UNITED STATES
               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)
                        November 20, 1997


                       TACO CABANA, INC.
     (Exact name of registrant as specified in its charter)

                   Delaware                               0-20716
74-2201241
(State  or other jurisdiction            (Commission File Number)
(IRS employer identification no.)
 of incorporation or organization)

                  8918 Tesoro Drive, Suite 200
                   San Antonio, Texas  78217
  (Address of principal executive offices, including ZIP Code)

                         (210) 804-0990
      (Registrant's telephone number, including area code)

                               N/A
  (Former name or former address, if changed since last report)


Item 5.        OTHER EVENTS

          On  November 20, 1997, Taco Cabana, Inc. issued  a
          press  release  with respect to certain  strategic
          actions  to be taken during the fourth quarter  to
          improve the operating results of its business.   A
          copy  of such press release is attached hereto  as
          Exhibit 1.
          
          The actions described in the press release include
          the  closure  of seventeen restaurants,  including
          all   seven   of  the  Company's  restaurants   in
          Colorado.   The carrying value of the  restaurants
          to   be  disposed  of  totals  approximately   $14
          million,  or 9.7% of total assets as of  September
          28,  1997.  In addition to the net carrying value,
          the  Company will establish lease reserves related
          to  these restaurants of approximately $5 million,
          net  of  expected proceeds from the  sale  of  the
          three  locations  which are owned.   In  addition,
          several   significant  items  were   accrued   for
          relating   to  the  closing  of  the  restaurants.
          Finally,  due  to the significance of  the  events
          described  above,  an analysis  of  all  operating
          assets  in  accordance with Statement of Financial
          Accounting Standards No. 121, Accounting  for  the
          Impairment of Long-Lived Assets and for Long-Lived
          Assets  to  Be  Disposed Of, was  performed.   The
          total amount of the announced special charge is up
          to  $70 million, including the tax benefit  to  be
          realized  due  to the charge.  It  is  anticipated
          that  much of the tax benefit to be recorded  will
          be  reduced by a valuation allowance as called for
          by Statement of Financial Accounting Standards No.
          109, Accounting for Income Taxes.  As a result  of
          this  valuation  allowance, the Company  does  not
          anticipate  incurring any income tax  expense  for
          financial reporting purposes during fiscal 1998.
          
Item 7.        FINANCIAL STATEMENTS AND EXHIBITS

         [C]   Exhibits
               1.  Press Release dated November 20, 1997.






                         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.

                                        TACO CABANA, INC.

(Registrant)


Date:  December 24, 1997           By:  /s/ David G. Lloyd
                                David G. Lloyd
                                Senior  Vice  President  and
Chief  Financial Officer








                                                   Exhibit 1

           TACO CABANA REPORTS CLOSURE OF COLORADO
                  MARKET AND SPECIAL CHARGE


San Antonio - November 20, 1997

      Taco Cabana, Inc. (NASDAQ - TACO)  announced today its
plan to cease operations in its Colorado market, and to take
a  special  charge which will include the anticipated  costs
and   expenses  relative  to  the  closure  of   its   seven
restaurants  in the Colorado market.  The charge  will  also
include  the  cost of closing ten additional underperforming
restaurants  and  non-cash charges for  the  revaluation  of
certain assets and goodwill in accordance with Statement  of
Financial   Accounting  Standards   No.   121   (FAS   121).
Management  anticipates  that the aggregate  amount  of  the
special charge will be up to $70 million, after taking  into
account the tax benefit associated with the charge.  Since a
majority of these charges and costs are non-cash items,  the
Company  estimates that the after-tax cash  impact  will  be
approximately $5 million.

     Stephen V. Clark, President & CEO, said "Management and
the  Board  of  Directors are committed to  taking  whatever
steps  are necessary to improve our performance and  enhance
shareholder  value.   We are convinced  that  the  difficult
decisions  we  have made will make us a more  efficient  and
more  profitable  Company going forward.   These  restaurant
closings  and associated writedowns will make us  much  more
focused  in  our successful markets." Mr. Clark added,  "Our
core  markets  are  performing well.   We  are  particularly
pleased  with  the  results  from  our  five  new  prototype
restaurants as well as our reimaging program.  We  currently
have two restaurants under construction and plan to open  an
additional eight to ten restaurants in existing markets, and
expand  our  reimage program during 1998.  We  would  expect
these actions to result in a significant improvement in  our
performance going forward."

      David  G.  Lloyd, Chief Financial Officer, stated  "We
believe  that  this charge will allow shareholders  to  more
clearly  focus  on our Company's underlying strengths.   The
amount  of  the  charge related to the closing  of  existing
restaurants  totals  approximately  $20  million,   pre-tax.
Additionally,  we have reviewed other long-lived  assets  as
required  by  FAS  121 and determined that  a  reduction  of
approximately  $50 to $60 million, pre-tax, is  required  in
the  carrying value of goodwill and certain other long-lived
assets.  Finally certain other accruals will be increased by
approximately  $2  million, pre-tax.  The closing  of  these
underperforming  restaurants will allow us to  increase  our
cash  flows and earnings on a prospective basis.  The  final
amount  of  the charge will be determined during the  annual
audit  process and will be included in the Company's   year-
end earnings release in early 1998."

     Statements in this press release concerning Taco Cabana
which  are  (a)  projections of revenues or other  financial
items,  (b)  statements of plans and objectives  for  future
operations,   specifically  statements   regarding   planned
restaurant openings and reimagings, (c) statements of future
economic  performance,  (d)  statements  of  assumptions  or
estimates  underlying or supporting the  foregoing,  or  (e)
statements  regarding the expected cash flows from  property
sales or closures are forward-looking statements within  the
meaning  of  Section 27A of the Securities Act of  1933  and
Section  21E  of the Securities Act of 1934.   The  ultimate
accuracy of forward-looking statements is subject to a  wide
range  of  business risks and changes in circumstances,  and
actual  results and outcomes often differ from expectations.
Any  number of important factors could cause actual  results
to  differ  materially  from those  in  the  forward-looking
statements herein, including the following:  the timing  and
extent  of  changes in prices; actions of our customers  and
competitors;  the  liquidity in the real estate  markets  in
which  the Company is or will be attempting to market closed
properties;  state  and  federal  environmental,   economic,
safety  and  other  policies and  regulations,  any  changes
therein, and any legal or regulatory delays or other factors
beyond  the Company's control; execution of and availability
of   financing   for   planned  capital  projects;   weather
conditions affecting the Company's operations or  the  areas
in  which  the  Company's  products  are  marketed;  natural
disasters   affecting  operations;  and   adverse   rulings,
judgments,  or  settlements  in litigation  or  other  legal
matters.   The Company undertakes no obligation to  publicly
release  the  result of any revisions to any  such  forward-
looking  statements that may be made to  reflect  events  or
circumstances  after  the  date hereof  or  to  reflect  the
occurrence of unanticipated events.