
---------- ----------
Total redeemable convertible preferred stock............................ 17,002,701 17,695,325
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT):
Convertible preferred stock Series A ($2.00 per share liquidation
preference), actual--$.001 par value, 1,973,395 shares authorized,
1,973,395 issued and outstanding in 1997 and 1,924,747 issued and
outstanding in 1998..................................................... 1,973 1,925
Common stock, actual--$.001 par value, 7,298,725 shares authorized,
1,010,577 issued and outstanding in 1997 and 1,048,600 issued and
outstanding in 1998..................................................... 1,011 1,049
Paid-in capital........................................................... 28,271 --
Deferred compensation..................................................... -- 22,881
Accumulated other comprehensive income.................................... -- 44,271
Retained earnings (accumulated deficit)................................... (172,078) 125,930
---------- ----------
Total stockholders' equity (deficit).................................... (140,823) 196,056
---------- ----------
---------- ----------
TOTAL....................................................................... $23,054,005 $25,751,497
---------- ----------
---------- ----------
</TABLE>

See notes to consolidated financial statements.

F-3
<PAGE>
RUBIO'S RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

<TABLE>
<CAPTION>
1996 1997 1998
------------- ------------- -------------
<S> <C> <C> <C>
SALES............................................................... $ 19,523,064 $ 29,703,726 $ 44,698,531
COSTS AND EXPENSES:
Cost of sales..................................................... 5,068,647 8,658,651 13,073,417
Restaurant labor, occupancy and other............................. 10,440,660 15,639,052 22,616,021
General and administrative expenses............................... 3,175,603 4,253,704 6,148,137
Depreciation and amortization..................................... 735,241 1,259,283 1,945,932
Pre-opening expenses.............................................. 18,298 270,846 318,529
Loss on asset impairment.......................................... -- 386,928 --
------------- ------------- -------------
OPERATING INCOME (LOSS)............................................. 84,615 (764,738) 596,495
OTHER INCOME (EXPENSE):
Interest and investment income.................................... 236,469 188,132 521,110
Interest expense.................................................. (219,307) (262,622) (253,575)
Miscellaneous income (expense).................................... 1,235 (5,321) (9,945)
Loss on disposal/sale of property................................. (1,799) (56,395) (5,073)
------------- ------------- -------------
Total other income (expense).................................... 16,598 (136,206) 252,517
------------- ------------- -------------
INCOME (LOSS) BEFORE INCOME TAXES................................... 101,213 (900,944) 849,012
INCOME TAX (EXPENSE) BENEFIT........................................ (29,611) (99,522) 66,276
------------- ------------- -------------
NET INCOME (LOSS)................................................... $ 71,602 $ (1,000,466) $ 915,288
------------- ------------- -------------
------------- ------------- -------------
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS............... $ 2,644 $ (1,095,105) $ 568,055
------------- ------------- -------------
------------- ------------- -------------
HISTORIC NET INCOME (LOSS) PER SHARE:
Basic............................................................. $ -- $ (1.08) $ .55
------------- ------------- -------------
------------- ------------- -------------
Diluted........................................................... $ -- $ (1.08) $ .14
------------- ------------- -------------
------------- ------------- -------------
HISTORIC SHARES USED IN CALCULATING HISTORIC NET INCOME (LOSS) PER
SHARE:
Basic............................................................. 1,007,639 1,010,483 1,033,469
------------- ------------- -------------
------------- ------------- -------------
Diluted........................................................... 1,025,588 1,010,483 6,417,654
------------- ------------- -------------
------------- ------------- -------------
PRO FORMA NET INCOME PER SHARE (UNAUDITED):
Basic............................................................. $ .14
-------------
-------------
Diluted........................................................... $ .14
-------------
-------------
PRO FORMA SHARES USED IN CALCULATING PRO FORMA NET INCOME PER SHARE
(UNAUDITED):
Basic............................................................. 6,334,031
-------------
-------------
Diluted........................................................... 6,455,331
-------------
-------------
</TABLE>

See notes to consolidated financial statements.

F-4
<PAGE>
RUBIO'S RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998
<TABLE>
<CAPTION>
CONVERTIBLE
PREFERRED STOCK
SERIES A COMMON STOCK
---------------------- ---------------------- PAID-IN DEFERRED
SHARES AMOUNT SHARES AMOUNT CAPITAL COMPENSATION
--------- ----------- --------- ----------- --------- -------------

<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996............................ 2,000,000 $ 2,000 1,000,000 $ 1,000 $ 24,387
Exercise of common stock options.................. -- -- 10,107 10 3,651
Repurchase shares of Series A preferred stock..... (26,605) (27) -- -- (216)
Net income........................................ -- -- -- -- --
Accretion of redemption--preferred stock.......... -- -- -- -- --
--------- ----------- --------- ----------- ---------
BALANCE, DECEMBER 29, 1996.......................... 1,973,395 1,973 1,010,107 1,010 27,822
Exercise of common stock options.................. -- -- 450 1 449
Net loss.......................................... -- -- -- -- --
Accretion of redemption--preferred stock.......... -- -- -- -- --
--------- ----------- --------- ----------- ---------
BALANCE, DECEMBER 28, 1997.......................... 1,973,395 1,973 1,010,557 1,011 28,271
Exercise of common stock options.................. -- -- 38,043 38 51,634
Repurchase shares of Series A preferred stock..... (48,648) (48) -- -- (79,905)
Deferred compensation--stock options.............. -- -- -- -- -- $ 22,881
Accretion of redemption--preferred stock.......... -- -- -- -- -- --
Net income........................................ -- -- -- -- -- --
Other comprehensive income:
Net unrealized gain on available-for-sale
investments, net of $30,765 tax............... -- -- -- -- -- --
Total comprehensive income.................... -- -- -- -- -- --
--------- ----------- --------- ----------- --------- -------------
BALANCE, DECEMBER 27, 1998.......................... 1,924,747 $ 1,925 1,048,600 $ 1,049 $ -- $ 22,881
--------- ----------- --------- ----------- --------- -------------
--------- ----------- --------- ----------- --------- -------------

<CAPTION>
ACCUMULATED
OTHER RETAINED TOTAL TOTAL
COMPRE- EARNINGS STOCKHOLDERS' COMPRE-
HENSIVE (ACCUMULATED EQUITY HENSIVE
INCOME DEFICIT) (DEFICIT) INCOME
------------- ------------ ------------ -----------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996............................ $1,063,309 $1,090,696
Exercise of common stock options.................. -- 3,661
Repurchase shares of Series A preferred stock..... (142,926) (143,169)
Net income........................................ 71,602 71,602
Accretion of redemption--preferred stock.......... (68,958) (68,958)
------------ ------------
BALANCE, DECEMBER 29, 1996.......................... 923,027 953,832
Exercise of common stock options.................. -- 450
Net loss.......................................... (1,000,466) (1,000,466)
Accretion of redemption--preferred stock.......... (94,639) (94,639)
------------ ------------
BALANCE, DECEMBER 28, 1997.......................... (172,078) (140,823)
Exercise of common stock options.................. -- 51,672
Repurchase shares of Series A preferred stock..... (270,047) (350,000)
Deferred compensation--stock options.............. -- 22,881
Accretion of redemption--preferred stock.......... (347,233) (347,233)
Net income........................................ 915,288 915,288 $ 915,288
Other comprehensive income:
Net unrealized gain on available-for-sale
investments, net of $30,765 tax............... $ 44,271 -- 44,271 44,271
-----------
Total comprehensive income.................... -- -- -- $ 959,559
------------- ------------ ------------ -----------
-----------
BALANCE, DECEMBER 27, 1998.......................... $ 44,271 $ 125,930 $ 196,056
------------- ------------ ------------
------------- ------------ ------------
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>
RUBIO'S RESTAURANTS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

<TABLE>
<CAPTION>
1996 1997 1998
------------ -------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)..................................................... $ 71,602 $ (1,000,466) $ 915,288
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization....................................... 735,241 1,259,283 1,945,932
Loss on asset impairment............................................ -- 386,928 --
Deferred compensation............................................... -- -- 22,881
Loss on disposal/sale of property................................... 1,799 56,395 5,073
Changes in assets and liabilities:
Other receivables................................................. (24,178) 11,586 (157,096)
Income taxes receivable........................................... 51,060 8,849 (96,163)
Inventory......................................................... (40,880) (80,230) (105,545)
Prepaid expenses.................................................. (179,460) 52,522 (121,035)
Other assets...................................................... (26,122) 55,781 (146,471)
Deferred income taxes............................................. 12,525 33,611 (447,399)
Accounts payable.................................................. 522,001 540,584 1,177,250
Accrued expenses and other liabilities............................ 246,727 535,084 923,670
Income taxes payable.............................................. -- -- 105,235
Deferred rent..................................................... 77,489 135,775 167,475
------------ -------------- --------------
Cash provided by operating activities........................... 1,447,804 1,995,702 4,189,095
INVESTING ACTIVITIES:
Proceeds from sale of property........................................ 2,002 9,330 7,200
Purchase of property.................................................. (2,951,304) (6,423,481) (6,923,746)
Purchases of investments.............................................. (9,119,679) (17,264,580) (29,648,505)
Sales and maturities of investments................................... 5,508,529 12,291,384 32,954,867
------------ -------------- --------------
Cash used for investing activities.............................. (6,560,452) (11,387,347) (3,610,184)
FINANCING ACTIVITIES:
Proceeds from long-term debt.......................................... 1,168,678 836,869 2,227,720
Principal payments on long-term debt.................................. (609,162) (757,418) (2,933,361)
Proceeds from the sale of redeemable preferred stock.................. 4,224,527 9,388,152 350,000
Repurchase of Series A preferred stock................................ (143,169) -- (350,000)
Proceeds from exercise of stock options............................... 3,661 450 51,672
Deferred offering costs............................................... -- -- (4,609)
Transfer of cash from restricted deposit.............................. 97,002 156,624 --
------------ -------------- --------------
Cash provided by (used for) financing activities................ 4,741,537 9,624,677 (658,578)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........................ (371,111) 233,032 (79,667)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR.......................... 1,004,239 633,128 866,160
------------ -------------- --------------
CASH AND CASH EQUIVALENTS AT END OF YEAR................................ $ 633,128 $ 866,160 $ 786,493
------------ -------------- --------------
------------ -------------- --------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest................................................ $ 203,716 $ 260,988 $ 219,740
Cash paid (received) related to income taxes--net..................... $ 68,250 $ (61,085) $ 402,818
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Holding gains on available-for-sale investments, before tax........... $ 75,036
--------------
--------------
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF OPERATIONS--Rubio's Restaurants, Inc. was incorporated in
California in 1985 and reincorporated in Delaware in 1997 (see Note 7). Rubio's
Restaurants, Inc. has a wholly-owned subsidiary which was incorporated in Nevada
in 1997. Rubio's Restaurants, Inc. and its subsidiary (collectively, the
"Company") own and operate a chain of 59 restaurants and three concessions in
Southern California, Nevada and Arizona.

BASIS OF FINANCIAL STATEMENT PRESENTATION--The Company operates and reports
on a 52-53 week fiscal year ending on the Sunday closest to December 31.

ACCOUNTING ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and contingencies at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. Actual
results may differ from those estimates.

CASH EQUIVALENTS--Cash equivalents consist of money market instruments
purchased with an original maturity date of three months or less.

INVESTMENTS--The Company's investments are composed primarily of government
and mortgage-backed securities. While it is the Company's general intent to hold
such securities until maturity, management will occasionally sell particular
securities for cash flow purposes. Therefore, pursuant to Statement of Financial
Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," the Company's investments are classified as
available-for-sale based upon the Company's intent, and are accounted for at
fair market value (see Note 2). The fair market value of such investments is
determined based on quoted market prices for those investments, and approximated
cost at December 28, 1997. Holding gains on these investments were $75,036 at
December 27, 1998 and are included as other accumulated comprehensive income in
the statements of stockholders' equity. Short-term investments are investments
with original maturities of greater than three months and remaining maturities
of less than one year, or investments that are reasonably expected to be
realized in cash or consumed in operations over the next year (see Note 2).

INVENTORY--Inventory consists of food, beverage and restaurant supplies and
is stated at the lower of cost (first-in, first-out method) or market.

PROPERTY--Property is stated at cost. Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets or the remaining lease term, whichever is less. The lives for equipment
are 3 - 7 years and for building and leasehold items, 5 - 20 years.

The Company periodically assesses its ability to recover the carrying value
of its long-lived assets. If management concludes that the carrying value will
not be recovered, an impairment write-down is recorded to reduce the asset to
its estimated fair value.

In 1997, in accordance with SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets to be Disposed Of," the Company recorded a loss of $386,928 on
long-lived assets where circumstances indicated that the assets were impaired
based on the expected future cash flows of one of the restaurant locations.
Impairment is reviewed at the lowest levels for which there are identifiable
cash flows that are independent of the cash flows of other groups of assets. In
the Company's circumstances,

F-7
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
such analysis is performed on an individual restaurant basis. The impairment
charge was the difference between the carrying value and the estimated fair
value of the assets. The Company estimated fair values based on sales prices for
comparable assets. The Company will continue to operate this store to the end of
the lease term. The Company did not have any impairment losses in fiscal 1996 or
1998.

DEFERRED RENT--Rent expense on operating leases with scheduled or minimum
rent increases is expensed on the straight-line basis over the lease terms.
Deferred rent represents the excess of rent charged to expense over rent payable
under the lease agreement.

UNEARNED USAGE ALLOWANCE--The Company receives payments from the Company's
beverage suppliers under the suppliers' marketing allowance programs and records
such amounts as an unearned usage allowance. The Company recognizes the usage
allowance as a reduction to cost of sales based on the actual quantity purchased
on a monthly basis.

STORE PRE-OPENING EXPENSES--Costs incurred in connection with start-up and
promotion of new store openings are expensed as incurred.

INCOME TAXES--The Company accounts for income taxes in accordance with SFAS
No. 109 "Accounting for Income Taxes" (see Note 5).

STOCK-BASED COMPENSATION--Effective January 1, 1996, the Company adopted
SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No. 123
encourages, but does not require, companies to record compensation cost for
stock-based employee compensation plans at fair value. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and related Interpretations.
Accordingly, compensation cost for stock options is measured as the excess, if
any, of the fair market value of the Company's stock at the date of the grant
over the amount an employee must pay to acquire the stock (see Note 7).

CONCENTRATION OF CREDIT RISK--The Company invests its excess cash in money
market accounts and debt securities. The Company has not experienced any
material losses on its cash accounts or other investments.

EARNINGS PER SHARE--In February 1997, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 128, "Earnings Per Share" (EPS), effective for
all financial statements issued after December 15, 1997. SFAS No. 128 requires
dual presentation of "Basic" and "Diluted" EPS by entities with complex capital
structures, replacing "Primary" and "Fully Diluted" EPS under APB Opinion No.
15. Basic EPS excludes dilution and is computed by dividing net income or loss
attributable to common stockholders by the weighted average of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock (convertible
preferred stock, warrants to purchase common stock and common stock options
using the treasury stock method) were exercised or converted into common stock.
Potential common shares in the diluted EPS computation are excluded where their
effect would be antidilutive. EPS for all periods have been computed in
accordance with SFAS No. 128 (see Note 8).

PRO FORMA NET INCOME PER SHARE--In accordance with SFAS No. 128, pro forma
basic net income per share is computed based on the weighted average of common
shares outstanding during the year,

F-8
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
which includes the conversion of 5,262,885 shares of convertible preferred stock
then outstanding into 5,262,885 shares of common stock, and the issuance of
37,677 shares of common stock upon the exercise of certain outstanding warrants
upon the consummation of the Company's planned initial public offering. Pro
forma diluted earnings per share is computed assuming the potential dilution
upon exercise of potential common shares using the treasury stock method, except
for the years where potential dilution is not assumed as the effect would be
antidilutive (see "Earnings Per Share" and Note 8).

RECENT ACCOUNTING PRONOUNCEMENTS--In June 1997, the FASB issued SFAS No.
130, "Reporting Comprehensive Income," effective for fiscal years beginning
after December 15, 1997. SFAS No. 130 establishes standards for the reporting
and display of comprehensive income and its components in a full set of general
purpose financial statements. Comprehensive income is defined as the change in
equity of a business enterprise during a period, resulting from transactions and
other events and circumstances from nonowner sources. The Company implemented
SFAS No. 130 for fiscal 1998.

In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of an
Enterprise and Related Information." SFAS No. 131 requires publicly held
companies to report financial and other information about key revenue-producing
segments of the entity for which such information is available and is utilized
by the chief operating decision maker. Specific information to be reported for
individual segments includes profit or loss, certain revenue and expense items
and total assets. A reconciliation of segment financial information to amounts
reported in the financial statements would be provided. SFAS No. 131 is
effective for the Company in 1998. The Company currently operates as one segment
(see Note 9).

In April 1998, Statement of Position ("SOP") 98-5, "Reporting on the Costs
of Start-Up Activities" was issued by the Accounting Standards Executive
Committee. SOP 98-5 provides guidance on the financial reporting of start-up
costs and organization costs. It requires costs of start-up activities and
organization costs to be expensed as incurred, and is effective for fiscal years
beginning after December 15, 1998. The Company early adopted this SOP for the
fiscal year ended December 28, 1997. The adoption of this SOP did not have a
material effect on the results of operations.

RECLASSIFICATIONS--Certain prior year amounts have been reclassified to
conform with current year presentation.

2. BALANCE SHEET DETAILS as of December 28, 1997 and December 27, 1998,
respectively:

<TABLE>
<CAPTION>
1997 1998
------------- -------------
<S> <C> <C>
PROPERTY--at cost:
Building and leasehold improvements.......................... $ 7,884,212 $ 11,209,218
Equipment and furniture...................................... 7,411,138 10,319,498
Construction in process and related costs.................... 468,580 1,059,514
------------- -------------
15,763,930 22,588,230
Less: accumulated depreciation and amortization................ (3,596,079) (5,454,838)
------------- -------------
Total.......................................................... $ 12,167,851 $ 17,133,392
------------- -------------
------------- -------------
</TABLE>

F-9
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

2. BALANCE SHEET DETAILS as of December 28, 1997 and December 27, 1998,
respectively: (CONTINUED)

<TABLE>
<CAPTION>
1997 1998
------------- -------------
<S> <C> <C>
OTHER ASSETS:
Long-term deposits........................................... $ 193,836 $ 268,680
Other........................................................ 6,458 78,085
------------- -------------
Total.......................................................... $ 200,294 $ 346,765
------------- -------------
------------- -------------

ACCRUED EXPENSES AND OTHER LIABILITIES:
Compensation................................................. $ 531,997 $ 1,069,227
Sales taxes.................................................. 223,129 334,157
Vacation pay................................................. 165,347 248,136
Unearned usage allowance..................................... 114,442 206,316
Other........................................................ 191,839 292,588
------------- -------------
Total.......................................................... $ 1,226,754 $ 2,150,424
------------- -------------
------------- -------------

INVESTMENTS:
U.S. Treasury notes.......................................... $ 9,324,976 $ 4,911,791
Mortgage-backed securities................................... 50,499 1,201,593
------------- -------------
9,375,475 6,113,384
Less current portion......................................... (4,758,475) (2,721,894)
------------- -------------
Non-current.................................................. $ 4,617,000 $ 3,391,490
------------- -------------
------------- -------------
</TABLE>

3. LONG-TERM DEBT AND CREDIT FACILITIES

CAPITAL EXPANSION LINE--In 1997, the Company had a $3,000,000 capital
expansion line (the "Capital line") with a bank which provided for interest at
1.0% over the bank's referenced rate (8.50% at December 28, 1997). The purpose
of the Capital line was to assist the Company in financing leasehold
improvements and equipment in new restaurant locations. Under the Capital line,
the bank would advance 75% of the invoice amounts, not to exceed $200,000 per
location. Once each restaurant was completed the advances were converted to an
individual term loan. Each individual loan had specific monthly payments of both
principal and interest, commencing one month after conversion. The Capital line
was secured by the Company's assets, including a specific collateral assignment
of Rubio's trademarks and Waiver and Consent Agreement on all new locations
financed. Interest expense for the borrowings under the Capital line was
$219,307, $262,622 and $82,081 for the years ended December 29, 1996, December
28, 1997 and December 27, 1998, respectively. The Capital line contained various
covenants including the maintenance of a minimum amount of tangible net worth
and a debt coverage ratio, and placed certain restrictions on fixed asset
purchases. There was $2,562,074 in total borrowings against the Capital line as
of December 28, 1997, and the Company was in compliance with all related
covenants. There were no additional amounts available upon the expiration of the
Capital line on April 30, 1997. The Company refinanced the remaining borrowings
under the Capital line with the Term Loan in May 1998.

F-10
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

3. LONG-TERM DEBT AND CREDIT FACILITIES (CONTINUED)
TERM LOAN--In May 1998, the Company entered into a term loan (the "Term
Loan") with another bank to refinance the remaining borrowings under the Capital
line. The Term Loan provides for interest, at the election of the Company at:
(1) adjusted LIBOR plus 4.0% per annum (9.25% at December 27, 1998) or (2) the
greater of the bank reference rate plus 1.5% or the Federal Funds Effective Rate
plus 2.0%. There was $1,856,433 outstanding under the Term Loan as of December
27, 1998. Interest expense was $171,494 under the Term Loan for the year ended
December 27, 1998. There are no additional amounts available to the Company
under the Term Loan. Principal and interest payments are due in quarterly
installments through April 1, 2001 or no later than 90 days after the completion
of an initial public offering, whichever is earlier.

REVOLVING LINE OF CREDIT--In May 1998, the Company entered into a revolving
line of credit (the "Credit line") in conjunction with the Term Loan, which
provides for interest at the election of the Company, at: (1) adjusted LIBOR
plus 4.0% per annum (9.25% at December 27, 1998) or (2) the greater of the bank
reference rate plus 1.5% or the Federal Funds Effective Rate plus 2.0%.
Principal and interest payments due under the Credit line are payable upon or
before maturity at May 12, 2001. There were no borrowings outstanding against
the Credit line at December 27, 1998.

The Term Loan and Credit line contain various covenants including a fixed
charge coverage ratio, minimum interest coverage ratio, and maximum total
leverage ratio, and place certain restrictions on fixed asset purchases. The
Term Loan and Credit line restrict the payment of cash dividends and other stock
redemptions or repurchases, as defined in the agreement, without prior consent
of the lender. Borrowings under the Credit line and the Term Loan are secured by
the Company's assets. The Company was in compliance with all such covenants as
of December 27, 1998.

The following summarizes the balances outstanding as long-term debt as of
December 28, 1997 and December 27, 1998:

<TABLE>
<CAPTION>
1997 1998
------------ ------------
<S> <C> <C>
Term Loan, total quarterly installment payments of $185,643,
interest payable in arrears ranging from 9.14% to 9.25%......... $ -- $ 1,856,433

Capital line, total monthly installment payments approximating
$89,193 including interest ranging from 8.38% to 10.75%......... 2,562,074 --

Less current portion.............................................. (808,232) (742,573)
------------ ------------

Long-term debt.................................................... $ 1,753,842 $ 1,113,860
------------ ------------
------------ ------------
</TABLE>

F-11
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

3. LONG-TERM DEBT AND CREDIT FACILITIES (CONTINUED)
Principal payments on total long-term debt at December 27, 1998 are as
follows:

<TABLE>
<CAPTION>
FISCAL YEAR
- --------------------------------------------------------------------------------
<S> <C>
1999............................................................................ $ 742,573
2000............................................................................ 742,573
2001............................................................................ 371,287
------------
$ 1,856,433
------------
------------
</TABLE>

4. COMMITMENTS AND CONTINGENCIES

The Company leases restaurant and office facilities, four vehicles, and
office equipment under various operating leases expiring through 2013. The
leases generally provide renewal options from three to ten years. Certain leases
are subject to minimum annual increases based upon the consumer price index not
to exceed specific maximum amounts, certain leases have built-in contingent
percentage rents based upon sales, and other leases pass through common area
charges to the Company. Rental expense under these operating leases was
approximately $1,879,954, $2,495,415 and $3,545,546 for fiscal years 1996, 1997
and 1998, respectively.

Future minimum annual lease commitments, as of December 27, 1998, are as
follows:

<TABLE>
<CAPTION>
FISCAL YEAR
- -------------------------------------------------------------------------------
<S> <C>
1999........................................................................... $ 3,808,816
2000........................................................................... 3,761,455
2001........................................................................... 3,782,455
2002........................................................................... 3,683,500
2003........................................................................... 3,687,735
Thereafter..................................................................... 11,873,765
-------------
Total.......................................................................... $ 30,597,726
-------------
-------------
</TABLE>

EMPLOYEE SAVINGS PLAN--On January 31, 1997, the Company adopted a defined
contribution benefit 401(k) plan. This plan allows eligible employees to
contribute a percentage of their salary, subject to annual limits. The Company
matches 25% of each eligible employee's contributions up to 6% of their gross
salary. The contributions vest over a five-year period. The Company contributed
$43,573 to the plan for the year ended December 27, 1998.

5. INCOME TAXES

The Company accounts for income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, the deferred tax (provision)
benefit is determined under the liability method. Under this method, deferred
tax assets and liabilities are recognized based on differences between the
financial statement and tax basis of assets and liabilities using presently
enacted tax rates.

F-12
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

5. INCOME TAXES (CONTINUED)
The components of the income taxes expense for the years ended December 29,
1996, December 28, 1997 and December 27, 1998 are as follows:

<TABLE>
<CAPTION>
1996 1997 1998
---------- ----------- -----------
<S> <C> <C> <C>
Federal (expense) benefit:
Current............................................... $ (30,609) $ 42,483 $ (306,652)
Deferred.............................................. 10,120 (127,496) 368,361
State (expense) benefit:
Current............................................... (800) 9,753 (105,236)
Deferred.............................................. (8,322) (24,262) 109,803
---------- ----------- -----------
Total income tax (expense) benefit...................... $ (29,611) $ (99,522) $ 66,276
---------- ----------- -----------
---------- ----------- -----------
</TABLE>

The income tax expense differs from the Federal statutory rate because of
the effect of the following items for the years ended December 29, 1996,
December 28, 1997 and December 27, 1998:

<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Statutory rate..................................................... (34.0)% 34.0% (35.0)%
State income taxes, net of Federal benefit......................... (6.0) (1.1) (5.9)
Non-deductible items............................................... (4.4) (.1) (.9)
Valuation allowance................................................ -- (49.2) 53.2
Other.............................................................. 15.1 5.3 (3.6)
--------- --------- ---------
Effective tax (expense) benefit rate............................... (29.3)% (11.1)% 7.8%
--------- --------- ---------
--------- --------- ---------
</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for reporting and the
amounts used for income tax purposes.

The tax effects of items comprising the Company's net deferred tax assets as
of December 28, 1997 and December 27, 1998 are as follows:

<TABLE>
<CAPTION>
1997 1998
----------- -----------
<S> <C> <C>
Deferred rent....................................................... $ 273,139 $ 352,936
Differences between book and tax basis of property.................. (351,147) (326,163)
Reserves currently not deductible................................... 227,770 262,464
Net operating losses................................................ 234,737 --
Credits............................................................. 66,089 245,301
Other............................................................... 921 (17,943)
Unrealized gain on investments...................................... -- (30,765)
State taxes......................................................... -- (38,431)
----------- -----------
Net deferred tax assets before valuation allowance.................. 451,509 447,399
Valuation allowance................................................. (451,509) --
----------- -----------
Total............................................................... $ -- $ 447,399
----------- -----------
----------- -----------
</TABLE>

F-13
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

5. INCOME TAXES (CONTINUED)
The Company has Federal credit carryforwards available to offset future tax
liabilities of $245,301.

The Company has provided a valuation allowance equal to the net deferred tax
asset as of December 28, 1997. The Company eliminated the valuation allowance in
1998 due to management's belief that current year activity made realization of
such benefit more likely than not.

6. REDEEMABLE CONVERTIBLE PREFERRED STOCK

REDEEMABLE CONVERTIBLE PREFERRED STOCK--The Company has three classes of
redeemable convertible preferred stock outstanding, each with voting rights and
each subject to the Stock Restriction Agreement dated February 1, 1995, as
amended and the Amended and Restated Certificate of Incorporation dated November
18, 1997 (the "Certificate of Incorporation").

SERIES B REDEEMABLE--In conjunction with the Certificate of
Incorporation, the Series B Stock Purchase Agreement and Investors'
Rights Agreement as amended and restated on November 19, 1997 provide,
among other things, that the Series B stockholders: (1) are entitled to a
$.26 per share annual dividend (non-cumulative) prior to any declaration
or payment of dividends to any holders of Series A Preferred Stock or
common stock, (2) have a liquidation preference of $3.20511 per share
plus declared but unpaid dividends plus an amount equal to 8% compounded
per annum, (3) may request redemption of their shares, subject to legally
available funds, any time on or after July 1, 2000 at a price equal to
the greater of $3.20511 per share or the fair market value of such
shares, but the Company may elect to defer a portion of the redemption
for up to four years from the date of the redemption request, with such
deferral bearing interest at prime plus 1%, (4) have the right at any
time to convert their shares into common stock on a 1 for 1 basis
(subject to adjustment) as defined in the Certificate of Incorporation,
(5) shall automatically convert their shares to common stock on a 1 for 1
basis upon either (a) the consummation of a public offering with
aggregate net proceeds of $15 million, or (b) the date upon which the
Company obtains the consent of the holders of a majority of the then
outstanding shares of Series B Preferred Stock for such conversion, (6)
have certain registration rights and (7) have the right to approve
certain corporate transactions and the right of first refusal on certain
stock offerings.

SERIES C REDEEMABLE--In conjunction with the Certificate of
Incorporation, the Series C Preferred Stock Purchase Agreement and
Investors' Rights Agreement as amended and restated on November 19, 1997,
provide, among other things, that the Series C stockholders: (1) are
entitled to a $.43 per share annual dividend (non-cumulative) prior to
any declaration or payment of dividends to any holders of Series A
Preferred Stock or common stock, (2) have a liquidation preference of
$5.38126 per share plus declared but unpaid dividends, plus an amount
equal to 8% compounded per annum, (3) may request redemption of their
shares, subject to legally available funds, any time on or after July 1,
2000 at a price equal to the greater of $5.38126 per share or the fair
market value of such shares, but the Company may elect to defer a portion
of the redemption for up to four years from the date of the redemption
request, with such deferral bearing interest at prime plus 1%, (4) have
the right to convert their shares into common stock on a 1 for 1 basis
(subject to adjustment) as defined in the Certificate of Incorporation,
(5) shall automatically convert their shares to common

F-14
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

6. REDEEMABLE CONVERTIBLE PREFERRED STOCK (CONTINUED)
stock on a 1 for 1 basis (subject to adjustment) upon either (a) the
consummation of a public offering with aggregate net proceeds of $15
million, or (b) the date upon which the Company obtains the consent of
the holders of a majority of the then outstanding shares of Series C
Preferred Stock for such conversion, (6) have certain registration rights
and (7) have the right to approve certain corporate transactions and the
right of first refusal on certain stock offerings.

SERIES D REDEEMABLE--In conjunction with the Certificate of
Incorporation, the Series D Preferred Stock Purchase Agreement and
Investors' Rights Agreement dated November 19, 1997, provide, among other
things, that the Series D stockholders: (1) are entitled to a $.5756 per
share annual dividend (non-cumulative) prior to any declaration or
payment of dividends to any holders of Series A Preferred Stock or common
stock, (2) have a liquidation preference of $7.19454 per share plus
declared but unpaid dividends, plus an amount equal to 8% compounded per
annum, (3) may request redemption of their shares, subject to legally
available funds, any time on or after July 1, 2000 at a price equal to
the greater of $7.19454 per share or the fair market value of such
shares, but the Company may elect to defer a portion of the redemption
for up to four years from the date of the redemption request, with such
deferral bearing interest at prime plus 1%, (4) have the right to convert
their shares into common stock on a 1 for 1 basis (subject to adjustment)
as defined in the Certificate of Incorporation, (5) shall automatically
convert their shares to common stock on a 1 for 1 basis (subject to
adjustment) upon either (a) the consummation of a public offering with
aggregate net proceeds of $15 million, or (b) the date upon which the
Company obtains the consent of the holders of a majority of the then
outstanding shares of Series D Preferred Stock for such conversion, (6)
have certain registration rights and (7) have the right to approve
certain corporate transactions and the right of first refusal on certain
stock offerings.

PREFERRED STOCK PURCHASE WARRANTS

DEFERRED STOCK ISSUE COSTS--In connection with the Series D redeemable
convertible preferred stock ("Series D Preferred Stock") issuance, the
Company issued a warrant to purchase up to 27,104 shares (subject to
adjustment under a formula defined in the warrant) of the Company's
Series D Preferred Stock. The warrant is exercisable under certain
conditions specified in the warrant. The warrant term extends until the
earlier of December 31, 2002 or the effective date of an initial public
offering of equity securities. The exercise price is $8.63345 per share.
The fair value of the warrants upon date of issuance was not material.

DEBT ISSUE COSTS--In connection with the Term Loan (see Note 3), the
Company issued a warrant to purchase up to 45,000 shares (subject to
adjustment under a formula defined in the warrant) of the Company's
Series D Preferred Stock. The warrant is exercisable under certain
conditions specified in the warrant. The warrant term extends until the
earlier of December 31, 2002 or the business day preceding an
acquisition. The exercise price is $7.19454 per share. The fair value of
the warrant upon date of issuance was not material.

F-15
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

7. STOCKHOLDERS' EQUITY (DEFICIT)

REINCORPORATION--In 1997, the Company changed its state of incorporation
from California to Delaware. In connection with this change, the outstanding
shares of the Company's no par value common and convertible preferred stock were
converted into and exchanged for an equal number of shares of $.001 par value
common and convertible preferred stock of the Delaware entity. The financial
statements have been restated for all periods presented to reflect this change.

COMMON STOCK--Holders of common stock are entitled to one vote per share.
The rights of the common stock are subject to prior rights of the preferred
stock.

CONVERTIBLE PREFERRED STOCK--The Company has Series A convertible preferred
stock outstanding with voting rights. The Series A Preferred Stock is subject to
the Stock Restriction Agreement dated February 1, 1995, as amended and the
Amended and Restated Certificate of Incorporation dated November 18, 1997 (the
"Certificate of Incorporation"). The rights of the Series A stockholders are
junior to the Series B, Series C and Series D stockholders. The Series A
stockholders have the right, at any time, to convert their shares into common
stock on a 1 for 1 basis, subject to adjustment as defined in the Certificate of
Incorporation. Should a liquidation take place, preferred stockholders have
preferential rights to distributions equal to $2.00 per share. Conversion
becomes automatic in the event: (1) the Company initiates a public offering with
aggregate net proceeds of $15 million, or (2) the majority of the holders of the
then outstanding preferred stock elect to convert their shares into common
stock. The holders have certain registration rights.

COMMON STOCK WARRANT--In connection with the Series B convertible redeemable
preferred stock issuance (see Note 6), the Company issued a warrant to purchase
up to 50,000 shares (subject to adjustment under a formula defined in the
warrant) of the Company's common stock. The warrant is exercisable under certain
conditions specified in the warrant. The warrant term extends until the earlier
of February 2, 2000 or the effective date of an initial public offering of
equity securities. The exercise price is $3.20511 per share. The total fair
value of the warrant upon date of issuance was not material.

1995 STOCK OPTION/STOCK ISSUANCE PLAN--On May 30, 1996, the stockholders of
the Company approved the 1995 Stock Option/Stock Issuance Plan (the "Plan"). The
Plan supersedes and incorporates all options outstanding under the 1993 Stock
Option Plan. The Plan provides for the issuance of incentive and nonstatutory
options and for the purchase of common stock for eligible individuals. The Board
of Directors administers the Plan. The stock issuable under the Plan is shares
of authorized but unissued or reacquired common stock. The maximum number of
shares of common stock which may be issued over the term of the Plan may not
exceed 306,147 shares. The total number of shares authorized, as well as shares
subject to outstanding options, will be adjusted in the event of certain changes
to the Company's capital structure, such as stock splits or dividends or other
recapitalization. In no event will any adjustment be made in connection with the
conversion of one or more outstanding shares of the Company's preferred stock
into shares of common stock.

The Plan is divided into two separate programs: (1) the option grant program
and (2) the stock issuance program. Participation in the Plan is limited to
employees, non-employee directors and consultants of the Company. The option
exercise price per share is fixed by the Plan administrator in accordance with
the following provisions: (1) the exercise price shall not be less than 85% of
the fair market value per share of the common stock on the date of grant, except
for incentive stock options, where the exercise price shall not be less than
100% of the fair market value of the common stock on

F-16
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
the date of grant, and (2) if the person to whom the option is granted is a 10%
stockholder, then the exercise price per share shall not be less than 110% of
the fair market value per share of the common stock on the option grant date.
The purchase price per share for stock issuances is determined by the Plan
administrator and must be at least 85% of the fair market value of a share of
common stock at the time of issuance.

Each option granted under the Plan has a maximum term of either five or ten
years (depending on stock ownership) and will be subject to earlier termination
in the event of the optionee's termination of service.

1998 STOCK OPTION/STOCK ISSUANCE PLAN--On March 27, 1998, the stockholders
of the Company approved the 1998 Stock Option/Stock Issuance Plan (the "1998
Plan"). The 1998 Plan provides for the issuance of incentive and nonstatutory
options and for the purchase of common stock for eligible individuals. The Board
of Directors administers the 1998 Plan. The stock issuable under the 1998 Plan
is shares of authorized but unissued or reacquired common stock. The number of
shares of common stock which may be issued over the term of the 1998 Plan,
including the authorization of an additional 200,000 shares for issuance on
March 18, 1999, may not exceed 368,853 shares. The total number of shares
authorized, as well as shares subject to outstanding options, will be adjusted
in the event of certain changes to the Company's capital structure, such as
stock splits or dividends or other recapitalization. In no event will any
adjustment be made in connection with the conversion of one or more outstanding
shares of the Company's preferred stock into shares of common stock.

The 1998 Plan is divided into two separate programs: (1) the option grant
program and (2) the stock issuance program. Participation in the 1998 Plan is
limited to employees, non-employee directors and consultants of the Company. The
option exercise price per share is fixed by the 1998 Plan administrator in
accordance with the following provisions: (1) the exercise price shall not be
less than 85% of the fair market value per share of the common stock on the date
of grant, except for incentive stock options, where the exercise price shall not
be less than 100% of the fair market value of the common stock on the date of
grant, and (2) if the person to whom the option is granted is a 10% stockholder,
then the exercise price per share shall not be less than 110% of the fair market
value per share of the common stock on the option grant date. The purchase price
per share for stock issuances is determined by the 1998 Plan administrator and
must be at least 85% of the fair market value of a share of common stock at the
time of issuance. The purchase price per share for stock issuances to a 10%
stockholder shall not be less than 110% of the fair market at the time of
issuance.

Each option granted under the 1998 Plan has a maximum term of either five or
ten years (depending on stock ownership) and will be subject to earlier
termination in the event of the optionee's termination of service.

1999 STOCK INCENTIVE PLAN--On March 18, 1999 and March 24, 1999, the Board
of Directors and the stockholders, respectively, of the Company approved the
1999 Stock Incentive Plan (the "1999 Plan"). The 1999 Plan will be effective
upon the execution of the underwriting agreement and pricing of the common stock
with respect to the Company's initial public offering. All outstanding options
under the 1993 Stock Option Plan, the 1995 Stock Option/Stock Issuance Plan and
the 1998 Stock Option/Stock Issuance Plan (collectively, the "predecessor
plans") will be incorporated into the 1999 Plan upon the effective date, and no
further grants will be made under the predecessor plans. Except as otherwise

F-17
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
noted below, the options previously granted under the predecessor plans will
have substantially the same terms as in effect for new grants made under the
1999 Plan.

The stock issuable under the 1999 Plan shall be shares of authorized but
unissued or reacquired common stock, including shares repurchased by the Company
on the open market. A total of 1,123,938 shares of common stock have been
authorized for issuance under the 1999 Plan, which includes the shares subject
to outstanding options under the predecessor plans. As of December 27, 1998,
145,860 options were available for grant under the predecessor plans. The number
of shares of common stock reserved for issuance under the 1999 Plan will
automatically increase on the first trading day in January each year, beginning
in calendar year 2000. The increase will be equal to 3% of the total number of
shares of common stock outstanding as of the last trading day in December of the
preceding year, not to exceed 450,000 shares in any given year. In addition, no
participant in the 1999 Plan may be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances for more than
500,000 shares of common stock in the aggregate per calendar year. Each option
shall have a maximum term of either five or ten years, depending on the related
program, and will be subject to earlier termination in the event of the
optionee's termination of service.

The 1999 Plan is divided into five separate components; (1) the
discretionary option grant program, (2) the stock issuance program, (3) the
salary investment option grant program, (4) the automatic option grant program
and (5) the director fee option grant program.

The discretionary option grant and stock issuance programs provide for the
issuance of incentive and nonstatutory options for eligible employees. The
option exercise price per share is fixed by the 1999 Plan administrator in
accordance with the following provisions: (1) the exercise price shall not be
less than 100% of the fair market value per share of the common stock on the
date of grant, and (2) if the person to whom the option is granted is a 10%
stockholder, then the exercise price per share shall not be less than 110% of
the fair market value per share of the common stock on the date of grant. The
purchase price for stock issuances is determined by the 1999 Plan administrator
and shall not be less than 100% of the fair market value of a share of common
stock at the time of issuance. Each option shall be exercisable at such time or
times, during such period and for such number of shares as shall be determined
by the 1999 Plan administrator as set forth in the related individual option
agreements.

The salary investment option grant program, if activated, would be available
to executive officers and other highly compensated eligible employees. The
participants may elect, prior to the start of a calendar year, to reduce their
base salary by a specific dollar amount not less than $10,000 nor more than
$50,000. The options will be exercisable at a price equal to one-third of the
fair market value of the options at grant date. The options will vest monthly
for one year and are subject to full and immediate vesting upon certain changes
in ownership of the Company.

The automatic option grant program is available to non-employee board
members. When the 1999 Plan becomes effective, eligible individuals will
automatically receive an option grant for 15,000 shares on the date of joining
the board provided that they have not been previously employed by the Company.
In addition, at the date of each annual meeting of stockholders, each
non-employee board member will automatically be granted an option to purchase
5,000 shares of common stock, provided that the individual has served on the
board for at least six months. All grants under the automatic

F-18
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
option grant program vest immediately upon issuance. The exercise price per
share shall be equal to 100% of the fair market value of the common stock on the
date of grant.

The director fee option grant program allows, if activated, for non-employee
board members to apply any of their annual retainer fees to the acquisition of a
special option grant. The options will be exercisable at a price equal to
one-third of the fair market value of the options at the grant date. The options
will vest monthly for one year and are subject to full and immediate vesting
upon certain changes in ownership of the Company.

The board may amend or modify the 1999 Plan at any time, subject to any
required stockholder approval. The 1999 Plan will terminate at the earliest of
(1) March 17, 2009, (2) the date on which all shares available for issuance
under our 1999 Plan have been issued as fully-vested shares or (3) the
termination of all outstanding options in connection with certain ownership
changes.

1999 EMPLOYEE STOCK PURCHASE PLAN--On March 18, 1999 and March 24, 1999, the
Board of Directors and stockholders, respectively, approved the 1999 Employee
Stock Purchase Plan ("ESPP"). The ESPP will be effective upon the execution of
the underwriting agreement and pricing of the common stock with respect to the
Company's initial public offering. The ESPP allows eligible employees, as
specified in the ESPP, to purchase shares of common stock in semi-annual
intervals through payroll deductions under this plan. The accumulated payroll
deductions will be applied to the purchase of shares on the employee's behalf at
a price per share equal to 85% of the lower of (1) the fair market value of the
Company's common stock at the date of entry into the current offering period or
(2) the fair market value on the purchase date. An initial reserve of 200,000
shares of common stock has been authorized for issuance under the ESPP. The
Board of Directors may alter, suspend or discontinue the ESPP. However, certain
amendments to the ESPP may require stockholder approval.

F-19
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
The following is a summary of stock option activity for fiscal 1996, 1997
and 1998:

<TABLE>
<CAPTION>
SHARES
----------------------- WEIGHTED
OPTIONS AVERAGE EXERCISE
AVAILABLE OPTIONS PRICE
FOR GRANT OUTSTANDING PER SHARE
---------- ----------- -----------------
<S> <C> <C> <C>
Balance at January 1, 1996......................... 161,720 63,280 $ 0.86
Authorized....................................... 100,000 -- --
Granted.......................................... (125,060) 125,060 1.46
Exercised........................................ (10,107) 0.36
Forfeited........................................ 23,863 (23,863) 1.07
---------- -----------
Balance at December 29, 1996....................... 160,523 154,370 1.40
Authorized.......................................
Granted.......................................... (87,930) 87,930 1.54
Exercised........................................ (450) 1.00
Forfeited........................................ 17,200 (17,200) 1.50
---------- -----------
Balance at December 28, 1997....................... 89,793 224,650 1.33
Authorized....................................... 150,000
Granted.......................................... (137,140) 137,140 2.63
Exercised........................................ (38,043) 1.39
Forfeited........................................ 43,207 (43,207) 1.75
---------- -----------
Balance at December 27, 1998....................... 145,860 280,540 1.96
---------- -----------
---------- -----------
Exercisable, December 29, 1996..................... 14,945 1.01
-----------
-----------
Exercisable, December 28, 1997..................... 66,010 1.33
-----------
-----------
Exercisable, December 27, 1998..................... 92,585 1.46
-----------
-----------
</TABLE>

The Company applies APB Opinion No. 25 and related interpretations in
accounting for its employee stock option plans (see Note 1). Under APB Opinion
No. 25, the Company will record compensation expense resulting from the
difference between the respective grant price per share and the estimated fair
market value of the common stock at the dates of grant. Total deferred
compensation for fiscal 1998 grants was $300,540, and will be recorded ratably
over the vesting period of the respective options. For the year ended December
27, 1998 the Company recorded $22,881 of deferred compensation expense
associated with these option grants.

F-20
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
The following table summarizes the impact on the Company's net income (loss)
had compensation cost been determined based upon the fair value at the grant
date for awards under the stock option plans consistent with the methodology
prescribed under SFAS No. 123:

<TABLE>
<CAPTION>
FISCAL YEARS
-------------------------------------
1996 1997 1998
---------- ------------- ----------
<S> <C> <C> <C>
Net income (loss) attributable to common stockholders:
Basic.............................................. $ 2,644 $ (1,095,105) $ 568,055
Diluted............................................ 2,644 (1,095,105) 915,288

As adjusted under SFAS No. 123:
Net income (loss):
Basic.............................................. $ (19,262) $ (1,127,202) $ 520,283
Diluted............................................ (19,262) (1,127,202) 867,516

Net income (loss) per share:
Basic.............................................. $ (0.02) $ (1.12) $ 0.50
Diluted............................................ (0.02) (1.12) 0.14
</TABLE>

The following table summarizes the weighted average fair value at grant date
for the options granted during fiscal 1996, 1997 and 1998 using the
Black-Scholes option-pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
FISCAL YEARS
-------------------------------
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Expected dividend yield...................................... None None None
Expected stock price volatility.............................. None None None
Risk-free interest rate...................................... 6.00% 6.00% 5.60%
Assumed forfeiture rate...................................... 0% 20% 10%
Expected lives of options.................................... 10 years 8 years 5 years
Weighted average fair value per share........................ $0.64 $0.58 $0.57
</TABLE>

The estimated fair value of options granted is subject to the assumptions
made and if the assumptions changed, the estimated fair value amounts could be
significantly different.

F-21
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

7. STOCKHOLDERS' EQUITY (DEFICIT) (CONTINUED)
The following table summarizes information as of December 27, 1998
concerning currently outstanding and exercisable options:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------------------- ------------------------
WEIGHTED AVERAGE WEIGHTED
REMAINING WEIGHTED AVERAGE
RANGE OF EXERCISE NUMBER CONTRACTUAL LIFE AVERAGE NUMBER EXERCISE
PRICES OUTSTANDING (YEARS) EXERCISE PRICE EXERCISABLE PRICE
- ----------------------- ----------- ----------------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$1.00--$2.00........... 249,320 3 $ 1.62 92,585 $ 1.46
$4.00--$5.00........... 31,220 5 $ 4.64 -- --
----------- -----------
280,540... $ 1.96 92,585 $ 1.46
----------- -----------
----------- -----------
</TABLE>

8. EARNINGS PER SHARE

Reconciliation of basic and diluted earnings per share in accordance with
SFAS No. 128 (see Note 1) is as follows:

<TABLE>
<CAPTION>
FISCAL YEAR PRO FORMA
----------------------------------------- 1998
1996 1997 1998 (UNAUDITED)
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Numerator
Basic:
Net income (loss)........................................... $ 71,602 $ (1,000,466) $ 915,288 $ 915,288
Accretion on redeemable convertible preferred stock......... (68,958) (94,639) (347,233) --
------------ ------------- ------------ ------------
Net income (loss) attributable to common stockholders..... 2,644 (1,095,105) 568,055 915,288
Diluted:
Reversal of accretion on redeemable convertible preferred
stock..................................................... -- -- 347,233 --
------------ ------------- ------------ ------------
Net income (loss) attributable to common stockholders..... $ 2,644 $ (1,095,105) $ 915,288 $ 915,288
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
</TABLE>

F-22
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 29, 1996, DECEMBER 28, 1997 AND DECEMBER 27, 1998

8. EARNINGS PER SHARE (CONTINUED)

<TABLE>
<CAPTION>
FISCAL YEAR PRO FORMA
----------------------------------------- 1998
1996 1997 1998 (UNAUDITED)
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
Denominator
Basic:
Weighted average common shares
outstanding............................................... 1,007,639 1,010,483 1,033,469 1,033,469
Conversion of convertible preferred stock................... -- -- -- 5,262,885
Conversion of warrants into common stock.................... -- -- -- 37,677
------------ ------------- ------------ ------------
Total weighted average common shares outstanding.......... 1,007,639 1,010,483 1,033,469 6,334,031
Diluted:
Effect of dilutive securities:
Common stock options........................................ 17,949 -- 121,300 121,300
Conversion of convertible preferred stock................... -- -- 5,262,885 --
------------ ------------- ------------ ------------
Total weighted average common and potential common shares
outstanding............................................. 1,025,588 1,010,483 6,417,654 6,455,331
------------ ------------- ------------ ------------
------------ ------------- ------------ ------------
Earnings (loss) per share:
Basic......................................................... $ -- $ (1.08) $ 0.55 $ 0.14
Diluted....................................................... $ -- $ (1.08) $ 0.14 $ 0.14
</TABLE>

9. SEGMENTED INFORMATION

The Company owns and operates high-quality, quick-service Mexican
restaurants under the name "Rubio's Baja Grill," with restaurants primarily in
California, Arizona and Nevada. In accordance with SFAS No. 131, the Company
currently considers its business to consist of one reportable operating segment.

********

F-23
<PAGE>
RUBIO'S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
PRO FORMA
STOCKHOLDERS'
EQUITY
MARCH 28, MARCH 28,
1999 1999
DECEMBER 27, ------------- -------------
1998
-------------
(AUDITED)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 786,493 $ 1,124,061
Short-term investments............................................ 2,721,894 646,950
Other receivables................................................. 169,688 379,817
Income taxes receivable........................................... 99,478 99,478
Inventory......................................................... 359,755 371,169
Prepaid expenses.................................................. 295,143 446,224
Deferred income taxes............................................. 53,485 53,485
------------- -------------
Total current assets............................................ 4,485,936 3,121,184
INVESTMENTS......................................................... 3,391,490 2,525,880
PROPERTY--net....................................................... 17,133,392 19,052,820
OTHER ASSETS........................................................ 346,765 392,530
DEFERRED INCOME TAXES............................................... 393,914 342,125
------------- -------------
TOTAL........................................................... $ 25,751,497 $ 25,434,539
------------- -------------
------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable.................................................. $ 2,942,970 $ 2,708,255
Accrued expenses and other liabilities............................ 2,150,424 2,201,124
Current portion of long-term debt................................. 742,573 742,573
Income taxes payable.............................................. 105,235 40,477
------------- -------------
Total current liabilities....................................... 5,941,202 5,692,429
DEFERRED RENT....................................................... 805,054 891,111
LONG-TERM DEBT...................................................... 1,113,860 928,217
------------- -------------
Total liabilities............................................... 7,860,116 7,511,757
------------- -------------
COMMITMENTS AND CONTINGENCIES (NOTE 3)
REDEEMABLE CONVERTIBLE PREFERRED STOCK:
Series B redeemable ($4.12 per share liquidation preference),
actual--$.001 par value, 1,092,007 shares authorized, issued and
outstanding; pro forma--no shares authorized, issued or
outstanding..................................................... 3,408,810 3,424,008
Series C redeemable ($6.40 per share liquidation preference),
actual--$.001 par value, 793,640 shares authorized, issued and
outstanding; pro forma--no shares authorized, issued or
outstanding..................................................... 4,254,450 4,257,171
Series D redeemable ($7.93 per share liquidation preference),
actual--$.001 par value, 1,524,595 shares authorized, 1,452,491
issued and outstanding; pro forma--no shares authorized, issued
or outstanding.................................................. 10,032,065 10,100,954
------------- -------------
Total redeemable convertible preferred stock...................... 17,695,325 17,782,133 $ --
------------- ------------- -------------
STOCKHOLDERS' EQUITY
Convertible preferred stock Series A ($2.00 per share liquidation
preference), acutal--$.001 par value, 1,973,395 shares
authorized, 1,924,747 issued and outstanding; pro forma--no
shares authorized, issued or outstanding........................ 1,925 1,925
Common stock, actual--$.001 par value, 7,298,725 shares
authorized, 1,048,600 issued and outstanding in 1998 and
1,051,062 issued and outstanding in 1999; pro forma-- 6,351,624
shares issued and outstanding................................... 1,049 1,051 6,352
Paid-in capital................................................... -- 2,893 17,781,650
Deferred compensation............................................. 22,881 39,014 39,014
Accumulated other comprehensive income............................ 44,271 11,278 11,278
Retained earnings................................................. 125,930 84,488 84,488
------------- ------------- -------------
Total stockholders' equity...................................... 196,056 140,649 $ 17,922,782
------------- ------------- -------------
-------------
TOTAL........................................................... $ 25,751,497 $ 25,434,539
------------- -------------
------------- -------------
</TABLE>

See notes to unaudited consolidated financial statements.

F-24
<PAGE>
RUBIO'S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------
MARCH 29, 1998 MARCH 28, 1999
----------------- -----------------
<S> <C> <C>
SALES...................................................................... $ 9,217,238 $ 14,382,898
COSTS AND EXPENSES:
Cost of sales............................................................ 2,671,495 4,246,923
Restaurant labor, occupancy and other.................................... 4,895,311 7,253,498
General and administrative expenses...................................... 1,428,142 2,074,890
Depreciation and amortization............................................ 425,964 640,606
Pre-opening expenses..................................................... 50,732 94,394
----------------- -----------------
OPERATING INCOME (LOSS).................................................... (254,406) 72,587
OTHER INCOME (EXPENSE):
Interest and investment income........................................... 137,236 62,928
Interest expense......................................................... (58,004) (55,517)
Miscellaneous income (expense)........................................... 2,394 (400)
Gain (loss) on disposal/sale of property................................. 5,725 (3,989)
----------------- -----------------
Total other income (expense)........................................... 87,351 3,022
----------------- -----------------
INCOME (LOSS) BEFORE INCOME TAXES.......................................... (167,055) 75,609
INCOME TAX EXPENSE......................................................... (12,999) (30,244)
----------------- -----------------
NET INCOME (LOSS).......................................................... $ (180,054) $ 45,365
----------------- -----------------
----------------- -----------------

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS............................... $ (266,862) $ (41,443)
----------------- -----------------
----------------- -----------------
HISTORIC NET LOSS PER SHARE:
Basic and diluted........................................................ $ (0.26) $ (0.04)
----------------- -----------------
----------------- -----------------
HISTORIC SHARES USED IN CALCULATING HISTORIC NET LOSS PER SHARE:
Basic and diluted........................................................ 1,012,731 1,049,790
----------------- -----------------
----------------- -----------------
PRO FORMA NET INCOME PER SHARE.............................................
(UNAUDITED):
Basic and diluted........................................................ $ 0.01
-----------------
-----------------
PRO FORMA SHARES USED IN CALCULATING PRO FORMA NET INCOME PER SHARE
(UNAUDITED):
Basic.................................................................... 6,350,352
-----------------
-----------------
Diluted.................................................................. 6,616,061
-----------------
-----------------
</TABLE>

See notes to unaudited consolidated financial statements.

F-25
<PAGE>
RUBIO'S RESTAURANTS, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
----------------------------------
MARCH 29, 1998 MARCH 28, 1999
---------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss)........................................................... $ (180,054) $ 45,365
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization............................................. 425,964 640,606
Deferred compensation..................................................... 7,627 16,133
(Gain) loss on disposal/sale of property.................................. (5,725) 3,989
Changes in assets and liabilities:
Other receivables....................................................... (11,578) (210,129)
Inventory............................................................... 3,663 (11,414)
Prepaid expenses........................................................ (47,329) (151,081)
Other assets............................................................ (20,311) (45,765)
Accounts payable........................................................ (83,809) (234,715)
Accrued expenses and other liabilities.................................. 189,002 50,700
Income taxes payable.................................................... 12,999 (64,758)
Deferred rent........................................................... 42,284 86,057
---------------- ----------------
Cash provided by operating activities................................. 332,733 124,988
---------------- ----------------
INVESTING ACTIVITIES:
Proceeds from sale of property.............................................. 7,200 --
Purchase of property........................................................ (1,332,870) (2,564,022)
Purchases of investments.................................................... (3,007,802) (8,969,694)
Sales and maturities of investments......................................... 4,102,130 11,929,044
---------------- ----------------
Cash provided by (used for) investing activities...................... (231,342) 395,328
---------------- ----------------
FINANCING ACTIVITIES:
Principal payments on long-term debt........................................ (205,990) (185,643)
Proceeds from exercise of stock options..................................... -- 2,895
Deferred offering costs..................................................... (4,608) --
---------------- ----------------
Cash used for financing activities.................................... (210,598) (182,748)
---------------- ----------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............................. (109,207) 337,568
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.............................. 866,160 786,493
---------------- ----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD.................................... $ 756,953 $ 1,124,061
---------------- ----------------
---------------- ----------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest...................................................... $ 55,630 $ 53,467
Cash paid related to income taxes........................................... $ 95,000

SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING AND FINANCING ACTIVITIES:
Holding gains on available-for-sale investments, before tax................. $ 18,796
----------------
----------------
</TABLE>

See notes to unaudited consolidated financial statements.

F-26
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE MONTHS ENDED MARCH 28, 1999

1. BASIS OF PRESENTATION

The accompanying consolidated financial information has been prepared by
Rubio's Restaurants, Inc. and its wholly-owned subsidiary (collectively, the
"Company") without audit, in accordance with the instructions to Form 10-Q and
therefore does not include all information and footnotes necessary for a fair
presentation of financial position, results of operations and cash flows in
accordance with generally accepted accounting principles.

UNAUDITED INTERIM FINANCIAL DATA--In the opinion of management, the
unaudited consolidated financial statements for the interim periods presented
reflect all adjustments, consisting of only normal recurring accruals, necessary
for a fair presentation of the financial position and results of operations as
of and for such periods indicated. These consolidated financial statements and
notes thereto should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this prospectus for the year
ended December 27, 1998. Results for the interim periods presented herein are
not necessarily indicative of results which may be reported for any other
interim period or for the entire fiscal year.

PRO FORMA NET INCOME PER SHARE--In accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share" (EPS), pro forma
basic net income per share is computed based on the weighted average of common
shares outstanding during the year, which includes the conversion of all
convertible preferred stock and the issuance of shares of common stock upon the
exercise of certain outstanding warrants (see "Unaudited Pro Forma Stockholders'
Equity") upon the consummation of the Company's planned initial public offering.
Pro forma diluted earnings per share is computed assuming the potential dilution
upon exercise of potential common shares using the treasury stock method, except
for the years where potential dilution is not assumed as the effect would be
antidilutive (see Note 4).

UNAUDITED PRO FORMA STOCKHOLDERS' EQUITY--On March 18, 1999, the Company's
Board of Directors approved an increase in the authorized shares of common stock
to 75,000,000 and authorized 5,000,000 shares of undesignated preferred stock.
The change in authorized shares will be effective upon the closing of the
company's planned initial public offering. Consolidated stockholders' equity as
of March 28, 1999 has been shown on a pro forma basis, assuming conversion of
5,262,885 shares of convertible preferred stock then outstanding into 5,262,885
shares of common stock, and the issuance of 37,677 shares of common stock upon
the exercise of certain outstanding warrants. The unaudited pro forma
consolidated balance sheet as of March 28, 1999 and pro forma net income per
share (see "Pro Forma Net Income Per Share"), reflect this conversion.

F-27
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE THREE MONTHS ENDED MARCH 28, 1999

2. BALANCE SHEET DETAILS as of December 27, 1998 and March 28, 1999,
respectively:

<TABLE>
<CAPTION>
1998 1999
------------- -------------
<S> <C> <C>
PROPERTY--at cost:
Building and leasehold improvements.......................... $ 11,209,218 $ 12,419,980
Equipment and furniture...................................... 10,319,498 12,062,713
Construction in process and related costs.................... 1,059,514 696,110
------------- -------------
22,588,230 25,178,803
Less: accumulated depreciation and amortization.............. (5,454,838) (6,125,983)
------------- -------------
Total........................................................ $ 17,133,392 $ 19,052,820
------------- -------------
------------- -------------
ACCRUED EXPENSES AND OTHER LIABILITIES:
Compensation................................................. $ 1,069,227 $ 817,744
Sales taxes.................................................. 334,157 422,606
Vacation pay................................................. 248,136 260,556
Unearned usage allowance..................................... 206,316 100,502
Other........................................................ 292,588 599,716
------------- -------------
Total...................................................... $ 2,150,424 $ 2,201,124
------------- -------------
------------- -------------
</TABLE>

3. LONG-TERM DEBT AND CREDIT FACILITIES

TERM LOAN--On April 1, 1999, the Company amended the Revolving Credit and
Term Loan Agreement (the "Term Loan"). The amendment eliminated the provision to
prepay the Term Loan including interest not later than 90 days after the
completion of an initial public offering. The amendment also provides for a
decrease in the interest rate, at the election of the Company, to a bank
reference rate plus 0.75% or an adjusted LIBOR plus 3.0% per annum. There was
$1,670,790 outstanding under the Term Loan as of March 28, 1999. Interest
expense was $55,517 under the Term Loan for the three months ended March 28,
1999. There are no additional amounts available to the Company under the Term
Loan. Principal and interest payments are due in quarterly installments through
April 1, 2001.

REVOLVING LINE OF CREDIT--On April 1, 1999, the Company amended the
Revolving Credit and Term Loan Agreement (the "Credit line"). The amendment
decreased the rate for any unused commitment fees to 0.375%. In addition, the
amendment provides for a decrease in the interest rate, at the election of the
Company, to a bank reference rate plus 0.75% or an adjusted LIBOR plus 3.0% per
annum. Principal and interest payments due under the Credit line are payable
before or upon maturity at May 12, 2001. There were no borrowings outstanding
against the Credit line at March 28, 1999. On April 9, 1999, the Company
borrowed $1.0 million against the Credit line.

F-28
<PAGE>
RUBIO'S RESTAURANTS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

FOR THE THREE MONTHS ENDED MARCH 28, 1999

4. EARNINGS PER SHARE

Reconciliation of basic and diluted earnings per share in accordance with
SFAS No. 128 is as follows:

<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
------------------------------------
MARCH 29, 1998 MARCH 28,1999
----------------- ----------------- PRO FORMA
MARCH 28,1999
-----------------
(UNAUDITED)
<S> <C> <C> <C>
Numerator
Basic:
Net income (loss).................................... $ (180,054) $ 45,365 $ 45,365
Accretion on redeemable convertible preferred
stock.............................................. (86,808) (86,808) --
----------------- ----------------- -----------------
Net income (loss) attributable to common
stockholders..................................... (266,862) (41,443) 45,365
Diluted:
Reversal of accretion on redeemable convertible
preferred stock -- -- --
----------------- ----------------- -----------------
Net income (loss) attributable to common
stockholders..................................... $ (266,862) $ (41,443) $ 45,365
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Denominator
Basic:
Weighted average common shares outstanding......... 1,012,731 1,049,790 1,049,790
Conversion of convertible preferred stock.......... -- -- 5,262,885
Conversion of warrants into common stock........... -- -- 37,677
----------------- ----------------- -----------------
Total weighted average common shares
outstanding.................................... 1,012,731 1,049,790 6,350,352
Diluted:
Effect of dilutive securities:
Common stock options............................... -- -- 265,709
Conversion of convertible preferred stock.......... -- -- --
----------------- ----------------- -----------------
Total weighted average common and potential
common shares outstanding...................... 1,012,731 1,049,790 6,616,061
----------------- ----------------- -----------------
----------------- ----------------- -----------------
Earnings (loss) per share:
Basic................................................ $ (0.26) $ (0.04) $ 0.01
Diluted.............................................. $ (0.26) $ (0.04) $ 0.01
</TABLE>

F-29
<PAGE>
REAR INSIDE COVER:

Photograph of a scene from the Baja peninsula, overlaid with pictures of our
restaurant interiors, as well as pictures of a Baja Bowl, lobster burrito and
nachos grande from our menu, with captions identifying the name of each product.

A copy of our menu will be attached to the inside back cover.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

You should rely only on the information contained in this prospectus or to which
we have referred you. Neither we nor any underwriter has authorized anyone to
provide you with information that is different. This prospectus is not an offer
to sell nor is it seeking an offer to buy these securities in any jurisdiction
where the offer or sale is not permitted. The information contained in this
prospectus is correct only as of the date of this prospectus, even if this
prospectus is delivered to you after the prospectus date, or you buy our common
stock after the prospectus date.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 7
Conventions Which Apply to this Prospectus................................ 14
Use of Proceeds........................................................... 14
Dividend Policy........................................................... 14
Dilution.................................................................. 15
Capitalization............................................................ 16
Selected Consolidated Financial Data...................................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 19
Business.................................................................. 28
Management................................................................ 37
Certain Relationships and Related Transactions............................ 47
Principal Stockholders.................................................... 48
Selling Stockholders...................................................... 50
Description of Securities................................................. 51
Shares Eligible for Future Sale........................................... 56
Underwriting.............................................................. 57
Legal Matters............................................................. 60
Experts................................................................... 60
Where You Can Find More Information....................................... 60
Index to Consolidated Financial Statements................................ F-1
</TABLE>

Until , 1999, all dealers selling shares of our common stock, whether
or not participating in this offering, may be required to deliver a prospectus.
This delivery requirement is in addition to the obligation of dealers to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.

[LOGO]

Rubio's Restaurants, Inc.

3,150,000 Shares

Common Stock
---------------------

PROSPECTUS

---------------------

Thomas Weisel Partners LLC

Dain Rauscher Wessels
a division of Dain Rauscher Incorporated

U.S. Bancorp Piper Jaffray

, 1999

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses to be paid by the Registrant are as follows. All amounts other
than the SEC registration fee, the NASD filing fees and the Nasdaq National
Market listing fee are estimates.

<TABLE>
<CAPTION>
AMOUNT TO
BE PAID
----------
<S> <C>
SEC registration fee.............................................................. $ 10,071
NASD filing fee................................................................... 4,123
Nasdaq National Market listing fee................................................ 17,000
Legal fees and expenses........................................................... 250,000
Accounting fees and expenses...................................................... 200,000
Printing and engraving............................................................ 150,000
Blue sky fees and expenses (including legal fees)................................. 5,000
Transfer agent fees............................................................... 5,000
Miscellaneous..................................................................... 58,806
----------
Total........................................................................... $ 700,000
----------
----------
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law authorizes a court to
award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
specified circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933.

As permitted by the Delaware General Corporation Law, the Registrant's
Second Restated Certificate of Incorporation includes a provision that
eliminates the personal liability of our directors for monetary damages for
breach of fiduciary duty as a director, except for liability (1) for any breach
of the director's duty of loyalty to the Registrant or our stockholders, (2) for
acts or omissions not in good faith or that involve intentional misconduct or a
knowing violation of law, (3) under section 174 of the Delaware General
Corporation Law (regarding unlawful dividends and stock purchases), or (4) for
any transaction from which the director derived an improper personal benefit.

As permitted by the Delaware General Corporation Law, the bylaws of the
Registrant provide that (1) the Registrant is required to indemnify its
directors and officers to the fullest extent permitted by the Delaware General
Corporation Law, subject to very limited exceptions, (2) the Registrant may
indemnify its other employees and agents as set forth in the Delaware General
Corporation Law, (3) the Registrant is required to advance expenses, as
incurred, to its directors and executive officers in connection with a legal
proceeding to the fullest extent permitted by the Delaware General Corporation
Law, subject to very limited exceptions and (4) the rights conferred in the
bylaws are not exclusive.

The Registrant has entered into indemnification agreements with each of its
directors and executive officers to give such directors and officers additional
contractual assurances regarding the scope of the indemnification set forth in
the Registrant's Amended and Restated Certificate of Incorporation and to
provide additional procedural protections. At present, there is no pending
litigation or proceeding involving a director, officer or employee of the
Registrant regarding which indemnification is sought, nor is the Registrant
aware of any threatened litigation that may result in claims for
indemnification.

II-1
<PAGE>
Reference is also made to Section 8 of the Underwriting Agreement, which
provides for the indemnification of officers, directors and controlling persons
of the Registrant against certain liabilities. The indemnification provision in
the Registrant's Certificate of Incorporation, bylaws and the indemnification
agreements entered into between the Registrant and each of its directors and
executive officers may be sufficiently broad to permit indemnification of the
Registrant's directors and executive officers for liabilities arising under the
Securities Act of 1933.

The Registrant has applied for liability insurance for its officers and
directors.

Reference is made to the following documents filed as exhibits to this
Registration Statement regarding relevant indemnification provisions described
above and elsewhere in this prospectus:

<TABLE>
<CAPTION>
DOCUMENT EXHIBIT NUMBER
- ----------------------------------------------------------------------------- -----------------
<S> <C>
Form of Underwriting Agreement............................................... 1.1
Form of Amended and Restated Certificate of Incorporation of Registrant...... 3.2
Form of Restated Bylaws of Registrant........................................ 3.4
Form of Indemnification Agreement--Directors................................. 10.25
Form of Indemnification Agreement--Officers.................................. 10.26
</TABLE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

The Registrant has sold and issued the following securities since January 1,
1996:

(1) The Registrant from time to time has granted stock options to employees
and consultants in reliance upon exemption from registration pursuant to
either (1) Section 4(2) of the Securities Act of 1933 or (2) Rule 701
promulgated under the Securities Act of 1933. The following table sets
forth certain information regarding such grants:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICES
----------- -------------
<S> <C> <C>
Fiscal year ended December 29, 1996................................ 125,060 $ 1.00-$1.50
Fiscal year ended December 28, 1997................................ 87,930 $ 1.50-$2.00
Fiscal year ended December 27, 1998................................ 137,140 $ 2.00-$5.00
Fiscal quarter ended March 28, 1999................................ 121,850 $ 7.00-$9.00
</TABLE>

For additional information concerning these transactions, please see
"Management--Benefit Plans" in the prospectus included in this
registration statement.

(2) On March 28, 1996 and June 30, 1996, the Registrant issued a total of
793,640 shares of Series C preferred stock to various venture
capitalists, accredited investors and insiders for an aggregate
consideration of $4,270,783.

(3) On November 19, 1997 and December 3, 1997, the Registrant issued a total
of 1,403,843 shares of Series D preferred stock to various venture
capitalists, accredited investors and insiders for an aggregate
consideration of $10,100,005.

(4) On December 31, 1997, the Registrant issued a warrant to purchase up to
27,104 shares of Series D preferred stock to NationsBanc Montgomery
Securities, LLC in consideration for services provided in the private
placement of the Registrant's Series D preferred stock.

(5) On May 7, 1998, the Registrant issued 25,000 shares of common stock to a
director upon exercise of options for a consideration of $37,500.

II-2
<PAGE>
(6) On May 11, 1998, the Registrant issued a warrant to purchase up to
45,000 shares of Series D preferred stock to FSC Corp. in connection with
its credit facility with BankBoston, N.A.

(7) On June 16, 1998, the Registrant issued 48,648 shares of Series D
preferred stock to accredited investors for an aggregate consideration of
$350,000.

The above securities were offered and sold by the Registrant in reliance
upon exemptions from registration pursuant to either (1) Section 4(2) of the
Securities Act of 1933 as transactions not involving any public offering, or (2)
Rule 701 promulgated under the Securities Act of 1933. No underwriters were
involved in connection with the sales of securities referred to in this Item 15.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits.

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1+ Form of Underwriting Agreement.
3.1+ Amended and Restated Certificate of Incorporation, as amended.
3.2+ Form of Amended and Restated Certificate of Incorporation to be in effect upon the closing of this
offering.
3.3+ Bylaws, as amended.
3.4+ Form of Restated Bylaws to be in effect upon the closing of this offering.
4.1 Specimen common stock certificate.
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
10.1+ Series B Preferred Stock Purchase Agreement, dated February 1, 1995.
10.2+ Common Stock Purchase Warrant granted to Flemming & Lessard, Inc., dated February 2, 1995.
10.3+ Series C Preferred Stock Purchase Agreement, dated March 28, 1996.
10.4+ Amendment Number One to Series C Preferred Stock Purchase Agreement, dated June 30, 1996.
10.5++ Series D Preferred Stock Purchase Agreement, dated November 19, 1997.
10.6+ Amendment No. 1 to the Series D Preferred Stock Purchase Agreement, dated December 3, 1997.
10.7+ Amended and Restated Investors' Rights Agreement, dated November 19, 1997.
10.8+ Amendment No. 1 to the Amended and Restated Investors' Rights Agreement, dated December 31, 1997.
10.9+ Amendment No. 2 to the Amended and Restated Investors' Rights Agreement, dated May 13, 1998.
10.10+ Amended and Restated Stock Restriction Agreement, dated November 19, 1997.
10.11+ Series D Preferred Stock Purchase Warrant granted to NationsBanc Montgomery Securities, LLC, dated
December 31, 1997.
10.12+ Series D Preferred Stock Purchase Warrant granted to FSC Corp., dated May 11, 1998.
10.13+ Stock Purchase Agreement, dated June 16, 1998.
10.14+ Revolving Credit and Term Loan Agreement between us and BankBoston, N.A., dated May 13, 1998, as
amended.
10.15+ Lease Agreement between us and Macro Plaza Enterprises, dated October 27, 1997.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.16+ First Amendment to Lease Agreement between us and Cornerstone Corporate Centre, LLC, dated October 16,
1998.
10.17+ Agreement between us and Service America Corporation, dated April 9, 1992.
10.18++ Test Agreement between us and Host International, Inc., dated August 4, 1995.
10.19+ General Purchasing Term Agreement between us and Pacific Basin Foods, Inc., dated October 21, 1996.
10.20+ Amendment to Agreement between us and Pacific Basin Foods, Inc., dated November 20, 1998.
10.21+ Agreement between us and Coca-Cola USA Fountain, dated March 10, 1998.
10.22+ Agreement between us and Dr. Pepper/Seven Up, Inc., dated June 23, 1998.
10.23++ Rental Agreement between us and Premier Food Services, Inc., dated July 10, 1998.
10.24++ Letter Agreement between us and Volume Service America, dated March 29, 1999.
10.25+ Form of Indemnification Agreement between us and each of our directors.
10.26+ Form of Indemnification Agreement between us and each of our officers.
10.27+ 1993 Stock Option/Stock Issuance Plan, as amended.
10.28+ 1993 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock Option.
10.29+ 1993 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.30+ 1993 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.31+ 1993 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement.
10.32+ 1995 Stock Option/Stock Issuance Plan.
10.33+ 1995 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock Option.
10.34+ 1995 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.35+ 1995 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.36+ 1995 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement.
10.37+ 1998 Stock Option/Stock Issuance Plan.
10.38+ 1998 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock Option.
10.39+ 1998 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.40+ 1998 Stock Option/Stock Issuance Plan Form of Addendum to Stock Option Agreement.
10.41+ 1998 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.42+ 1998 Stock Option/Stock Issuance Plan Form of Addendum to Stock Purchase Agreement.
10.43+ 1998 Stock Option/Stock Issuance Plan Form of Stock Issuance Agreement.
10.44+ 1998 Stock Option/Stock Issuance Plan Form of Addendum to Stock Issuance Agreement.
10.45+ Form of 1999 Stock Incentive Plan.
10.46+ Form of Employee Stock Purchase Plan.
11.1+ Statement re: Computation of Basic and Diluted Net Income (Loss) Per Share.
21.1+ Subsidiary List.
23.1 Independent Auditors' Consent.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1+ Powers of Attorney (See Signature Page on Page II-6).
27.1+ Financial Data Schedule.
</TABLE>

- ------------------------

+ We have sought confidential treatment pursuant to Rule 406 of portions of the
referenced exhibits.

+ Previously filed.

II-4
<PAGE>
(b) Financial Statement Schedules.

All financial statement schedules have been omitted because they are not
required, are not applicable or because the information required is included in
our consolidated financial statements or notes thereto.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes to provide to the Underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriter to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities Exchange Commission such
indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424 (b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused Amendment No. 2 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in San Diego,
California, on this 14th day of May, 1999.

<TABLE>
<S> <C> <C>
RUBIO'S RESTAURANTS, INC.

By: /s/ RALPH RUBIO
------------------------------------------
Ralph Rubio
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>

<TABLE>
<CAPTION>
SIGNATURE TITLE(S) DATE
- ------------------------------ -------------------------- -------------------

<C> <S> <C>
President, Chief Executive
/s/ RALPH RUBIO Officer and Director
- ------------------------------ (principal executive May 14, 1999
Ralph Rubio officer)

Chief Strategic and
* Financial Officer
- ------------------------------ (principal financial and May 14, 1999
Joseph N. Stein accounting officer)

*
- ------------------------------ Director May 14, 1999
Kyle A. Anderson

*
- ------------------------------ Director May 14, 1999
Jason M. Fish

*
- ------------------------------ Director May 14, 1999
Rafael Rubio

*
- ------------------------------ Director May 14, 1999
Robert Rubio

*
- ------------------------------ Director May 14, 1999
Kim Lopdrup

*
- ------------------------------ Director May 14, 1999
Timothy J. Ryan

*
- ------------------------------ Director May 14, 1999
Michael Dooling

*By: /s/ RALPH
RUBIO
- ------------------------------ May 14, 1999
Ralph Rubio
ATTORNEY-IN-FACT
</TABLE>

II-6
<PAGE>
INDEX TO EXHIBITS

<PAGE>

<TABLE>
<CAPTION>
NUMBER DESCRIPTION
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.26+ Form of Indemnification Agreement between us and each of our officers.
10.27+ 1993 Stock Option/Stock Issuance Plan, as amended.
10.28+ 1993 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock Option.
10.29+ 1993 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.30+ 1993 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.31+ 1993 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement.
10.32+ 1995 Stock Option/Stock Issuance Plan.
10.33+ 1995 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock Option.
10.34+ 1995 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.35+ 1995 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.36+ 1995 Stock Option/Stock Issuance Plan Form of Restricted Stock Issuance Agreement.
10.37+ 1998 Stock Option/Stock Issuance Plan.
10.38+ 1998 Stock Option/Stock Issuance Plan Form of Notice of Grant of Stock Option.
10.39+ 1998 Stock Option/Stock Issuance Plan Form of Stock Option Agreement.
10.40+ 1998 Stock Option/Stock Issuance Plan Form of Addendum to Stock Option Agreement.
10.41+ 1998 Stock Option/Stock Issuance Plan Form of Stock Purchase Agreement.
10.42+ 1998 Stock Option/Stock Issuance Plan Form of Addendum to Stock Purchase Agreement.
10.43+ 1998 Stock Option/Stock Issuance Plan Form of Stock Issuance Agreement.
10.44+ 1998 Stock Option/Stock Issuance Plan Form of Addendum to Stock Issuance Agreement.
10.45+ Form of 1999 Stock Incentive Plan.
10.46+ Form of Employee Stock Purchase Plan.
21.1+ Subsidiary List.
23.1 Independent Auditors' Consent.
23.2 Consent of Brobeck, Phleger & Harrison LLP (included in Exhibit 5.1).
24.1+ Powers of Attorney (See Signature Page on Page II-6).
27.1+ Financial Data Schedule.
</TABLE>

- ------------------------

+ We have sought confidential treatment pursuant to Rule 406 of portions of the
referenced exhibits.

+ Previously filed.

<PAGE>

EXHIBIT 4.1

COMMON STOCK RUBIO'S COMMON STOCK
NUMBER BAJA GRILL
C- HOME OF THE FISH TACO -REGISTERED TRADEMARK-

INCORPORATED UNDER THE LAWS OF CUSIP 78116B 10 2
THE STATE OF DELAWARE SEE REVERSE FOR CERTAIN DEFINITIONS

THIS CERTIFIES THAT

IS THE RECORD HOLDER OF

FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK,
PAR VALUE $0.001 PER SHARE, OF

RUBIO'S RESTAURANTS, INC.

TRANSFERABLE ONLY ON THE BOOKS OF THE CORPORATION BY THE HOLDER HEREOF IN
PERSON OR BY DULY AUTHORIZED ATTORNEY UPON SURRENDER OF THIS CERTIFICATE
PROPERLY ENDORSED. THIS CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED AND
REGISTERED BY THE TRANSFER AGENT AND REGISTRAR.

WITNESS THE FACSIMILE SEAL OF SAID CORPORATION AND THE FACSIMILE
SIGNATURES OF ITS DULY AUTHORIZED OFFICERS.

DATED:

[ILLEGIBLE] SEAL [ILLEGIBLE]

SECRETARY PRESIDENT AND CHIEF EXECUTIVE OFFICER

COUNTERSIGNED AND REGISTERED:
U.S. STOCK TRANSFER CORPORATION

TRANSFER AGENT
AND REGISTRAR,

AUTHORIZED SIGNATURE

<PAGE>

RUBIO'S RESTAURANTS, INC.

THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE POWERS, DESIGNATIONS, PREFERENCES AND RELATIVE PARTICIPATING,
OPTIONAL OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF AND
THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH PREFERENCES AND/OR
RIGHTS. SUCH REQUEST MUST BE MADE TO THE CORPORATION'S SECRETARY AT THE
PRINCIPAL EXECUTIVE OFFICE 0F THE CORPORATION.

Keep this Certificate in a safe place. If it is lost, stolen or
destroyed, the Corporation will require a bond of indemnity as a condition to
the issuance of a replacement certificate.

The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:

<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT-...........Custodian..........
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act...........................
in common (State)

UNIF TRF MIN ACT-.......Custodian (until age....)
(Cust)

....... under Uniform Transfers
(Minor)
to Minors Act...................
(State)

Additional abbreviations may also be used though not in the above list.
</TABLE>

FOR VALUE RECEIVED, hereby sell, assign and transfer unto
---------------------

PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
- -------------------------------------

- -------------------------------------

- -----------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)

- -----------------------------------------------------------------------------

- ----------------------------------------------------------------------- Shares

of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
------------------------------------------
Attorney to transfer the said stock on the books of the within named
Corporation, with full power of substitution in the premises.

Dated
---------------------------------
X
---------------------------------

X
---------------------------------
NOTICE: THE SIGNATURE(S) TO THIS
ASSIGNMENT MUST CORRESPOND WITH
THE NAME(S) AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN
EVERY PARTICULAR WITHOUT
ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.

SIGNATURE(S) GUARANTEED:

BY
-----------------------------------------------------------------------
THE SIGNATURE(S) MUST BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.

<PAGE>

[LETTERHEAD OF BROBECK, PHLEGER & HARRISON LLP]

May 14, 1999

Rubio's Restaurants, Inc.
1902 Wright Place, Suite 300
Carlsbad, CA 92008

Re: Rubio's Restaurants, Inc. Registration Statement on Form S-1
for 3,622,500 Shares of Common Stock

Ladies and Gentlemen:

We have acted as counsel to Rubio's Restaurants, Inc., a Delaware
corporation (the "Company"), in connection with the proposed issuance and sale
by the Company of up to 3,622,500 shares of the Company's Common Stock (the
"Shares"), including 472,000 Shares which the underwriters have the option to
purchase to cover overallotments, if any, pursuant to the Company's Registration
Statement on Form S-1 (the "Registration Statement") filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Act").

This opinion is being furnished in accordance with the requirements of
Item 16(a) of Form S-1 and Item 601(b)(5)(i) of Regulation S-K.

We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the issuance and sale of the
Shares. Based on such review, we are of the opinion that the Shares have been
duly authorized, and if, as and when issued in accordance with the Registration
Statement and the related prospectus (as amended and supplemented through the
date of issuance) will be legally issued, fully paid and nonassessable.

We consent to the filing of this opinion letter as Exhibit 5.1 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus which is part of the Registration Statement.
In giving this consent, we do not thereby admit that we are within the category
of persons whose consent is required under Section 7 of the Act, the rules and
regulations of the Securities and Exchange Commission promulgated thereunder, or
Item 509 of Regulation S-K.

<PAGE>

Rubio's Restaurants, Inc.
Page 2

Our opinion is expressly limited to the matters set forth above and
we render no opinion, whether by implication or otherwise, as to any other
matters relating to the Company or the Shares.

Very truly yours,

BROBECK, PHLEGER & HARRISON LLP

<PAGE>

EXHIBIT 10.17

SERVICE AMERICA CORPORATION
SAN DIEGO JACK MURPHY STADIUM

THIS AGREEMENT is made this 9th day of April, 1992 by and between SERVICE
AMERICA CORPORATION ("SAC") , and RUBIO'S RESTAURANTS, INC. ("Rubio's"), a
California corporation with its principal place of business at 7857 Convoy
Court, San Diego, CA 92111.

WITNESSETH:

In consideration of the mutual covenants set forth below, and for other valuable
consideration, the parties agree, as follows:

1. OBLIGATIONS OF SAC:

a. SAC shall, in conjunction with Rubio's, as described below,
operate a concession stand ("the stand"), as part of SAC's
operation at the San Diego Jack Murphy Stadium, which "stand"
shall be located on the Upper Level, Section 21, and Kiosk C-34K
located on the Plaza Level, Section 34, or such additional
location as SAC may determine. SAC shall permit Rubio's to
advertise its products at the Stadium, in accordance with the
terms of this Agreement.

b. SAC shall provide the following materials and services for the
operation of "the stand":

i. Concession stand location.

ii. Utilities, including gas, water and electricity.

iii. Sufficient equipment mutually agreed upon, to prepare
Rubio's concession menu items.

iv. Menu strips for the menu board.

v. A suitable staff of employees.

vi. Additional smallwares, as required.

c. SAC shall maintain adequate insurance for the operation of The
Top Deck and Kiosk and shall indemnify and hold Rubio's harmless
from any claims, damages and expenses that may arise in
connection with SAC's negligent acts or omissions with respect to
The Top Deck or Kiosk.

d. All recipes and preparation procedures provided by Rubio's shall
be treated by SAC as proprietary and confidential.

<PAGE>

e. SAC shall pay Rubio's within *** after the end of SAC's monthly
accounting period, a sum equal to *** of the net sales
(revenues less all taxes) on Rubio's products sold in these
locations, excluding give-aways, employee meals and similar
adjustments. SAC shall provide Rubio's with periodic access to
The Top Deck and Kiosk to audit SAC's procedures.

f. As per this Amended Agreement, SAC will make an additional
investment of not more than *** to upgrade the cooking/serving
line in the Top Deck. As shown in the attachment of March 23rd,
this investment will include the cost of hook-up and
installation.

2. OBLIGATIONS OF RUBIO'S

a. Rubio's shall assist SAC in the operation of The Top Deck and
Kiosk and shall be subject at all times to and comply with, the
terms and conditions of the written Agreement between SAC and San
Diego Jack Murphy Stadium and with all applicable laws and
regulations.

b. Rubio's shall provide the following:

i. Neon sign acceptable to SAC, advertising The Top Deck,
which sign shall remain the *** upon termination of this
Agreement, and two (2) neon signs, advertising Rubio's
Fish Tacos, which shall remain the property of Rubio's and
be removed *** upon termination of this Agreement.

ii. Four replacement exterior signs acceptable to SAC and
consistent with other Stadium kiosks, which shall remain
the property of Rubio's and shall be removed, *** ,
upon the termination of this Agreement. *** shall be
*** for any and all *** to the *** and any other person
or entity in connection with
***.

iii. One walk-in refrigerator, minimum size 8' x 8' weather
protected, with electrical and plumbing and hookups,
concrete pad, fencing and installation and all necessary
labor.

iv. Interior layout and design and all kitchen equipment and
labor required for the conversion of the stand into a
high-production fish taco stand.

v. Recipes, procedures and training for SAC employees in the
preparation of foods to be sold at the Kiosk and ongoing
supervision in the preparation and sale of food products.

vi. Smallwares for the initial operation of the Kiosk.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

2
<PAGE>

vii. Public address system for order pick-up.

c. Rubio's shall make available for sale to SAC sufficient
quantities of spices and seasonings as may be required for the
sale of Rubio's products from The Top Deck and Kiosk.

d. Rubio's grants to SAC the right and license for the term and all
renewals of this Agreement, to use the name, "Rubio's" and any
and all other trademarks, tradenames, logos and/or copyrights
utilized by Rubio's in the sale of its products.

e. All operational procedures and policies of SAC shall be treated
by Rubio's as proprietary and confidential.

f. Rubio's shall be *** for any and all *** to the ***
and any other persons or entities in connection with ***
depicting *** .

g. As per this Amended Agreement, Rubio's will make an additional
investment of not more than *** to upgrade the appearance
and areas surrounding the C-34 Kiosk and the Top Deck.

3. THE TERM

a. This Agreement shall remain in effect for a period of Four (4)
years, commencing as of the date hereof.

b. This Agreement shall automatically renew for an additional
one (1) year term, unless either party serves notice of its
intent not to renew, prior to March 1st of the initial or any
renewal term. Notwithstanding the foregoing, this Agreement
shall terminate upon termination of the ***
*** .

c. Upon termination of this Agreement, all equipment and materials
owned by Rubio's shall be removed by Rubio's, *** , unless
purchased by SAC upon such terms as the parties may agree.

4. MISCELLANEOUS

a. Neither party shall have any liability for any failure in
performance due to any Act of God, or any other reason beyond
such party's controls.

b. This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and supersedes all other
understandings and communications relating to such subject
matter.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

3
<PAGE>

c. All investments will be made by Service America, initially,
through its' Facility Planning Department. The investments will
be reimbursed to SAC by subtracting *** from the royalty
due to Rubio's on net sales until this investment has been
repaid.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized representatives, as of the
date first above written.

SERVICE AMERICA CORPORATION RUBIO'S RESTAURANTS, INC.

/s/ Gary L. Howath /s/ illegible
- -------------------------------- -------------------------------------
By: By:

Sr. V.P. President
- -------------------------------- -------------------------------------
Title: Title

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

EXHIBIT 10.19

PACIFIC BASIN FOODS, INC.
GENERAL PURCHASING TERMS AGREEMENT

THIS GENERAL PURCHASING TERMS AGREEMENT (this "Agreement") is effective on this
21st day of October 1996, by and between Pacific Basin Foods, Inc. with its
office at 9586 Distribution Avenue, Ste D, San Diego, California 92121 herein
referred to as "PBF" and Rubio's Restaurants, Inc., with its principal offices
at 5151 Shoreham Place, Ste 260, San Diego, CA 92122 herein referred to as
"Buyer".

RECITALS

PBF is a corporation which purchases and distributes food, meat, beverages and
related supplies for restaurants and other food service businesses. Buyer is a
restaurant organization which purchases said items. The parties desire to
establish certain terms pursuant to which Buyer will purchase such food, meat,
beverages and related supplies from PBF.

NOW, THEREFORE, in consideration of the terms and covenants stated herein and
for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree that the following terms shall relate to any
purchases by Buyer.

ARTICLE I
PURCHASE AND TERM

1(a). TERM. Buyer agrees to purchase from PBF, and PBF agrees to acquire and
to sell to Buyer, pursuant to Buyer's specifications, food, meat, beverages and
related supplies which are regularly stocked by PBF, herein referred to as
"Inventory" for an initial term beginning on the day of this Agreement and
expiring one year thereafter; PBF shall, in good faith, use its reasonable
efforts to provide such Inventory at the best cost and quality level consistent
with Buyer's specifications. PBF will use best efforts maintain a fill rate of
98% or more and to supply Buyer with relevant product information to make cost
and quality decisions.

ARTICLE II
INVENTORY

2(a). INVENTORY. Buyer shall buy for its account Inventory which shall be
categorized as either General Inventory or Dedicated Inventory.

2(b). DEDICATED INVENTORY. Dedicated Inventory is defined as specific food,
meat, beverages or other consumable supplies used by no other customer of PBF
and acquired by PBF for the exclusive, ongoing use of Buyer.

2(c). GENERAL INVENTORY. General Inventory is defined as all Inventory other
than Dedicated Inventory.

2(d). OBSOLETE DEDICATED INVENTORY. At the end of each PBF accounting period,
PBF will provide Buyer with an analysis of activity levels for all Dedicated
Inventory purchased for

<PAGE>

the exclusive use of Buyer. To the extent that such Dedicated Inventory has
been taken off the menu, discontinued by Buyer's restaurants or for any other
reason is no longer purchased by Buyer from PBF, *** for such *** shall be
*** *** of an *** therefore. If *** is not *** within that time
frame, Buyer shall be *** for any *** associated with *** of such inventory.
PBF shall have the right, but not the *** to dispose of such *** in a
commercially responsible manner and shall *** with any net proceeds from such
sales after deducting PBF's costs.

2(e). OPPORTUNISTIC PURCHASES. From time to time, PBF may, in its sole
discretion, offer Buyer the opportunity to acquire certain items of Inventory at
prices, in amounts and upon terms which differ from those ordinarily offered by
PBF. Such opportunities shall be referred to as "Opportunistic Purchases". All
such Opportunistic Purchases shall be available only on such terms and
conditions as may be established by PBF from time to time, including, without
limitation, requirements for advance payment from Buyer, and PBF shall have no
obligation to execute any Opportunistic Purchase ordered by Buyer until such
time as Buyer is in full and strict compliance with all such terms and
conditions. PBF may, at its option offer finance terms at *** plus any
*** incurred. *** will be determined as published by Bank of America.

2(f). OPPORTUNISTIC INVENTORY PAYMENTS. All Opportunistic Purchases to be
paid for by Buyer shall be paid within *** after PBF's delivery of written
notice to Buyer confirming PBF's receipt of such Opportunistic Purchases, or
within the terms of PBF's payment to vendor for such product, whichever is
longer.

2(g). PERIODIC STATEMENTS. Within *** after the end of each of PBF's four
week accounting periods, PBF shall provide to Buyer a statement summarizing in
reasonable detail the status of activity with respect to Opportunistic Purchases
held by PBF for Buyer's account during such period, and unless Buyer responds
within *** , such statement will be presumed to be correct.

2(h). NON FOOD MERCHANDISING MATERIALS. Any items such as uniforms
or promotional merchandise will be paid for by the Buyer directly pursuant to
the terms established by the vendor.

2(i). IDENTIFICATION OF INVENTORY AND WARRANTIES. Any description of the
Inventory sold under this Agreement is for the sole purpose of identifying such
Inventory and should not be construed as a warranty for any other purpose
whatsoever. PBF retains the right to change or to substitute with like kind the
Inventory. PBF will obtain Buyer's approval prior to substitution.

IT IS SPECIFICALLY AGREED THAT ANY WARRANTY FROM PBF TO BUYER WITH
REGARD TO ANY OF THE INVENTORY, WHETHER DEDICATED INVENTORY OR GENERAL
INVENTORY, MUST BE MADE IN WRITING FROM PBF TO BUYER, MUST BE SIGNED BY
A DULY AUTHORIZED OFFICER OF

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission

Page 2
<PAGE>

PBF, AND MUST CONTAIN THE EXPRESS TERMS "WARRANTY" AND "WARRANTS". ANY
SUCH WARRANTY GIVEN BY PBF TO BUYER SHALL BE IN LIEU OF ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE OR ANY WARRANTY OF
MERCHANTABILITY. THE SOLE AND EXCLUSIVE REMEDY FOR BREACH OF ANY AND
ALL WARRANTIES WITH RESPECT TO THE INVENTORY, WHETHER DEDICATED INVENTORY
OR GENERAL INVENTORY, SHALL BE THE REPLACEMENT OF SUCH INVENTORY WITHOUT
CHARGE TO BUYER. IN NO EVENT SHALL PBF BE LIABLE FOR INDIRECT,
INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES, INCLUDING, BUT NOT LIMITED
TO, LOST PROFITS, PERSONAL INJURY OR ECONOMIC LOSS, ARISING IN CONNECTION
WITH OR OUT OF BUYER'S PURCHASE OR USE OF ANY INVENTORY.

Notwithstanding the foregoing, PBF agrees that, to the extent such
warranties or rights of recovery are assignable, PBF shall assign to
Buyer any manufacturers' or suppliers, warranties or rights or recovery
against manufactures or suppliers to which PBF may be entitled that are
applicable to the Inventory.

2(j). PRODUCT LIABILITY. At all times during the term of this Agreement, PFB
shall maintain product liability insurance in an amount which is not less than
*** per occurrence in accordance with then prevailing industry standards. All
such product liability insurance shall (1) be primary, (2) name Buyer and PBF as
insured, (3) contain waivers of subrogation, and (4) provide that no
cancellation or modification thereof will be effective without *** prior
written notice to Buyer and PBF. PBF will provide buyer with evidence of such
insurance. PBF will have Certificates of Insurance on file from its vendors.

ARTICLE III
PRICING

3(a). PRICING FOR INVENTORY. Inventory shall be sold to Buyer at Landed Cost
+ *** . Landed Cost shall be defined as the sum of the cost of an item of
Inventory to PBF, plus the actual cost of freight to PBF's facilities and, to
the extent necessary, the actual costs of outside storage (herein "Landed
Cost"). Outside storage costs will be deemed necessary in the event that PBF
takes delivery of Opportunistic Purchases for Buyer's benefit. PBF will provide
warehouse space for Buyer's normal requirements.

3(b). PRICING FOR FURNITURE, FIXTURES AND EQUIPMENT. Furniture, fixtures and
equipment shall be sold to Buyer at actual cost +***, plus the actual cost of
freight, installation and applicable sales tax.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission

Page 3
<PAGE>

3(c). RIGHT TO CONFIRM COSTS/PRICING

(i) During the term hereof, Buyer shall have the right to inspect,
during PBF's normal business hours, accounting records, including purchase
orders, of PBF as may be reasonably necessary to confirm that Buyer has, in
fact, been charged no more than is permissible under Section 3 (a) above, it
being understood that any such inspection shall be limited to the sole purpose
of confirming that the prices, fees, and other amounts charged to Buyer comply
with the provisions of this Agreement. Buyer shall give PBF 30 days notice
prior to inspection. Any costs incurred for purposes of this verification are
the responsibility of Buyer.

(ii) If Buyer elects to review the accounting records of PBF to
confirm that the prices, fees, and other amounts which PBF has charged to Buyer
comply with the provisions of this Agreement and Buyer thereafter claims that is
has been charged amounts in excess of that which is permissible under Section
3(a) above, PBF and Buyer will determine amount of overcharge, if any, and
return said overcharge to Buyer within 30 days. Any shortfall shall be paid
from Buyer to PBF within 30 days.

(iii) Buyer's right to inspect such records of PBF shall be limited as
follows: (a) Buyer shall not inspect the records of PBF any more frequently than
two times per calendar year; and (b) Buyer shall audit only those records which
relate to transactions which have occurred within the twelve months immediately
prior to the notice of request to inspect.

ARTICLE IV
PAYMENT

4(a). BILLING FOR INVENTORY. Payment for Inventory other than Opportunistic
Purchases will be due from Buyer to PBF based upon the attached schedule of
payment due dates. Such payment will be remitted through electronic funds
transfer. Invoices must be paid in full and deductions shall be permitted only
when documented by a credit memo invoice issued by PBF. PBF shall use its best
reasonable efforts to issue such credit memo invoices within one week after the
delivery of the items of Inventory which give rise to such deductions.

4(b). BILLING FOR FURNITURE, FIXTURES AND EQUIPMENT. Billing for Furniture,
Fixtures and Equipment will be by invoice from PBF to Buyer on a restaurant by
restaurant basis. PBF will invoice Buyer for such Furniture, Fixtures and
Equipment once the project is completed. Payment for Furniture, Fixtures and
Equipment invoices shall be due from Buyer to PBF within *** of receipt.

4(c). FINANCE CHARGES. In the event that any payment is not paid by Buyer
within *** of the schedule referred to in Sections 4(a) and 4(b) above,
finance charges will be assessed at a rate of *** .

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission

Page 4
<PAGE>

ARTICLE V
DELIVERY

5(a). DELIVERY. Unless otherwise agreed, the Inventory shall be delivered at
two times per week during normal restaurant operating hours to each location
provided by Buyer. The day of delivery shall be the same for each week unless
an alternative day(s) is agreed to by both parties.

5(b). RISK OF LOSS. The risk of loss of the Inventory shall not pass to Buyer
until PBF delivers the Inventory to a location specified by Buyer or to Buyer or
Buyer's agent.

5(c). INSURANCE. PBF shall secure, at its own expense, adequate insurance
coverage for the Inventory sold under this Agreement. If the Inventory is lost
or damaged, the party then bearing the risk of loss under the terms of this
Agreement and applicable law shall look to the insurance proceeds for full
satisfaction regardless of the adequacy of those proceeds and without regard to
any breach of this Agreement by either party.

ARTICLE VI
TERMINATION, NOTICES & REMEDIES.

6(a). TERMINATION BY PBF. Without limiting any other rights or remedies which
PBF may have hereunder, at law, in equity or otherwise, at any time during the
term of this Agreement and at any time thereafter, PBF shall have the right to
terminate this Agreement and cease deliveries to Buyer's restaurants (1) if
Buyer fails to pay an amount due within seven days of Buyer having received
written notice of late payment as defined in Sections 4(a) and 4(b). Such
written notice may be issued no earlier than three days after the payment due
date; or (2) upon the appointment of a receiver for the property of Buyer or the
initiation of any bankruptcy, insolvency, reorganization or other proceeding for
the relief or protection of debtors, whether voluntary or involuntary, by or
against Buyer, where such appointment or proceeding is not dismissed within
thirty days.

6(b). TERMINATION BY BUYER. Without limiting any other rights or remedies
which Buyer may have hereunder, at law, in equity or otherwise, at any time
during the term of this Agreement and at any time thereafter, Buyer shall have
the right to terminate this Agreement (1) upon thirty days' prior notice if PBF
is in default hereunder and fails to cure such default within such thirty day
period; (2) upon thirty days' prior notice if PBF fails to pay its debts as the
same become due in the ordinary course of business; or (3) upon the appointment
of a receiver for the property of PBF or the initiation of any bankruptcy
insolvency, reorganization or other proceedings for the relief or protection of
debtors, whether voluntary or involuntary, by or against PBF, where such
appointment or proceeding is not dismissed within thirty days. In any event, a
material default is necessary for termination.

6(c). INVENTORY, TERMINATION. Upon termination, Buyer shall purchase ***
*** , including *** , which was purchased *** and will ***

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission

Page 5
<PAGE>

*** to PBF within *** of termination. PBF will deliver said *** to ***,
if desired.

6(d). *** OF INVENTORY. If Buyer *** any *** upon termination as
required under this Agreement, then PBF may, without limiting any other rights
and remedies which it may have hereunder, *** of all such *** in a
commercially reasonable manner apply the *** of such *** to all *** due
*** to PBF, and seek any *** from Buyer.

6(e). ACCOUNTS RECEIVABLE. Upon termination, Buyer will remit payment for all
amounts due related to accounts receivable within *** of termination.

6(f). NOTICES. Any notice required under this Agreement shall be provided by
first class, postage prepaid mail to the "designated party contacts" at the
addresses set forth below or by facsimile transmission to the number set forth
below unless otherwise changed by either party:

Designated Party Contacts:

Rubio's Restaurants, Inc. Pacific Basin Foods, Inc.
5151 Shoreham Place 9586 Distribution Avenue
Ste 260 Ste D
San Diego, CA 92122 San Diego, CA 92121
Phone: (619) 452-1770 Phone: (619) 566-8892
Fax: (619) 452-0181 Fax: (619) 566-9946
Attn: Reynaldo Ochoa Attn: Herschel Hendrickson
Attn: James Stryker

Mailed notices shall be deemed effective five days after mailing. Facsimile
notices shall be deemed effective on the date transmitted.

6(d). ATTORNEY'S FEES. Should any party be required to enforce its rights
under this Agreement, then in addition to any remedy or damage provided by law
or equity, the prevailing party shall be entitled to payment of its fees, costs
and reasonable attorney's fees incurred in enforcing such rights.

ARTICLE VII
MISCELLANEOUS

7(a). GENERAL. This Agreement constitutes the entire agreement between the
parties, shall be construed in accordance with the laws of the State of
California, and may not be assigned by any party without the consent of the
other party. Notwithstanding the foregoing, either party may assign its rights
under this Agreement to any person or entity which controls, is controlled by,
or is under common control with, the assigning party; provided, however, that
such assignment

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission

Page 6
<PAGE>

shall not serve to release the assigning party from its obligations under
this Agreement. This Agreement supersedes all prior agreements between the
parties.

7(b). FINANCIAL INFORMATION. Buyer shall provide PBF with quarterly
financial statements, and will notify PBF of any material changes in the
financial structure of Buyer's organization.

7(c). CONFIDENTIALITY. Buyer acknowledges that the accounting books and
records and other financial information of PBF to which Buyer or its agents may
have access pursuant to Article III hereof and the compilation of prices and
other contents of PBF's Order Guide Book are confidential and proprietary to
PBF. Buyer shall not disclose such information to any other person without
PBF'S prior written consent and will use such information only in furtherance of
Buyer's proper performance of its obligations under this Agreement or in
enforcing its rights hereunder. Upon the termination of this Agreement, Buyer
shall immediately return all such information, in whatever form, to PBF, and
thereafter Buyer shall not use such information for any purpose, unless and to
the extent that such information is deemed to be in the public domain or has
been obtained by Buyer from third parties without any prohibitions on
disclosures thereof. PBF acknowledges that all information obtained about
Buyer's financial condition and business operations that is not otherwise
available is confidential and proprietary to Buyer. PBF shall not disclose such
information to any other person without Buyer's written consent and will use
such information only in furtherance of PBF's proper performance of its
obligations under this Agreement or in enforcing its rights hereunder.

7(d). EXCUSABLE DELAYS. Neither party shall be liable for any delay in the
performance of any of its obligations hereunder, or for any damages suffered by
the other party as a result of such delay, where such delay directly or
indirectly causes or in any manner arises in connection with fires, floods,
accidents, riots, strikes or other labor unrest, acts of God, war, governmental
restrictions or interference, shortages of fuel, labor, materials or supplies,
transportation delays or any other causes which are beyond the reasonable
control of the party whose performance is so delayed; provided, however, that no
delay in the payment of monies due from either party hereunder shall be deemed
or construed to be excused pursuant to this Section 7(c).

7(e). WAIVERS AND MODIFICATIONS. All waivers or modifications hereunder must
be made in writing and signed by both parties, and the failure to require a
party's performance of any obligation hereunder shall not affect the other
party's right subsequently to require performance of that obligation. No waiver
of any breach hereunder shall be construed as a waiver of any continuing or
succeeding breach or a waiver of modification of the terms of this Agreement.

7(f). SEVERABILITY. If any provision of this Agreement is deemed to be
invalid or unenforceable under applicable law, such provision shall be
ineffective to the extent required by such invalidity or unenforceability
without affecting the remainder of such provision or the remainder of this
Agreement.

Page 7
<PAGE>

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.

PBF BUYER

By: /s/ Herschel Hendrickson By: /s/ James W. Stryker
------------------------------ --------------------------------
Title: President Title: Vice Pres.
--------------------------- -----------------------------

Page 8
<PAGE>

Rubio's Restaurants, Inc.
1999 Schedule of Payments Due: Pacific Basin Foods

SCHEDULE OF PAYMENT DUE DATES

<TABLE>
<CAPTION>
RUBIO'S FOR DELIVERIES
PERIOD/WEEK STARTING ENDING ***
FY96
<S> <C> <C> <C> <C>
P10 WEEK 2 9/30/96 10/13/96 ***
P10 WEEK 4 10/14/96 10/27/96 ***
P11 WEEK 2 10/28/96 11/10/96 ***
P11 WEEK 4 11/11/96 11/24/96 ***
P12 WEEK 2 11/25/96 12/08/96 ***
P12 WEEK 5 12/9/96 12/29/96 ***

FY97
P01 WEEK 2 12/30/96 01/12/97 ***
P01 WEEK 4 1/13/97 01/26/97 ***
P02 WEEK 2 1/27/97 02/09/97 ***
P02 WEEK 4 2/10/97 02/23/97 ***
P03 WEEK 2 2/24/97 03/09/97 ***
P03 WEEK 5 3/10/97 03/30/97 ***
P04 WEEK 2 3/31/97 04/13/97 ***
P04 WEEK 4 4/14/97 04/27/97 ***
P05 WEEK 2 4/28/97 05/11/97 ***
P05 WEEK 4 5/12/97 05/25/97 ***
P06 WEEK 2 5/26/97 06/08/97 ***
P06 WEEK 5 6/9/97 06/29/97 ***
P07 WEEK 2 6/30/97 07/13/97 ***
P07 WEEK 4 7/14/97 07/27197 ***
P08 WEEK 2 7/28/97 08/10/97 ***
P08 WEEK 4 8/11/97 08/24/97 ***
P09 WEEK 2 8/25/97 09/07/97 ***
P09 WEEK 5 9/8/97 09/28/97 ***
P10 WEEK 2 9/29/97 10/12/97 ***
P10 WEEK 4 10/13/97 10/26/97 ***
P11 WEEK 2 10/27/97 11/09/97 ***
P11 WEEK 4 11/10/97 11/23/97 ***
P12 WEEK 2 11/24/97 12/07/97 ***
P12 WEEK 5 12/8/97 12/28/97 ***
</TABLE>

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission

Page 9

<PAGE>

EXHIBIT 10.20

AMENDMENT TO AGREEMENT BETWEEN
PACIFIC BASIN FOODS, INC.
AND RUBIO'S RESTAURANTS, INC.

This Amendment is entered into the 20th day of November, 1998, by and between
Rubio's Restaurants Inc. (hereinafter referred to as "Buyer") and Pacific Basin
Foods, Inc. (hereinafter referred to as "PBF").

RECITALS

1. Buyer and PBF entered into a written agreement dated October 21, 1996,
(hereinafter referred to as "Master Agreement") for the provision of
purchase and distribution of certain food products, related supplies, and
furniture, fixtures and equipment, all as specifically set forth in such
Agreement, to Buyer by PBF.

2. By this Agreement, Buyer and PBF desire to amend the Master Agreement in
the manner more particularly set forth herein as of the date first written
above.

TERMS

NOW THEREFORE, for and in consideration of the premises and the mutual promises
contained herein, the parties hereto agree as follows:

3. AMENDMENT OF MASTER AGREEMENT, ARTICLE I, SECTION 1(a) "TERM" AS FOLLOWS:

The parties hereto mutually agree to extend the term of the Master
Agreement for an additional period of one (1) year, commencing as of the
date first written above, herein referred to as the "Effective Date", and
expiring on January 19, 2000 (on the last Payment Due Date of the Attached
Schedule).

4. AMENDMENT OF MASTER AGREEMENT, ARTICLE IV, SECTION 4(a) "BILLING FOR
INVENTORY" AS FOLLOWS:

The parties hereto mutually agree that payment for inventory other than
Opportunistic Purchases and Furniture and Equipment, will be due from Buyer
to PBF based upon the attached schedule of payment due dates. Buyer will
make such payments *** or *** to *** , provided that the funds are
*** *** by PBF *** , on the scheduled due dates.

5. [Deleted]

6. AMENDMENT OF MASTER AGREEMENT, ARTICLE IV, SECTION 4(b) "BILLING FOR
FURNITURE, FIXTURE AND EQUIPMENT" AS FOLLOWS:

Billing for furniture, fixtures and equipment will be by invoice from PBF
to Buyer on a restaurant by restaurant basis. PBF will invoice Buyer for
furniture, fixture and equipment per contract amount ones the product is
completed (i.e. final walkthrough if

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

applicable). Payment for furniture, fixtures and equipment shall be due
from Buyer to PBF within 10 days of the final installation date of the
original contract amount *** or *** , to *** , provided that the ***
*** , on the due dates. Any changes to the original contract (i.e. add
ons) shall be billed separately from the original contract. All add ons
and miscellaneous furniture, fixture and equipment purchases (i.e. other
than new restaurant openings) by Buyer shall be payable within 10 days of
the invoice date, and may be paid by any payment method (i.e. *** ).

7. AMENDMENT OF MASTER AGREEMENT, ARTICLE VII, SECTION 7(B) "FINANCIAL
INFORMATION" AS FOLLOWS:

Buyer shall provide PBF with quarterly financial statements, and will
notify PBF of any material changes in the financial structure of Buyer's
organization. Furthermore, Buyer shall provide PBF annual audited
financial statements issued by a certified public accountant(s).

IN WITNESS WHEREOF, the parties hereto have executed this amendment as of the
date and year first written above.

PBF BUYER

By: /s/ Herschel Hendrickson By: /s/ James W. Stryker
----------------------------------- ---------------------------------
Its: President Its: Vice Pres.
----------------------------------- ---------------------------------

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

Rubio's Restaurants, Inc.
1999 Schedule of Payments Due: Pacific Basin Foods

Rubio's For Deliveries
- ---------------------------------------------------------------------------------------------------------------------
Period Acct. Week Starting Ending *** ***
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 1 12/28/98 01/03/99 *** 1
1 2 01/04/99 01/10/99 *** 2
1 3 01/11/99 01/17/99 *** 3
1 4 01/18/99 01/24/99 *** 4
2 5 01/25/99 01/31/99 *** 5
2 6 02/01/99 02/07/99 *** 6
2 7 02/08/99 02/14/99 *** 7
2 8 02/15/99 02/21/99 *** 8
3 9 02/22/99 02/28/99 *** 9
3 10 03/01/99 03/07/99 *** 10
3 11 03/08/99 03/14/99 *** 11
3 12 03/15/99 03/21/99 *** 12
3 13 03/22/99 03/28/99 *** 13
4 14 03/29/99 04/04/99 *** 14
4 15 04/05/99 04/11/99 *** 15
4 16 04/12/99 04/18/99 *** 16
4 17 04/19/99 04/25/99 *** 17
5 18 04/26/99 05/02/99 *** 18
5 19 05/03/99 05/09/99 *** 19
5 20 05/10/99 05/16/99 *** 20
5 21 05/17/99 05/23/99 *** 21
6 22 05/24/99 05/30/99 *** 22
6 23 05/31/99 06/06/99 *** 23
6 24 06/07/99 06/13/99 *** 24
6 25 06/14/99 06/20/99 *** 25
6 26 06/21/99 06/27/99 *** 26
7 27 06/28/99 07/04/99 *** 27
7 28 07/05/99 07/11/99 *** 28
7 29 07/12/99 07/18/99 *** 29
7 30 07/19/99 07/25/99 *** 30
8 31 07/26/99 08/01/99 *** 31
6 32 08/02/99 08/08/99 *** 32
8 33 08/09/99 08/15/99 *** 33
8 34 08/16/99 08/22/99 *** 34
9 35 08/23/99 08/29/99 *** 35
9 36 08/30/99 09/05/99 *** 36
9 37 09/06/99 09/12/99 *** 37
9 38 09/13/99 09/19/99 *** 38
9 39 09/20/99 09/26/99 *** 39
10 40 09/27/99 10/03/99 *** 40
10 41 10/04/99 10/10/99 *** 41
10 42 10/11/99 10/17/99 *** 42
10 43 10/18/99 10/24/99 *** 43
11 44 10/25/99 10/31/99 *** 44

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>

Rubio's Restaurants, Inc.
1999 Schedule of Payments Due: Pacific Basin Foods

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

</TABLE>

<PAGE>

[COCA-COLA LOGO]

March 6, 1998 EXHIBIT 10.21

Ralph Rubio
President, CEO
Rubio's Restaurants, Inc.
5151 Shoreham Place
Suite 260
San Diego, CA 92122

Re: Coca-Cola USA Fountain Marketing Program

Dear Ralph:

This letter will confirm the agreement between Rubio's Restaurants, Inc.
("Rubio's") and Coca-Cola USA Fountain ("CCF") with regard to the availability
and promotion of CCF's fountain beverages in restaurants owned or operated by
Rubio's. When signed by both parties, this letter, with the Term Sheets (and
Lease Agreement), will constitute a legally binding agreement (the "Marketing
Agreement") between the parties for the duration of the Term defined in the
selected Term Sheet, and will be terminable only as stated in the selected Term
Sheet. Two individual and separate Term Sheets (Term Sheet "A" and Term
Sheet "B") are attached for consideration. Rubio's will have seven days from
date of signature to render a decision in writing to CCF as to the selection of
either Term Sheet "A" or Term Sheet "B".

This letter and its attachments are confidential and Rubio's may not disclose to
any third party, without the prior consent of CCF, any information concerning
the programs described in the Term sheet, except for disclosure to employees,
attorneys, accountants, and consultants involved in assisting with the
negotiation and closing of the contemplated transaction, or unless such
disclosure is required by law. Rubio's shall obtain assurances from any party
to whom disclosure is made that such party will keep confidential the
information disclosed, except where disclosure is required by law.

If this letter and its attachments correctly state the agreement between CCF and
Rubio's, please sign and date both copies and return one copy to me. In signing
this agreement, you represent and warrant that you are authorized to enter into
this agreement on behalf of Rubio's, and that Rubio's has the power and
authority to receive the funding contemplated by the Marketing Agreement and to
cause the outlets covered by the Marketing Agreement to perform the activities
required to earn the funding.

Suite 100
6 Executive Circle
Irvine, CA 92714
<PAGE>

Rubio's Restaurants, Inc.
March 6, 1998
Page 2 of 2

Sincerely,

/s/ Jerry S. Wilson

Jerry S. Wilson
Vice President, Western Area
Coca-Cola USA

Agreed to this 10th day of March, 1998.

Rubio's Restaurants, Inc.

By: /s/ James W. Stryker
-------------------------------
President, CFO

Attachments

<PAGE>

TERM SHEET
(B)
RUBIOS RESTAURANTS, INC.

APRIL 1, 1998

SCOPE OF MARKETING AGREEMENT

The parties to the Marketing Agreement are Rubios Restaurants, Inc. "Rubios"
d/b/a Rubios Baja Grill and Coca-Cola USA Fountain ("CCF"). The Marketing
Agreement will apply to all outlets where Fountain Beverages are served that are
owned or operated by Rubios or any of its subsidiaries including any outlets
that are opened after the Marketing Agreement is signed. The Marketing
Agreement will also apply to outlets acquired by Rubios, unless those outlets
are already governed by an agreement with CCF and that agreement is assigned to
Rubios as part of the acquisition. The Marketing Agreement will not apply to
any outlets outside the fifty United States, and may not be assigned to a third
party without CCF's approval, which would not be unreasonably withheld. All
outlets to which the Marketing Agreement applies are referred to as "Covered
Outlets".

TERM

The Marketing Agreement will go into effect as of the first day of the month
in which it is signed and will continue for a period of five years or until
Rubio's has purchased it's volume commitment of CCF's Fountain Syrups,
whichever occurs last. When used in the Marketing Agreement the term "Year"
means each consecutive twelve month period during the Term, beginning with
the first day of the Term.

BEVERAGE AVAILABILITY

The term "Beverage" means all soft drinks and other non-alcoholic beverages,
including waters, sports drinks, frozen beverages, juices, juice-containing
drinks, punches, ades, bar mixers and iced teas, whether carbonated or
non-carbonated, with the exception of coffee or tea brewed on the premises and
dairy beverages. "Fountain Beverages" are those Beverages that are dispensed
from post-mix, or frozen beverage dispensers, bubblers, or similar equipment.
The term "Fountain Syrup" means the post-mix syrup used to prepare Fountain
Beverages, but does not include other forms of concentrate, or Breakmate syrup
or syrup for frozen beverages that is purchased from a full service supplier of
frozen beverages to which CCF provides promotional funding.

Rubios will serve in each Covered Outlet a core brand set of Fountain Beverages
that consists of Coca-Cola-Registered Trademark- classic, diet Coke-Registered
Trademark- and Sprite-Registered Trademark-, and the remaining products will be
jointly selected by Rubios and CCF. CCF's Fountain Beverages will be the only
Fountain Beverages served in the Covered Outlets.

Rubios recognizes that the sale of competitive Beverages in bottles, cans or
other packaging would diminish the product availability rights given to CCF, and
therefore also agrees not to serve competitive Beverages in bottles or cans in
the Covered Outlets.

VOLUME COMMITMENT

Rubios agrees to purchase *** of CCF's Fountain Syrup during the Term.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

Projected annual volume is currently as follows:

***

MARKETING PROGRAM

The following marketing programs will be provided to assist Rubios in maximizing
the sale of Fountain Beverages in the Covered Outlets:

CONVERSION FUND CCF will provide funding of *** to offset costs
associated with the conversion to CCF brands. Funding is provided in return for
Rubios commitment to serve CCF's Fountain Beverages in the Covered Outlets
throughout the Term, and *** .

MARKETING ALLOWANCES. The amount of available funding is calculated at the rate
of *** for each gallon of CCF's Fountain Syrup Rubios purchases. To
qualify for funding Rubio's agrees to perform a minimum of *** of the
following activities annually:

Fully integrated (system wide) Co-op trademark cups, consistent in size
with current trademark cups.

Logo/brand identification on beverage portion of illuminated menuboards and
table menus.

Mutually agreeable *** .

Funding will be *** in years *** of the agreement and reconciled in
accordance actual volume purchases. Marketing allowances in the years ***
will be paid *** .

INCIDENCE IMPROVEMENT FUNDS. Funding is earned at the rate of *** for each
gallon of CCF's Fountain Syrups that Rubios Baja Grill purchases. To qualify
for this fund Rubios agrees to perform a minimum of *** of the following
activities annually:

Trademark identified meal combination program.

Trademark identified refill merchandising.

Annual crew incentive programs.

Mutually agreeable brand integration and activation initiatives.

Trademark Co-op advertising that supports mutually agreeable initiatives.

Funding will be *** in years *** of the agreement and reconciled in
accordance actual volume purchases. Incidence improvement funds in years ***
will be paid *** .

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

2
<PAGE>

NESTEA-Registered Trademark- PROGRAM CCF will make available Nestea-Registered
Trademark- Raspberry Tea for Rubio's testing and evaluation in certain mutually
determined Covered Outlets. If Rubio's elects to test Nestea-Registered
Trademark- Raspberry Tea in the Covered Outlets, CCF and Rubio's will agree what
the test criteria and parameters will be. If the results of the test are
successful according to the criteria that the parties have agreed to, Rubio's
will introduce Nestea-Registered Trademark- Raspberry Tea in the Covered Outlets
within (90) days after the test is complete.

FAIR SHARE

If Rubio's Baja Grill desires to use equipment provided by CCF to dispense one
competitive fountain beverage, an additional fair share lease charge of ***
per dispenser will be added. Equipment provided by CCF may not be used to
dispense any competitive cola product, more than one competitive beverage, or
any brand of Pepsico, Inc. Further, if service is provided to an outlet that
serves a competitive fountain beverage an additional fair share service charge
of *** per outlet will be incurred.

EQUIPMENT PROGRAM

CCF will provide for Rubios use the Fountain Beverage dispensers, water
filtration equipment, and the annual water filter cartridges necessary to enable
Rubios to dispense a quality Fountain Beverage in the Covered Outlets. The cost
of installation and configuration of ice combo dispensing units are also the
financial responsibility of CCF. No dispensing equipment for frozen Beverages
or ice makers will be provided.

The equipment is provided by CCF subject to the terms and conditions of CCF's
standard lease agreement, but no lease payment will be charged. A copy of the
standard lease agreement is attached and is a part of the Marketing Agreement,
except as specifically changed by the Marketing Agreement.

SERVICE PROGRAM

CCF will provide free and reasonable service to Covered Outlets for mechanical
repair needed for Fountain Beverage dispensing equipment. Service calls will be
pro-actively managed across the Rubios system to ensure all regular mechanical
repair reasonably needed for the fountain beverage dispensing equipment is
provided at no charge. In addition to mechanical repair, parts [valued at no
more than *** ] will also be provided free of charge to restaurant managers
upon request via the CCF toll free service network.

TERMINATION

Once the Marketing Agreement is signed by both parties, it may be terminated
before the scheduled expiration date only in the following circumstances:

Either party may terminate the Marketing Agreement if the other party
fails to comply with a material term or condition of the Marketing
Agreement and does not remedy the failure within ninety (90) days
after receiving written notice (the "Cure Period"). Termination will
be effective thirty (30) days after the end of the Cure Period.

Either party may terminate the Marketing Agreement without cause after
giving twelve months' prior written notice.

CCF may terminate the Marketing Agreement if there is a transfer of a
substantial portion of the stock or assets of Rubios that is not in
the ordinary course of business. (An Initial Public Offering is
considered normal course of business)

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

If the Marketing Agreement is terminated before its expiration date, Rubios must
return any dispensing equipment owned by CCF. Additionally, unless the
Marketing Agreement is terminated by CCF without cause, Rubio's will pay the
following damages at the time of termination:

All unearned funding. For purposes of this provision Conversion Funds
will be deemed earned at the rate of *** per month.

Interest on all advanced funding on a rate of *** per month,
accrued from the date funds were paid or costs were incurred.

The unamortized portion of the cost of installation (standard cost of
installation is *** per unit), and the entire cost of refurbishing
and removal (standard cost of removal and refurbishment is *** ) of
all equipment owned by CCF that was installed less than five years
before termination.

DISPUTE RESOLUTION

Should there be a dispute between CCF and Rubios arising out of the Marketing
Agreement or the breach of the Marketing Agreement, the parties agree that they
will make a good faith effort to settle the dispute in an amicable manner. If
the parties are unable to settle the dispute through direct discussions, they
will attempt to settle the dispute by mediation administered by the American
Arbitration Association (the "AAA"), and if that procedure is unsuccessful, the
dispute will be resolved by binding arbitration administered by AAA in
accordance with its Commercial Arbitration Rules, arbitration will occur in
California. A judgment on the award of the arbitrator(s) may be entered in any
court that has jurisdiction.

PERMITTED EXCEPTIONS

If Rubio's enters into an agreement to open a restaurant or restaurants in
venues or facilities e.g. (stadiums, colleges or airports) where the pouring
rights have been pre-determined, Rubio's will make reasonable efforts to insure
that Coca-Cola Fountain products are dispensed during the term of that
agreement.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

<PAGE>

EXHIBIT 10.22

AGREEMENT

This AGREEMENT, (the "Agreement") is executed and entered into this 23rd day of
June, 1998, by and between Dr Pepper/Seven Up, Inc. ("Dr Pepper") and Rubio's
Restaurants, Inc. (the "Fountain Account').

WITNESSETH:

WHEREAS, the marketing plan described in this Agreement has been offered to the
Fountain Account as a result of Dr Pepper's understanding that the Fountain
Account has received an offer from a competitor of Dr Pepper with regard to the
purchase of that competitor's post-mix products; and

WHEREAS, Dr Pepper is willing to make a competitive offer by means of the
marketing plan set forth herein to ensure the availability of DR PEPPER post-mix
products (collectively the "Product') in the Restaurants (as hereinafter defined
in Paragraph 3a), subject to the terms and conditions set forth below;

NOW, THEREFORE, for and in consideration of the covenants and promises contained
herein, the parties hereto agree as follows:

1. VOLUME COMMITMENT/TERM. The term (the "Term") of the Agreement commences
as of May 1, 1998, and ends on the later to occur of April 30, 2003, or
the aggregate purchase of *** of Product by the Fountain Account.

2. MARKETING PLAN. In response to the competitive offer, Dr Pepper commits to
a marketing plan requiring payment of monies for the Term as follows:

a. TRADE ALLOWANCE FUND. A *** per gallon allowance off invoice pricing
shall be provided on Product purchased by the Fountain Account during
the Term.

b. EQUIPMENT/SERVICE FUND. *** per gallon shall be paid *** to
offset the costs associated with equipment and service on the fountain
equipment dispensing the Product.

c. MARKETING FUND. *** per gallon shall be paid to the Fountain
Account. To qualify for this fund, the Fountain Account agrees to
perform a minimum of *** of the following activities annually:

Mutually agreeable *** ;
Annual crew incentive programs;
Placement of DR PEPPER identified point of purchase
materials;
Trademark co-op advertising that supports mutually agreeable
initiatives.

d. PAYMENT SCHEDULE. Funding for these 2 funds will be *** in each
year of years *** of the Agreement and reconciled each year in
accordance with actual volume purchases of the Product. For years
***, payment shall be made within *** at the end of each *** in
each of these agreement years based on actual gallons of Product
purchased by the Fountain Account.

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
<PAGE>

e. GALLONAGE REPORT. Volume for the purpose of making the payments
outlined herein shall be provided via Dr Pepper's authorized computer
report or approved distributor reports/recaps reflecting actual
gallonage of Product purchased by the Restaurants which the Fountain
Account shall provide to Dr Pepper for verification and payment
purposes. The parties agree that in any discrepancy in reported
gallonage purchases Dr Pepper and the Fountain Account shall make the
mutual determination of such actual gallonage purchases of Product.

To qualify for this marketing plan, the Fountain Account must purchase the
Product and execute those performance requirements as outlined in
Paragraphs 2 and 3. It is understood and agreed that for purposes of this
entire Agreement, the Product will not be considered to have been
"purchased" until it has been paid for in full and performance requirements
have been fulfilled by the Fountain Account. Accordingly, any marketing
support based on the purchase of the Product will be earned only to the
extent that the Fountain Account has paid for such Product and performance
requirements have been fulfilled by the Fountain Account. Since Dr Pepper
will provide reimbursement for expenses before the Fountain Account has
purchased sufficient gallonage to earn such sums, such payment will be
deemed an advance of funding which must be refunded in the event of early
termination or at the end of the Term if any portion of the advanced sum
remains unearned.

3. RESPONSIBILITIES OF THE FOUNTAIN ACCOUNT. In consideration of the payments
to be made to the Fountain Account by Dr Pepper pursuant to this Agreement,
the Fountain Account also agrees to:

a. Guarantee that the Product will be available in all present and future
Restaurants owned or operated by the Fountain Account (collectively
the "Restaurants") during the Term, with the exception of external
venues (i.e., arenas, schools) that have preexisting post-mix soft
drink contracts;

b. Guarantee that all of the Restaurants dispensing the Product will not
dispense at the same time competing pepper-flavored post-mix products
of the same or similar flavor as the Product during the Term (i.e.,
MR. PIBB, DR SLICE). The Fountain Account and Dr Pepper shall make
the mutual determination of whether the dispensing of other competing
post-mix products violates the terms and conditions of this Agreement.
The Fountain Account also agrees that the Product shall be the only
approved flavored post-mix product in the Restaurants for that flavor
category;

c. Identify the Product in all Restaurants during the entire Term,
including but not limited to brand identification on the menu boards
and dispensing fountain heads in all Restaurants;

d. Provide to Dr Pepper upon the execution of this Agreement a list of
all Restaurants in the Fountain Account's system as of the current
time. The Fountain Account shall promptly notify Dr Pepper of all new
Restaurants in the Fountain Account's system which are opened or
acquired, and any Restaurants which are sold or transferred or
otherwise disposed of during the Term.

4. TERMINATION AND REFUND OF PAYMENTS. This Agreement may only be terminated
by either party hereto for cause. "Cause" shall be deemed the material
breach of this Agreement by the defaulting party which shall have 60 days
to cure such default upon receipt of written notice from the nondefaulting
party that such a material breach has occurred. Both parties agree to meet
and work together in good faith to resolve and cure such default. In the
event the material breach has not been cured to the reasonable satisfaction
of the nondefaulting party hereto, then this Agreement shall be deemed
terminated immediately following said 60 day period.

a. In the event termination occurs prior to the end of years *** of this
Term, the Fountain Account shall (i) repay to Dr Pepper all of the
estimated amount paid to the Fountain Account pursuant to Paragraph 2d
which have not been earned by the Fountain Account based on actual gallons
of Product purchased as of the date of termination, and (ii) pay interest
on all sums due to Dr Pepper under this paragraph at the rate of

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

-2-
<PAGE>

*** per month, or such lesser percentage as required by law, accrued
since the effective date of the Term. Such amounts shall be paid by the
Fountain Account to Dr Pepper within 60 days of termination of this
Agreement; and

b. In the event termination occurs at any time during the agreement years ***
of the Term, Dr Pepper and the Fountain Account shall mutually determine
the actual gallons of Product purchased as of the date of termination
pursuant to Paragraph 2d, for which payment shall then be made to the
Fountain Account within 60 days after the termination thereof; provided
that the Fountain Account has fulfilled all of its performance requirements
hereunder. Dr Pepper reserves the right to withhold payment due hereunder
as an offset against amounts not paid by the Fountain Account for Product
delivered to the Fountain Account.

5. BOTTLE/CAN AVAILABILITY. If at any time during the Term the Fountain
Account decides to sell bottled/canned carbonated soft drinks in the
Restaurants, the Fountain Account will provide Dr Pepper an opportunity to
present the same bottle/can products which correspond to the Product for
sale in its Restaurants and will consider such products in good faith.

6. NEW RESTAURANTS. If at any time during the Term the Fountain Account opens
or acquires additional Restaurants where post-mix products are or will be
sold ("New Restaurants"), the Product will also be dispensed at such New
Restaurants under the same terms, obligations and marketing plan of this
Agreement.

7. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the
parties with respect to the transactions contemplated herein and supersedes
all previous oral or written negotiations or commitments. No amendment or
modification of this Agreement may be made except in a writing executed by
the party against whom such amendment or modification is sought to be
enforced.

8. VENUE. This Agreement shall be construed, interpreted and enforced under
the laws of the State of Texas without regard to principles of conflict
or choice of laws. Any action or proceeding arising out of or in
connection with this Agreement shall be venued in a federal or state court
of appropriate subject matter jurisdiction located in San Diego,
California and the parties hereby consent to the personal jurisdiction in
such courts.

9. BINDING AGREEMENT. This Agreement shall be binding upon each of the
parties hereto and shall inure to their respective benefits and the benefit
of their successors, assigns and legal representatives, as the case may be.
This Agreement may not be assigned or transferred by either party hereto
without the prior written consent of the other party.

10. COSTS AND EXPENSES. Except as expressly otherwise provided in this
Agreement, each party hereto shall bear its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby.
If any legal action is taken by either party hereunder to enforce the terms
and conditions of this Agreement in the event of a material breach, the
prevailing party may recover its attorneys' fees in connection with
enforcement of the Agreement.

11. FORCE MAJEURE. Either party is excused from performance hereunder if such
nonperformance results from any acts of God, strikes, lockout, labor
trouble or other industrial disturbance, war, riots, acts of

*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.

-3-
<PAGE>

governmental authorities, shortages of raw materials or any other cause
outside the reasonable control of the nonperforming party. In the event
either party wishes to invoke this provision, it must give prompt written
notice to the other party, specifying the basis for the assertion of the
same and for how long it is expected that such situation will continue.
Upon the cessation of such situation, the invoking party shall give written
notice of such fact to the other party and shall resume performance of all
obligations covered hereunder with respect to which compliance has been so
interrupted.

12. NONDISCLOSURE. Except as may otherwise be required by law or legal
process, the Fountain Account shall not disclose to any third party the
terms and conditions of this Agreement.

13. NOTICES. Any notices given or related to the Agreement shall be in writing
and hand-delivered or sent by prepaid, certified or express mail, return
receipt requested, and if to the Fountain Account, to 5151 Shoreham Place,
San Diego, CA 92122-5940, Attn: Jim Stryker-Chief Financial Officer, and if
to Dr Pepper, to 5301 Legacy Drive, Plano, Texas 75024, Attn: Senior Vice
President Fountain Foodservice, National Accounts.

14. INDEPENDENT CONTRACTORS. It is understood and agreed by the parties that
this Agreement does not create a fiduciary relationship between them; each
party's relationship to the other party is that of an independent
contractor. Nothing herein contained shall be construed to place the
parties in the relationship of partners or joint venturers or to make
either party the agent of the other and neither party shall have any power
to obligate or bind the other in any manner whatsoever.

15. WAIVER. Failure of either party to require performance of any provision of
this Agreement shall not affect either party's right to require full
performance of this Agreement at any time thereafter during the Term hereof
and the waiver by either party of any provision hereof shall not constitute
or be deemed a waiver of a similar breach in the future.

IN WITNESS WHEREOF, the undersigned have executed this Agreement on behalf of
the Fountain Account and Dr Pepper as of the day and year first above written.

DR PEPPER/SEVEN UP, INC. RUBIO'S RESTAURANTS, INC.

By: /s/ illegible By: /s/ James W. Stryker
-------------------------- ------------------------
Title: Senior VP Title: Vice Pres.
-------------------------- ------------------------

-4-

<PAGE>
EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Amendment No. 2 to Registration Statement No.
333-75087 of Rubio's Restaurants, Inc. of our report dated March 25, 1999
appearing in the Prospectus, which is a part of such Registration Statement,
and to the reference to us under the headings "Selected Financial Data" and
"Experts" in such Prospectus.

/s/ DELOITTE & TOUCHE LLP

San Diego, California
May 13, 1999