Exhibit 99.1

Schlotzsky's Announces Modified and Extended Terms of Its Debt With
Its Largest Creditor

    AUSTIN, Texas--(BUSINESS WIRE)--Jan. 9, 2004--Schlotzsky's Inc.
(Nasdaq:BUNZ) today reported that it has modified and extended the
terms of its note payable with its largest creditor, NS Associates I
Ltd., to reduce the interest rate on the principal (current
outstanding balance of approximately $18 million) from 8% to 3% and
the monthly payments from $520,000 to $120,000, for 12 months.
Beginning December 2004, the monthly payments will increase to
$420,000 and the interest rate will vary pursuant to the agreement. In
addition, the balloon payment due date was extended from June 30,
2005, to Dec. 15, 2006.
    "These changes are very positive for the Company as they
significantly decrease the Company's debt service requirements for the
next two years," stated Monica Landers, Company spokesperson.
    In exchange for the reduced payments and interest rates, NS
Associates received a security interest in Schlotzsky's trademarks and
other intellectual property. In addition, John C. Wooley, president
and CEO of Schlotzsky's, and Jeffrey J. Wooley, senior vice president,
each agreed to extend certain prior loans that they have made to the
Company and to subordinate those loans to the security interest held
by NS Associates. The transaction also allows for the use of the
trademarks and intellectual property in connection with a first lien
term loan in the amount of $3 million, which the Company is currently
pursuing.

    This release may contain statements deemed to be "forward-looking
statements" under applicable laws. Any statements that are not
historical facts may be deemed forward-looking statements, and are not
meant to predict or guarantee actual results or events, and may not be
realized because they are based upon our current projections and plans
and are subject to a number of risks and uncertainties, many of which
are beyond our control. Actual results and circumstances may differ
materially from those described by such statements. Factors that may
cause actual results to differ materially from those described by the
forward-looking statements may include, without limitation, the
inability to obtain additional financing. There can be no assurance
that any events or results described in any forward-looking statement
will actually be achieved. We undertake no obligation to revise these
statements to reflect events that arise after this date or to reflect
the occurrence of unanticipated events.

    CONTACT: Schlotzsky's Inc., Austin
             Jessica Furlow, 512-236-3644
             www.schlotzskys.com