SC 13D

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO

RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)

O’Charley’s Inc.

(Name of Issuer)

Common Stock, no par value

(Title of Class of Securities)

670823103

(CUSIP Number)

JET CAPITAL INVESTORS, L.P.

667 Madison Avenue, 9^th Floor

New York, New York 10021.

(Name, Address and Telephone Number of Person

Authorized to Receive Notices and Communications)

May10, 2006        

(Date of Event Which Requires Filing

of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box:  ¨

(Continued on following pages)

(Page 1 of  15 Pages)

CUSIP No. 670823103		13D		Page 2 of  15 Pages
1	NAMES OF REPORTING PERSONS Jet Capital Investors, LP I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP   (a) [  ]            (b) See Item 5
3	SEC USE ONLY
4	SOURCE OF FUNDS OO (see Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 288,325
		8	SHARED VOTING POWER 1,155,759
		9	SOLE DISPOSITIVE POWER 288,325
		10	SHARED DISPOSITIVE POWER 1,155,759
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,444,085
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [   ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.3%
14	TYPE OF REPORTING PERSON PN

CUSIP No. 670823103		13D		Page 3 of  15 Pages
1	NAMES OF REPORTING PERSONS Jet Capital Arbitrage & Event Fund I, LP I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [  ]  (b) See Item 5
3	SEC USE ONLY
4	SOURCE OF FUNDS WC (see Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 47,487
		8	SHARED VOTING POWER None
		9	SOLE DISPOSITIVE POWER 47,487
		10	SHARED DISPOSITIVE POWER None
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 47,487
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [   ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.2%
14	TYPE OF REPORTING PERSON PN

CUSIP No. 670823103		13D		Page 4 of  15 Pages
1	NAMES OF REPORTING PERSONS Jet Capital Concentrated Fund, LP I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [  ]  (b) See Item 5
3	SEC USE ONLY
4	SOURCE OF FUNDS WC (see Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [  ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 143,601
		8	SHARED VOTING POWER None
		9	SOLE DISPOSITIVE POWER 143,601
		10	SHARED DISPOSITIVE POWER None
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 143,601
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [   ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.6%
14	TYPE OF REPORTING PERSON PN

CUSIP No. 670823103		13D		Page 5 of 15 Pages
1	NAMES OF REPORTING PERSONS Jet Capital Concentrated Offshore Fund, LTD I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [  ]  (b) See Item 5
3	SEC USE ONLY
4	SOURCE OF FUNDS WC (see Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 97,237
		8	SHARED VOTING POWER None
		9	SOLE DISPOSITIVE POWER 97,237
		10	SHARED DISPOSITIVE POWER None
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 97,237
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [   ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.4%
14	TYPE OF REPORTING PERSON CO

CUSIP No. 670823103		13D		Page 6 of 15 Pages
1	NAMES OF REPORTING PERSONS Jet Capital Management, L.L.C. I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [  ]  (b) See Item 5
3	SEC USE ONLY
4	SOURCE OF FUNDS OO (see Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER 191,088
		8	SHARED VOTING POWER None
		9	SOLE DISPOSITIVE POWER 191,088
		10	SHARED DISPOSITIVE POWER None
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 191,088
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [   ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.8%
14	TYPE OF REPORTING PERSON OO

CUSIP No. 670823103		13D		Page 7 of 15 Pages
1	NAMES OF REPORTING PERSONS Alan Cooper I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Not applicable
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [  ]  (b) See Item 5
3	SEC USE ONLY
4	SOURCE OF FUNDS OO (see Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER None
		8	SHARED VOTING POWER 1,444,085
		9	SOLE DISPOSITIVE POWER None
		10	SHARED DISPOSITIVE POWER 1,444,085
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,444,085
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [   ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.3%
14	TYPE OF REPORTING PERSON IN

CUSIP No. 670823103		13D		Page 8 of 15 Pages
1	NAMES OF REPORTING PERSONS Matthew Mark I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY) Not applicable
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP  (a) [  ]  (b) See Item 5
3	SEC USE ONLY
4	SOURCE OF FUNDS OO (see Item 3)
5	CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ]
6	CITIZENSHIP OR PLACE OF ORGANIZATION United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH		7	SOLE VOTING POWER None
		8	SHARED VOTING POWER 1,444,085
		9	SOLE DISPOSITIVE POWER None
		10	SHARED DISPOSITIVE POWER 1,444,085
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,444,085
12	CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [   ]
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 6.3%
14	TYPE OF REPORTING PERSON IN

Schedule 13D

Item 1. Security and Issuer.

This Statement on Schedule 13D relates to the common stock, no par value (the “Common Stock”), of O’Charley’s Inc., a Tennessee company (the “Company”). The principal executive offices of the Company are located at 3038 Sidco Drive, Nashville, Tennessee, 37204.

Item 2. Identity and Background.

(a)-(c) This Statement is being filed by Jet Capital Investors, LP (“Jet Capital”), Jet Capital Arbitrage & Event Fund I, LP (“Jet Arbitrage”), Jet Capital Concentrated Fund, LP (“Jet Concentrated”), Jet Capital Concentrated Offshore Fund, LTD (“Jet Offshore”), Jet Capital Management, L.L.C. (the “Jet Management”), Alan Cooper and Matthew Mark. Jet Capital, Jet Arbitrage, Jet Concentrated, Jet Management, Mr. Cooper and Mr. Mark are collectively referred to as the “Reporting Persons.”

Jet Capital is a Delaware limited partnership which serves as investment manager to Jet Arbitrage and Jet Concentrated, and as investment advisor to Jet Offshore. Jet Capital also manages various investment accounts over which it has discretionary authority (the “Managed Accounts,” and, together with Jet Arbitrage, Jet Concentrated and Jet Offshore, the “Funds”). Jet Capital G.P. L.L.C., a Delaware limited liability company (“Jet Capital G.P.”), is the general partner of Jet Capital.

Jet Arbitrage is a Delaware limited partnership engaged in certain investment activities, including but not limited to long and short investments in equity securities, convertible securities, put and call options, swaps and cash and cash equivalents.

Jet Concentrated is a Delaware limited partnership engaged in investment activities similar in nature to the activities engaged in by Jet Arbitrage.

Jet Offshore, an exempted limited liability company incorporated under the laws of the Cayman Islands, is engaged in investment activities similar in nature to the activities engaged in by Jet Arbitrage and Jet Concentrated. A list of the directors and officers of Jet Offshore is attached as Schedule I.

Jet Management is a Delaware limited liability company which serves as the general partner of both Jet Arbitrage and Jet Concentrated.

Messrs. Cooper and Mark serve as managing members of Jet Management and Jet Capital G.P. Together, Messrs. Cooper and Mark are responsible for the supervision and conduct of all investment activities of Jet Management and Jet Capital G.P., including, without limitation, for all investment decisions with respect to the assets of the Funds.

The business address and the address of the principal executive office of Jet Capital, Jet Management, Jet Capital G.P., Jet Arbitrage and Jet Concentrated is 667 Madison Avenue, 9^th Floor, New York, New York 10021. The business address and the address of the principal

executive office of Jet Offshore is c/o Morgan Stanley Fund Services (Cayman) Ltd., P.O. Box 2681 GT, Century Yard, 4th Floor, Cricket Square, Hutchins Drive, George Town, Cayman Islands.

(d)-(e) During the last five years, none of the Reporting Persons has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction, and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibitions or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Each natural person identified in this Item 2 is a citizen of the United States.

Item 3. Source and Amount of Funds or Other Consideration.

The shares of Common Stock reported to be owned by the Funds were acquired in the open market. All such purchases of Common Stock were funded by investment capital, [which may, at any given time, include margin loans made by brokerage firms in the ordinary course of business]. The amount of the funds expended for such purchases by Jet Arbitrage, Jet Offshore, Jet Concentrated and the Managed Accounts was $703,682, $1,514,689, $2,168,849 and $17,275,246, respectively.

Item 4. Purpose of Transaction.

The Reporting Persons acquired beneficial ownership of the shares of Common Stock to which this Statement relates for investment.

Messrs. Cooper and Mark have from time to time communicated with the management of the Company concerning the Company’s assets, business and operations. A copy of a letter sent by Mr. Mark to management on May 22, 2006 is filed as Exhibit 99.2 to this Schedule and, to the extent its contents are responsive to this Item 4, incorporated here by reference.

The Reporting Persons may acquire additional shares of Common Stock or other securities of the Company or sell or otherwise dispose of any or all of the shares of Common Stock or other securities of the Company beneficially owned by them. The Reporting Persons may take any other action with respect to the Company or any of its debt or equity securities in any manner permitted by law.

Except as disclosed in this Item 4, the Reporting Persons have no current plans or proposals which relate to or would result in any of the events described in Items (a) through (j) of the instructions to Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer.

(a)As of the date hereof, the Reporting Persons beneficially own an aggregate of 1,444,085 shares of Common Stock, representing approximately 6.3% of the outstanding Common

Stock.¹ Jet Arbitrage beneficially owns 47,487 of such shares, representing approximately 0.2% of the Common Stock outstanding, Jet Concentrated beneficially owns 143,601 of such shares, representing 0.6% of the Common Stock outstanding, and Jet Offshore beneficially owns 97,237 of such shares, representing 0.4% of the Common Stock outstanding. A total of 1,155,759 of such shares, representing approximately 5.0% of the Common Stock outstanding, are held in the Managed Accounts.

(b)By reason of its position as investment manager to Jet Arbitrage, Jet Concentrated and the Managed Accounts, Jet Capital may be deemed to possess the power to vote and dispose of the shares of Common Stock beneficially owned by Jet Arbitrage and Jet Concentrated and the shares of Common Stock held in the Managed Accounts. By reason of its position as investment advisor to Jet Offshore, Jet Capital may be deemed to possess the power to vote and dispose of the shares of Common Stock beneficially owned by Jet Offshore. By reason of its position as the general partner of Jet Arbitrage and Jet Concentrated, Jet Management may be deemed to possess the power to vote and dispose of the shares of Common Stock beneficially owned by Jet Arbitrage and Jet Concentrated. By reason of their positions as managing member of Jet Capital G.P. and Jet Management, Messrs. Cooper and Mark may be deemed to possess the power to vote and dispose of the shares of Common Stock beneficially owned by Jet Capital and Jet Management.

(c)Except for the transactions set forth in Schedule II annexed hereto, none of the persons identified in Item 2 has effected any transactions in the Common Stock during the past 60 days. All such transactions were effected in the open market.

(d)Not applicable.

(e)Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

None.

Item 7. Material to be Filed as Exhibits.

99.1   Agreement of joint filing pursuant to Rule 13d-1(f) promulgated under the Securities Exchange Act of 1934, as amended.

99.2   A letter dated May 22, 2006 from Matthew Mark to Gregory L. Burns, Chairman of the Board andChief Executive Officer and Lawrence E. Hyatt, Chief Financial Officer, Secretary and Treasurer.

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

¹ Based on 22,914,003 shares of common stock outstanding on March 7, 2006, as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended December 25, 2005.

SIGNATURES

After reasonable inquiry and to the best knowledge and belief of the undersigned, the undersigned certifies that the information set forth in this Statement is true, complete and correct.

Date:  May 22, 2006

JET CAPITAL INVESTORS, L.P.

By:Jet Capital G.P. L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

JET CAPITAL ARBITRAGE &

EVENT FUND I, L.P.

By:Jet Capital Management, L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

JET CAPITAL CONCENTRATED FUND, L.P.

By: Jet Capital Management, L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

JET CAPITAL CONCENTRATED OFFSHORE FUND, LTD.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Director

JET CAPITAL MANAGEMENT, L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

Matthew Mark

/s/ Matthew Mark

Alan Cooper

/s/ Alan Cooper

SCHEDULE I

Directors and Officers of Jet Capital Concentrated Offshore Fund, Ltd.

Name and Position	Principal Business Address
Matthew Mark, Officer and Director	667 Madison Avenue, 9th Floor New York, New York 10021
Alan Cooper, Officer and Director	667 Madison Avenue, 9th Floor New York, New York 10021

SCHEDULE II

This schedule sets forth information with respect to each purchase of Common Stock which was effectuated by Jet Capital Arbitrage & Event Fund I, L.P. during the past 60 days.

Date	Number of Shares	Price Per Share	Cost
3/16/2006	(4,933)	18.43	90,904.89
4/12/2006	1,624	17.33	28,152.02
4/12/2006	20	17.06	336.54
4/17/2006	760	16.87	12,811.51
4/18/2006	1,315	16.98	22,334.78
4/19/2006	1,644	17.03	28,000.68
5/11/2006	888	16.23	14,409.46
5/11/2006	3,012	16.10	48,500.45
5/12/2006	3,456	15.99	55,266.89
5/15/2006	86	15.64	1,350.94
5/18/2006	204	15.98	3,258.01
5/19/2006	1,406	16.00	22,496.00
5/22/2006	1,973	15.72	31,015.56

This schedule sets forth information with respect to each purchase of Common Stock which was effectuated by Jet Capital Concentrated Fund, L.P. during the past 60 days.

Date	Number of Shares	Price Per Share	Cost
3/16/2006	(14,916)	18.43	274,897.22
4/12/2006	4,912	17.33	85,131.96
4/12/2006	60	17.06	1,017.70
4/17/2006	2,297	16.87	38,742.13
4/18/2006	3,978	16.98	67,540.58
4/19/2006	4,972	17.03	84,674.33
5/11/2006	2,685	16.23	43,574.33
5/11/2006	9,109	16.10	146,665.82
5/12/2006	10,451	15.99	167,127.60
5/15/2006	261	15.64	4,085.25
5/18/2006	617	15.98	9,852.25
5/19/2006	4,252	16.00	68,032.00
5/22/2006	5,966	15.72	93,785.52

This schedule sets forth information with respect to each purchase of Common Stock which was effectuated by Jet Capital Concentrated Offshore Fund, Ltd. during the past 60 days.

Date	Number of Shares	Price Per Share	Cost
3/16/2006	(10,100)	18.43	186,141
4/12/2006	3,326	17.33	57,645.64
4/12/2006	40	17.06	689.12
4/17/2006	1,555	16.87	26,233.56
4/18/2006	2,693	16.98	45,733.94
4/19/2006	3,367	17.03	57,335.76
5/11/2006	1,818	16.23	29,505.60
5/11/2006	6,168	16.10	99,312.23
5/12/2006	7,077	15.99	13,167.57
5/15/2006	177	15.64	2,766.26
5/18/2006	417	15.98	6,671.28
5/19/2006	2,879	16.00	46,064.00
5/22/2006	4,040	15.72	63,508,.80

This schedule sets forth information with respect to each purchase of Common Stock which was effectuated in the Managed Accounts during the past 60 days.

Date	Number of Shares	Price Per Share	Cost
3/16/2006	120,051	18.43	2,212,470.97
4/12/2006	38,537	17.33	685,172.39
4/12/2006	480	17.06	8,190.47
4/17/2006	18,488	16.87	311,810.47
4/18/2006	32,014	16.98	543,590.70
4/19/2006	40,017	17.03	681,489.22
5/11/2006	21,609	16.23	350,701.73
5/11/2006	73,311	16.10	1,180,418.89
5/12/2006	84,116	15.99	1,345,102.55
5/15/2006	2,102	15.64	32,879.55
5/18/2006	4,962	15.98	79,294.45
5/19/2006	34,224	16.00	547,584.00
5/22/2006	48,020	15.72	754,874.40

EX-99.1

EXHIBIT 99.1

Agreement of Joint Filing

Pursuant to Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned persons hereby agree to file with the Securities and Exchange Commission the Statement on Schedule 13D (the “Statement”) to which this Agreement is attached as an exhibit, and agree that such Statement, as so filed, is filed on behalf of each of them.

IN WITNESS WHEREOF, the undersigned have executed this Agreement.

Dated:May 22, 2006

JET CAPITAL INVESTORS, L.P.

By:Jet Capital G.P. L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

JET CAPITAL ARBITRAGE &

EVENT FUND I, L.P.

By:Jet Capital Management, L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

JET CAPITAL CONCENTRATED FUND, L.P.

By: Jet Capital Management, L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

JET CAPITAL CONCENTRATED OFFSHORE FUND, LTD.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Director

JET CAPITAL MANAGEMENT, L.L.C.

By: /s/ Matthew Mark

Name: Matthew Mark

Title:   Managing Member

Matthew Mark

/s/ Matthew Mark

Alan Cooper

/s/ Alan Cooper

EX-99.2

                    Exhibit99.2

                May 22, 2006

Mr. Gregory Burns

Chairman and Chief Executive Officer

O'Charley's Inc.

3038 Sidco Drive

Nashville, Tennessee 37204

Mr. Lawrence Hyatt

Chief Financial Officer and Treasurer

O'Charley's Inc.

3038 Sidco Drive

Nashville, Tennessee 37204

Dear Greg and Larry,

Thank you again for spending time with me and Mathew Barnett last week discussing the first quarter results and, more importantly, the company's various strategies laid out on your conference call to improve its operating margins and return on capital. As you know, we strongly support management's efforts to enhance margins and returns. Your plans appear reasonable and accomplishable, utilizing an increasingly analytical methodology across all aspects of operations. We look forward to seeing progress as the menu pricing, labor scheduling, food cost modeling, and other plans gain steam. We are also interested observers in the company's potential franchising opportunities and supply chain analysis. It is clear that it is not business as usual at the company.

Despite management's efforts, which we recognize are still in their early stages, the company's stock price continues to languish at less than 6 times consensus 2006 EBITDA and well below a conservative estimate of its liquidation value. As a result, and in part because we are strong supporters of the company's turnaround, Jet Capital has increased its investment to more than 1,335,000 shares in the company. Because we have gone over 5% ownership of the stock, we will be making an SEC filing disclosing our ownership, and this letter will be appended to it.

It appears that the public market either fails to appreciate the size of the opportunity that the company has to improve its operations, or heavily discounts management's ability to seize it. In 2002, O'Charley's ended the year with 188 restaurants, $500 million in revenue, and $46 million in EBIT. The company ended 2005 with 341 restaurants, $930 million in revenue, but just S37 million in EBIT. To be sure, even the best operated of the company's competitors have faced margin pressure over the past few years from rising utility and

commodity costs, among other factors. But none that we can find has experienced as severe a decline as O'Charley's. Importantly, the causes of the margin erosion over the past 4 years appear widespread. It is in both the extent and the severity of the margin decline that we see opportunity, and we eagerly await more substantial progress toward operational excellence at the company.

We are aware that management's 2006 earnings guidance implies a modest recovery in operating margins. And we are encouraged that you and the rest of the management team recognize that operating O'Charley's at the 5% EBIT margins implied by your 2006 guidance still fails to provide adequate returns on capital to your shareholders. Given current returns, we are further encouraged by management's expression of the urgency of the task of improving margins. We share the view that time is of the essence. If the company hits its 2006 guidance, we estimate it will earn a return on invested capital of just 4.9%, far below a reasonable estimate of its cost of capital. However, should the company get only halfway back to its 2002 margins, it would generate a 7% operating margin, and we estimate a closer to respectable 8.5% return on invested capital. Holding its current capital structure constant—a decision we continue to think unduly conservative—we estimate a 7% margin would generate earning power of more than $1.70 per share and a share price above $30.00. Higher returns—once they are achieved—would also justify investing in the many growth opportunities that a regionally focused, 341 store portfolio offers, likely in our view further supporting the earnings multiple of the stock.

However, especially given the potential upside that the company's turnaround effort offers, we were surprised by a number of aspects of the company's recent review of its financial structuring alternatives. While there is no question that the company's focus on its operational turnaround should be paramount, we would have liked to see management and the Board explore options more fully than they appear to have. We were very surprised to hear that the company did no serious appraisal of its substantial real estate assets as part of its review of alternatives. Through a variety of analyses of publicly available information and discussions with industry sources, we estimate the current market value of the company's real estate assets is approximately $400 to 500 million dollars. To be clear, this attributes some discounted value to those sites where O'Charley's owns its building and facilities and operates under a long term lease on the land. While better disclosure about the length and structure of O'Charley's leases would assist shareholders in understanding the company's asset base, we think valuing this real estate asset at zero—as management appears to have—is more than conservative. We would be happy to discuss any portion of our analysis with you further.

Almost regardless of the exact real estate valuation, the real estate is a very substantial asset of O'Charley's, and its value is clearly understated by the cost based accounting on the company's balance sheet. This fact drives our conviction that O'Charley's remains overcapitalized, a condition that will depress returns even as margins improve. If management's goal is to expand margins in order to generate acceptable returns at the company—as we think it should be—then not just the operational turnaround but also a fair valuation of O'Charley's asset base is necessary. While we appreciate the primacy of the operational turnaround, both the numerator and denominator are important drivers of the increased return potential of the company. We trust that management and the Board remain open to consider this issue in the coming months, in terms of the real estate of the

company, in terms of the potential repurchase of the company's stock, and in terms of analyzing the capital employed in the company's atypical commissary investments.

One last comment on the financial alternatives review. Despite the Board's decision not to proceed with any alternative at this time, it seems clear that the liquidation value of the company provides shareholders with a substantial value cushion should the company's turnaround efforts not progress far enough or fast enough. This is especially the case given that the Ninety-Nine concept, as you know, owns no meaningful real estate, so its roughly $27mm of EBITDA provides a second leg to a liquidation analysis of the company. Indeed, capitalizing Ninety-Nine's EBITDA at only the company's currently depressed multiple and adding the value of the real estate generates a valuation, net of debt, of roughly $19 per share (using the midpoint of our real estate valuation). While this valuation implies a not insubstantial premium to current market prices, it is based on multiples that—for both Ninety-Nine and the real estate—are far below a variety of recent transaction comps in the current environment. This analysis also values Stoney River and the company's commissary and other assets at zero, and obviously places no value on the potential to drive reasonable returns on the company's asset base. As shareholders, we take comfort in the value cushion a liquidation analysis of the company provides. And we trust that the Board will meet its fiduciary duties to shareholders to put the company up for sale should management fail to drive the operational progress required to enable the company to earn an at least adequate return on its asset base.

Surely, all constituents—and we think especially shareholders—will be best served by seeing returns increase, and increase both by raising earnings and, where appropriate, reducing the capital employed in the business. And as we said at the start of our letter, our increased investment in the company is founded in part in our strong support of its turnaround potential.

Thank you again for your follow up conversation after the first quarter earnings call. We look forward to being shareholders as the exciting changes at the company take place.

Sincerely,

/s/ Matthew Mark                                     

Matthew Mark

General Partner