<PAGE>
 
                                 UNITED STATES

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

                                   FORM 10-Q
                                        
(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                For the quarterly period ended October 5, 1997

                                      OR
                                        
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                  For the transition period from ____ to ____

                        Commission file number 0-22802

                             BOSTON CHICKEN, INC.
            (Exact name of registrant as specified in its charter)
                                        
                   Delaware                    36-3904053              
        (State or other jurisdiction of        (IRS Employer           
          incorporation or organization )      Identification No.)      


                           14103 Denver West Parkway
                                P. O. Box 4086
                            Golden, CO  80401-4086
         (Address of principal executive offices, including zip code)

                                (303) 278-9500
             (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                         Yes   X      No
                              ---       ---      

Number of shares of Common Stock, $.01 par value per share, outstanding as of
November 7, 1997: 71,385,057
<PAGE>
 
                             BOSTON CHICKEN, INC.

                                     INDEX
                                        
<TABLE>
<CAPTION>
PART I.   FINANCIAL INFORMATION                                                              Page No.
<S>                                                                                          <C>
          Item 1.  Financial Statements
 
               Consolidated Balance Sheets as of December 29, 1996 and                                 
               October 5, 1997...................................................................2
 
               Consolidated Income Statements for the quarter and three quarters ended                                    
               October 6, 1996 and October 5, 1997...............................................3
                                                                                                                          
               Consolidated Statements of Cash Flows for the three quarters ended                                         
               October 6, 1996 and October 5, 1997...............................................4
                                                                                                                          
               Notes to Consolidated Financial Statements........................................5 
 
          Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations.........................................13
 
PART II.  OTHER INFORMATION
 
          Item 1.  Legal Proceedings............................................................19
 
          Item 6.  Exhibits and Reports on Form 8-K.............................................19
 
          Signature Page........................................................................20
 
          Exhibit Index.................................................................Exhibit -1
</TABLE>

                                       1
<PAGE>
 
                     BOSTON CHICKEN, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                       (In thousands, except share data)


<TABLE>
<CAPTION>
                                                                        December 29,               October 5,
                                                                            1996                      1997
                                                                    -------------------      -------------------
<S>                                                                   <C>                      <C>
  ASSETS                                                                                          (Unaudited)
  ------
Current Assets:
  Cash and cash equivalents....................................              $  100,800               $  113,725
  Accounts receivable, net.....................................                  22,438                   25,317
  Due from affiliates..........................................                  10,246                   13,748
  Inventories..................................................                   2,585                    5,753
  Prepaid expenses and other current assets....................                   1,465                    1,952
  Deferred income taxes........................................                   8,928                    1,631
                                                                    -------------------      -------------------
     Total current assets......................................                 146,462                  162,126
Property and Equipment, net....................................                 334,748                  430,345
Notes Receivable - Boston Chicken, Inc.........................                 654,432                  788,442
Notes Receivable - Einstein/Noah Bagel Corp....................                 146,087                  304,180
Deferred Financing Costs, net..................................                  13,361                   22,149
Goodwill, net..................................................                 190,439                  335,454
Other Assets, net..............................................                  58,087                   85,139
                                                                    -------------------      -------------------
     Total assets..............................................              $1,543,616               $2,127,835
                                                                    ===================      ===================
 
  LIABILITIES AND STOCKHOLDERS' EQUITY    
  ------------------------------------                               
Current Liabilities:
  Accounts payable.............................................              $   40,430               $    8,419
  Accrued expenses.............................................                  33,817                   42,595
  Other current liabilities....................................                   2,730                   23,319
  Deferred franchise revenue...................................                  10,656                    3,500
                                                                    -------------------      -------------------
     Total current liabilities.................................                  87,633                   77,833
Deferred Franchise Revenue.....................................                   7,740                    6,228
Convertible Subordinated Debt - Boston Chicken, Inc............                 129,841                  417,020
Convertible Subordinated Debt - Einstein/Noah Bagel Corp.......                       -                  125,000
Liquid Yield Option Notes......................................                 182,613                  193,925
Deferred Income Taxes..........................................                  40,216                   39,237
Other Noncurrent Liabilities...................................                   6,292                    4,930
Minority Interests.............................................                 153,441                  189,016
Commitments and Contingencies
Stockholders' Equity:
  Preferred Stock----$.01 par value; authorized  20,000,000     
   shares; no shares issued and outstanding....................                       -                        -
  Common Stock----$.01 par value; authorized 480,000,000        
   shares; issued and outstanding: 64,245,868 in 1996           
    and 71,318,032 in 1997.....................................                     642                      713
  Additional paid-in capital...................................                 827,611                  916,696
  Retained earnings............................................                 107,587                  157,237
                                                                    -------------------      -------------------
                                                                                935,840                1,074,646
                                                                    -------------------      -------------------
     Total liabilities and stockholders' equity................              $1,543,616               $2,127,835
                                                                    ===================      ===================
</TABLE>

The accompanying notes to the consolidated financial statements are an integral
                           part of these statements.

                                       2
<PAGE>
 
                     BOSTON CHICKEN, INC. AND SUBSIDIARIES

                        CONSOLIDATED INCOME STATEMENTS
                     (In thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                             Three
                                                             Quarter Ended               Quarters Ended
                                                        ------------------------    ------------------------
                                                        October 6,    October 5,    October 6,    October 5,
                                                           1996          1997          1996          1997
                                                        ----------    ----------    ----------    ----------
<S>                                                     <C>           <C>           <C>           <C>
Revenue:                                               
  Company-operated stores.............................   $28,664       $ 57,804      $ 55,402      $165,982                      
  Royalties and franchise-related fees................    30,124         28,999        83,395       107,749                      
  Interest income.....................................    15,522         24,023        47,421        70,455                      
                                                         -------       --------      --------      --------                      
    Total revenue.....................................    74,310        110,826       186,218       344,186                      
Cost and Expenses:                                                                                                               
  Cost of products sold...............................    10,567         21,154        20,515        61,379                      
  Salaries and benefits...............................    12,862         21,593        29,699        66,806                      
  General and administrative..........................    31,368         36,520        58,084        98,575                      
                                                         -------       --------      --------      --------                      
    Total cost and expenses...........................    54,797         79,267       108,298       226,760                      
                                                         -------       --------      --------      --------                      
Income from Operations................................    19,513         31,559        77,920       117,426                      
Other Income (Expense):                                                                                                          
  Interest expense, net...............................    (3,803)       (10,782)      (10,138)      (27,322)                     
  Gain (loss) on sale of subsidiary's stock...........    14,778           (130)       14,778           (48)                     
  Other income (expense), net.........................         4            (43)          316         1,598                      
                                                         -------       --------      --------      --------                      
    Total other income (expense)......................    10,979        (10,955)        4,956       (25,772)                     
                                                         -------       --------      --------      --------                      
Income Before Income Taxes and Minority Interest......    30,492         20,604        82,876        91,654                      
Income Taxes..........................................    11,194         10,257        30,992        38,199                      
Minority Interest in (Earnings) Loss of Subsidiaries..    (1,998)           617        (3,019)       (3,805)                     
                                                         -------       --------      --------      --------                      
Net Income............................................   $17,300       $ 10,964      $ 48,865      $ 49,650                      
                                                         =======       ========      ========      ========                      
                                                                                                                                 
Net Income Per Common and                                                                                                        
 Equivalent Share.....................................   $  0.26       $   0.16      $   0.74      $   0.73          
                                                         =======       ========      ========      ========          
Weighted Average Number of Common                                                                                                
 and Equivalent Shares Outstanding....................    67,416         69,562        66,091        68,294          
                                                         =======       ========      ========      ========          
</TABLE>

       The accompanying notes to the consolidated financial statements 
                   are an integral part of these statements.

                                       3

<PAGE>
 

                     BOSTON CHICKEN, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                            Three Quarters Ended
                                                                                         --------------------------
                                                                                         October 6,     October 5,
                                                                                            1996           1997
                                                                                         -----------    -----------
<S>                                                                                      <C>            <C>
Cash Flows from Operating Activities:
Net income...........................................................................    $    48,865    $    49,650
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization......................................................         15,559         30,962
  Interest on liquid yield option notes..............................................         10,542         11,338
  Loss (gain) on sale of subsidiary's stock..........................................        (14,778)            48
  Deferred income taxes..............................................................        (21,843)         6,318
  Minority interest..................................................................          3,019          3,805
  Loss (gain) on disposal of assets..................................................           (160)           423
  Changes in assets and liabilities, excluding effects from acquisitions:
    Accounts receivable and due from affiliates......................................         (3,877)        (4,765)
    Accounts payable, accrued expenses and other current liabilities.................          7,776        (29,944)
    Deferred franchise revenue.......................................................          2,713         (8,668)
    Other assets and liabilities.....................................................          1,175        (15,387)
                                                                                         -----------    -----------
      Net cash provided by operating activities......................................         48,991         43,780
                                                                                         -----------    -----------
Cash Flows from Investing Activities:
  Purchase of property and equipment.................................................        (92,351)       (36,704)
  Proceeds from the sale of assets...................................................         58,996         12,142
  Purchase of other assets...........................................................         (4,566)        (8,655)
  Issuance of notes receivable.......................................................     (1,013,570)    (1,067,431)
  Repayments of notes receivable.....................................................        630,064        648,420
                                                                                         -----------    -----------
      Net cash used in investing activities..........................................       (421,427)      (452,228)
                                                                                         -----------    -----------
Cash Flows from Financing Activities:
  Proceeds from issuance of common stock.............................................        110,833          9,479
  Proceeds from issuance of subsidiary's common stock................................         59,902         10,350
  Proceeds from the issuance of convertible subordinated notes.......................              -        412,500
  Increase in deferred financing costs...............................................         (5,681)       (10,956)
  Proceeds from revolving credit facilities..........................................         32,660        283,200
  Repayments of revolving credit facilities..........................................        (76,356)      (283,200)
                                                                                         -----------    -----------
      Net cash provided by financing activities......................................        121,358        421,373
                                                                                         -----------    -----------
Net Increase (Decrease) in Cash and Cash Equivalents.................................       (251,078)        12,925
Cash and Cash Equivalents, beginning of period.......................................        310,436        100,800
                                                                                         -----------    -----------
Cash and Cash Equivalents, end of period.............................................    $    59,358    $   113,725
                                                                                         ===========    ===========
</TABLE>

       The accompanying notes to the consolidated financial statements 
                   are an integral part of these statements.

                                       4
<PAGE>
 
                     BOSTON CHICKEN, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                        
1.   Basis of Presentation

  The consolidated financial statements have been prepared by Boston Chicken,
Inc. (the "Company") and are unaudited except for the consolidated balance sheet
at December 29, 1996 and notes related thereto. The financial statements and
notes thereto have been prepared in accordance with the instructions for Form
10-Q and, therefore, do not necessarily include all information and footnotes
required by generally accepted accounting principles. In the opinion of the
Company, all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the Company's consolidated financial position,
results of operations and cash flows as of October 5, 1997 and for all periods
presented have been made. The statements are subject to year-end audit
adjustment. A description of the Company's accounting policies and other
financial information is included in the audited consolidated financial 
statements as filed with the Securities and Exchange Commission in the Company's
Form 10-K/A for the year ended December 29, 1996. The consolidated results of
operations for the quarter and three quarters ended October 5, 1997 are not
necessarily indicative of the results expected for the full year.

2.   Acquisitions

  In March 1997, the Company converted its loan to BC New York, L.L.C. ("BCNY")
into a majority equity interest in BCNY. The BCNY transaction added 118 Boston
Market stores, operating in the metropolitan New York area, northern New Jersey,
and Connecticut, to the Company store base. As of the date of conversion, total
loan advances to BCNY were $80.0 million. As part of this transaction, the
Company assumed approximately $10.0 million in liabilities owed to third
parties. The transaction has been accounted for as a purchase, and, accordingly,
the purchase price was allocated to identified assets and liabilities based upon
their fair values at the date of the transaction, resulting in goodwill of
approximately $75.0 million (based upon a preliminary allocation), which is
being amortized over a 35-year life. The operating results of BCNY are included
in consolidated net income from the date of acquisition.

  In August 1997, the Company converted its loan to Mayfair Partners, L.P.
("Mayfair") into a majority equity interest in Mayfair. The Mayfair transaction
added 53 Boston Market stores, operating in Washington, D.C., northern Virginia
and portions of Maryland to the Company store base. As of the date of the
transaction, total loan advances to Mayfair were $56.0 million. As part of this
transaction, the Company assumed approximately $10.0 million in liabilities owed
to third parties. The transaction has been accounted for as a purchase, and,
accordingly, the purchase price was allocated to identified assets and
liabilities based upon their fair values at the date of the transaction,
resulting in goodwill of approximately $54.0 million (based upon a preliminary
allocation), which is being amortized over a 35-year life. The operating results
of Mayfair are included in consolidated net income from the date of acquisition.

  In August 1997, the Company purchased from Saad Nadhir, the Company's Co-
Chairman of the Board and Chief Executive Officer and Scott Beck, the Company's
Co-Chairman and President, approximately an 85% equity interest in Progressive
Food Concepts, Inc. ("PFCI") for $2.0 million in cash and notes for
approximately $6.4 million. The purchase price was equal to their original cost
for such interests in PFCI plus an 8% interest factor. Messrs. Beck and Nadhir
also granted to the Company an option to acquire the balance of their interests
in PFCI for a purchase price equal to their original cost for such interests in
PFCI plus an 8% interest factor. As part of this transaction, the Company
assumed approximately $1.0 million in liabilities owed to third parties. The
transaction has been accounted for as a purchase, and, accordingly, the purchase
price was allocated to identified assets and liabilities based upon their fair
values at the date of the transaction, resulting in goodwill of approximately
$4.7 million (based upon a preliminary allocation), which is being amortized
over a 35-year life. The operating results of PFCI are included in consolidated
net income from the date of acquisition.

                                       5
<PAGE>
 
  The Company purchased, in two separate transactions, 20 Boston Market stores
in the Denver metropolitan area for use in testing the expanded Boston Market
concept currently being tested in Charlotte, North Carolina in an entire
geographic area. The Company issued 1,431,066 shares of its common stock, with
an aggregate market value at the time of issuance of approximately $18.3
million, for these assets.

  Finally, in August 1997, the Company purchased the remaining equity interests
in Mid-Atlantic Restaurant Systems, L.P. ("Mid-Atlantic"), resulting in Mid-
Atlantic becoming a wholly-owned subsidiary of the Company. The Company issued
298,037 shares of its common stock, with an aggregate market value at the time
of issuance of approximately $3.9 million, for the equity interests.

  The following represents the unaudited pro forma results of operations for the
three quarters ended October 5, 1997 as if the purchase transactions described
above had occurred at the beginning of the Company's fiscal year (in thousands
of dollars, except per share data):

<TABLE>
        <S>                                   <C>
        Revenue..................             $420,577
        Net income...............             $ 38,659
        Net income per share.....             $   0.56
</TABLE>

3.  Area Developer Financing

  The Company currently offers convertible and non-convertible secured debt
financing to Boston Market area developers to partially finance store
development and working capital needs. Area developer financing generally
requires the developer to expend at least 75% of its contributed capital toward
developing stores prior to drawing on its revolving loan facility provided by
the Company, with advances permitted in a predetermined maximum amount,
generally equal to three to four times the amount of the area developer's
contributed capital. Upon expiration of the draw period, the loan converts to an
amortizing term loan payable in periodic installments. The Company may extend
the draw and repayment periods, subject to the area developer purchasing
additional development rights, contributing additional capital, or in connection
with other amendments to the loan agreement. As a result of amendments to extend
the time period during which area developers are required to open stores under
their development agreements, the Company and its area developers have amended
their loan agreements to extend the draw and repayment periods. Upon expiration
of the draw periods (which range from 1999 to 2006), the loans convert to term
loans payable in periodic installments over periods ranging from two to seven
years, in some cases with a balloon payment upon maturity, with an average
repayment period of approximately five years. Interest is set at the applicable
reference rate of Bank of America National Trust and Savings Association as
established from time to time (8.5% at October 5, 1997, an average rate of 8.5%
for the quarter ended October 5, 1997, and an average rate of 8.42% for the
three quarters ended October 5, 1997) plus 1%, and is payable each four-week
period. The loan is secured by a pledge of substantially all of the assets of
the area developer and generally by a pledge of the equity interests of the
owners of the area developer.

  Einstein/Noah Bagel Corp. ("ENBC") offers secured debt financing to its area
developers to partially finance store development and working capital needs on
terms similar to those offered by the Company to Boston Market area developers.

  (a)  Loan Conversion Option

  The Company may convert all or any portion of the convertible loan amount
after a moratorium period (generally two years from execution or subsequent
amendment of the loan) and generally after the area developer has completed not
less than 80% of its area developer commitment or in the event of the defaults
set forth below and generally up to the later of full repayment of the loan or a
specified date in the agreement, into equity in the area developer at the
conversion price set forth in the loan agreement negotiated at arm's length with
each area developer, which is at a premium over the per unit price paid by the
investors in the area developer for their equity investment made concurrently
with the execution of the loan agreement or subsequent amendments thereto. In
October 1997, in connection with amending its senior secured credit facilities
(see Note 4), the Company received from a majority of its area developers a
waiver of the moratorium period. Default provisions

                                       6
<PAGE>
 
contained in the area developer loans typically include default in payment of
principal and interest, breach of a representation, warranty or any covenant
contained in the loan agreement or security instruments, bankruptcy or a
bankruptcy-related act of the borrower, resignation or termination of key
management personnel, default under the area development agreement, termination
of three or more franchise agreements, dissolution or liquidation, material
adverse change in financial condition, default of other indebtedness, the master
lease, sublease or any real estate lease, a judgment in excess of $100,000 (not
satisfied, vacated or covered by insurance) and the invalidity or termination of
any security instrument. To the extent such loan is not fully drawn or has been
drawn and repaid, the Company has a corresponding option to acquire, at the loan
conversion price, the amount of additional equity it could have acquired by
conversion of the loan, had the loan been fully drawn. On average, upon
conversion or exercise of the option, the Company would own approximately an 80%
interest in each of its area developers.

  ENBC's loan agreements with its area developers contain conversion and option
features similar to the Company's loan agreements with its Boston Market area
developers. On average, upon conversion or exercise of the option, ENBC would
own approximately a 77% interest in each of its area developers.

  (b)  Commitments to Extend Area Developer Financing

  The following tables summarize loan commitments, loan availability,
outstanding loan balances (included in Notes Receivable on the Company's balance
sheets) and contributed capital for Boston Market and ENBC area developers (in
thousands of dollars, except number of area developers):

<TABLE>
<CAPTION>
                                                                     December 29,               October 5,
                                                                         1996                      1997
                                                                    ---------------           ---------------
BOSTON MARKET:
-------------
<S>                                                                       <C>                        <C>
Number of area developers receiving financing.............                       15                        14
Loan commitments..........................................                $ 838,043                  $825,025
Loan availability.........................................                 (190,778)                  (55,406)
                                                                          ---------                  --------
Loans outstanding (included in Notes Receivable)..........                $ 647,265                  $769,619
                                                                          =========                  ========
Contributed capital.......................................                $ 286,413                  $279,557
                                                                          =========                  ========

                                                                     December 29,               October 5,
                                                                         1996                      1997
                                                                    ---------------           ---------------
ENBC:
----                                                      
Number of area developers receiving financing*............                       11                         5
Loan commitments..........................................                $ 283,200                  $359,900
Loan availability.........................................                 (142,446)                  (59,156)
                                                                          ---------                  --------
Loans outstanding (included in Notes Receivable)..........                $ 140,754                  $300,744
                                                                          =========                  ========
Contributed capital.......................................                $  75,765                  $109,126
                                                                          =========                  ========
</TABLE>

  *During the first three quarters of 1997, one area developer was formed and
several area developers merged, reducing the number of area developers receiving
financing from 11 to five.

                                       7
<PAGE>
 
 
  The following tables summarize area developer financing activity of Boston
Market and ENBC area developers (in thousands of dollars):

<TABLE>
<CAPTION>
                                                                       Three Quarters Ended
                                                                -----------------------------------
                                                                 October 6,              October 5,
                                                                    1996                    1997
                                                                -------------            ----------
<S>                                                             <C>                      <C>
Boston Market:
--------------
Area developer loan balances, beginning of year.............    $     411,418            $  647,265
Additional loan advances....................................          710,874               760,211
Loan repayments.............................................         (490,362)             (501,838)
Loans converted into equity or eliminated in consolidation..          (35,400)             (136,019)
                                                                -------------            ----------
Area developer loan balances, end of quarter................    $     596,530            $  769,619
                                                                =============            ==========
<CAPTION>
                                                                June 17, 1996
                                                                  (date of
                                                                  ENBC loan                Three
                                                                 conversion)              Quarters
                                                                   through                 Ended
                                                                 October 6,              October 5,
                                                                    1996                    1997
                                                                -------------            ----------
ENBC:
-----
Area developer loan balances, beginning of period...........    $      41,224            $  140,754
Loan advances...............................................           82,327               299,808
Loan repayments.............................................          (22,821)             (139,818)
                                                                -------------            ----------
Area developer loan balances, end of quarter................    $     100,730            $  300,744
                                                                =============            ==========
</TABLE>

  The majority of the loan advance and repayment activity reflects the revolving
nature of the loans; that is, area developers draw and repay amounts to optimize
cash management.

  (c)  Credit Risk and Allowance for Loan Losses

   Two Boston Market area developers accounted for approximately 15% and 12% of
the Boston Market area developers' notes receivable balance at October 5, 1997
and no other Boston Market area developer individually accounted for 10% or more
of such notes receivable balance as of such date. The five ENBC area developers
accounted for approximately 26%, 24%, 20%, 16%, and 14%, respectively, of the
ENBC area developers' notes receivable balance at October 5, 1997.

  The allowance for Boston Market and ENBC financed area developers' loan losses
is maintained at a level that in management's judgment is adequate to provide
for estimated possible loan losses. The amount of the allowance is based on
management's review of use of loan proceeds, adherence to store development
schedules, store performance trends, type and amount of collateral securing the
loan, prevailing economic conditions, and other factors that management deems
relevant at the time. Based upon this review and analysis, no allowance for loan
losses was required as of December 29, 1996 and October 5, 1997. There can be no
assurance, however, that such review and analysis will not result in a provision
for loan losses in any future quarter.

                                       8
<PAGE>
 

  The following tables set forth certain combined audited financial information
as of the dates indicated provided annually to the Company by Boston Market
financed area developers. During 1995, six financed area developers were formed,
and their data have been included in the table for 1995 from the dates of their
respective formation. During 1996, two financed area developers were formed, and
their data have been included in the table for 1996 from the dates of their
respective formation, and two financed area developers combined with two other
financed area developers with geographically contiguous territories. The table
excludes Mid-Atlantic and New Jersey Rose, L.L.C. for both years and BCNY for
1996, the loans to which have been converted into equity or eliminated in
consolidation (in thousands, except number of financed area developers and store
data):

<TABLE>
<CAPTION>
                                                                December 31,             December 29,
                                                                    1995                     1996
                                                                ------------             ------------
Boston Market Financed Area Developers:
---------------------------------------
<S>                                                             <C>                      <C>
Total number of financed area developers......................       15                       14
Total number of financed area developer stores open...........      627                      841

Balance sheet data:
  Total gross assets..........................................  $    513,926             $    640,534
  Total debt:
    To the Company............................................       372,071                  555,105
    To third parties (including capital lease obligations)....        14,456                   23,797
Total other liabilities (including trade payables)............       105,129                  105,635
Total stockholder/partner/member deficit......................        (9,891)                (102,754)
<CAPTION>
                                                                          Fiscal Year Ended
                                                                -------------------------------------
                                                                December 31,             December 29,
                                                                    1995                     1996
                                                                ------------             ------------
Statement of operations data:
  Gross revenue...............................................  $    491,341             $    865,082
  Income (loss) from continuing operations....................      (148,338)                (156,505)

Statement of cash flows data:
  Cash flows from (used in) operating activities..............  $    (76,926)            $   (128,819)
  Cash flows from (used in) investing activities..............      (193,100)                 (82,307)
  Cash flows from (used in) financing activities..............       269,746                  212,366
                                                                ------------             ------------
    Net change in cash........................................  $       (280)            $      1,240
                                                                ============             ============
</TABLE>

  The following tables set forth certain combined audited financial information
as of the dates indicated provided annually to ENBC by its financed area
developers. During 1995, two financed area developers were formed, and their
data have been included in the table for 1995 from the dates of their respective
formation. During 1996, ten financed area developers were formed (data
concerning such area developers being included in the table for 1996 from the
dates of their respective formation), and one financed area developer combined
with one other financed area developer with geographically contiguous territory.

                                       9
<PAGE>
 

<TABLE>
<CAPTION>
                                                                December 31,             December 29,
                                                                    1995                     1996
                                                                ------------             ------------
ENBC Financed Area Developers:
------------------------------
<S>                                                             <C>                      <C>
Total number of financed area developers......................        2                       11
Total number of financed area developer stores open...........       13                      301

Balance sheet data:
  Total gross assets..........................................  $      9,262             $    221,156
  Total debt:
    To ENBC...................................................         3,538                  140,754
    To third parties..........................................           -                        -  
Total other liabilities (including trade payables)............         3,011                   37,033
Total partner/member equity...................................         2,676                   33,847 
<CAPTION>
                                                                          Fiscal Year Ended
                                                                -------------------------------------
                                                                December 31,             December 29,
                                                                    1995                     1996
                                                                ------------             ------------
Statement of operations data:
  Gross revenue...............................................  $        768             $    109,940
  Income (loss) from continuing operations....................        (1,324)                 (40,592)

Statement of cash flows data:
  Cash flows from (used in) operating activities..............  $      1,616             $    (16,382)
  Cash flows from (used in) investing activities..............        (8,064)                (187,955)
  Cash flows from (used in) financing activities..............         7,038                  205,756
                                                                ------------             ------------
    Net change in cash........................................  $        590             $      1,419
                                                                ============             ============
</TABLE>

4.  Debt

  In April 1997, the Company issued $287.5 million of 7-3/4% convertible
subordinated debentures due May 1, 2004. Interest is payable semi-annually on
May 1 and November 1 of each year beginning November 1, 1997. The debentures are
convertible at any time prior to maturity into shares of the Company's common
stock at a conversion rate of $26.70 per share, subject to adjustments under
certain conditions. The debentures may be redeemed at the option of the Company
beginning May 1, 2000, initially at 104.43% of their principal amount and at
declining prices thereafter, plus accrued interest. In addition, the Company is
required, as of 40 business days after the occurrence of a Change in Control (as
defined in the indenture relating to the debentures) to purchase all or any part
of any debenture at the option of the debenture holder.

  In May 1997, ENBC issued $125.0 million of 7-1/4% convertible subordinated
debentures due June 1, 2004. Interest is payable semi-annually on June 1 and
December 1 of each year beginning December 1, 1997. The debentures are
convertible at any time prior to maturity into shares of ENBC's common stock at
a conversion rate of $21.25 per share, subject to adjustments under certain
conditions. The debentures may be redeemed at the option of ENBC beginning June
1, 2000, initially at 104.14% of their principal amount and at declining prices
thereafter, plus accrued interest. In addition, ENBC is required, as of 40
business days after the occurrence of a Change in Control (as defined in the
indenture relating to the debentures) to purchase all or any part of any
debenture at the option of the debenture holder.

                                      10
<PAGE>
 
  As of October 5, 1997, the Company's senior lenders amended the Company's
senior secured credit facilities to, among other things, modify the financial
covenants, collateral and availability under the facilities. The revised
financial covenants use systemwide performance measures which reflect current
levels of Boston Market store performance, including systemwide average weekly
net sales, systemwide store cashflow and systemwide overhead. In connection with
the amendment to its senior credit facilities, the Company was required to (i)
pledge to the lenders additional collateral, (ii) amend its secured loan
agreements with a majority of its area developers to terminate the conversion
moratorium period and (iii) limit to $10 million the Company's use of cash
consideration in any acquisition of BC Equity Funding, L.L.C. ("BCEF") and
Market Partners, L.L.C. Subject to compliance with the revised financial
covenants, the amended revolving credit facility provides for a maximum
commitment of $85 million, none of which is currently outstanding.

5.   Royalties and Franchise Related Fees

  Royalties and franchise related fees are comprised of the following (in
thousands of dollars):

<TABLE>
<CAPTION>
                                                            Quarter Ended                    Three Quarters Ended
                                                  -------------------------------     ------------------------------- 
                                                     October 6,        October 5,        October 6,        October 5,
                                                        1996              1997              1996              1997
                                                  --------------  ---------------     -------------   ---------------
<S>                                               <C>             <C>                 <C>             <C>
Royalties.....................................        $14,159           $14,757           $40,519          $ 50,921    
Lease and real estate services income.........          7,000             7,331            20,255            24,022    
Initial franchise and area developer fees.....          5,978             3,373            13,255            15,448    
Software license and maintenance fees.........          2,858             3,538             9,238            17,358    
Other.........................................            129                 -               128                 -    
                                                  -------------   ---------------     -------------   ---------------  
                                                      $30,124           $28,999           $83,395          $107,749    
                                                  =============   ===============     =============   ===============  
</TABLE>

6.   Commitments

  Through October 5, 1997, BCEF had invested an aggregate of approximately $57.0
million in certain Boston Market area developers in the form of 10% cumulative
preferred equity, redeemable by the area developers at a premium initially equal
to 10% of the initial issue price, to be increased by 2% each year up to a
maximum of 20% of the initial issue price plus accrued dividends (the
"Redemption Price"). In the event the Company's conversion and option rights
under its secured loan agreement with any of these area developers expire
unexercised and the Company does not consent to an area developer's request to
undertake a firm commitment underwritten public offering of the stock of such
area developer, the Company has agreed to purchase the preferred equity of such
area developer from BCEF at the Redemption Price.

  Through October 5, 1997, Bagel Store Development Funding, L.L.C. ("Bagel
Funding") had invested an aggregate of approximately $90.0 million in ENBC's 
area developers in the form of common equity. ENBC is obligated to purchase
Bagel Funding's equity interest in an area developer at a formula price in the
event that the area developer fails to fulfill its obligation to redeem such
interests at such price in any one of the following circumstances: (i) ENBC
converts its loan into or otherwise acquires a majority equity interest in the
area developer; (ii) ENBC does not consent to the area developer's request to
undertake a firm commitment underwritten public offering of stock of the area
developer after ENBC's conversion and option rights under its loan agreement
with the area developer have expired unexercised; or (iii) ENBC does not consent
to the area developer's request to terminate the area developer's area
development and franchise agreements with ENBC after ENBC's conversion and
option rights under its loan agreement with the area developer have expired
unexercised.

                                      11
<PAGE>
 
7.   Contingencies

  The Company, three of the Company's directors and an officer (the "Individual
Defendants"), and certain investment banking firms which had underwritten
securities offerings by the Company (the "Underwriter Defendants") are
defendants in a class action lawsuit filed in the United States District Court
for the District of Colorado (the "federal proceeding"). The federal proceeding
is comprised of separate actions that were consolidated into one action for pre-
trial purposes on August 8, 1997. The Company, the Individual Defendants, the
Underwriter Defendants and Arthur Andersen, L.L.P., the Company's independent
public accountants, are defendants in a separate class action lawsuit filed in
Jefferson County District Court in the State of Colorado (the "state
proceeding"). The state proceeding is comprised of two separate actions that
were consolidated into one action on November 13, 1997. Also on November 13,
1997, the judge in the state proceeding agreed to stay the state proceeding
until resolution of the federal proceeding. The complaints in the federal
proceeding and the state proceeding allege, among other things, that the Company
and the other defendants violated Sections 11, 12(2) and 15 of the Securities
Act of 1933, as amended, and Section 10(b) of the Securities Act of 1934, as
amended, and Rule 10b-5 promulgated thereunder, as well as certain similar
provisions of Colorado state securities statutes. The plaintiffs are seeking,
among other things, (i) to certify each of the complaints as a class action on
behalf of all persons who purchased common stock of the Company during the
purported class period, (ii) an award of unspecified compensatory damages,
interests and costs to all members of the purported class and (iii) equitable
relief permitted by law, equity or federal or state statutes. The Company
believes that the complaints are without merit and intends to vigorously defend
against the allegations made in such complaints.

  ENBC, certain of its executive officers and directors and the underwriters in
ENBC's initial public offering are defendants in a class action lawsuit filed in
the United States District Court for the District of Colorado. The lawsuit is
comprised of separate actions that were consolidated into one action for pre-
trial purposes on September 2, 1997. ENBC and the other defendants are also
defendants in a class action lawsuit filed in state court in Jefferson County
Colorado. The complaints allege, among other things, that ENBC and the other
defendants violated Sections 11, 12(2) and 15 of the Securities Act of 1933, as
amended, and Section 10(b) of the Securities Exchange Act of 1934, as amended
and Rule 10b-5 promulgated thereunder, as well as certain similar provisions of
Colorado state securities statutes. In each case, the plaintiffs are seeking,
among other things, (i) to certify their complaint as a class action on behalf
of all persons who purchased the common stock of ENBC during the purported class
period, (ii) an award of unspecified compensatory damages, interest and costs to
all members of the purported class and (iii) equitable relief permitted by law,
equity or federal or state statutes. ENBC believes that all of the complaints
are without merit and intends to vigorously defend against the allegations made
in such complaints.

  The Company is subject to various other lawsuits, claims, and other legal
matters in the course of conducting its business, including its business as a
franchisor. The Company believes that the outcome of such other lawsuits,
claims, and other legal matters will not have a material impact on the Company's
consolidated financial position or results of operations.

8.   Earnings Per Share

  In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share". SFAS No. 128 requires disclosure of basic and diluted
earnings per share. Basic earnings per share excludes dilution and is computed
by dividing income available to common shareholders by the weighted-average
number of common shares outstanding for the reporting period. Diluted earnings
per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common
stock. SFAS No. 128 is effective for financial statements issued for periods
ending after December 15, 1997. The pro forma earnings per share for the quarter
and three quarters ended October 6, 1996 and October 5, 1997, utilizing the
requirements of SFAS No. 128 are as follows:

<TABLE>
<CAPTION>
                                              Quarter Ended                   Three Quarters Ended
                                     ------------------------------     ------------------------------
<S>                                  <C>              <C>               <C>              <C>
                                       October 6,       October 5,        October 6,       October 5,
                                          1996             1997              1996             1997
                                     -------------    -------------     -------------    -------------
 
     Basic earnings per share.......     $0.27            $0.16             $0.78            $0.75    
     Diluted earnings per share.....     $0.25            $0.16             $0.73            $0.72     
</TABLE>

                                      12
<PAGE>
 
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

               SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
                                        
  Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Act"). Such forward-looking statements involve known and unknown risks,
uncertainties, and other factors which may cause the actual results,
performance, or achievements of Boston Chicken, Inc. (the "Company"),
Einstein/Noah Bagel Corp. ("ENBC") and their area developers, franchisees, and
licensees, Boston Market(r) stores, Einstein Bros.(R) Bagels and Noah's New York
Bagels(R) stores, and Progressive Food Concepts, Inc. ("PFCI") to be materially
different from any future results, performance, or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the following: store performance; competition; success of operating initiatives;
development and operating costs; area developers' adherence to development
schedules; advertising and promotional efforts; brand awareness; adverse
publicity; acceptance of new product offerings; availability, locations, and
terms of sites for store development; changes in business strategy; changes in
development plans; availability and cost of capital; food, labor, and employee
benefit costs; changes in government regulations; regional weather conditions;
and other factors referenced in this Form 10-Q and in the Company's other
filings with the Securities and Exchange Commission. The cautionary statements
made pursuant to the Act below and elsewhere by the Company should not be
construed as exhaustive or as any admission regarding the adequacy of
disclosures made by the Company prior to the effective date of such Act. The
Company cannot always predict what factors would cause actual results to differ
materially from those indicated by the forward-looking statements. In addition,
readers are urged to consider statements that include the terms "believes",
"belief", "expects", "plans", "anticipates", "intends", or the like to be
uncertain and forward-looking. All cautionary statements made herein should be
read as being applicable to all forward-looking statements wherever they appear.

  All forward-looking statements relating to the proposed transition to a
Company-owned structure discussed herein are subject to, among other things,
various board, special committee and regulatory approvals, and negotiation of
definitive agreements on acceptable terms. There can be no assurance that the
transition to a Company-owned structure will be achieved.

General

  On October 29, 1997, the board of directors of the Company recommended that
the Company change to a structure in which Boston Market stores are owned by the
Company instead of being owned by financed area developers. The board of
directors' recommendation to change to a Company-owned structure was based
primarily upon their determination that a simplified organizational structure
would (i) provide a clearer path of control to management in the field, which
could yield greater management effectiveness, (ii) facilitate the Company's
ability to form and deploy expansion capital, (iii) result in annual tax savings
to the system and (iv) unencumber the Company's ability to deliver products
under the Boston Market brand into alternative distribution channels. The board
of directors further recommended that becoming a Company-owned system could be
best achieved by the Company first acquiring BC Equity Funding, L.L.C. ("BCEF")
and Market Partners, L.L.C. ("Market Partners"), which hold preferred equity
interests in many of the Company's 14 area developers. The terms of such
preferred equity interests generally require the area developer to redeem such
interests (including accrued dividends and redemption premiums) for cash upon
the occurrence of certain events, including the acquisition by the Company of a
majority equity interest in the area developer. BCEF and Market Partners have
invested an aggregate of approximately $132 million in the Company's financed
area developers and have accrued dividends through October 5, 1997 of
approximately $15 million. The board of directors has appointed a special
committee (the "Special Committee") of independent directors to determine
whether transactions with BCEF and Market Partners would be in the best
interests of stockholders of the Company. The Special Committee has been
authorized to negotiate such transactions with BCEF and Market Partners if it
deems such action to be an appropriate step. The Company has been advised by the
Special Committee that the Special Committee is attempting to complete its
assignment by the end of 1997. If an agreement is reached with


                                      13
<PAGE>

BCEF and Market Partners, the Company may seek to acquire the remaining equity
interests in each of its area developers. The Company expects that the proposed
transactions could result in potentially significant legal, financial advisory
and accounting fees being paid by the Company. See "Special Note Regarding
Forward-Looking Statements" on page 13.

  The proposal to move to a Company-owned structure pursuant to the transactions
outlined above will significantly impact the Company's results of operations and
financial position. For example, at the point, if any, in which the acquisition
of BCEF and Market Partners becomes probable, the Company would begin
recognizing, in a single line item on its consolidated income statement, the net
losses of the area developers in which BCEF and Market Partners have preferred
equity interests. The Company would continue to charge such area developers
royalties, franchise and related fees and interest but would no longer recognize
these payments as revenue. The area developers' net losses recognized by the
Company would be correspondingly reduced by the amount of the royalties,
franchise and related fees and interest not recognized by the Company. Further,
if agreement is reached with BCEF and Market Partners, the Company may seek to
obtain the remaining equity interests in each of its area developers. Upon
obtaining a majority equity interest in each such area developer, the Company
would consolidate the area developers' results of operations and financial
position into its financial statements, resulting in the revenue historically
generated by the Company as lender, franchisor and service provider being
replaced with revenue and operating expenses from store operations. Finally, any
transaction or series of transactions in which the Company acquires its area
developers would result in the Company recording a substantial amount of store-
related fixed assets and goodwill. The Company expects that if the proposed
transactions are completed and the Company acquires the stores in the Boston
Market system that it does not currently own, the Company would report positive
consolidated systemwide cashflow in 1998. However, due primarily to significant
depreciation charges associated with an increased Company-store base and
significant goodwill amortization charges which would result from the
transactions, the Company would expect to report a net loss in 1998. See
"Special Note Regarding Forward-Looking Statements" on page 13.

  The probability and timing of the proposed transactions are uncertain.
However, to the extent the transactions are consummated, they will have a
material impact on the Company's financial statements and will significantly
affect the comparability of the Company's results of operations to prior
reporting periods. The Company believes that consolidated systemwide cashflow
will be less affected by these transactions than will the Company's results of
operations. Consolidated systemwide cashflow consists of earnings before income
taxes, depreciation and amortization expenses and financing expenses for the
Boston Market system and the systemwide cashflow generated by ENBC included in
the Company's results of operations. The Company's current objective is to
achieve consolidated systemwide cashflow for fiscal 1998 of between $110 million
and $130 million. See "Special Note Regarding Forward-Looking Statements" on
page 13.

  Consolidated systemwide cashflow is dependent upon a number of factors,
including the number of Boston Market stores in operation systemwide, the net
weekly per store average ("WPSA") revenue and cash flow of such stores,
systemwide overhead expenses and the amount of systemwide cashflow generated by
ENBC included in the Company's results of operations. Boston Market financed
area developers have incurred net losses in each of the last three years and
the Company expects such area developers to incur aggregate net losses in fiscal
1997 over fiscal 1996 levels. The net losses incurred by the financed area
developers in fiscal 1996, 1995 and 1994 aggregated $156.5 million, $148.3
million, and $51.3 million, respectively. Such losses included (a) approximately
$201 million in royalties, franchise and related fees and interest paid to the
Company, (b) approximately $148 million attributable to investment overhead,
scale inefficiencies in operating overhead, and other start-up costs, and (c)
depreciation and amortization charges of approximately $93.0 million. While a
100% Company-owned structure would eliminate royalties, franchise and related
fees and interest paid to the Company, and although the Boston Market system has
taken recent steps to reduce investment overhead and scale inefficiencies in
operating overhead, there can be no assurance that the Boston Market system will
achieve the net WPSA revenue, cash flow margins or systemwide overhead levels
necessary to achieve its consolidated systemwide cashflow objective. In
addition, there can be no assurance ENBC will achieve its systemwide cashflow
objective included in the Company's consolidated systemwide cashflow objective.
See "Special Note Regarding Forward-Looking Statements" on page 13.

                                      14
<PAGE>
 

Results of Operations

The Boston Market System

  Total systemwide Boston Market net revenue was $265.1 million for the quarter
ended October 5, 1997 compared to $270.6 million for the quarter ended October
6, 1996. The decrease in systemwide net revenue was due to lower net revenue per
Boston Market store ($18,507 for the third quarter of 1997 compared to $23,134
for the third quarter of 1996), offset by an increase in the number of Boston
Market stores (an average of 974 for the third quarter of 1996 compared to 1,194
for the third quarter of 1997). Net WPSA revenue represents the weekly per store
average revenue for all stores in the Boston Market system after customer
coupons and employee discounts, based upon the actual number of days the stores
are open in the reporting period. The Company believes the decline in net WPSA
revenue was primarily attributable to transitioning its marketing plan away from
price-promoted offers and high levels of media spending with an emphasis on
lunch to the marketing plan implemented during the third quarter of 1997, which
is characterized by a significantly reduced level of price-promoted offers and
media spending with an emphasis on dinner. The Company believes the decline in
net WPSA revenue attributable to the transition of its marketing plan bottomed
out toward the middle of the third quarter of 1997 at a net WPSA revenue level
of approximately $18,000. The Company believes it began to see the benefits of
its new marketing plan take effect towards the latter part of the quarter, with
net WPSA revenue increasing in the last period of the quarter. There can be no
assurance that the new marketing plan will favorably impact store revenue in the
future. Given the signficantly reduced levels of media spending, the new
marketing plan does not provide as much advertising support in 1997 to Boston
Market holiday products as was provided in prior years. As a result, the Company
expects seasonal declines in net WPSA revenue to have a greater impact on net
WPSA revenue for the Boston Market system in the fourth quarter of 1997 than in
prior years. See "Special Note Regarding Forward-Looking Statements" on page 13.

  The Company believes the decline in store performance levels experienced in
the third quarter does not indicate a trend that would affect area developer
loan recoverability, especially in light of the improved store performance
experienced in the last period of the quarter. The Company's analysis of loan
recoverability is dependent upon, among other things, discernible trends in
store performance. To the extent the recovery in store performance is not as
significant as expected, or takes longer than expected, the Company believes it
will adversely impact its loan recoverability analysis, results of operations
and financial position. See "Special Note Regarding Forward-Looking Statements"
on page 13.

Results of Company-owned Stores

  The following table sets forth store performance data for the Boston Market
stores owned by the Company (excluding test stores) for the quarters ended
October 5, 1997 and October 6, 1996 (in thousands of dollars, except numbers of
stores and net WPSA revenue). Such amounts exclude unallocated capital charges,
income taxes and non-store overhead costs, including accounting, administration
and discretionary advertising:

<TABLE>
<CAPTION>
                                                                Quarter Ended
                                        --------------------------------------------------------------
                                               October 6, 1996                  October 5, 1997
                                        -----------------------------    -----------------------------
<S>                                     <C>          <C>       <C>       <C>          <C>       <C>
   Number of Company stores
    at quarter end..................                   95                               310
                                                       ==                               ===
   Net WPSA revenue for the quarter.                 $23,396                          $19,181
                                                     =======                          =======
   Net sales........................    $25,964.5              100.0%    $57,505.7              100.0%
   Food and paper costs.............      9,606.2               37.0%     21,042.8               36.6%
   Salaries and benefits............      6,614.0               25.5%     14,801.7               25.7%
   Operating expenses...............      2,033.8                7.8%      5,743.5               10.0%
   Occupancy and advertising costs..      2,813.5               10.8%      8,124.0               14.1%
                                        ---------              ------    ---------              ------
   Store cash flow..................    $ 4,897.0               18.9%    $ 7,793.7               13.6%
                                        =========              ======    =========              ======
</TABLE>

                                      15
<PAGE>
 
  The increase in net sales was due to a higher average number of stores
operating during 1997, partially offset by lower net revenue per store. The
average number of Boston Market Company stores for the third quarter of 1997 was
250 compared to 93 for the third quarter of 1996. The Company believes the
factors contributing to the overall Boston Market system's decrease in net WPSA
revenue also contributed to the decline in Company store net WPSA revenue. See
"--The Boston Market System."

  Store cashflow increased $2.9 million or 59.2% for the third quarter of 1997
compared to the third quarter of 1996. Store cashflow margins decreased from
18.9% for the quarter ended October 6, 1996 to 13.6% for the quarter ended
October 5, 1997. While stores owned by the Company were able to manage their
variable and semi-variable costs (food and paper costs and salary and benefits)
as net WPSA revenue declined, rent, utilities and other relatively fixed store
operating costs resulted in decreased store margins.

Boston Chicken, Inc. Operating Results

  Revenue. Total revenue increased $36.5 million or 49.1% for the third quarter
of 1997 and increased $158.0 million or 84.8% for the three quarters ended
October 5, 1997, compared to the prior comparable periods. Revenue from Company
stores increased $29.1 million or 101.7% for the third quarter of 1997 and
increased $110.6 million or 199.6% for the three quarters ended October 5, 1997,
compared to the prior comparable periods. The increases were primarily due to a
higher average number of Company stores operating during the 1997 periods,
partially offset by lower net revenue per store. See "--The Boston Market
System."

  Royalties and franchise related fees decreased $1.1 million or 3.7% for the
third quarter of 1997 compared to the prior comparable period, as a result of
lower initial franchise and area developer fees due primarily to fewer new
Boston Market franchised store openings. Fewer store openings resulted from the
Boston Market system's decision to slow store development in favor of
concentrating field management resources on the existing store base. Royalty and
franchise related fees increased $24.4 million or 29.2% for the three quarters
ended October 5, 1997 compared to the comparable period in 1996. The increase
was primarily attributable to increased royalties, software license fees
recognized for store software provided by the Company to franchisees, and an
increase in lease and real estate services income. Interest income increased
$8.5 million or 54.8% for the quarter ended October 5, 1997 and $23.0 million or
48.6% for the three quarters ended October 5, 1997. The increases were
attributable to higher outstanding loan balances associated primarily with the
increase in stores opened by Boston Market and ENBC area developers and
investment overhead incurred by such developers.

  Should the acquisition of BCEF and Market Partners become probable, the
Company will no longer recognize royalties, franchise and related fees and
interest income as revenue from the area developers in which BCEF and Market
Partners have preferred equity investments. The acquisition of BCEF and Market
Partners could become probable during the fourth quarter of 1997. In addition,
to the extent area developers have not generated sufficient cash on a cumulative
basis from store operations, capital contributions and other sources (excluding
borrowings from the Company) to pay royalties, interest and franchise fees when
due, the Company will defer recognition of any unpaid amounts. Given levels of
store performance expected in the fourth quarter of 1997, the Company
anticipates one or more of its area developers may not generate sufficient cash
to pay the Company all royalties and interest when due. To the extent any area
developer generates insufficient cash to pay fees, it can be expected to have a
material adverse impact on the Company's results of operations and financial
position. See "Special Note Regarding Forward-Looking Statements" on page 13.

  Cost of Products Sold. Cost of products sold increased $10.6 million or 100.2%
for the third quarter of 1997 and increased $40.9 million or 199.2% for the
three quarters ended October 5, 1997, compared to the prior comparable periods.
The increases were due to a higher average number of stores operating during the
1997 periods. Cost of products sold, as a percentage of Company store revenue,
remained relatively consistent during the periods.

                                      16
<PAGE>
 
  Salaries and Benefits. Salaries and benefits increased $8.7 million or 67.9%
for the third quarter of 1997 and increased $37.1 million or 124.9% for the
three quarters ended October 5, 1997 compared to the prior comparable periods.
The increases were primarily a result of the higher average number of Company
stores operating in the 1997 periods. In addition, the increase for the three
quarters ended October 5, 1997, was due to inclusion of ENBC employees for the
entire reporting period in 1997 compared to only a portion of the reporting
period in 1996 and a special pre-tax charge of $4.0 million in the second
quarter of 1997 relating to a workforce reduction to streamline the Boston
Market support center organization.

  General and Administrative. General and administrative expenses increased $5.2
million or 16.4% for the third quarter of 1997 and increased $40.5 million or
69.7% for the three quarters ended October 5, 1997 compared to the prior
comparable periods. Included in general and administrative expenses for the
quarter and three quarters ended October 6, 1996, was a non-recurring charge of
approximately $15.0 million to purchase store equipment from Boston Market area
developers. Exclusive of this charge, the increases in general and
administrative expenses were primarily attributable to the costs associated with
operating a larger Company store base and greater depreciation and amortization
expense resulting from the acquisition of Company stores. In addition, the
increase for the three quarters ended October 5, 1997, was due to the inclusion
of ENBC's general and administrative expenses for the entire reporting period in
1997 compared to only a portion of the reporting period in 1996.

  Other Expense. The Company incurred a net expense, including interest expense,
of $11.0 million for the third quarter of 1997 compared to other income of $11.0
million for the third quarter of 1996. The Company incurred a net expense of
$25.8 million for the three quarters ended October 5, 1997 compared to other
income of $5.0 million for the three quarters ended October 6, 1996. Included in
the quarter and three quarters ended October 6, 1996 were gains of $14.8 million
recognized as a result of ENBC issuing shares of its common stock to third
parties at prices per share greater than the Company's carrying value. The
quarter and three quarters ended October 5, 1997 included losses of $130,000 and
$48,000, respectively, as a result of ENBC issuing shares of its common stock to
third parties at prices per share less than the Company's carrying value. Net
interest expense increased from $3.8 million for the third quarter of 1996 to
$10.8 million for the third quarter of 1997. Net interest expense increased from
$10.1 million for the three quarters ended October 6, 1996 to $27.3 million for
the three quarters ended October 5, 1997. The increases were due to additional
interest expense from the issuance in the second quarter of 1997 of $287.5
million of convertible subordinated debentures by the Company and the issuance
of $125.0 million of convertible subordinated debentures by ENBC, higher
utilization of the Company's and ENBC's senior secured revolving credit
facilities and lower interest income earned in 1997.

  Income Taxes. The provision for income taxes for the quarter and three
quarters ended October 5, 1997 is based upon the Company's anticipated tax rate.

  Minority Interest. The combined minority interest in majority-owned
subsidiaries resulted in a benefit of $.6 million for the quarter ended October
5, 1997 and a charge to earnings of $3.8 million for the three quarters ended
October 5, 1997. The minority interest in the earnings of subsidiaries of $2.0
million and $3.0 million for the quarter and three quarters ended October 6,
1996, respectively, represents the minority ownership interest in the earnings
of ENBC.

Liquidity and Capital Resources

  The Company's primary sources of capital in 1997 have been from issuance of
debt securities and internally generated cash from operations. For the three
quarters ended October 5, 1997, the Company issued $287.5 million in aggregate
principal amount of its 7 3/4% convertible subordinated debentures due 2004, and
ENBC issued $125.0 million in aggregate principal amount of its 7 1/4%
convertible subordinated debentures due 2004. Cash generated from operations
totaled $43.8 million for the three quarters ended October 5, 1997.

  The Company's primary use of capital has been to fund loan obligations to
financed area developers. As of October 5, 1997, the Company had secured loan
commitments to its Boston Market financed area developers aggregating $825.0
million of which $769.6 million had been advanced. As of October 5, 1997, ENBC
had secured loan commitments to its area developers aggregating $359.9 million,
of which $300.7 million had been advanced. Net loan advances to area developers
were $418.4 million for the three quarters ended October 5, 1997.

                                      17
<PAGE>
 

  In addition to funding its loan commitments, during the third quarter of 1997,
the Company acquired approximately an 85% ownership interest in PFCI from Saad
Nadhir, the Company's Co-Chairman and Chief Executive Officer, and Scott Beck,
the Company's Co-Chairman and President, for $2.0 million in cash and notes for
approximately $6.4 million. The purchase price was equal to Messrs. Nadhir's and
Beck's original cost for such interests plus an 8% interest factor. Subsequent
to the end of the quarter, the Company's ownership interest in PFCI increased to
100% as a result of (i) PFCI's redemption of the interest held by Harry's
Farmers Market, Inc. for $2.5 million and (ii) the Company's exercise of its
option to purchase Messrs. Beck's and Nadhir's remaining interests in PFCI for
approximately $700,000 in cash, which was equal to their original cost for such
interests plus an 8% interest factor. In connection with the acquisition of
Messrs. Beck's and Nadhir's remaining interests, the Company prepaid
approximately $3.2 million of the $6.4 million of notes payable.

  During the third quarter of 1997, the Company acquired 53 stores from Mayfair
Partners, L.P. ("Mayfair") by converting its $56.0 million loan into a 73%
equity interest in Mayfair. During the quarter, the Company also acquired
additional Boston Market stores, real estate and other assets from various area
developers and acquired convertible debt securities of one of its area
developers under its loan agreement with such area developer, in consideration
for the issuance in the aggregate of approximately 3.8 million shares of its
common stock. The Company believes that as of October 5, 1997, approximately 3.3
million shares of the common stock issued in the above transactions were sold by
the area developers, with the area developers using a majority of the proceeds
of the sales to pay down their outstanding indebtedness to the Company. Also
during the third quarter of 1997, the Company issued approximately 0.5 million
shares of its common stock to acquire the remaining minority interest in Mid-
Atlantic Restaurant Systems L.P. and a portion of the minority interest
in BC New York, L.L.C.

  As of October 5, 1997, the Company's senior lenders amended the Company's
senior secured credit facilities to, among other things, modify the financial
covenants, collateral and availability under the facilities. The revised
financial covenants use systemwide performance measures which reflect current
levels of Boston Market store performance, including systemwide average weekly
net sales, systemwide store cashflow and systemwide overhead, and accommodate a
move to a Company-owned structure. In connection with the amendment to its
senior credit facilities, the Company was required to (i) pledge to the lenders
additional collateral, (ii) amend its secured loan agreements with a majority of
its area developers to terminate the moratorium on the Company's ability to
convert such loans into a majority equity interest in the area developers and
(iii) limit to $10 million the Company's use of cash consideration in any
acquisition of BCEF and Market Partners. Subject to compliance with the revised
financial covenants, the amended revolving credit facility provides for an $85
million maximum commitment, none of which is currently outstanding. Given its
expectations for store performance, its cash balance and the amended credit
facility, the Company believes that it has sufficient liquidity to address
working capital needs of the Boston Market system though 1998. The Company does
not expect that the acquisition of BCEF, Market Partners and its area developers
will materially impact the Company's cash resources. See "Special Note Regarding
Forward-Looking Statements" on page 13.

  As a result of the Company's decision to transition to a Company-owned
structure, the operational benefits which have resulted from slowing new store
development and the possibility of integrating elements of an expanded Boston
Market concept currently being tested in Charlotte, North Carolina into existing
Boston Market stores, the Company has determined to temporarily pause store
development for 1998. Consequently, the Company's primary use of capital in 1998
by the Boston Market system will be maintaining stores, developing new
prototypes of the expanded Boston Market concept, potential retrofits of the
existing store base to incorporate elements of the expanded Boston Market
concept and continued investments in the corporate infrastructure. The Company
believes that it has sufficient liquidity to address working capital needs of
the Boston Market system and maintain the current store base through 1998.
However, depending on the timing and amount of additional capital expenditures
related to new store development and retrofits of existing Boston Market stores
to incorporate elements of the expanded Boston Market concept, the Company
anticipates that it will have a need for expansion capital. See "Special Note
Regarding Forward-Looking Statements" on page 13.

                                      18
<PAGE>
 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

  The information set forth under Note 7 of the Company's Notes to Consolidated
Financial Statements contained in Part I of this Form 10-Q is incorporated
herein by reference thereto.

Item 2. Changes in Securities

  Pursuant to that purchase agreement dated as of August 6, 1997, the Company
issued an aggregate of 100,000 shares of common stock to an accredited investor
in consideration of the purchase of certain assets. Such shares were sold
without registration under the Securities Act of 1933, as amended ("Securities
Act") in reliance on Rule 506 of Regulation D of the Securities Act.

  Pursuant to that Stock Purchase Agreement dated as of August 22, 1997, the
Company issued an aggregate of 248,809 shares of common stock to an accredited
investor area developer of the Company. The aggregate cash purchase price for
the shares was $3,001,250. Such shares were sold without registration under the
Securities Act in reliance on Rule 506 of Regulation D of the Securities Act.

  Pursuant to a Secured Loan Agreement dated as of March 3, 1997, as amended, on
September 12, 1997 the Company issued an aggregate of 493,175 shares of common
stock to an accredited investor area developer of the Company in consideration
for $7,000,000 of convertible debt securities of the area developer under such
loan agreement. Such shares were sold without registration under the Securities
Act in reliance on Rule 506 of Regulation D of the Securities Act.

Item 6. Exhibits and Reports on Form 8-K

  A. Exhibits: See Exhibit Index appearing elsewhere herein, which is
     incorporated herein by reference.

  B. Reports on Form 8-K: The Company filed two reports on Form 8-K during the
     quarter ended October 5, 1997.

        The first report was dated August 27, 1997 (the "August Form 8-K"). The
     August Form 8-K reported under Item 5 (Other Events) that the Company had
     acquired a majority equity interest in Progressive Food Concepts, Inc. The
     August Form 8-K also reported under Item 5 (Other Events) that, as
     previously reported, Saad J. Nadhir, would rejoin the Board of Directors of
     the Company as Co-Chairman and become Chief Executive Officer on October 1,
     1997. The August Form 8-K also reported under Item 5 (Other Events) the
     Company's conversion of its loan to Mayfair Partners, L.P. into a 75%
     equity interest.

        The second report was dated September 5, 1997 (the "September Form 
     8-K"). The September Form 8-K reported under Item 5 (Other Events) that the
     Company had received from its lenders a waiver of compliance by the Company
     with the financial covenant in the Company's senior credit facilities
     requiring systemwide gross weekly per store average revenue of not less
     than $20,500 per accounting period.

                                      19
<PAGE>
 

                                  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 thereunto duly authorized.


                                                   BOSTON CHICKEN, INC.


Date: November 17, 1997                             /s/ Saad J. Nadhir
                                          --------------------------------------
                                                      Saad J. Nadhir
                                             Co-Chairman of the Board and 
                                               Chief Executive Officer


Date: November 17, 1997                            /s/ Mark W. Stephens
                                          --------------------------------------
                                                     Mark W. Stephens
                                            Vice Chairman and Chief Financial
                                          Officer (Principal Financial Officer)

                                      20
<PAGE>
 
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                      Sequential
Exhibit                                                                  Page
Number                        Exhibits                                  Number 
-------                       --------                                ----------
<S>       <C>                                                         <C> 
  4.1     First Amendment and Consent dated October 24, 1997 
          ("Credit Agreement Amendment") to Secured Revolving 
          Credit Agreement dated as of December 9, 1996 among 
          the Company, Bankers Trust Company, as Documentation
          Agent, Bank of America National Trust and Savings 
          Association, as Agent, and the Lenders named therein.
          
  4.2     Amended and Restated Facilities Agreement dated as of 
          October 24, 1997, among the Company, Bank of America 
          National Trust and Savings Association, as Agent for
          certain lenders and General Electric Capital Corporation, 
          for itself and as Agent for certain lease participants 
          ("Amended and Restated Facilities Agreement").
 
  10.1    Credit Agreement Amendment (included in Exhibit 4.1).
 
  10.2    Amended and Restated Facilities Agreement (included in 
          Exhibit 4.2).
 
  10.3    Waiver of Compliance to Facilities Agreement dated as 
          of September 5, 1997, among the Company, Bank of America 
          National Trust and Savings Association, as Agent for
          the Lenders and the Issuing Lender, and General Electric 
          Capital Corporation, for itself and as agent for the 
          Lease Participants (incorporated by reference to Exhibit
          10.1 to the Company's Current Report on Form 8-K dated 
          September 5, 1997).
 
  10.4(a) Purchase Agreement dated as of August 27, 1997, among the 
          Company, Scott A. Beck and Saad J. Nadhir, including 
          promissory notes from the Company in favor of Scott A.
          Beck and Saad J. Nadhir.
 
  10.4(b) Assignment and Assumption Agreement dated August 27, 1997 
          by the Company in favor of Scott A. Beck.
 
  10.4(c) Assignment and Assumption Agreement dated August 27, 1997 
          by the Company in favor of Saad J. Nadhir.
 
  10.5    Transition and Consulting Agreement dated August 29, 1997 
          between the Company and Laurence Zwain.
 
  10.6    Fourth Amendment dated August 11, 1997 to Secured Credit 
          Agreement dated as of May 17, 1996 ("ENBC Secured Credit 
          Agreement") among Einstein/Noah Bagel Corp. ("ENBC"),
          the Lenders named therein, and Bank of America National 
          Trust and Savings Association, as Agent (incorporated by 
          reference to Exhibit 10.3 to ENBC's Quarterly
          Report on Form 10-Q for the quarter ended July 13, 1997) 
          (Exchange Act File No.0-21097).
</TABLE>

                                  Exhibit - 1
<PAGE>
 
<TABLE>
<CAPTION>
                                                                      Sequential
Exhibit                                                                  Page
Number                          Exhibits                                Number
-------                         --------                              ----------
<S>       <C>                                                         <C>
  10.7    Fifth Amendment dated October 3, 1997 to ENBC Secured 
          Credit Agreement.
 
  11      Statement re Computation of Earnings Per Share.
 
  27      Financial Data Schedule.
 
  99      Uniform Franchise Offering Circular dated March 25, 1997, 
          as amended July 11, and August 15, 1997.
</TABLE>

                                  Exhibit - 2