8-K

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT


Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934


Date of Report (date of earliest event reported): June 28, 1996

GROUND ROUND RESTAURANTS, INC.
(Exact name of registrant as specified in its charter)

New York                        1-6192                   13-5637682

(State or other         (Commission File Number)         (I.R.S. Employer
jurisdiction of                                          Identification Number)
incorporation)

35 Braintree Hill Office Park, Braintree, Massachusetts 02184-9078
(Address of Principal Executive Offices)                (Zip Code)

Registrant's telephone number, including area code: (617) 380-3100


This Current Report on Form 8-K consists of 6 pages. 
Exhibits begin on page 5.


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Item 2.    Disposition of Assets:
- -------    ----------------------

           On June 28, 1996 the Registrant agreed to sell up to 16 restaurant
           units to Lone Star Steakhouse & Saloon, Inc. ("Purchaser") for up to
           $16 million in cash. The purchase price was negotiated in an arms
           length transaction by the parties. Closing of the sale of the
           restaurants is subject to the satisfaction of certain conditions,
           including (i) the issuance or regulatory approval of the assignment
           of liquor licenses to Purchaser; (ii) obtaining the consent of
           lessors to the assignment of leases where such consent is
           required;(iii) the right of Purchaser to renegotiate leases with the
           lessors with respect to seven restaurants; (iv) conveyance by
           Registrant of good title to each restaurant (in each case subject to
           waiver by the Purchaser).

           The closing of the transaction shall occur on or before the later of
           August 12, 1996 or five business days after the issuance or
           regulatory approval of the assignment to Purchaser of the liquor
           licenses, but in no event later than November 30, 1996. In the event
           not all of the liquor licenses or regulatory approvals of the
           assignments is obtained prior to the scheduled closing date, the
           parties shall close with respect to a minimum of eleven restaurants
           for which such licenses or approvals have been obtained, with the
           closing on the balance within five business days after all closing
           conditions as to such remaining restaurants have been satisfied.

           Any restaurant as to which the closing conditions cannot be timely
           satisfied may be rejected by the Purchaser; in which event the
           purchase price shall be reduced by a specified amount agreed by the
           parties; provided, however, in no event shall Purchaser purchase less
           than eleven restaurants.

           Purchaser intends to utilize the proceeds to reduce bank debt and for
           general corporate purposes.

Item 5.    Other Events:
           -------------

           On June 28, 1996, the Registrant and its lenders amended the
           Registrant's Credit Facility so as to (i) defer certain principal
           payments totalling approximately $2.9 million, which were due on June
           30, 1996, until July 31, 1996; (ii) defer until July 31, 1996 the
           payment of a restructuring fee that was due on June 30, 1996; and
           (iii) permit the Registrant to retain a percentage of the proceeds of
           sale of restaurants, subject to the Registrant and its lenders
           reaching final agreement on a definitive term sheet restructuring its
           Credit Facility


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           prior to July 31, 1996. In addition, such amendment waived
           Registrant's compliance with certain financial covenants through the
           Registrant's third fiscal quarter ending June 30, 1996.

Item 7.    Financial Statements and Exhibits:
           ---------------------------------

           (a)   Financial Statement of businesses acquired.

                      None.

           (b)   PRO FORMA financial information.

                      None.

           (c)   Exhibits:

                      1. Press Release dated June 28, 1996.

                      2. Press Release dated July 1, 1996.


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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                        GROUND ROUND RESTAURANTS, INC.

Date: July 11, 1996                     By /s/ Michael R. Jorgensen
                                           ------------------------
                                               Michael R. Jorgensen
                                        Senior Vice President and
                                        Chief Financial Officer

EX-99.1

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Exhibit 1. Press Release dated June 28, 1996.

FOR IMMEDIATE RELEASE

Contacts: Alan Dempsey                              Peter Dobrow
          Ground Round Restaurants,Inc.             Creamer, Dickson, Basford
          (617) 380-3125                            (212) 887-8145

GROUND ROUND RESTAURANTS, INC.
AMENDS CREDIT FACILITY

BRAINTREE, Mass., June 28, 1996 - Ground Round Restaurants, Inc. (Nasdaq: GRXR)
announced today that the Company and its banks have amended their Credit
Facility in order to defer certain principal payments, totaling $2.9 million,
which was due on June 30, 1996, until July 31, 1996, pending the completion of a
restructured facility in late July.

Management believes that it will reach final agreement with its banks on a
definitive term sheet restructuring its Credit Facility within the next two
weeks, although it can give no assurance in this regard.

When finalized, the amended Credit Facility should provide the Company with the
financial resources to complete the balance of its strategic plan.

Ground Round Restaurants, Inc. operates 147 Company and franchises 44
family-oriented, full-service, casual dining restaurants in the Northeast,
Mid-Atlantic and Midwest regions of the United States.

EX-99.2

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Exhibit 2. Press Release dated July 1, 1996.

FOR IMMEDIATE RELEASE

Contacts: Alan Dempsey            Mary Conroy          Peter Dobrow
          Ground Round            Ground Round         Creamer, Dickson, Basford
          (617) 380-3125          (617)380-3121        (212) 887-8145

GROUND ROUND RESTAURANTS SELLS 16 SITES

BRAINTREE, Mass., July 1, 1996 - Ground Round Restaurants, Inc. (Nasdaq: GRXR)
announced today that the Company has agreed to sell up to 16 units to Lone Star
Steakhouse and Saloon, Inc. (Nasdaq: STAR) for up to $16 million in cash.
Proceeds will be used to reduce funded bank debt by approximately 25 percent as
well as for general corporate purposes.

"The sale of these units should enable the Company to accelerate implementation
of its program of offering its new, greatly expanded menu for both its adult and
children customers, seasonal menus and superior quality food and service," said
Daniel R. Scoggin, Chairman of the Board, Chief Executive Officer and President
of The Ground Round. "In fact, year-to-date, The Ground Round has outperformed
the industry segment in positive store sales as a result of the food and service
programs we now have in place.

"By reducing Company debt and providing resources for additional investment, we
expect this transaction to position the Company for future growth," Scoggin
added.

Closing is expected within 90 days, pending satisfaction of certain conditions.

Ground Round Restaurants, Inc. operates 147 Company and franchises 44
family-oriented, full-service, casual dining restaurants in the Northeast,
Mid-Atlantic and Midwest regions of the United States.