<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 April 19, 1998

                                      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.)

                           14123 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
May 27, 1998: 72,335,078.
<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 28, 1997 and
              April 19, 1998.........................................................  2

              Consolidated Statements of Operations for the quarters ended
              April 20, 1997 and April 19, 1998......................................  3

              Consolidated Statements of Cash Flows for the
              quarters ended April 20, 1997 and April 19, 1998.......................  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 28,       April 19,
                                                                   1997             1998
                                                              --------------   -------------
<S>                                                           <C>              <C>
                                                                                (unaudited)
     ASSETS
     ------
Current Assets:
     Cash and cash equivalents (including $10,000 in
     restricted cash at April 1998)..........................   $   90,559      $   32,698
     Accounts receivable, net................................       13,894           9,765
     Inventories.............................................       16,132          16,530
     Prepaid expenses and other current assets...............        1,436             777
     Deferred income taxes...................................        2,353           2,353
                                                                ----------      ----------
         Total current assets................................      124,374          62,123
Property and Equipment, net..................................      530,582         559,170
Notes Receivable, net........................................      609,175         276,553
Deferred Financing Costs, net................................       24,570          23,255
Goodwill, net................................................      639,364         696,057
Other Assets, net............................................       77,062          76,918
                                                                ----------      ----------
          Total assets.......................................   $2,005,127      $1,694,076
                                                                ==========      ==========

     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------
Current Liabilities:
     Accounts payable........................................   $   33,205      $   21,409
     Accrued expenses........................................       85,207          87,441
     Other current liabilities...............................       14,119          14,611
                                                                ----------      ----------
          Total current liabilities..........................      132,531         123,461
Deferred Franchise Revenue...................................        5,723           5,268
Convertible Subordinated Debt-Boston Chicken, Inc............      417,020         417,020
Convertible Subordinated Debt-Einstein/Noah Bagel Corp.......      125,000         125,000
Liquid Yield Option Notes....................................      197,442         202,270
Senior Term Loan-Einstein/Noah Bagel Corp....................       24,000          22,500
Senior Secured Revolver-Boston Chicken, Inc..................            -          10,000
Deferred Income Taxes........................................        2,353           2,353
Other Noncurrent Liabilities.................................       44,753          45,396
Minority Interests...........................................      253,630         250,238
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: 71,400,179 shares at
      December 1997 and 71,464,290 shares at April 1998......          714             715
    Additional paid-in capital...............................      918,266         918,717
    Accumulated deficit......................................     (116,305)       (428,862)
                                                                ----------       ---------
                                                                   802,675         490,570
                                                                ----------      ----------
          Total liabilities and stockholders' equity.........   $2,005,127      $1,694,076
                                                                ==========      ==========
</TABLE>

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

                                       2
<PAGE>
 

                     BOSTON CHICKEN, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                             Quarter Ended
                                                        -----------------------
                                                        April 20,     April 19,
                                                          1997          1998
                                                        --------      ---------
<S>                                                     <C>           <C>
Revenue:
  Company stores......................................  $ 50,092      $ 203,929
  Royalties and franchise related fees................    41,432          4,542
  Interest income.....................................    25,240          3,221
                                                        --------      ---------
    Total revenue.....................................   116,764        211,692
Costs and Expenses:
  Store operations:
    Food and paper....................................    18,734         72,209
    Labor.............................................    11,753         59,019
    Other controllable costs..........................     4,740         22,127
    Rent, occupancy and related.......................     3,230         19,447
    Contractual and discretionary marketing...........     3,963         11,078
  General and administrative..........................    18,222         53,704
  Depreciation and amortization
  (excluding goodwill amortization)...................     8,221         16,806
  Goodwill amortization...............................     1,880          5,954
  Provision for loan losses...........................         -        202,000
  Losses of Boston Chicken Inc.'s area developers.....         -         58,079
                                                        --------      ---------
    Total costs and expenses..........................    70,743        520,423
                                                        --------      ---------
Income (Loss) from Operations.........................    46,021       (308,731)
Other Income (Expense):
  Interest expense, net...............................    (7,229)       (16,767)
  Gain (loss) on issuances of subsidiary's stock......       701            (17)
  Other (expense) income, net.........................       (26)         1,010
                                                        --------      ---------
    Total other income (expense)......................    (6,554)       (15,774)
                                                        --------      ---------
Income (Loss) Before Income Taxes and
  Minority Interest...................................    39,467       (324,505)
Income Taxes..........................................    15,433              -
Minority Interest in (Earnings) Loss of Subsidiaries..    (2,586)        11,948
                                                        --------      ---------
Net Income (Loss).....................................  $ 21,448      $(312,557)
                                                        ========      =========
Basic Earnings (Loss) Per Share.......................  $   0.33      $   (4.38)
                                                        ========      =========
Diluted Earnings (Loss) Per Share.....................  $   0.31      $   (4.38)
                                                        ========      =========
Weighted Average Number of
  Common Shares Outstanding:
    Basic.............................................    64,718         71,438
                                                        ========      =========
    Diluted...........................................    72,597         71,438
                                                        ========      =========
</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>
                                                                                          Quarter Ended
                                                                         ---------------------------------------------
                                                                               April 20,                 April 19,
                                                                                  1997                     1998
                                                                         -------------------      --------------------
<S>                                                                      <C>                      <C>
Cash Flows from Operating Activities:
Net income (loss)..................................................                $  21,448                 $(312,557)
Adjustments to reconcile net income (loss) to net cash
 used in operating activities:
  Depreciation and amortization....................................                   10,101                    22,760
  Interest on liquid yield option notes............................                    4,464                     4,828
  Deferred income taxes............................................                    1,517                         -
  Gain (loss) on sale of subsidiary's stock........................                     (701)                       17
  Minority interest................................................                    2,586                   (11,948)
  Provision for loan losses........................................                        -                   202,000
  Revenue not recognized from Boston Chicken, Inc.'s area
   developers.......................................................                       -                    48,469
  Losses of Boston Chicken, Inc.'s area developers.................                        -                    58,079
  Gain on disposal of assets.......................................                        -                     1,221
  Changes in assets and liabilities, excluding effects from
    acquisition:
    Accounts receivable and due from affiliates....................                    5,830                     3,910
    Accounts payable and accrued expenses..........................                  (56,699)                  (15,087)
    Deferred franchise revenue.....................................                     (409)                        -
    Other assets and liabilities...................................                   (4,041)                   (2,481)
                                                                         -------------------      --------------------
      Net cash used in operating activities........................                  (15,904)                     (789)
                                                                         -------------------      --------------------
Cash Flows from Investing Activities:
  Purchase of property and equipment...............................                  (28,524)                  (12,691)
  Proceeds from the sale of assets.................................                    4,659                     1,010
  Acquisition of other assets......................................                   (4,314)                        -
  Issuance of notes receivable.....................................                 (425,290)                 (201,292)
  Repayments of notes receivable...................................                  295,631                   147,219
                                                                         -------------------      --------------------
      Net cash used in investing activities........................                 (157,838)                  (65,754)
                                                                         -------------------      --------------------
Cash Flows from Financing Activities:
  Proceeds from issuance of common stock...........................                    2,285                       182
  Proceeds from issuance of subsidiary's common stock..............                    8,206                         -
  Increase in deferred financing costs.............................                     (406)                        -
  Proceeds from revolving credit facilities........................                  219,500                    10,000
  Repayments of revolving credit facilities........................                 (154,200)                   (1,500)
                                                                         -------------------      --------------------
      Net cash provided by financing activities....................                   75,385                     8,682
                                                                         -------------------      --------------------
Net Decrease in Cash and Cash Equivalents..........................                  (98,357)                  (57,861)
Cash and Cash Equivalents, beginning of period.....................                  100,800                    90,559
                                                                         -------------------      --------------------
Cash and Cash Equivalents, end of period...........................                $   2,443                 $  32,698
                                                                         ===================      ====================

</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 28, 1997 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 April 19, 1998 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 for the year ended December 28, 1997. The consolidated results of
operations for the quarter ended April 19, 1998 are not necessarily indicative
of the results expected for the full year.

2.   Going Concern
  
     On May 19, 1998, the Company announced that as a result of its analysis of
operating results for the quarter ended April 19, 1998, and subsequent periods,
and based upon the decline in store cash flow of the Boston Market system during
1998, unless the Company is able to renegotiate its senior credit facilities,
sell assets and/or improve Boston Market store performance, the Company may not
generate sufficient liquidity to meet its financial obligations in 1998. In
addition, based upon the trends in performance of the Boston Market system to
date, the Company announced in a Form 8-K report filed May 27, 1998, that it may
not remain in compliance with certain covenants contained in its senior credit
facilities. If the Company is in violation of the senior credit facilities, upon
action of the required number of lenders, the outstanding principal balances
under the Company's revolving credit facility and other senior credit
facilities, including master lease financing, which in the aggregate totaled
$241.8 million as of April 19, 1998, may be accelerated. Any such acceleration
would also permit holders of other senior and subordinated debt of the Company
to exercise their remedies, which include acceleration of their debt which in
the aggregate totaled approximately $619.3 million as of April 19, 1998. The
Company is holding discussions with its senior lenders to restructure the
repayment terms and financial covenants of its credit facilities and is
evaluating the sale of assets in an effort to improve its liquidity. As
announced in a May 19, 1998 press release and the May 27, 1998 Form 8-K, Arthur
Andersen LLP, the Company's independent public accountants, has reissued its
report on the Company's 1997 financial statements to include a qualification
which states there exists substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities, that might result should the
Company be unable to continue as a going concern.

3.   Area Developer Financing

        Area Developer Financing
     
     The Company offers convertible and non-convertible secured debt financing
to Boston Market area developers to partially finance store development and
working capital needs. Advances under the facility are 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,
sometimes with a final balloon payment. 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. 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 April 19, 1998 and an average rate of 8.5% for 1998)
plus 1%, and is payable each four-week period. The loan is

                                       5
<PAGE>
 
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 developer.
As previously announced, the Company has established provisions for potential
loan losses on all but one of its area developers' notes.  See Note 3(c) herein;
Area Developer Information.

(a)  Loan Conversion Option
     
     The Company may convert all or any portion of the 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 commitments or in the event of certain defaults 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, 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. The Company has received a waiver of the moratorium period from all but
one of its area developers. Subject to acquiring BC Equity Funding, L.L.C.
("BCEF") and Market Partners, L.L.C. ("Market Partners") (see Note 5), the
Company plans to convert its notes into at least a majority equity interest in
the area developers in which BCEF and Market Partners have preferred equity
investments. Default provisions contained in the area developer loans typically
include default in payment of principal and interest, breach of a representation
or warranty or of any covenant contained in the loan agreement or security
instruments, bankruptcy or 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 of the loan or exercise of the option, the Company
would own approximately an 80% interest in each of its area developers.

     In March 1998, the Company converted its $119.2 million of loans to BC
Great Lakes, L.L.C. ("Great Lakes") into an 85% equity interest in Great Lakes.
The Company had previously established a $34.4 million provision for potential
loan losses related to Great Lakes' loans. The Great Lakes transaction added 113
Boston Market stores, operating in the Chicago, Detroit, Milwaukee, Toledo
metropolitan areas and parts of Indiana to the Company store base. As part of
this transaction, the Company assumed approximately $11 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 $63.0 million (based upon a preliminary
allocation), which is being amortized over a 35-year life. The operating results
of Great Lakes are included in results of operations from the date of
acquisition.

     The following represents the unaudited pro forma results of operations as
if the purchase transaction described above had occurred at the beginning of the
Company's fiscal year (in thousands of dollars, except per share data):

        Total revenue............            $ 235,278
        Net loss.................             (314,375)
        Basic loss per share.....                (4.40)
        Diluted loss per share...            $   (4.40)

                                       6
<PAGE>

  (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 area developers (in
thousands of dollars, except number of area developers):
<TABLE>
<CAPTION>
                                                                     December 28,               April 19,
                                                                         1997                      1998
                                                                -------------------       -------------------
Boston Market:
-------------
<S>                                                               <C>                       <C>
Number of area developers receiving financing.............                       14                        13
Loan commitments..........................................                $ 842,148                 $ 793,172
Loan availability.........................................                  (42,105)                  (59,265)
                                                                -------------------       -------------------
Loans outstanding, gross..................................                $ 800,043                 $ 733,907
Loan allowances...........................................                 (198,371)                 (464,856)
                                                                -------------------       -------------------
Loans outstanding, net....................................                $ 601,672                 $ 269,051
                                                                ===================       ===================
Contributed capital.......................................                $ 276,104                 $ 250,499
                                                                ===================       ===================
</TABLE>
  The following tables summarize area developer financing activity of Boston
Market area developers (in thousands of dollars):
<TABLE>
<CAPTION>
                                                                                 Quarter Ended
                                                                ---------------------------------------------
                                                                      April 20,                 April 19,
                                                                         1997                      1998
                                                                -------------------       -------------------
Boston Market:
-------------
<S>                                                               <C>                       <C>
Area developer loan balances, beginning of quarter........                $ 647,265                 $ 800,043
Additional loan advances..................................                  292,451                   201,292
Loan repayments...........................................                 (237,042)                 (147,219)
Loans converted into equity or eliminated
  in consolidation........................................                  (80,000)                 (120,209)
                                                                -------------------       -------------------
Area developer loan balances, end of quarter..............                $ 622,674                 $ 733,907
                                                                ===================       ===================
</TABLE>
   The majority of the loan advance and repayment activity reflects the
revolving nature of the loans, that is, amounts are drawn and repaid on a
regular basis to optimize cash management.

  (c) Area Developer Information

  Three Boston Market area developers accounted for approximately 13%, 11%, and
11% of the Boston Market area developers' gross notes receivable balance at
April 19, 1998 and no other Boston Market area developer individually accounted
for 10% or more of such notes receivable balance as of such date.

  A loan is considered impaired if it is probable that the Company will be
unable to collect all contractual principal and interest when due.  As of
December 28, 1997 and April 19, 1998, the Company believed that each of the area
developer loans may be impaired.  Once a loan is deemed impaired, the Company
determines the ultimate collectibility of the loan without regard to the
contractual terms of the existing loan.  Such evaluation resulted in a provision
for potential loan losses of $202.0 million for the quarter ended April 19, 1998
(in addition to the $128.0 million provision for potential loan losses for
fiscal 1997), which related to 13 of the area developer loans aggregating $846.9
million (including Great Lakes' loans).  No provision for potential loan losses
was deemed necessary for the remaining one area developer loan which had a loan
balance of $7.3 million.  The provision for potential loan losses for the first
quarter of 1998 was based upon management's review of use of loan proceeds, the
form and amount of consideration proposed in the acquisition of BCEF and Market
Partners (See Note 5) and evaluations regarding the cost and availability of
capital and the value of the collateral securing the loans.  The provision for
potential loan losses does not relieve the area developer of their obligation to
repay their indebtedness to the Company.  The balance at the beginning of fiscal
1998, average balance for the first quarter of 1998 and balance at the end of
the first quarter of 1998, of all of the Company's area developer loans, was
$800.0 million, $808.3 million and $733.9 million, respectively.  The Company
recognizes interest income on impaired

                                       7
<PAGE>
 
loans, if in its judgement, the interest is ultimately collectible. Total
interest income for the first quarter of 1998 recognized on impaired loans was
$3.2 million, all of which has been collected by the Company. The total interest
income the Company would have earned based upon the contractual terms of the
loans was $24.1 million for the first quarter of 1998. The activity in the
allowance for loan losses for the first quarter of 1998 was as follows (in
thousands of dollars):

Balance at December 28, 1997.............      $128,000
Provision for loan losses................       202,000 
Great Lakes loan conversion..............       (34,419) 
Costs charged to the allowance...........        (3,573) 
Loan write-offs..........................             -
                                               --------
Balance at April 19, 1998................      $292,008 
                                               ========
 
     Commencing from the date the Company announced its intent in October 1997
to acquire BCEF and Market Partners, the Company has recognized in a single line
item on its consolidated statement of operations, the net losses of the area
developers in which BCEF and Market Partners have preferred equity interests,
which aggregated $58.1 million for the first quarter of 1998. The losses were
primarily non-cash and were due to goodwill and fixed asset writedowns by the
area developers. The Company continues to charge such area developers royalties,
franchise and related fees and interest, but no longer recognizes these payments
as revenue. The area developer net losses recognized by the Company have been
correspondingly reduced by the amount of the royalties, franchise and related
fees and interest not recognized by the Company, which amounts aggregated $41.1
million for the first quarter of 1998. In addition, if an area developer
generates insufficient 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 not recognize
such fees, which amounts aggregated $7.4 million for the first quarter of 1998.
The area developer losses and revenue not recognized by the Company have been
presented as a reduction of the notes receivable balance from area developers in
the accompanying balance sheet. The Boston Market area developer notes
receivable balance as of December 28, 1997 and April 19, 1998, is summarized as
follows (in thousands of dollars):

                                    December 28,   April 19,
                                       1997          1998
                                    -----------    ---------
Notes Receivable..................   $ 800,043     $ 733,907
Provision for loan losses.........    (128,000)     (292,008)
Losses of area developers.........     (49,352)     (107,431)
Revenue from area developers             
not recognized....................     (21,019)      (65,417)
                                     ---------     ---------
Notes Receivable, net.............   $ 601,672     $ 269,051
                                     =========     =========
                                                                               
     The following tables set forth certain combined financial information
provided to the Company by Boston Market financed area developers. 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
Restaurant Systems L.P., New Jersey Rose, L.L.C., and BC New York, L.L.C. for
both years and Mayfair Partners, L.P. and Great Lakes for 1997, the loans to
which have been converted into equity or eliminated in consolidation (in
thousands, except number of financed area developers and store data):

                                       8
<PAGE>
 
<TABLE>
<CAPTION>
                                                                  December 29,             December 28,  
                                                                      1996                     1997     
                                                               -----------------         ---------------
Boston Market Financed Area Developers:                                               
---------------------------------------                                               
<S>                                                            <C>                       <C>
Total number of financed area developers..................                14                     13
Total number of financed area developer stores open.......               841                    734
                                                                                      
Balance sheet data:                                                                   
   Total gross assets.....................................         $ 640,534              $ 516,300
   Total debt:                                                                        
      To the Company......................................           555,105                687,366
      To third parties (including capital lease                       23,797                 20,462
       obligations).......................................                            
   Total other liabilities (including trade payables).....           105,635                108,974
   Total stockholder/partner/member deficit...............          (102,754)              (377,960)
 
                                                                            Fiscal Years Ended
                                                               ------------------------------------
                                                                 December 29,           December 28,
                                                                     1996                  1997
                                                               ----------------       -------------
Statement of operations data:                                                         
   Gross revenue..........................................         $ 865,082              $ 801,792
   Income (loss) from continuing operations...............          (156,505)              (337,342)
                                                                                          
Statement of cash flows data:                                                             
   Cash flows from (used in) operating activities.........         $(128,819)             $(244,435)
   Cash flows from (used in) investing activities.........           (82,307)               (35,555)
   Cash flows from (used in) financing activities.........           212,366                272,555
                                                                   ---------              ---------
        Net change in cash................................         $   1,240              $  (7,435)
                                                                   =========              =========
</TABLE>
4.  Royalties and Franchise Related Fees

  Royalties and franchise related fees are comprised of the following (in
thousands of dollars):
<TABLE>
<CAPTION>
                                                                   Quarter Ended
                                                           -----------------------------
                                                            April 20,         April 19,
                                                               1997             1998
                                                           ------------     ------------
<S>                                                        <C>              <C>
Royalties.............................................       $20,856           $1,875
Lease and real estate services income.................         9,244            2,496
Initial franchise and area developer fees.............         6,865                -
Software license and maintenance fees.................         4,467              171
                                                             -------           ------
                                                             $41,432           $4,542
                                                             =======           ======
</TABLE>
5.  Commitments

     Through April 19, 1998, BCEF had invested an aggregate of $56.7 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.

     Bagel Store Development Funding, L.L.C. ("Bagel Funding") has invested a
total of approximately $89.5 million, representing an approximately 21% equity
interest in Einstein/Noah Bagel Partners, L.P. ("Bagel Partners"), a majority
owned subsidiary of Einstein/Noah Bagel Corp. ("ENBC"). ENBC is the manager of
Bagel
                                       9
<PAGE>
 
Funding. Bagel Funding has the right to require Bagel Partners or ENBC to redeem
Bagel Funding's equity interest in Bagel Partners at a pre-determined formula
price based on store level cash flow of Bagel Partners in the event that, at any
time after December 5, 1999 and prior to June 5, 2001, ENBC does not consent to
a public offering of such equity interests or the termination of certain rights
and obligations under franchise and license agreements between ENBC and Bagel
Partners. Such right becomes exercisable prior to December 5, 1999 if there is a
Change in Control (as defined in the Bagel Partners partnership agreement) of
ENBC. ENBC or Bagel Partners may pay the purchase price for such equity
interests in cash, shares of the ENBC's common stock or any combination thereof.

     The Company and ENBC have entered into agreements with certain vendors
which provide for minimum purchases over specified terms. Such agreements call
for retroactive rate adjustments or cash settlement in the event of purchase
shortfalls. Management had established provisions of $20.0 million at December
28, 1997 for the amount of rate adjustments or cash settlements anticipated to
result from projected shortfalls. In the event there are additional projected
shortfalls, the Company and ENBC will be subject to additional charges.

     In March 1998, the Company entered into an agreement with BCEF and Market
Partners to acquire BCEF and Market Partners. The agreement calls for the
Company to acquire BCEF and Market Partners through a proposed merger of BCEF
and Market Partners with and into a wholly-owned subsidiary of the Company for
aggregate consideration of $126.8 million aggregate liquidation preference of
10% Series A Exchangeable Preferred Stock of the Company (the "Preferred
Stock"), 3.5 million shares of common stock of the Company and $10.0 million in
cash. The 10% dividend payable quarterly on the Preferred Stock is payable, at
the Company's option, in either additional shares of Preferred Stock or cash for
a period of three years and is payable in cash thereafter. The Preferred Stock
is optionally redeemable by the Company at any time, in cash, at redemption
prices which start at 50% of the liquidation preference and increase over time.
The Preferred Stock is mandatorily redeemable in 2005 at a price of 110% of the
liquidation preference. The transaction is subject to approval of holders owning
at least two-thirds of the interest of each of BCEF and Market Partners and
final documentation.

6.  Contingencies

     The Company, Saad J. Nadhir, former Co-Chairman of the Board and Chief
Executive Officer and a former director of the Company, Scott A. Beck, former 
Co-Chairman of the Board and President and a former director of the Company, and
Mark W. Stephens, former Vice-Chairman of the Board and Chief Financial Officer
and a former director of the Company (the "Individual Defendants"), and
investment banking firms which had underwritten securities offerings by the
Company (the "Underwriter Defendants") and the Company's independent public
accountants 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 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 securities 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 period and (iii)
equitable relief permitted by law, equity or federal or state statutes. On
February 10, 1998, the Company filed a motion to dismiss the complaint in the
federal case. The Company believes that the complaints are without merit and
intends to vigorously defend against the allegations made in such complaints.

     ENBC, Scott A. Beck, former Chairman of the Board and a former director of
ENBC, Mark R. Goldston, former President and Chief Executive Officer and a
former director of ENBC, Theodore R. Heininger, former Vice President-Controller
of ENBC, W. Eric Carlborg, Chief Financial Officer of ENBC, the underwriters in
ENBC's initial public offering and ENBC's independent public accountants 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

                                      10
<PAGE>
 
actions that were consolidated into one action for pre-trial purposes. ENBC and
certain of the other defendants are also defendants in a class action lawsuit
filed in state court in Jefferson County Colorado, although such action has been
stayed pending resolution of the federal case. 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 securities 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. On February 10, 1998, ENBC filed a motion to dismiss the
complaint in the federal case. ENBC believes that the complaints are without
merit and intends to vigorously defend against the allegations made in such
complaints.

     In July 1997, GFI America, Inc. a former vendor of processed beef products
to the Company and its area developers, initiated an action against the Company
by filing a complaint in the District Court for Hennepin County, Minnesota. In
the complaint, the plaintiff asserted various causes of action including
misappropriation of trade secrets, breach of unilateral and bilateral contract,
breach of fiduciary duty, fraud, promissory estoppel, equitable estoppel and
violation of Minnesota trade secrets law arising from the Company's decision to
stop purchasing processed beef products from the plaintiff and commence
purchasing such products from another vendor. The plaintiff sought injunctive
relief and unspecified damages, reasonable attorneys' fees and costs, and such
other relief available under state law. The matter was removed to federal court,
and in October 1997, the court denied the plaintiff's motion for injunctive
relief. The Company filed a motion to dismiss the complaint in September 1997,
which motion was granted in part in May 1998. The court dismissed certain of the
plaintiff's breach of contract claims and plaintiff's claims for breach of
fiduciary duty and negligent misrepresentation and ruled that the plaintiff may
amend its complaint to replead certain of its other claims. The case is in the
discovery phase. The Company denies the material allegations asserted in the
complaint and intends to vigorously defend against the complaint.

     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 lawsuits, claims, and
other legal matters will not have a material impact on the Company's
consolidated financial position or results of operations.

7.  Segment Information

     The Financial Accounting Standards Board has issued Financial Accounting
Standard No. 131, "Disclosure about Segments of an Enterprise and Related
Information" ("SFAS No. 131") which became effective for the Company commencing
in the first quarter of 1998. SFAS No. 131 requires disclosure of operating
segments, which as defined, are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. The Company operates in two different segments; home meal
replacement and retail bagel sales. The Company's Boston Market operations
operate in the home meal replacement segment and ENBC's operations operate in
the retail bagel segment. The following provides information on the Company's
segments (in thousand of dollars):
<TABLE>
<CAPTION>
                                        Quarter Ended April 20, 1997                    Quarter Ended April 19, 1998
                                ------------------------------------------     -------------------------------------------
                                      Home Meal                                      Home Meal     
                                     Replacement           Retail Bagels            Replacement         Retail Bagels
                                   --------------        ---------------         ----------------      --------------
<S>                                <C>                   <C>                     <C>                   <C>
Revenue from external                                                                              
customers...................         $  100,036               $ 16,728              $  101,217            $110,475
Intersegment revenue........              1,302                      -                   2,051                   -
Income (loss) before                                                                               
income taxes................             16,581                  5,178                (299,140)            (13,417)
Total assets................          1,242,781                393,136               1,043,064             651,012
</TABLE>
                                                                               
     In May 1997, the Company's board of directors authorized the Company to
evaluate the sale of its interest in ENBC. Commencing with the second quarter of
1998, the Company will report ENBC's results of operations pursuant to
Accounting Principle Board Opinion No. 30, "Reporting the Results of
Operations--Reporting the
                       
                                      11
<PAGE>
 
Effect of Disposal of a Segment of Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions."

8.  Reclassifications

     Certain reclassifications have been made to the 1997 financial statements
to conform to the 1998 presentation.

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

     Certain statements in this Form 10-Q constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform 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") and
Einstein/Noah Bagel Corp. ("ENBC") and their respective 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: the success of the Company's efforts to renegotiate
its senior credit facilities and to sell all or some of its equity interests in
ENBC; store performance (including sales and profit margins); success of the
proposal to seek control of the area developer structure; competition; success
of operating initiatives; development and operating costs; advertising and
promotional efforts; brand awareness; adverse publicity; acceptance of new
product offerings (e.g., menu items and pricing structures); 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 Commission. The cautionary statements made
pursuant to the Reform Act herein 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 the Reform Act.
The Company cannot always predict or determine after the fact what factors would
cause actual results to differ materially from those indicated by the forward-
looking statements or other statements. In addition, readers are urged to
consider statements that include the terms "believes", "belief", "expects",
"plans", "objectives", "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 merger of BC Equity
Funding, L.L.C. ("BCEF") and Market Partners, L.L.C. ("Market Partners") with
and into a wholly-owned subsidiary of the Company and the related transactions
and the proposal seeking control of the area developer structure and the
transition of the Boston Market system to a company-controlled structure
discussed herein are subject to, among other things, approval of the holders
owning at least two-thirds of the interests of each of BCEF and Market Partners.
There can be no assurance that the transition to a company-controlled structure
will be achieved.

     All statements made concerning expected financial performance, ongoing
business strategies and possible future actions which the Company intends to
pursue constitute forward-looking statements. The implementation of these
strategies and of such future actions and the achievement of such financial
performance are each subject to numerous conditions, uncertainties and risk
factors. Accordingly, no assurance can be given that the Company will be able to
successfully accomplish its strategic objectives or achieve such financial
performance.

General

     In the fourth quarter of 1997, the Company announced its intention to
acquire BCEF and Market Partners, as a first step to becoming a Company-
controlled system. The move to a Company-controlled system has significantly
impacted the Company's results of operations and financial position. Commencing
from the date the Company announced its intent to acquire BCEF and Market
Partners, the Company recognized, in a single line item on its consolidated
statement of operations, the net losses of the area developers in which BCEF and
Market Partners have preferred equity investments. The Company continues to
charge such area developers royalties, franchise and related fees and interest,
but the Company no longer recognizes these payments as revenue. As a result, the
area developers' net losses recognized by the Company have been correspondingly
reduced by the amount of the royalties, franchise and related fees and interest
not recognized by the Company. Additionally during the fourth quarter of 1997,
ENBC acquired a majority equity interest in all of its area developers. As a
result of this acquisition, the revenue generated by ENBC as a lender,
franchisor and service provider is eliminated

                                      13
<PAGE>
 
in consolidation and replaced with store revenue and operating expenses. As a
result of the foregoing, the Company's results of operations for the quarter
ended April 19, 1998 are not readily comparable to the quarter ended April 20,
1997.


Results of Operations

     Revenue. Total revenue increased $94.9 million or 81% for the quarter ended
April 19, 1998 over the quarter ended April 20, 1997. Royalties and franchise
related fees decreased $36.9 million or 89% and interest income decreased $22.0
million or 87% for the quarter ended April 19, 1998 over the quarter ended April
20, 1997. As a result of the Company's intent to acquire BCEF and Market
Partners, the Company did not recognize in the first quarter of 1998, royalties,
franchise and related fees and interest income totaling $41.1 million from 11 of
its 14 area developers. Also, as a result of certain area developers generating
insufficient 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 has not recognized
$7.4 million of revenue during the first quarter of 1998. Further, ENBC's
conversion to a company-owned system has resulted in its royalties and franchise
and related fees and interest income being replaced with company-store revenue.

     Revenue from Company stores is significantly affected by the average number
of stores in the periods being compared. The average number of Company-owned
Boston Market stores was 332 for the quarter ended April 19, 1998 compared to
134 Company-owned Boston Market stores for the quarter ended April 20, 1997. The
increase in the average number of Company-owned Boston Market stores was
primarily attributable to the acquisition of Mayfair Partners, L.P. and B.C.
Great Lakes, L.L.C. ("Great Lakes"). The average number of ENBC company-owned
stores was 560 for the quarter ended April 19, 1998 compared to 12 ENBC company-
owned stores for the quarter ended April 20, 1997. The increase in the average
number of ENBC company-owned stores was attributable to the acquisition of all
area developer stores in December 1997. Revenue from Company-owned and ENBC
company-owned stores increased $153.8 million or 307% for the quarter ended
April 19, 1998 compared to April 20, 1997. Company-owned Boston Market stores
accounted for $45.4 million or 30% of the increase and ENBC company-owned stores
accounted for $108.4 million or 70% of the increase.

     Cost of store operations. The cost of store operations (food and paper;
labor; other controllable costs, including telephone, utilities, security,
repairs and maintenance, supplies, help wanted advertisements, uniforms and
laundry; rent; other occupancy and related and contractual and discretionary
marketing) increased $141.5 million or 334% for the quarter ended April 19, 1998
over the quarter ended April 20, 1997, primarily due to an increase the number
of Company-owned Boston Market stores and ENBC company-owned stores. Company-
owned Boston Market stores accounted for $45.4 million of the increase and ENBC
company-owned stores accounted for $96.1 million of the increase. Cost of store
operations for Company-owned Boston Market stores, as a percentage of store
revenue for Boston Market stores, increased from 84.8% for the quarter ended
April 20, 1997 to 92.1% for the quarter ended April 19, 1998. The increase was
primarily attributable to higher labor costs, coupled with lower revenue which
resulted in rent, utilities and other fixed store operating costs representing a
greater percentage of store revenue. Cost of store operations for ENBC company-
owned stores, as a percentage of store revenue for ENBC company-owned stores,
increased from 81.4% for the quarter ended April 20, 1997 to 88.5% for the
quarter ended April 19, 1998. The increase was due to differences in store
concept and configuration. ENBC company-owned stores operating in the first
quarter of 1997 were significantly smaller in size and were staffed with fewer
employees. Stores operating in the 1998 quarter operate under ENBC's current
Einstein Bros. Bagels and Noah's New York Bagels concepts.

     General and administrative expenses. General and administrative expenses
increased $35.5 million or 195% for the quarter ended April 19, 1998 over the
quarter ended April 20, 1997. The Company's general and administrative expenses
increased $26.6 million or 218% for the quarter ended April 19, 1998 compared to
the prior comparable quarter and ENBC's general and administrative expenses
increased $8.9 million or 147% for the quarter ended April 19, 1998 compared to
the prior comparable quarter. The increase in both the Company's and ENBC's
general and administrative expenses was primarily due to larger company-owned
store bases in 1998 compared to 1997.

     Depreciation and amortization (excluding goodwill amortization).
Depreciation and amortization increased $8.6 million or 104% for the quarter
ended April 19, 1998 over the quarter ended April 20, 1997. The Company's

                                      14
<PAGE>
 
depreciation and amortization increased $2.5 million or 35% for the quarter
ended April 19, 1998 compared to the prior comparable quarter and ENBC's
depreciation and amortization increased $6.1 million or 535% for the quarter
ended April 19, 1998 compared to the prior comparable quarter. The increase in
both the Company's and ENBC's depreciation and amortization was primarily due to
larger company-owned store bases in 1998 compared to 1997.

     Goodwill amortization. Goodwill amortization increased $4.1 million or 217%
for the quarter ended April 19, 1998 over the quarter ended April 20, 1997. The
Company's goodwill amortization increased $1.5 million or 116% for the quarter
ended April 19, 1998 compared to the prior comparable quarter and ENBC's
goodwill amortization increased $2.6 million or 420% for the quarter ended April
19, 1998 compared to the prior comparable quarter. The increase in both the
Company's and ENBC's goodwill amortization was due to acquisitions of
controlling interests in area developers in 1998 and 1997.

     Provision for loan losses. Primarily as a result of lower than expected
store sales and customer transactions in the first quarter of 1998, the Company
established a $202.0 million provision for potential loan losses (in addition to
the $128.0 million provision for potential loan losses established in the fourth
quarter of 1997), after a determination that an additional portion of its loans
to certain of its area developers may not be recoverable. There can be no
assurance that the Company's loan recoverability analysis will not result in
additional provisions for potential loan losses in subsequent quarters. See
"Special Note Regarding Forward-Looking Statements" on page 13.

     Losses of Boston Chicken, Inc.'s Area Developers. As a result of the
Company's intent to acquire BCEF and Market Partners, the Company has
recognized, in a single line item on its statement of operations, the net losses
of the area developers in which BCEF and Market Partners have preferred equity
interests. The losses, which totaled $58.1 million for the quarter ended April
19, 1998, were primarily non-cash due to goodwill and fixed asset write-downs by
the area developers. Such amount represents the net losses (reduced by $41.1
million of royalties, franchise and related fees and interest not recognized by
the Company) of the area developers. The recognition of the area developer
losses has been accounted for as a reduction of the area developers' note
receivable balance. The Company will continue to recognize the area developer
net losses in a single line item on its statement of operations until it has
acquired a majority equity interest in such area developers through conversion
of its convertible loans to such area developers or other acquisition by the
Company of such area developers. Upon acquisition of a majority equity interest
in an area developer, the Company will then consolidate such area developer's
results of operations in its financial statements. While the timing of the
acquisition of BCEF and Market Partners is uncertain, the Company is attempting
to complete the acquisition by the end of the second quarter of 1998. 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. Due in part 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 at least 1998. See "Special Note Regarding
Forward-Looking Statements" on page 13.

     Other Income (Expense). The Company incurred $15.8 million of other
expenses in the first quarter of 1998 compared to $6.6 million in the first
quarter of 1997. The increase of $9.2 million primarily related to additional
interest expense incurred on the Company's $287.5 million of convertible
subordinated debentures and ENBC's $125.0 million of convertible subordinated
debentures, both issued in the second quarter of 1997. The increase was
partially offset by $1.2 million of gains recognized on the disposal of
miscellaneous assets.

     Income Taxes. Due to the uncertainty of having sufficient taxable income to
utilize losses generated in the first quarter of 1998, no income tax benefit was
provided.

     Minority Interest. For the quarter ended April 19, 1998, the minority
interests in subsidiaries absorbed $11.9 million of such subsidiaries' losses
whereas for the quarter ended April 20, 1997, the minority interests in
subsidiaries represented a charge of $2.6 million. The change was primarily due
to ENBC incurring a loss in the 1998 quarter compared to reporting income in the
prior comparable quarter.

                                      15
<PAGE>
 
Liquidity and Capital Resources

Historic Sources and Uses of Cash

     Cash used in operations totaled $0.8 million for the first quarter of 1998
compared to $15.9 million of cash used in operations for the first quarter of
1997. The reduction in cash used for operations was primarily attributable to
less cash used for working capital purposes, offset by a lower level of cash
generated from operations. Included in the cash flows from operating activities
for the first quarter of 1998, was $48.5 million of royalties, franchise related
fees and interest paid to the Company by its area developers but not recognized
as revenue.

     During the first quarter of 1998, the Company borrowed $10.0 million from
its revolving credit facility to fund the escrow account pursuant to the
Agreement and Plan of Merger to acquire BCEF and Market Partners. Subsequent to
the end of the first quarter of 1998, through June 1, 1998, the Company borrowed
an additional $38.0 million from its revolving credit facility to fund scheduled
contractual payments on indebtedness and for working capital purposes. During
the first quarter of 1998, ENBC made scheduled contractual principal payments of
$1.5 million on its senior term loan. During the first quarter of 1997, the
Company and ENBC had net borrowings of $65.3 million under their senior credit
facilities.

     The Company's primary use of capital has been to fund loan obligations to
its financed area developers. As of April 19, 1998, the Company had secured loan
commitments to its Boston Market area developers of $793.2 million, of which
$733.9 million had been advanced. Net loan advances to Boston Market area
developers were $54.0 million for the first quarter of 1998 (consisting of
$201.2 million of loan advances, net of $147.2 million of loan repayments)
compared to $55.5 million for the first quarter of 1997 (consisting of $292.5
million of loan advances, net of $237.0 million of loan repayments). The net
amounts advanced during the first quarter of 1998 were primarily used to fund
operating expenses. During the first quarter of 1998, the Company converted its
$119.2 million of loans to Great Lakes, the Company's area developer for the
Great Lakes region, into an 85% equity interest in Great Lakes.

     The Company's and ENBC's other uses of capital have included opening new
stores, maintaining their existing stores and developing their corporate
infrastructure. Total capital expenditures were $12.7 million for the first
quarter of 1998 and $28.5 million for the first quarter of 1997.

Expected Sources and Uses of Cash

     In March 1998, the board of directors approved an acquisition of BCEF and
Market Partners, which calls for the Company to acquire BCEF and Market Partners
in exchange for consideration of $126.8 million aggregate liquidation preference
of 10% series A exchangeable Preferred Stock ("Preferred Stock"), 3.5 million
shares of common stock and $10.0 million in cash. The 10% dividend on the
Preferred Stock is payable in additional shares of Preferred Stock for a period
of three years and payable in cash thereafter. The Preferred Stock is optionally
redeemable by the Company at any time, in cash, at redemption prices which start
at 50% of its face value and increase over time. The Preferred Stock is
mandatorily redeemable in 2005 at a price of 110% of its face value. The
agreement is subject to the approval of holders owning at least two-thirds of
the interests of each of BCEF and Market Partners.

     The Company's other uses of capital in 1998, other than providing working
capital for normal operating expenses (including scheduled payments on the
Company's lease obligations), will be maintaining stores, converting
approximately 20 additional stores to incorporate elements of the Boston Market
store format currently being tested in Charlotte, North Carolina and paying
interest and principal on outstanding indebtedness. The conversion of such 20
Boston Market stores, which is anticipated to be performed in four different
regional markets, will enable the Company to test the consumer appeal and
acceptance of improved product presentation and expanded product offerings
which, if successful, can be replicated nationwide using the existing Boston
Market supply chain. ENBC's primary uses of capital in 1998, other than
providing working capital for normal operating expenses, will be maintaining
stores, opening new stores and paying principal and interest on outstanding
indebtedness.

                                      16
<PAGE>
 
     For the remainder of 1998, the Company expects its primary sources of cash
will be from store operations, sale of assets and, to the extent the Company is
able to renegotiate the terms of its revolving credit facilities, borrowings
under its revolving credit facilities.

     The Company is a party to an $85.0 million revolving credit facility (the
"Revolver Facility"). The Revolver Facility is part of a $252.7 million senior
credit facility that includes $167.7 million of master lease financing (the
"1996 Master Lease Facility," and together with the "Revolver Facility," the
"Credit Facility"). The Company also had outstanding as of April 19, 1998 an
additional $64.1 million of master lease financing that contains cross-default
and cross-acceleration provisions with the facilities agreement governing the
Credit Facility (the "1995 Master Lease Facility"). The facilities agreement
contains, among other things, an incurrence test (which limits the amount the
Company may borrow under the Revolver Facility based on the ratio of senior
secured debt to annualized store cash flow (as determined pursuant to the
facilities agreement)) and financial covenants, the breach of which could affect
the Company's ability to borrow under the Revolver Facility. Such test and
covenants use systemwide performance measures, including average weekly net
revenue (average weekly gross revenue net of customer coupons and discounts)
("average weekly net revenue"), systemwide store cash flow, systemwide overhead
and systemwide cash flow. In addition, the facilities agreement also requires
the Company to maintain specific financial ratios and satisfy certain other
tests on a systemwide basis, including, without limitation, a maximum total
overhead level and a minimum fixed charge coverage ratio. As previously
disclosed in a Form 8-K report filed May 27, 1998, based upon the decline in
customer transactions and resulting decline in systemwide store cash flow of the
Boston Market system during 1998, the Company will not be able to access the
Revolver Facility after June 3, 1998 as a result of the limitations imposed by
the incurrence test contained in the facilities agreement and may not remain in
compliance with certain covenants contained in the facilities agreement. For
example, the facilities agreement requires average weekly net revenue of at
least $17,500 for the first quarter of fiscal 1998, $18,000 for the second
quarter of fiscal 1998, $18,500 for the third quarter of fiscal 1998, $19,000
for the fourth quarter of fiscal 1998 and the first quarter of fiscal 1999, and
$20,000 thereafter (the "average weekly net revenue covenant"). Systemwide
average weekly net revenue for the first quarter of fiscal 1998 was $17,533.
Based upon preliminary information for the second quarter through May 31, 1998,
unless store performance improves materially through the balance of the second
quarter, the Company will not be in compliance with the average weekly net
revenue covenant at the end of the second quarter. As such, the Company is
currently holding discussions with the agent lenders under the Credit Facility
to restructure the repayment terms and funds availability of the Credit Facility
and the financial covenants contained in the facilities agreement, including the
average weekly net revenue covenant. However, the agent lenders have indicated
that they may be unwilling to amend or restructure the terms of the Credit
Facility unless and until the Merger of BCEF and Market Partners with and into a
wholly-owned subsidiary of the Company (the "Merger") is consummated. If the
Company is unable to obtain an amendment to the facilities agreement or
otherwise restructure its outstanding indebtedness, it may be in violation of
the facilities agreement. In the event the Company is in violation of the
facilities agreement, upon action of the required number of lenders, the
outstanding principal balances under the Credit Facility, which in the aggregate
totaled approximately $213.0 million as of May 31, 1998, may be accelerated. Any
such acceleration would also permit holders of other senior and subordinated
debt of the Company to exercise their remedies, which include acceleration of
their debt, which in the aggregate totaled approximately $683.4 million as of
April 19, 1998. The Credit Facility also contains financial and restrictive
covenants that limit the ability of the Company to, among other things, incur
additional debt, make acquisitions, sell assets or merge, grant or incur liens,
make investments or loans, engage in sale leaseback transactions, make capital
expenditures and pay cash dividends, including cash dividends on the Preferred
Stock. In addition, any bankruptcy by an area developer of the Company could
result in a default under the facilities agreement. There can be no assurance
that the Company will be successful in renegotiating the facilities agreement or
otherwise obtaining relief from the covenants with which it may not be in
compliance.

     In addition, due to year-to-date decline in customer transactions, the
Company, as previously disclosed in a Form 8-K report filed on May 27, 1998,
believes its previously stated objective of $75 million to $100 million in
systemwide cash flow for 1998 may no longer be achievable. As such, the Company
will need to obtain additional capital through the sale of assets or otherwise
obtain an amendment to the facilities agreement or otherwise restructure its
outstanding indebtedness in order to generate sufficient liquidity to implement
its business plan and meet its financial obligations, including approximately a
$10.7 million payment due under the 1995 Master Lease Facility and the 1996
Master Lease Facility on July 15, 1998. In addition to the $10.7 million payment
required under the 1995 Master Lease Facility and the 1996 Master Lease
Facility, as of May 21, 1998, the Company has approximately $29.3 million of
scheduled contractual principal and interest payments for the remainder of 1998
(based on current interest rates). Also, in October 1998, a portion

                                      17
<PAGE>
 
of the 1995 Master Lease Facility expires. The Company has the option to
purchase the assets being leased for $21.1 million or let the lease expire. The
Company is currently in discussion with the agent lenders to restructure the 
payment obligations under the 1995 Master Lease Facility and the 1996 Master
Lease Facility. The Company is contingently liable for $18.1 million if it
elects not to purchase the leased assets. In the event the Company were to let
the 1995 Master Lease Facility expire, the Company would need to replace
equipment currently used in the stores financed by such lease. Such contingent
obligation would be reduced by a portion of the proceeds received by the lessor
on the sale of the leased assets and payments received on the subleases from the
area developers. Additionally, the Company's current liquidity may adversely
affect its relationship with its suppliers which could have a material adverse
effect on the Company's business, financial condition and results of operations.
The Company and its agent lenders are currently discussing a renegotiation of
the terms of the Credit Facility. The Company anticipates any amendment of the
Credit Facility will be accomplished concurrently with the consummation of the
Merger and that each will be conditioned upon the occurrence of the other.
Although the Company is holding discussions with the agent lenders and
evaluating the sale of assets in an effort to improve its liquidity position,
there can be no assurance that the Company will be successful in obtaining the
additional capital needed to implement its business plan and meet its financial
obligations. Additionally, should the Company be able to sell assets, there can
be no assurance the Company will recover the full amount invested in such
assets.

     ENBC's credit facility contains financial covenants that require
maintaining certain minimum average weekly net sales levels and system and store
cash flow ratios and that limit overhead levels. If ENBC is unable to comply
with any of the covenants, ENBC would be unable to draw on the revolving credit
facility and, upon action of the required number of lenders, all outstanding
principal and interest under its credit facility could be accelerated and become
immediately due and payable. To the extent ENBC did not have borrowing
availability under its credit facility, it could be required to seek additional
sources of capital and, if unable to obtain such capital, could be unable to
satisfy its obligations when due. As of April 19, 1998, ENBC was in compliance
with the covenants contained in its credit facility.

                                      18
<PAGE>
 
PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

     The information set forth under Note 5 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 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 no reports on Form 8-K for the
          quarter ended April 19, 1998. Subsequent to such quarter, the Company
          has to date filed two reports on Form 8-K.

     The first report was dated May 1, 1998 and reported under Item 5 (Other
Events) that the Company had named J. Michael Jenkins as Chairman of the Board,
Chief Executive Officer and President of the Company. The Company also reported
under Item 5 (Other Events) that Saad J. Nadhir, Scott A. Beck and Mark W.
Stephens had resigned from their various executive officer and director
positions with the Company.

     The second report was dated May 19, 1998 and reported, among other things,
under Item 5 (Other Events) (i) the Company's first quarter results of
operations, (ii) that Arthur Andersen LLP, the Company's auditors, had included
an explanatory paragraph in its audit report that there is substantial doubt
about the Company's ability to continue as a going concern, (iii) that Lawrence
E. White was named Chief Financial Officer of the Company, and (iv) that the
Company had retained Morgan Stanley & Co. Incorporated to advise and assist the
Company in evaluating the sale of all or a portion of the shares of common stock
of ENBC owned by the Company to one or more third parties. In addition, the
Company also reported under Item 5 (Other Events) certain financial statement
and risk factor disclosure included in its Joint Information Statement/Offering
Memorandum circulated to holders of interests in BCEF and Market Partners
seeking their consent to the Merger.

                                      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: June 2, 1998                            /s/ J. MICHAEL JENKINS
                              -------------------------------------------------
                                               J. Michael Jenkins
                                 Chairman of the Board, Chief Executive Officer
                                                  and President


Date: June 2, 1998                             /s/ LAWRENCE E. WHITE
                              -------------------------------------------------
                                                Lawrence E. White
                                             Chief Financial Officer
                                          (Principal Financial Officer)

                                       20
<PAGE>

 

                                 EXHIBIT INDEX

<TABLE> 
<CAPTION> 
                                                                      Sequential
Exhibit                                                                  Page
Number    Exhibits                                                      Number
------    --------                                                      ------
<C>       <S>                                                         <C> 
  2.1     Agreement and Plan of Merger dated as of March 16, 1998 
          by and among the Company, BCI Acquisition Sub, L.L.C. 
          and BC Equity Funding, L.L.C. and Market Partners, L.L.C.

  10.1    Consulting Agreement dated as of May 1, 1998 by and 
          between the Company and Saad J. Nadhir (incorporated by 
          reference to Exhibit 10.1 to the Company's Form 8-K dated 
          May 1, 1998).
          
  10.2    Termination Agreement dated as of May 1, 1998 by and 
          between the Company and Scott A. Beck (incorporated by 
          reference to Exhibit 10.2 to the Company's Form 8-K dated 
          May 1, 1998).
          
  10.3    Transition and Consulting Agreement dated as of May 1, 
          1998 by and between the Company and Mark W. Stephens 
          (incorporated by reference to Exhibit 10.3 to the 
          Company's Form 8-K dated May 1, 1998).
          
  10.4    Executive Employment Agreement dated as of May 1, 1998 by 
          and between the Company and J. Michael Jenkins 
          (incorporated by reference to Exhibit 10.4 to the 
          Company's Form 8-K dated May 1, 1998).
          
  10.5    Indemnification Agreement dated as of May 1, 1998 by and 
          between the Company and J. Michael Jenkins (incorporated 
          by reference to Exhibit 10.5 to the Company's Form 8-K 
          dated May 1, 1998).
          
  10.6    Non-Qualified Stock Option Agreement dated as of May 1, 
          1998 by and between the Company and J. Michael Jenkins
          (incorporated by reference to Exhibit 10.6 to the 
          Company's Form 8-K dated May 1, 1998).

  10.7    Letter Agreement dated May 26, 1998 between the Company 
          and Morgan Stanley & Co. Incorporated (incorporated by 
          reference to Exhibit 1 to the Company's Amendment No. 3 
          to Schedule 13D with respect to shares of ENBC Common 
          Stock filed with the Commission on May 27, 1998).

  10.8    Letter Agreement dated as of May 11, 1998, by and 
          between the Company and Lawrence E. White.

  27      Financial Data Schedule.

                                  Exhibit - 1
</TABLE>