<PAGE>
 
                      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 September 28, 1997

                                      OR

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934


                       Commission File Number:  0-21587
                                        

                               PJ AMERICA, INC.
            (Exact name of registrant as specified in its charter)



           Delaware                                     61-1308435
         (State or other jurisdiction of               (I.R.S. Employer
        incorporation or organization)                  Identification Number)



                               9109 Parkway East
                          Birmingham, Alabama  35206
                   (Address of principal executive offices)



                                (205) 836-1212
             (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  ___
                    ---                   

     At November 11, 1997, there were outstanding 5,781,610 shares of the
registrant's common stock, par value $.01 per share.

 
<PAGE>

 
                       PJ AMERICA, INC. AND SUBSIDIARIES

                                     INDEX
<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION                                                Page No.
                                                                             -----------
<S>      <C>                                                                 <C>

Item 1.  Financial Statements


         Condensed Consolidated Balance Sheets (Unaudited) --
         September 28, 1997 and December 29, 1996                                2


         Condensed Consolidated Statements of Income (Unaudited) --
         Three Months and Nine Months Ended September 28, 1997
         and September 29, 1996                                                  3


         Condensed Consolidated Statements of Cash Flows (Unaudited) --
         Nine Months Ended September 28, 1997 and September 29, 1996             4


         Notes to Condensed Consolidated Financial Statements (Unaudited)        5


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                   9


PART II. OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K                                       12
</TABLE>
<PAGE>
 
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                       PJ AMERICA, INC. AND SUBSIDIARIES
                     Condensed Consolidated Balance Sheets
<TABLE> 
<CAPTION> 

                                                 September 28,     December 29,
                                                     1997              1996
                                                  (Unaudited)         (Note)
                                                 -------------     ------------
<S>                                              <C>               <C> 
(In thousands)
Assets
Current assets:
  Cash and cash equivalents                      $       4,525     $      4,076
  Accounts receivable, net                                  65               27
  Inventories                                              248              229
  Advances to related parties                               41              120
  Deferred income taxes                                      -              104
  Investments                                           19,952           12,058
  Prepaid expenses and other                                22              221
                                                 -------------     ------------
Total current assets                                    24,853           16,835

Investments                                              2,832                -
Net property and equipment                               8,612            5,936
Deferred franchise and development costs, net            1,255              758
Other assets                                               821               84
                                                 -------------     ------------

Total assets                                     $      38,373     $     23,613
                                                 =============     ============

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                               $         404     $        189
  Accrued expenses                                       2,151            1,765
  Current maturities of bank debt                            -               70
                                                 -------------     ------------
Total current liabilities                                2,555            2,024

Deferred income taxes                                      167               71 

Stockholders' equity:
  Common stock                                              58               50
  Additional paid-in-capital                            32,197           20,029
  Retained earnings                                      3,396            1,439
                                                 -------------     ------------
Total stockholders' equity                              35,651           21,518
                                                 -------------     ------------

Total liabilities and stockholders' equity       $      38,373     $     23,613
                                                 =============     ============
</TABLE> 

Note: The condensed consolidated balance sheet at December 29, 1996 has been
derived from the audited financial statements at that date but does not include
all information and footnotes required by generally accepted accounting
principles for complete financial statements.

See accompanying notes.

                                       2










<PAGE>
 
                       PJ AMERICA, INC. AND SUBSIDIARIES
                  Condensed Consolidated Statements of Income
                                  (Unaudited)

<TABLE> 
<CAPTION> 
              
                                                   Three Months Ended        Nine Months Ended
                                                   Sept 28,   Sept 29,      Sept 28,   Sept 29,
                                                     1997       1996          1997       1996
                                                   --------   --------      --------   --------
<S>                                                <C>        <C>           <C>        <C>  
(In thousands, except per share amounts)                                                       
Restaurant sales                                   $11,890    $ 5,402       $34,481    $15,422 

Restaurant operating expenses:
   Cost of sales                                     3,742      1,832        10,940      5,176
   Salaries and benefits                             3,127      1,329         8,919      3,813
   Other operating expenses                          2,875      1,273         8,263      3,579
   Depreciation and amortization                       327        136           927        387
                                                   -------    -------       -------    -------
                                                    10,071      4,570        29,049     12,955

Restaurant operating income                          1,819        832         5,432      2,467
General and administrative expenses                    619        280         1,897        965
                                                   -------    -------       -------    -------
Operating income                                     1,200        552         3,535      1,502


Other income (expense)                                 247        (29)          578        (75)
                                                   -------    -------       -------    -------

Income before income taxes                           1,447        523         4,113      1,427
Income tax expense                                     492          8         1,374         17

Net income                                         $   955    $   515       $ 2,739    $ 1,410       
                                                   =======    =======       =======    =======

Net income per share                               $  0.17   
                                                   =======
Weighted average shares outstanding                  5,696 
                                                   =======

Pro forma information:
Income before income taxes                                    $   523       $ 4,113    $ 1,427
Pro forma income tax expense                                      200         1,471        550
                                                              -------       -------    -------

Pro forma net income                                          $   323       $ 2,642    $   877
                                                              =======       =======    =======
Pro forma net income per share                                $  0.15       $  0.49    $  0.42   
                                                              =======       =======    =======
Weighted average shares outstanding                             2,102         5,352      2,092
                                                              =======       =======    ======= 
</TABLE> 

See accompanying notes.

                                      3 

<PAGE>

<TABLE>
<CAPTION>

                       PJ AMERICA, INC. AND SUSIDIARIES
                Condensed Consolidated Statements of Cash Flows
                                  (Unaudited)

                                                                 Nine Months Ended
                                                             Sept 28,        Sept 29,
                                                               1997            1996
                                                             --------        --------
<S>                                                         <C>            <C>
(In thousands)
Cash Flows from Operating Activities
  Net cash provided by operating activities                  $   4,244     $   2,069

Cash Flows from Investing Activities                         
  Acquisitions                                                  (1,582)            -
  Purchases of property and equipment                           (2,812)         (812)
  Purchases of investments                                     (10,726)            - 
                                                             ---------     ---------
     Net cash used in investing activities                     (15,120)         (812)

Cash Flows from Financing Activities
  (Payments on) proceeds from bank borrowings                      (70)          697
  Proceeds from stockholder notes                                    -            75
  Distributions paid                                              (781)       (1,928)
  Proceeds from sale of common stock                            12,176             -
                                                             ---------     ---------
     Net cash provided by (used in) financing activities        11,325        (1,156)

Net increase in cash and cash equivalents                          449           101
Cash and cash equivalents at beginning of period                 4,076           507
                                                             ---------     ---------
Cash and cash equivalents at end of period                   $   4,525     $     608
                                                             =========     =========
</TABLE>

See accompanying notes.

                                       4
<PAGE>
 
                       PJ AMERICA, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)


September 28, 1997

Note 1  Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and Article 10 of
Regulation S-X.  Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.  In the opinion of management, all adjustments, consisting
of normal recurring accruals, considered necessary for a fair presentation have
been included.  Operating results for the three and nine months ended September
28, 1997 are not necessarily indicative of the results that may be expected for
the year ending December 28, 1997.  A description of the Company's accounting
policies and other financial information is included in its audited supplemental
consolidated financial statements included in the prospectus that forms part of
the Company's Registration Statement on Form S-1 (Reg. No. 333-30109).

     The accompanying unaudited condensed consolidated financial statements
include the accounts of PJ America, Inc. and its wholly-owned subsidiaries, PJ
Cheese, Inc. and Ohio Pizza Delivery Co. (the "Company").  All significant
inter-company transactions between the consolidated companies have been
eliminated.  Prior to the Company's initial public offering (the "Offering") and
reorganization, the Company's financial statements represented the combined
financial position, results of operations and cash flows of Extra Cheese, Inc.
(Extra Cheese), Textra Cheese Corp. (Textra) and Twice the Cheese, Inc. (Twice),
collectively referred to herein as the "Alabama Group."  Those financial
statements excluded the combined financial position of PJVA, Inc. and PJV, Inc.,
collectively referred to as the "Virginia Group", prior to their acquisition on
October 30, 1996 (See Note 6).  These unaudited condensed consolidated financial
statements have been restated to give retroactive effect to the merger with Ohio
Pizza Delivery Co. (OPD), on June 5, 1997, in a transaction accounted for as a
pooling of interests, as if the merger had occurred at the beginning of fiscal
1995.  (See Note 4).

     Extra Cheese, Textra, and Twice operated as S corporations through October
30, 1996, when their S corporation elections were terminated.  As a result, they
were not subject to federal or state income tax before October 30, 1996.

     OPD operated as an S corporation from January 1, 1995 through June 5, 1997,
when its S corporation election was terminated.  As a result, OPD was not
subject to federal or state income taxes before June 5, 1997.  However, OPD was
subject to local income taxes.
                                              
     In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997.  At that time, the Company will be required to change the method currently
used to compute earnings per share and to restate all prior periods.  Under the
new requirements for calculating primary earnings per share, the dilutive effect

                                       5
<PAGE>
 
Note 1  Basis of Presentation (continued)
                      
of stock options and warrants will be excluded.  The impact is not expected to
result in an increase in primary earnings per share for the three and nine
months ended September 28, 1997 and September 29, 1996.  The impact of Statement
No. 128 on the calculation of fully diluted earnings per share for these periods
is not expected to be material.

Note 2  Reorganization

     The Company was formed in August, 1996 to succeed to the businesses of five
Papa John's International, Inc. (PJI) franchisees.  Extra Cheese entered into an
Agreement dated June 10, 1996, as amended on July 10, 1996, and a Plan of Merger
with Twice, Textra, PJVA, Inc. and PJV, Inc., pursuant to which all such
corporations agreed to be merged into PJ Cheese, Inc. (PJ Cheese), a wholly-
owned subsidiary of Extra Cheese, in exchange for shares of common stock of
Extra Cheese.  On October 30, 1996, concurrent with the completion of the
Offering (i) all such corporations merged into PJ Cheese; (ii) Extra Cheese
contributed to PJ Cheese all of the assets of Extra Cheese relating to its
restaurants, with PJ Cheese assuming all of Extra Cheese's liabilities relating
thereto; and (iii) Extra Cheese merged into the Company with the stockholders of
Extra Cheese receiving an aggregate of 3,000,000 shares of common stock of the
Company (the "Reorganization").  Accordingly, the Company is the parent of PJ
Cheese, and PJ Cheese owns all of the Papa John's restaurants which were owned
by Extra Cheese, Textra, Twice, PJVA, Inc. and PJV, Inc. (collectively, the
"Predecessor Companies").

     The Reorganization was an exchange of non-monetary assets by stockholders
and has been accounted for at historical cost.

Note 3  Common Stock Offering

     In July, 1997, the Company completed a public offering pursuant to which it
sold 750,000 shares of common stock at a price of $17.75 per share.  This
offering resulted in net proceeds to the Company of $12.2 million.

Note 4  Business Combinations

     On June 5, 1997, PJAM Acquisition Subsidiary, a subsidiary of PJ America,
Inc. merged with OPD, based in Akron, Ohio, in a transaction accounted for as a
pooling of interests.  Pursuant to the Agreement and Plan of Merger, dated as of
May 30, 1997, PJAM Acquisition Subsidiary was merged into OPD, with OPD
surviving the merger as a wholly-owned subsidiary of PJ America, Inc.

     Pursuant to a fixed formula price, the OPD shareholders received 276,610
shares of the Company's common stock in exchange for 100% of the common stock of
OPD.  The total value of the transaction was approximately $4.6 million, based
upon the conversion value of $16.50 per common share agreed upon on May 20,
1997.

     On June 30, 1997, the Company purchased the assets of one Papa John's
restaurant and development rights for three additional Papa John's restaurants
in northern Ohio from another Papa

                                       6
<PAGE>

Note 4 -- Business Combinations (continued)

John's franchisee. The purchase price consisted of a cash payment of $200,000,
and has been accounted for by the purchase method of accounting.

     On September 22, 1997, the Company purchased the assets and assumed lease
obligations of seven Papa John's restaurants in Virginia from Williamsburg Pizza
Group, Inc., a Papa John's International franchisee. The total consideration
paid by the Company in the acquisition was approximately $1.4 million. The
acquisition was accounted for by the purchase method of accounting.

Note 5 -- Pro Forma Information Excluding the Virginia Group Acquisition

     The Company terminated its status as an S corporation on October 29, 1996
(June 5, 1997 for OPD). Pro forma income taxes have been presented to reflect a
provision for federal, state, and local income taxes at an assumed effective
rate of 36.5% (41.0% for OPD).

     Pro forma net income per share is based on the weighted averaged number of
shares of common stock and common stock equivalents outstanding during the
period. The pro forma net income per share amounts were calculated assuming
issuance of the number of shares of common stock in the Offering necessary to
generate sufficient proceeds to fund the payment of the Company's undistributed
S corporation earnings. A summary of the components of the weighted average
shares of common stock and equivalents outstanding during the periods indicated
is as follows:

<TABLE>
<CAPTION>
                                                        Three Months          Nine Months
                                                           Ended                 Ended
                                                          Sept 29,       Sept 28,     Sept 29,
                                                            1996           1997         1996
                                                        ------------     --------     --------
<S>                                                     <C>              <C>          <C>
Total number of common shares outstanding
  throughout the period                                    2,047          5,032        2,047
Weighted average number of common shares
  issued in connection with stock offerings                    -            180            -
Shares issuable upon net exercise of
  outstanding stock options and warrant                        -            120            -
Adjustment to reflect shares issued to pay
  S corporation distributions                                 55             20           45
                                                        ------------     --------     --------
Total weighted average shares and equivalents
     outstanding                                           2,102          5,352        2,092
                                                        ============     ========     ========
</TABLE>

Note 6 -- Acquisition of Virginia Group - Pro Forma Information

     Concurrent with the Offering, the Company acquired PJVA, Inc. and PJV, Inc.
(see Note 1). The acquisition was accounted for at historical cost, with the
shareholders of PJVA, Inc. and PJV, Inc. receiving an aggregate of 1,230,000
shares of common stock of the Company.

                                       7

<PAGE>
 
Note 6 -- Acquisition of Virginia Group - Pro Forma Information (continued)

     The following represents the pro forma results of operations for the three
and nine months ended September 29, 1996 as if the Reorganization and OPD merger
had occurred at the beginning of the Company's fiscal year. Pro forma net income
reflects an assumed corporate income tax rate of 36.5% for the Company, and
41.0% for OPD.

<TABLE>
<CAPTION>
                                         Three Months       Nine Months
                                             Ended             Ended
                                         Sept 29, 1996     Sept 29, 1996
                                         -------------     -------------
<S>                                      <C>               <C>
In thousands, except per share data:

Restaurant sales                            $9,545            $27,465
                                         =============     =============

Pro forma net income                        $  500            $ 1,385
                                         =============     =============

Pro forma net income per share              $ 0.14            $  0.40
                                         =============     =============

Weighted average shares outstanding          3,483              3,457
                                         =============     =============
</TABLE>

     The pro forma information is not indicative of the results of operations
that actually would have been obtained if the transactions had occurred at the
beginning of the Company's fiscal year.  Additionally, the pro forma information
is not intended to be a projection of future results.

                                       8
<PAGE>
 
              SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS 


Certain statements in this Form 10-Q under "Management's Discussion and Analysis
of Financial Condition and Results of Operations" constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company 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:
competition; successful implementation of the Company's expansion strategy;
dependence on the success of the Papa John's system; success of operating
initiatives; advertising and promotional efforts; adverse publicity; acceptance
of new product offerings; availability, locations and terms of sites for store
development; changes in business strategy or development plans; availability and
terms of capital; food, labor and employee benefit costs; changes in government
regulations; regional weather conditions; and other factors referenced in this
Form 10-Q.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
of Operations.

Results of Operations

     Restaurant Sales.  Restaurant sales increased 120% to $11.9 million for the
three months ended September 28, 1997, from $5.4 million for the comparable
period in 1996, and 124% to $34.5 million for the nine months ended September
28, 1997, from $15.4 million for the comparable period in 1996. These increases
were primarily attributable to the 60 and 54 restaurants open throughout the
three and nine months ended September 28, 1997, respectively (includes 25
Virginia restaurants acquired on October 30, 1996), as compared to 25 and 22
restaurants for the same periods in the prior year and four and ten restaurants
opened in the three and nine months ended September 28, 1997, respectively. The
Company also acquired eight restaurants during the quarter. Also, comparable
restaurant sales increased 5.0% and 8.2% for the three and nine months ended
September 28, 1997, respectively.

     Costs and Expenses. Restaurant cost of sales, which consists of food,
beverage and paper costs, decreased as a percentage of restaurant sales to 31.5%
and 31.7% for the three and nine months ended September 28, 1997, respectively,
as compared to 33.9% and 33.6% respectively for the same periods in 1996. These
decreases were primarily attributable to lower cheese costs, increased
efficiencies, and a maturing restaurant base.

     Salaries and benefits increased as a percentage of restaurant sales to
26.3% and 25.9% for the three and nine months ended September 28, 1997,
respectively, as compared to 24.6% and 24.7% respectively, for the same periods
in 1996. These increases are primarily due to the increase in minimum wage in
October, 1996, and ten restaurant openings in the nine months ended September
28, 1997, as compared to four restaurant openings in the same period in 1996.

     Other operating expenses include other restaurant level operating costs,
the material components of which are automobile mileage reimbursement for
delivery drivers, rent, royalties, utility expenses,

                                       9
<PAGE>
 
pre-opening expenses and advertising expenses. Other operating expenses
increased as a percentage of restaurant sales to 24.3% and 24.0% for the three
and nine months ended September 28, 1997, respectively, as compared to 23.3% and
23.0% respectively, for the same periods in 1996. These increases are primarily
attributable to the acquisition of the Virginia restaurants, which historically
have had higher operating expenses as a percentage of restaurant sales, a higher
number of restaurant openings to date in 1997, partially offset by increased
leverage of expenses as a result of comparable store sales increases and
increased purchasing power for various expenses.

     Depreciation and amortization was relatively consistent as a percentage of
restaurant sales at 2.6% for the three and nine months ended September 28, 1997,
as compared to 2.5% for the same periods in 1996.

     General and administrative expenses (including OPD merger expenses of
$124,000 expensed in the second quarter of 1997), decreased as a percentage of
restaurant sales to 5.2% and 5.5% for the three and nine months ended September
28, 1997, respectively, as compared to 5.2% and 6.3% for the same periods in
1996. The decreases were primarily attributable to leveraging of general and
administrative expenses as a result of increased sales, partially offset by
additional corporate infrastructure necessary to support planned growth.

     Other income (expense), consisting primarily of investment income, was
approximately $247,000 and $578,000 for the three and nine months ended
September 28, 1997, respectively. The increase in investment income is a result
of earnings on funds received from the Company's public offerings in October,
1996 and July, 1997. Investment balances are considered available to fund growth
and acquisitions.

     Income Taxes. The Company was subject to only local income taxes in 1996.
The increase was due to the conversion from an S corporation to a C corporation
on October 30, 1996 (June 5, 1997 for OPD), at which time the Company became
subject to corporate level income taxes.

Liquidity and Capital Resources

     Cash flows from operating activities increased to $4.2 million for the nine
months ended September 28, 1997 from $2.1 million for the comparable period in
1996, primarily due to the higher level of net income for the first nine months
of 1997. During the third quarter of 1997, the Company purchased the assets of
eight Papa John's restaurants and development rights for three additional
restaurants in two separate transactions. The total purchase price of the two
acquisitions was approximately $1.6 million.

     The Company requires capital primarily for the development and acquisition
of new restaurants. Total capital expenditures, for the nine months ended
September 28, 1997, were approximately $2.8 million and were funded by available
cash and cash flows from operations.

     The Company has financed its operations principally from cash provided by
operating activities and proceeds from bank borrowings and stockholder loans. In
October, 1996, the Company received $19.2 million in net cash proceeds from its
initial public offering. These proceeds were used to fund

                                       10
<PAGE>
 
final S corporation distributions of $2.0 million to stockholders, $1.6 million
to retire stockholder indebtedness, and $2.0 million to retire bank
indebtedness. The remaining net proceeds were used to fund capital expenditures
in 1996 or were held in various investments. Also, the Company received net
proceeds of approximately $12.2 million from a July, 1997, public offering of
750,000 shares of its common stock.

     Capital expenditures are expected to be approximately $1.0 million for the
last three months of 1997, primarily for restaurant development and improvements
to existing restaurants. The Company may also acquire the operations of other
Papa John's franchisees if such operations become available on terms
satisfactory to the Company. Capital resources at September 28, 1997 include
$27.3 million of cash and investments. The Company plans to fund its capital
expenditures through 1998 from available cash, investments and cash generated
from operations. The Company has not sought and does not have any commitments
for any credit facilities.


                                       11

<PAGE>
 
PART II.  OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits.

          Exhibit
          Number:      Description:
          -----------------------------------------------------------

          11           Statement regarding Computation of Earnings
                       per Common Share

          27           Financial Data Schedule which is submitted
                       electronically to the Securities and Exchange
                       Commission for information only and not
                       deemed to be filed with the Commission

     (b)  Current Reports on Form 8-K

          A current report on Form 8-K dated July 17, 1997 was filed announcing
          the Company's operating results from June 5, 1997 through July 6,
          1997, which included the results of OPD, which merged into PJAM
          Acquisition Subsidiary, a wholly owned subsidiary of the Company, on
          June 5, 1997.

                                       12
<PAGE>
 
                                   SIGNATURES

                                        
     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                 PJ AMERICA, INC.



Date:  November 11, 1997                /s/  D. Ross Davison
                                 ---------------------------------------
                                             D. Ross Davison
                                 Vice President, Chief Financial Officer
                                and Treasurer (Principal Financial Officer)

                                       13