U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)


  |X| Quarterly  report  under  Section 13 or 15(d) of the  Securities  and
      Exchange Act of 1934 for the quarterly period ended October 7, 1997.

  |_| Transition  report under  Section 13 or 15(d) of the  Securities  and
      Exchange Act of 1934 for the transition period from _____ to_______.


                        COMMISSION FILE NUMBER 333-5488-D

                          STOICO RESTAURANT GROUP, INC.
        (Exact name of small business issuer as specified in its charter)

            Delaware                                   48-1177558        
     (State or other jurisdiction                   (I.R.S. Employer
     of incorporation or organization)              Identification No.)


                 Brittany Two Place, 1938 N. Woodlawn, Suite 301
                         Wichita, Kansas                 67208
                (Address of principal executive office) (Zip code)

                                  (316) 691-8880
                  (Issuer's telephone number, including area code)

         Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 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 past 90 days. Yes |X| No |_|.

        At October 7, 1997,  5,708,966 shares of common stock,  $0.01 per share
par value were outstanding.

        Transitional Small Business Disclosure Format (check one): Yes |_| No X

<PAGE>

                          STOICO RESTAURANT GROUP, INC.
                        INDEX TO 10-QSB FOR THE QUARTERLY
                          PERIOD ENDED OCTOBER 7, 1997
     
                                                                            PAGE

PART I:    FINANCIAL INFORMATION

ITEM 1:    FINANCIAL STATEMENTS

           Stoico Restaurant Group, Inc. and Subsidiaries Consolidated
           Balance Sheets - October 7, 1997 and December 31, 1996              3

           Stoico Restaurant Group, Inc. and Subsidiaries Consolidated
           Statements of Operations -  Twelve Week Period and Forty
           Week Period ended October 7, 1997 and October 1, 1996,
           respectively.                                                       4

           Stoico Restaurant Group, Inc. and Subsidiaries Consolidated
           Statements of Cash Flows - Forty Week Period ended
           October 7, 1997 and October 1, 1996, respectively.                  5

           Notes to Consolidated Financial Statements - October 7, 1997        6

ITEM 2:    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
           FINANCIAL CONDITION AND RESULTS OF OPERATION                        

PART II:   OTHER INFORMATION

ITEM 1:    LEGAL PROCEEDINGS                                                  16

ITEM 2:    CHANGES IN SECURITIES                                              16

ITEM 3:    DEFAULTS UPON SENIOR SECURITIES                                    16

ITEM 4:    SUBMISSION OF MATTERS TO A VOTE OF
           SECURITY HOLDERS                                                   16

ITEM 5:    OTHER INFORMATION                                                  16

ITEM 6:    EXHIBITS AND REPORTS ON FORM 8-K                                   17

           SIGNATURES                                                         18
                                        2
<PAGE>

<TABLE>
<CAPTION>

                 Stoico Restaurant Group, Inc. and Subsidiaries
                           Consolidated Balance Sheets
                      October 7, 1997 and December 31, 1996

                                                                       October 7,      December 31,
                        Assets                                           1997             1996
                        ------                                       -------------    -------------
                                                                      (Unaudited)
<S>                                                                  <C>             <C>    
Current assets:

         Cash and cash equivalents                                   $     48,369    $  2,271,550
         Receivables                                                      195,019          59,351
         Inventories                                                      155,087         177,909
         Prepaid expenses and other current assets                        175,169         253,216
                                                                     ------------    ------------
                  Total current assets                                    573,644       2,762,026

Property and equipment                                                  3,464,073       4,521,779

Goodwill, net of amortization of $136,940 and $76,655,
    respectively                                                          929,129         989,413

Notes receivable:

         Former Officer                                                    66,873         225,000
         Other, net of related deferred income of
         $201,560                                                          37,716          22,077

Other assets                                                               48,013          51,225
                                                                     ------------    ------------
                  Total assets                                       $  5,119,448    $  8,571,520
                                                                     ============    ============

         Liabilities and Stockholders' Equity Current liabilities:
         ---------------------------------------------------------

         Accounts payable                                            $  1,524,353    $  1,963,764
         Accrued expenses                                                 350,806         300,282
         Current portion of long-term debt                              1,141,965         190,191
         Note Payable - officer                                            40,000            --
         Deferred revenue                                                  50,000         195,000
                                                                     ------------    ------------
                  Total current liabilities                             3,107,125       2,649,237

Long-term debt, less current portion                                       18,240          43,580
Long-term lease obligation on closed store                                 61,158         116,951
Deferred revenue                                                           35,000          95,000
                                                                     ------------    ------------
                  Total liabilities                                     3,221,523       2,904,768

Stockholder's equity:

         Preferred stock, $.01 par value, 5,000,000 shares
              authorized, -0- shares issued and outstanding                  --              --
         Common stock, $.01 par value, 20,000,000 shares
              authorized, 5,708,966 issued and outstanding                 57,090          57,090
         Additional paid-in capital                                    14,285,754      14,285,754
         Accumulated deficit                                          (12,444,918)     (8,676,092)
                                                                     ------------    ------------
                  Total stockholders' equity                            1,897,926       5,666,752
                                                                     ------------    ------------
Commitments                                                                  --              --

                                                                     ------------    ------------
     Total liabilities and stockholders' equity                      $  5,119,448    $  8,571,520
                                                                     ============    ============

</TABLE>



                                        3

<PAGE>

<TABLE>
<CAPTION>

                 Stoico Restaurant Group, Inc. and Subsidiaries
                      Consolidated Statements of Operations
                                   (Unaudited)

                                                     Twelve Week Period               Forty Week
                                                          Ended                      Period Ended
                                               October 7,    October 1,       October 7,    October 1,
Revenues:                                         1997          1996            1997           1996
                                             -----------------------------------------------------------
<S>                                          <C>            <C>            <C>            <C>                 

         Sales                               $ 1,798,072    $ 1,579,906    $ 6,935,787    $ 5,228,920
         Royalty income                           23,472         30,673         73,785        104,248
         Franchise Fees                           25,000           --           85,000         34,000
                                             -----------     -----------    -----------    ----------    
                  Total revenue                1,846,544      1,610,579      7,094,572      5,367,168
                                               ---------      ---------      ---------      ---------

Cost of sales:
         Food and paper                          587,974        500,396      2,121,113      1,651,954
         Wages and benefits                      831,639        522,902      2,795,178      1,676,633
                                                 -------        -------      ---------      ---------

                  Total cost of sales          1,419,613      1,023,298      4,916,291      3,328,587
                                               ---------      ---------      ---------      ---------


                  Gross profit                   426,931        587,281      2,178,281      2,038,581

Restaurant operating expenses                    780,782        453,096      2,667,563      1,547,667
Pre-opening expenses                                --           97,389        123,054        133,973
Restaurant closing expenses                    1,732,576           --        1,732,576           --
Administrative expenses                          335,734        474,405      1,440,740      1,329,031
Noncash compensation expense                        --             --             --           13,749
                                             -----------    -----------    -----------    ----------- 
                  Operating loss              (2,422,161)      (437,609)    (3,785,652)      (985,839)

Other income (expense):

         Miscellaneous other income                3,599          5,621         34,902         31,695
         Provision for lease obligation on
         closed store                               --             --             --         (175,855)
         Interest income                           7,273         17,056         36,272         42,824
         Interest expense                        (30,669)      (161,859)       (54,348)      (471,464)
                                              -----------    -----------    -----------    -----------
                  Loss before income taxes    (2,441,958)      (576,791)    (3,768,826)    (1,558,639)
Income taxes                                        --             --             --             --
                                              -----------    -----------    -----------    -----------
Net loss                                     $(2,441,958)   $  (576,791)   $(3,768,826)   $(1,558,639)
                                              ===========    ===========    ===========    ===========   
Total weighted average of common and common
      equivalent shares                        5,730,700      4,328,756      5,730,700      4,307,252
                                              ===========    ===========    ===========    ===========

Loss per common share                        $      (.43)   $      (.13)   $      (.66)  $       (.36)
                                              ===========    ===========    ===========    ===========    


</TABLE>

                                        4

<PAGE>


<TABLE>
<CAPTION>

                 Stoico Restaurant Group, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows
                                   (Unaudited)

                                                                                                    Forty Week
                                                                                                    Period Ended
                                                                                         ---------------------------------  
                                                                                            October 7,        October 1,
                                                                                               1997              1996
                                                                                         --------------     --------------
<S>                                                                                        <C>            <C>                

Cash from operating activities:
         Net loss                                                                           $(3,768,826)   $(1,558,639)
         Adjustments to reconcile net loss to net cash used in operating activities
                  Depreciation and amortization                                                 732,726        321,256
                  (Gain) loss on disposal of equipment                                          (24,786)         3,302
                  Income attributable to Area Development fee forfeiture                        (45,000)          --
                  Noncash restaurant closing expenses                                         1,662,877           --
                  Increase in receivables                                                      (135,668)        (6,461)
                  Decrease (increase) in inventories                                             22,822         (7,081)
                  Decrease (increase) in notes receivable                                       142,488       (242,385)
                  Decrease (increase) in prepaid expenses and other current assets 78,047      (110,491)
                  Decrease (increase) in other assets                                             3,212        (34,998)
                  (Decrease) increase in accounts payable                                      (439,410)        78,318
                  Increase in accrued expenses                                                   50,524        171,124
                  (Decrease) increase in long term lease obligation on closed sto(55,793)       123,333
                  (Decrease) increase in deferred revenue                                       (40,000)       218,083
                                                                                            -----------    -----------
                           Net cash used in operating  activities                            (1,816,787)    (1,044,639)
                                                                                            -----------    -----------
Cash flows from investing activities:
         Purchase of property, plant and equipment                                           (1,340,734)      (606,949)
         Proceeds from sale of restaurant                                                        87,906        251,300
                                                                                            -----------    -----------
                           Net cash used in investing activities                             (1,252,828)      (355,649)
                                                                                            -----------    -----------
Cash flows from financing activities:
         Proceeds from issuance of long term debt                                             1,000,000      1,000,000
         Principal payments on long-term debt                                                   (73,566)      (195,944)
                Principal payments on officer note payable                                    (80,000))           --
         Proceeds from issuance of common stock                                                    --          315,095
         Deferred offering costs                                                                   --         (281,621)
                                                                                            -----------    -----------
                           Net cash provided by financing activities                            846,434        837,530
                                                                                            -----------    -----------
                           Net decrease in cash and cash equivalents                         (2,223,181)      (562,758)
Cash and cash equivalents at beginning of period                                              2,271,550        784,171
                                                                                            -----------    -----------
Cash and cash equivalents at end of period                                                  $    48,369    $   221,413
                                                                                            ===========    ===========

</TABLE>
                                       5
<PAGE>
                          STOICO RESTAURANT GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

(1)  Basis of Presentation

     The  accompanying  unaudited  financial  statements  have been  prepared in
accordance with the instructions to Form 10-QSB and,  therefore,  do not include
all  information  and footnotes  necessary for a fair  presentation of financial
position,  results of  operations  and cash flows in conformity  with  generally
accepted accounting  principles.  The information  furnished,  in the opinion of
management,   reflects  all  adjustments,  which  consist  of  normal  recurring
adjustments,  necessary to present  fairly the results of  operations  of Stoico
Restaurant  Group,  Inc. and  subsidiaries  (the  "Company")  for the forty week
period ended October 7, 1997,  and October 1, 1996. The  consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements and notes thereto, together with management's discussion and analysis
of financial  condition  and results of  operations,  contained in the Company's
Annual Report dated March 27, 1997.

     In February 1997,  FASB issued  Statement No. 128,  Earnings Per Share (FAS
128),  effective  for the Company for the interim  periods and years ended after
December 15, 1997.  FAS 128 replaces the  presentation  of primary  earnings per
share (EPS) with a presentation  of "basic" EPS. Basic EPS excludes the dilutive
effects of common stock equivalent shares in its calculation. A diluted EPS will
still be required,  and will be computed  similarly to the current fully diluted
EPS . Under FAS 128, both the basic and diluted EPS amounts will be presented in
the financial  statements.  Also, the statement will require  restatement of all
prior period EPS data presented in the financial  statements.  EPS as calculated
at October 7, 1997 would not be materially  different if calculated  using basic
EPS.

     In accordance  with FASB Statement No. 121,  "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets Disposed Of," the Company records
impairment  losses on  long-lived  assets  used in  operations  when  events and
circumstances  indicate  that the assets  might be  impaired,  and the  carrying
amount of the assets may not be recoverable from future  undiscounted cash flows
generated by those assets. If assets are considered impaired,  the impairment to
be  recognized  is  measured by the amount by which the  carrying  amount of the
assets  exceed  the fair  value of the  assets.  Assets  to be  disposed  of are
reported at the lower of the carrying amount or fair value less costs to sell.

     Due to the closing of certain  restaurants  in the current  quarter  ending
October  7,  1997,  the  Company  indicated  that  $945,476  of assets  might be
impaired.  However,  as of October 7, 1997,  the Company had not yet  determined
which of those assets would be utilized in other  restaurants,  sold, or kept in
storage, and thus there is no determination of future undiscounted cash flows to
be generated from the assets. Nonetheless, it is reasonably possible that in the
next  quarter,  an estimate  of  undiscounted  cash flows will be  determinable,
resulting in a need to write-down those assets to fair value.


                                       6

<PAGE>



(2)  Income (Loss) Per Share

     Loss per share is determined based on the weighted average number of common
and common  equivalent  shares  outstanding  during each  period.  The  weighted
average number of common and common equivalent shares  outstanding for the forty
weeks ended October 7, 1997 and October 1, 1996 were  5,730,700  and  4,307,252,
respectively.

(3)  Statements of Cash Flow

     Noncash financing and investing activities consist of the following for the
period ended October 7, 1997 and October 1, 1996:

     October 7, 1997
o    Deferred  revenue  reclassified  to note payable to an officer of $120,000.

     October 1, 1996
o    Property and equipment sold in exchange for note receivable, net of related
     deferred income of $201,560.

(4)  Related Party Transactions

     On July 17 1996, the Company made a loan to Timothy J. Jeffrey,  the former
President,  Chief Executive  Officer and a director of the Company in the amount
of  $66,873.31  was due July 31, 1997. As of the filing of this report that loan
has not been paid.

     In February 1997 the Company's board of directors  determined that $120,000
advanced to the Company by one of its officers should be refunded.  Accordingly,
this amount was reclassified from deferred revenue to note payable - officer, of
which $40,000 is still payable as of October 7, 1997.

(5)  Subsequent Events

The following event occurred subsequent to October 7, 1997:

o    Three under  performing  restaurants of which two were Spaghetti Jack's and
     one was a Sub & Stuff have been closed that were previously  opened earlier
     in 1997 or late 1996.



                                        7

<PAGE>



                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATION


Company-Owned Restaurants Opened at End of Period

                                                  Forty Weeks Ended
                                            October 7,        October 1,
                                               1997              1996
                                           -------------     ------------

                  Spaghetti Jack's              5                   4
                  Sub & Stuff                  18                  16

Results of Operations

         The following table sets forth  information  derived from the Company's
statement of operations expressed as a percentage of revenues:


                                                     Forty Weeks Ended
                                             -----------------------------------
                                                October 7,           October 1,
                                                  1997                  1996
                                             -----------------------------------
Revenues.....................................    100.00%               100.00%
Cost of sales................................      69.3                  62.0
Restaurant operating expenses................      37.6                  28.8
Pre-opening expenses.........................       1.7                   2.5
Restaurant closing expenses..................      24.4                   0.0
Administrative expenses......................      20.3                  24.8
Other income (expense).......................        .2                 (10.7)
Income taxes.................................       0.0                   0.0
Noncash compensation expense.................       0.0                    .3
Net loss.....................................      53.1                  29.0




                                        8

<PAGE>



Twelve Week Period Ended October 7, 1997 and October 1, 1996

Revenues

         Revenues for the twelve week period ended October 7, 1997  increased by
$235,965  or 14.7%  compared to the twelve  week  period  ended  October 1, 1996
primarily for the reasons  discussed below.  Spaghetti  Jack's  restaurant sales
increased  by $245,836 or 62.7% in 1997.  The increase in sales is the result of
the opening of three  Company-owned  restaurants during 1997, and the opening of
four Company-owned restaurants late in 1996, as of November 5, 1997 all of these
have since been  closed,  in addition  one opened in 1995 has also been  closed.
Comparable  restaurant sales (defined as sales from restaurants open during both
fiscal periods for the entire period) for Spaghetti  Jack's decreased by $78,787
or 25.8% in the aggregate.  Sub & Stuff restaurant sales decreased by $27,668 or
2.3% in 1997. Three  restaurant  openings late 1996 and four in 1997 contributed
$65,313 in  restaurant  sales,  as of October  30, 1997 of these five have since
been closed. Comparable restaurant sales for Sub & Stuff decreased by $92,981 or
9.1% in the  aggregate.  These  decreases  in  comparable  restaurant  sales for
Spaghetti  Jack's  and  Sub &  Stuff  are due to  discontinuing  couponing  as a
marketing  tool in early 1997,  and increased  competition in their core market.
Spaghetti Jack's royalty income  decreased by $7,917 or 29.4% in 1997,  compared
to the same period in 1996,  due to the closing of four  franchise  Restaurants.
Sub & Stuff royalty income increased $716 or 19.2% in 1997, compared to the same
period in 1996.  Sub & Stuff did not have any franchise fees for the twelve week
period ended October 7, 1997.  Spaghetti  Jack's  franchise  fees for the twelve
week  period  ended  October  7, 1997 were  $25,000  which is the  result of the
addition of one franchisee.

Cost of Sales

         Cost of sales  for the  twelve  week  period  ended  October  7,  1997,
compared to the twelve week period ended October 1, 1996,  increased $396,315 or
38.7% primarily as a result of opening seven Company-owned  restaurants in 1997,
and seven Company-owned  restaurants late in 1996, as of November 5, 1997 twelve
of these have since been  closed,  in addition  one opened in 1995 has also been
closed.  Spaghetti Jack's food and paper costs increased by $102,347 or 88.1% in
1997,  compared to the same period in 1996.  This  increase is attributed to the
opening  of three  Company-owned  restaurants  in 1997  and  four  Company-owned
restaurants  late in 1996,  as of  November 5, 1997 all of these have since been
closed,  in addition one opened in 1995 has also been closed. As a percentage of
Spaghetti  Jack's sales,  the cost of food and paper  increased to 34.3% in 1997
from 29.6% compared to the same period in 1996. This increase is due to a change
in product  specifications  resulting in larger  portions.  Sub & Stuff food and
paper cost decreased by $14,768 or 3.8% in 1997,  compared to the same period in
1996. As a percentage of Sub & Stuff sales, the cost of food and paper decreased
to 31.9% in 1997 from 32.4% in the comparable  period in 1996.  Spaghetti Jack's
cost of wages and benefits increased by


                                        9

<PAGE>



$184,675 or 156.8% in 1997,  compared to the twelve week period ended October 1,
1996. As a percentage of Spaghetti  Jack's  restaurant  sales, the cost of wages
and  benefits  increased to 47.4% in 1997 from 30.0% in 1996.  This  increase in
wages and  benefits,  as a percentage of  restaurant  sales,  is a result of the
fixed component of management salaries and crew wages, compared to the low sales
volume of the new restaurants,  decreases in same store sales, and lack of labor
efficiencies.  Sub & Stuff wages and benefits  increased by $124,061 or 30.6% in
1997,  compared  to the same  period  in 1996.  As a  percentage  of Sub & Stuff
restaurant sales, the cost of wages and benefits increased to 45.6% in 1997 from
34.1% in the  comparable  period in 1996.  This  increase is  attributed  to the
opening of Company-owned restaurants as stated above.

Restaurant Operating Expense

         Overall restaurant  operating expenses for the twelve week period ended
October 7, 1997,  compared  to the twelve  week  period  ended  October 1, 1996,
increased  by  $327,685  or  72.3%  primarily  as  a  result  of  opening  seven
Company-owned  restaurants in 1997, and seven Company-owned  restaurants late in
1996, as well as, an increase in  depreciation  and  amortization of $129,960 or
202.8% associated with new restaurant development. As of November 5, 1997 twelve
of these  restaurants have since been closed, in addition one opened in 1995 has
also been closed.  Spaghetti Jack's restaurant  operating  expenses increased by
$254,774 or 207.0% primarily a result of opening three Company-owned restaurants
in 1997, and four Company-owned  restaurants late in 1996, of which depreciation
and  amortization  accounts for $83,781 of the increase.  As of November 5, 1997
all of these  restaurants  have since been closed,  in addition to one opened in
1995 has also been closed. As a percentage of Spaghetti Jack's restaurant sales,
operating  expenses  increased  to  59.2%  in  1997,  compared  to  31.4% in the
comparable  twelve week period ended  October 1, 1996.  Sub & Stuff's  operating
expenses  increased  by  $72,913 or 22.1% in 1997,  primarily  the result of new
restaurant openings,  as well as an increase in depreciation and amortization of
$46,180  associated  with new restaurant  development.  As a percentage of Sub &
Stuff restaurant sales,  operating expenses increased to 34.7% compared to 27.8%
in the comparable twelve week period ended October 1, 1996.

Pre-opening Expenses

         Pre-opening  expenses are those costs  associated with the opening of a
Company-owned  restaurant.  The expenses  consist  principally of  non-recurring
costs such as employee  recruiting  and training and supplies and  miscellaneous
expenditures.  During the twelve week period ended October 7, 1997 there were no
pre-opening  expenses as compared to $4,131 for the  comparable  period in 1996.
Costs are expensed as incurred.





                                        10

<PAGE>



Restaurant Closing Expenses

         Restaurant  closing  costs are  recorded  when the  decision to close a
restaurant  is made.  Restaurant  closing costs include  estimated  losses,  the
unrecoverable  balances  of  leasehold  improvements,  and other  expenses.  The
Company has recorded all reasonably  estimable  costs as of October 7, 1997. For
the twelve  week period  ended  October 7, 1997 the  Company  recorded  costs of
$1,732,576  for  the  closing  of six  Spaghetti  Jack's  and  four  Sub & Stuff
restaurants. The costs of the additional three (two Spaghetti Jack's and one Sub
& Stuff) restaurant  closings  subsequent to this period will be recorded in the
next quarter.

Administrative Expenses

         Administrative  expenses  decreased by 29.2% or $138,671 for the twelve
week period  ended  October 7, 1997,  compared  to the twelve week period  ended
October 1, 1996.  This  decrease  is  attributed  to the  elimination  of twelve
corporate  positions,  relocating  the  corporate  office and the  reduction  of
general overhead expenses.

Other Income and Expense

         Interest  income  decreased  by $9,783 to $7,273  for the  twelve  week
period ended  October 7, 1997,  compared to the twelve week period ended October
1, 1996.  Interest expense  decreased by $131,190 to $30,669 for the twelve week
period ended  October 7, 1997,  compared to $161,859 for the  comparable  period
ended October 1, 1996.  This  decrease in interest  expense is the result of the
repayment  of debt  with  proceeds  of the  Company's  initial  public  offering
completed December 18, 1996.

Income Taxes

         The Company  continues to operate  unprofitably  and to accumulate  net
operating loss carryforwards, and as a result, does not have taxable income.

Forty Week Period Ended October 7, 1997 and October 1, 1996

Revenues

         Revenues for the forty week period ended  October 7, 1997  increased by
$1,727,404  or 32.2%  compared  to the forty week period  ended  October 1, 1996
primarily for the reasons  discussed below.  Spaghetti  Jack's  restaurant sales
increased by $1,205,591  or 84.9% in 1997,  compared to the same period in 1996.
The increase in sales is the result of opening three  Company-owned  restaurants
during 1997 and  opening  four  Company-owned  restaurants  late in 1996,  as of
November 5, 1997 all of these have since been closed,  in addition one opened in
1995 has also been closed.. Comparable restaurant


                                       11

<PAGE>



sales (defined as sales from restaurants open during both fiscal periods for the
entire  period)  for  Spaghetti  Jack's  decreased  by  $270,207 or 26.1% in the
aggregate, this decrease is due to increased competition in the core market. Sub
& Stuff restaurant  sales increased  $501,276 or 13.2% for the forty week period
ended October 7, 1997, as compared to the same period in 1996.  Three restaurant
openings late in 1996 and four in 1997 contributed $709,386 in restaurant sales,
as of October 30,  1997 of these five have since been  closed.  The  increase in
sales is the result of  opening  four  Company-owned  restaurants  in 1997,  the
opening  of  three  Company-owned  restaurants  late  in  1996,  relocating  one
restaurant,  relocating  and dual branding the second Sub & Stuff  restaurant by
adding  the  Spaghetti  Jack's  menu,  and dual  branding  the third Sub & Stuff
restaurant  in an  existing  location  by  adding  the  Spaghetti  Jack's  menu.
Comparable  restaurant  sales for Sub & Stuff decreased  $208,110 or 6.1% in the
aggregate.  Spaghetti Jack's royalty income decreased  $32,691 or 34.5% in 1997,
compared  to the  same  period  in 1996  due to the  closing  of four  franchise
restaurants.  Sub & Stuff royalty income  increased  $2,228 or 23.5% in 1997, as
compared to the same period in 1996.  Sub & Stuff  franchise  fees for the forty
week period  ended  October 7, 1997 totaled  $15,000  which is the result of the
addition of one franchisee. Sub & Stuff franchise fees for the forty week period
ended October 1, 1996 totaled  $9,000 which is the result of the addition of one
franchisee.  Spaghetti  Jack's  franchise  fees for the forty week period  ended
October 7, 1997 totaled $70,000 of which $45,000 is a fee fortfeiture on an Area
Development  Agreement and $25,000 is the addition of one franchisee.  Spaghetti
Jack's franchise fees for the comparable period in 1996 totaled $25,000.

Cost of Sales

         Cost of sales for the forty week period ended October 7, 1997, compared
to the forty week period ended  October 7, 1996,  increased  $1,587,704 or 47.7%
primarily as a result of opening seven  Company-owned  restaurants  in 1997, and
seven  Company-owned  restaurants late in 1996, as of November 5, 1997 twelve of
these have  since  been  closed,  in  addition  one opened in 1995 has also been
closed.  Spaghetti  Jack's food and paper costs increased by $386,530 or 92.2%in
1997,  compared to the same period in 1996.  This  increase is attributed to the
opening  of  Company-owned  restaurants  as stated  above.  As a  percentage  of
Spaghetti  Jack's sales,  the cost of food and paper  increased to 30.7% in 1997
from  29.5% in the  comparable  period  in  1996.  Sub & Stuff  food  and  paper
increased by $80,184 or 6.5% in 1997,  compared to the same period in 1996. As a
percentage of Sub & Stuff restaurant sales, the cost of food and paper decreased
from 32.4% to 30.5% in 1997,  compared to the same period in 1996. This decrease
is attributed  to  operational  efficiencies,  and a price  increase.  Spaghetti
Jack's  cost of wages  and  benefits  increased  by  $705,647  or 173.2% in 1997
compared  to the same  period  in 1996.  As a  percentage  of  Spaghetti  Jack's
restaurant sales, the cost of wages and benefits increased to 42.4% in 1997 from
28.7% in the comparable period in 1996. This increase in wages and benefits,  as
a  percentage  of  restaurant  sales,  is a result  of the  fixed  component  of
management salaries and crew wages, compared to the low sales volume of


                                       12

<PAGE>



the  new   restaurants,   decreases  in  same  store  sales,and  lack  of  labor
efficiencies.  Sub & Stuff wages and benefits  increased by $437,942 or 34.5% in
1997  compared  to the same  period  in  1996.  As a  percentage  of Sub & Stuff
restaurant  sales, the cost of wages and benefits  increased to 39.6% from 33.3%
in 1997, compared to the same period in 1996.

Restaurant Operating Expenses

         Overall  restaurant  operating expenses for the forty week period ended
October  7, 1997  compared  to the forty  week  period  ended  October  1, 1996,
increased  by  $1,119,896  or 20.9%  primarily  as a  result  of  opening  seven
Company-owned restaurants in 1997, seven Company-owned restaurants late in 1996,
as well as, an increase in depreciation  and  amortization of $391,854 or 163.9%
associated  with new  restaurant  development.  As of November 5, 1997 twelve of
these  restaurants  have since been  closed,  in addition one opened in 1995 has
also been closed.  Spaghetti Jack's restaurant  operating  expenses increased by
$773,485 or 159.2% primarily a result of opening three Company-owned restaurants
in 1997, and four Company-owned restaurants late in 1996, as of November 5, 1997
all of these  have  since been  closed.  As a  percentage  of  Spaghetti  Jack's
restaurant  sales,  operating  expenses  increased to 48.0% in 1997  compared to
34.2% in the  comparable  forty week period ended  October 1, 1996.  Sub & Stuff
operating  expenses  increased  by  $351,805 or 33.1% in 1997  primarily  as the
result of new restaurant  openings,  as well as an increase in depreciation  and
amortization of $124,270 or 113.3%  associated with new restaurant  development.
As a percentage of Sub & Stuff restaurant sales, operating expenses increased to
32.8% in 1997,  compared  to 27.9% in the  comparable  forty week  period  ended
October 1, 1996.

Pre-Opening Expenses

         Pre-opening  expenses are those costs  associated with the opening of a
Company-owned  restaurant.  The expenses  consist  principally of  non-recurring
costs such as employee  recruiting  and training and supplies and  miscellaneous
expenditures.  During  the forty week  period  ended  October 7, 1997,  expenses
totaled  $123,054 related to the opening of seven company  restaurants.  For the
forty week period ended October 1, 1996, expenses totaled $133,973.

Restaurant Closing Expenses

         Restaurant  closing  costs are  recorded  when the  decision to close a
restaurant  is made.  Restaurant  closing costs include  estimated  losses,  the
unrecoverable  balances  of  leasehold  improvements,  and other  expenses.  The
Company has recorded all reasonably  estimable  costs as of October 7, 1997. For
the forty week  period  ended  October  7, 1997 the  Company  recorded  costs of
$1,732,576 for the closing of six Spaghetti Jack's and four




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<PAGE>



Sub & Stuff restaurants. The costs of the additional three (two Spaghetti Jack's
and one Sub & Stuff)  restaurant  closings  subsequent  to this  period  will be
recorded in the next quarter.

Administrative Expenses

         Administrative  expenses  increased  by 8.4% or $111,709  for the forty
week period  ended  October 7, 1997,  compared  to the forty week  period  ended
October 1, 1996. This net increase is attributed to the following:  1) Increased
insurance  costs to include a directors  and officers  policy that was issued in
late 1996 of $55,196; 2) Professional fee costs increased by $122,241;  3) Wages
and benefits decreased $99,849 with the elimination of corporate  positions;  4)
Costs of $57,967  incurred due to three  locations  that were leased which build
outs were not done due to the lack of funding

Other Income and Expense

         Interest  income  decreased  to $36,272 for the forty week period ended
October 7, 1997, over the comparable period in 1996.  Interest expense decreased
by  $417,116  to $54,348  for the period  ended  October  7, 1997,  compared  to
$471,464  for the  comparable  forty week  period  ended  October 1, 1996.  This
decrease  in  interest  expense  is the  result  of the  repayment  of debt with
proceeds of the Company's initial public offering completed December 18, 1996.

Income Taxes

         The Company  continues to operate  unprofitably  and to accumulate  net
operating loss carryforwards, and as a result, does not have taxable income.

Liquidity and Capital Resources

         The Company's restaurant operations do not have significant receivables
or inventory and receive trade credit based upon negotiated  terms in purchasing
food and  supplies.  As of October 7, 1997,  the Company  had a working  capital
deficit of  $2,533,481,  as compared to a deficit of  $2,694,273,  at October 1,
1996.

         The Company  incurred losses for the forty week period ended October 7,
1997 and October 1, 1996 of $3,768,826 and $1,558,639  resulting in cash used by
operating   activities   of  $1,816,787   and   $1,044,639  in  1997  and  1996,
respectively.  The Company will not be able to sustain  losses or use of cash by
operating  activities  similar to the levels incurred through third quarter 1997
and 1996 without obtaining additional financing.  The Company does not presently
have any commitments to obtain  additional  financing.  Management's  plans have
included the elimination of twelve  corporate  staff  positions  compared to the
number of positions at year end 1996. The Company relocated its


                                       14

<PAGE>



corporate  offices and closed  thirteen (eight  Spaghetti  Jack's and five Sub &
Stuff's) under  performing  restaurants that were opened earlier in 1997 or late
in 1996, in an effort to reduce operating expenses and cash flow needs.

Continued Negative Cash Flow

         Since July 15, 1997,  the Company has continued to experience  negative
cash flow as sales revenues have not been  sufficient to meet the Company's cash
needs.  Prior to October 7, 1997, the Company borrowed  $500,000 on a short term
basis from WFB, Inc., a major  stockholder of the Company,  to fund a portion of
the Company's cash flow deficit.

         The Company has closed thirteen  restaurants  since July 17,1997 (eight
Spaghetti Jack's and five Sub & Stuff's), and as of November 25, 1997 had twenty
restaurants open (three Spaghetti Jack's and seventeen Sub & Stuff's).

         The Company is  continuing  to monitor  sales  levels of certain  other
restaurant locations and is considering  additional closings of under-performing
units. In addition, the Company has liquidated assets from closed units to raise
cash to repay  indebtedness.  In the event that sales levels continue to decline
or are not  sufficient  to meet the  Company's  cash needs,  the Company will be
required to borrow additional funds, sell additional  assets, or otherwise raise
liquid capital.

         There is no  assurance  that any such sources of cash will be available
or that the Company will be able to meet its cash needs.

         During the forty week period ended  October 7, 1997,  the Company had a
cash deficit from investing  activities of $1,252,828,  as compared to a deficit
of $355,649  for 1996.  The  increase in the  deficit was due  primarily  to the
purchases of property, plant and equipment related to the restaurant openings in
1997.  This increase was  partially  offset by the proceeds from the sale of one
Company-owned Sub & Stuff in 1997.

         Capital expenditures during the forty week period ended October 7, 1997
totaled  $1,340,734,  as compared to expenditures of $606,949 for the comparable
period in 1996. These expenditures are primarily  associated with the opening of
seven Company  owned  restaurants  of which four were Sub & Stuff's,  three were
Spaghetti Jack's,  and the addition of the third dual branded Sub & Stuff adding
the Spaghetti Jack's menu to an existing location in the forty week period ended
October 7, 1997.  The  Company  opened  two Sub & Stuff  restaurants  during the
comparable  period in 1996.  The amount of the Company's cash  requirements  for
capital expenditures depends in part on the number of new restaurants opened and
the development costs associated with such restaurants.

         The Company does not have any capital expenditures planned for the near
future, as to all available funds will be required to meet operational  expenses
and repay debt.


                                       15

<PAGE>



         During the forty week  period  ended  October 7, 1997,  the Company had
cash flows from financing  activities of $846,434,  as compared to cash flows of
$837,530 for the comparable period in 1996.




                                       16

<PAGE>



                                     PART II
                                OTHER INFORMATION

ITEM 1:           LEGAL PROCEEDINGS


                           A lawsuit has been filed in Sedgwick  County,  Kansas
                  against  the  Company  and  others by a group of  shareholders
                  seeking to represent the class of shareholders  that purchased
                  shares of the Company's stock in the registered stock offering
                  concluded  late last year.  The petition  alleges that certain
                  statements  made by the  Company,  certain  officers,  and the
                  underwriter were untrue or misleading.  The Company intends to
                  defend this lawsuit vigorously.


ITEM 2:           CHANGES IN SECURITIES


                  None


ITEM 3:           DEFAULTS UPON SENIOR SECURITIES


                  Not applicable


ITEM 4:           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


                  None


ITEM 5:           OTHER INFORMATION

                  None










                                       17

<PAGE>



ITEM 6:           EXHIBITS AND REPORTS ON FORM 8-K

         (a)      EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF REGULATION
                  S-B

                  3(a)*             Articles of Incorporation
                  3(b)*             Bylaws
                  27                Financial Data Schedule

*    Incorporated  by  reference  to such  numbered  exhibits  filed  as part of
     Registration  Statement No. 333- 5488-D filed with the Commission on August
     29, 1996.

          (b)      REPORTS ON FORM 8-K

          One Form 8-K was filed on August 28, 1997.




                                       18

<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 thereto duly authorized.

Dated: November 26, 1997                    STOICO RESTAURANT GROUP, INC.
                                            (Registrant)


                                            /s/ Louis Stoico, Jr.
                                            ------------------------------
                                            Louis Stoico, Jr.
                                            Chairman of the Board and President


                                            /s/ Cathy K. Martsolf
                                            -------------------------------
                                            Cathy K. Martsolf
                                            Senior Vice President of 
                                            Administration and principal 
                                            accounting officer



                                       19

<PAGE>



                                               EXHIBIT INDEX

                  Exhibit Number            Description
                  3(a)*                     Articles of Incorporation
                  3(b)*                     Bylaws
                  27                        Financial Data Schedule

*    Incorporated  by  reference  to such  numbered  exhibits  filed  as part of
     Registration  Statement No.  333-5488-D filed with the Commission on August
     29, 1996.




                                       20