EXHIBIT 99.1


SCHLOTZSKY'S, INC.

FOR IMMEDIATE RELEASE


CONTACTS AT THE COMPANY:

                                       
                  SCHLOTZSKY'S ADOPTS SHAREHOLDERS' RIGHTS PLAN


AUSTIN, TEXAS -- December 18, 1998 - Schlotzsky's, Inc. (NASDAQ: BUNZ) 
today announced that its Board of Directors has adopted a Shareholders' 
Rights Plan in which Rights to purchase shares of a new series of preferred 
stock will be distributed as a dividend, one Right per share, to record 
owners of the Company's Common Stock as of the close of business on December 
30, 1998. The Shareholders' Rights Plan was not adopted in response to any 
known offers for the Company.

         Schlotzsky's Board of Directors noted that the Plan is designed to 
require that any potential acquiror seeking to obtain control of Schlotzsky's 
treat all shareholders fairly and equally and to deter the use of coercive 
takeover tactics.

         Upon becoming exercisable, each Right entitles holders to purchase 
one one-hundredth of a share of Class C Series A Participating Preferred 
Stock, no par value, for an exercise price of $75.00 per one one-hundredth 
share. The Rights are not exercisable, however, until a person or group 
acquires more than 20% of Schlotzsky's Common Stock or announces a tender or 
exchange offer for more than 20% of the stock. If a person or group acquires 
more than 20% of the common stock (or certain other specified events occur), 
the Rights become rights to receive, on exercise, Common Stock with a value 
equal to two times the exercise price. This benefit is not available, 
however, to any person who is defined as an "Acquiring Person" under the 
Plan. Details of the Plan and the Rights are outlined in a Form 8-K filing 
being made with the Securities and Exchange Commission.

         Schlotzsky's, Inc. also announced that the Board of Directors had 
adopted the Third Amended and Restated Bylaws of the Company. The principal 
amendments were to: require cause for the removal of directors (consistent 
with a change to the Texas Business Corporation Act adopted in 1997) and the 
vote of two-thirds of all outstanding shares to remove a director; reduce the 
number of directors from nine to seven, which is the number of directors 
serving on the Board since going public in 1995; require three-fifths of the 
full Board or a majority of all outstanding 



shares to amend the Bylaws; require greater notice of shareholder proposals 
prior to a special or annual meeting of the shareholders (between 120 and 150 
days prior to the date of the prior year's proxy statement, in the case of an 
annual meeting--this results in a deadline of January 1, 1999 for the 1999 
meeting). The Board considered that these amendments would allow them the 
opportunity to properly consider shareholder proposals, consistent with the 
notice requirements of the Securities and Exchange Act, and guard against 
immediate changes in Board policies without proper consideration.

         Schlotzsky's, Inc., founded in Austin, Texas, in 1971, is a 
franchisor of quick service restaurants featuring made to order sandwiches 
served on distinctive sourdough bread, along with pizzas, salads, and soups. 
The Company previously announced that as of September 30, 1998, there were 
736 restaurants in the chain, operating in 38 states, the District of 
Columbia and 15 foreign countries.