<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 March 28, 1999

                                       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)


                              2300 Resource Drive
                           Birmingham, Alabama  35242
                    (Address of principal executive offices)
                                        

                                 (205) 981-2800
              (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 April 29, 1999, there were 5,817,960 shares of the registrant's common
stock, par value $.01 per share.
<PAGE>
 
                       PJ AMERICA, INC AND SUBSIDIARIES
                                        
                                     INDEX


PART I.   FINANCIAL INFORMATION                                     Page No.
                                                                    --------  
 
Item 1.   Financial Statements
 
 
          Condensed Consolidated Balance Sheets (Unaudited) -
          March 28, 1999 and December 27, 1998                          2
 
 
          Condensed Consolidated Statements of Income (Unaudited) -
          Three Months Ended March 28, 1999 and March 29, 1998          3
 
 
          Condensed Consolidated Statements of Cash Flows 
          (Unaudited) - Three Months Ended March 28, 1999 
          and March 29, 1998                                            4
 
 
          Notes to Condensed Consolidated Financial Statements
          (Unaudited)                                                   5
 
 
Item 2.   Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                           6
 
 
PART II.  OTHER INFORMATION
 
 
Item 6.   Exhibits and Reports on Form 8-K                              8
<PAGE>
 
PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

                       PJ AMERICA, INC. AND SUBSIDIARIES
                     Condensed Consolidated Balance Sheets

<TABLE> 
<CAPTION> 
                                                 March 28,       December 27,
                                                   1999              1998
                                                (Unaudited)         (Note)
                                                -----------      ------------
<S>                                             <C>              <C>
(In thousands)
Assets
Current assets:
  Cash and cash equivalents                      $  5,600         $  5,026
  Inventories                                         527              549
  Prepaid expenses and other                          390              264
  Investments                                       7,792            8,305
  Deferred income taxes                               151              151
                                                 --------         --------
Total current assets                               14,460           14,295

Investments                                         3,736            5,041
Net property and equipment                         22,721           21,146
Deferred franchise and development costs,
  net of accumulated amortization                   3,691            3,546
Goodwill, net of accumulated amortization           4,534            4,576
Other assets                                          224              209
                                                 --------         --------
Total assets                                     $ 49,366         $ 48,813
                                                 ========         ========

Liabilities and Stockholder's Equity         
Current liabilities:
  Accounts payable                               $    244         $    508
  Accounts payable - PJI                               --            1,345
  Accrued expenses                                  4,542            4,263
                                                 --------         --------
Total current liabilities                           4,786            6,116

Deferred income taxes                               1,130              951

Stockholders' equity:
  Common stock                                         58               58
  Additional paid-in-capital                       32,975           32,565
  Retained earnings                                10,417            9,123
                                                ---------         --------
Total stockholders' equity                         43,450           41,746
                                                ---------         --------
Total liabilities and stockholders' equity      $  49,366         $ 48,813
                                                =========         ========
</TABLE> 

Note: The condensed consolidated balance sheet at December 27, 1998 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
                                                 March 28,       March 29,
                                                   1999            1998
                                                ----------       ---------
<S>                                             <C>              <C>
(In thousands, except per share amounts)
Restaurant sales                                 $ 21,855         $ 14,218

Restaurant operating expenses:
  Cost of sales                                     6,620            4,485
  Salaries and benefits                             6,081            3,783 
  Other operating expenses                          5,241            3,359
  Depreciation and amortization                       710              400
                                                 --------         --------
                                                   18,652           12,027
                                                 --------         -------- 

Restaurant operating income                         3,203            2,191
General and administrative expenses                 1,137              720    
                                                 --------         --------
Operating income                                    2,066            1,471

Other income                                          169              272
                                                 --------         --------
Income before income taxes and cumulative
  effect of change in accounting principle          2,235            1,743
Income tax expense                                    760              575
                                                 --------         --------
Income before cumulative effect of change
  in accounting principle                           1,475            1,168
Cumulative effect of change in accounting 
  principle, net of taxes                            (181)              --
                                                 --------         --------
Net income                                       $  1,294         $  1,168
                                                 ========         ========

Basic earnings per share:                    
  Income before cumulative effect of change
   in accounting principle                       $   0.25         $   0.20
  Cumulative effect of accounting change,
   net of taxes                                     (0.03)              --
                                                 --------         --------
Net income per share - Basic                     $   0.22         $   0.20
                                                 ========         ========

Diluted earnings per share:                
  Income before cumulative effect of change
   in accounting principle                      $    0.25        $    0.20
  Cumulative effect of accounting change,
   net of taxes                                     (0.03)              --
                                                ---------        ---------   
  Net income per share - Diluted                $    0.22        $    0.20
                                                =========        =========     
Weighted average shares outstanding - Basic         5,779            5,782
                                                =========         ========
Weighted average shares outstanding - Diluted       5,996            5,909
                                                =========         ========
</TABLE> 

                                       3
<PAGE>
 

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


<TABLE> 
<CAPTION> 
                                                        Three Months Ended 
                                                      March 28,     March 29,
                                                        1999          1998
                                                      ---------     ---------
<S>                                                   <C>           <C>
(In thousands)
Cash Flows from Operating Activities
  Net cash provided by operating activities           $   760        $  1,828

Cash Flows from Investing Activities
  Purchases of property, equipment, franchise 
   and development fees                                (2,414)         (1,067)
  Maturity of investments                               1,818          (2,561)
                                                     --------        --------
   Net cash used in investing activities                 (596)         (3,628)

Cash Flows from Financing Activities               
  Proceeds from exercise of stock options                 410              16
                                                     --------        --------
   Net cash provided by financing activities              410              16

Net increase (decrease) in cash                           574          (1,784)
Cash and cash equivalents at beginning of year          5,026           6,674
                                                     --------        --------

Cash and cash equivalents at end of period           $  5,600        $  4,890
                                                     ========        ========

</TABLE> 

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

March 28, 1999

Note 1 - Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with 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 months ended March 28, 1999 are
not necessarily indicative of the results that may be expected for the year
ending December 26, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto included in the PJ America, Inc.
Annual Report on Form 10-K for the year ended December 27, 1998.

     The accompanying unaudited condensed consolidated financial statements
include the accounts of PJ America, Inc. and its wholly-owned subsidiaries (the
"Company"). All significant inter-company transactions between the consolidated
companies have been eliminated.

     The preparation of unaudited condensed consolidated financial statements
requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results
could differ from these estimates.

Note 2 - Change in Accounting for Deferred Commissary Start-Up Costs

     In the first quarter of 1999, the Company adopted the American Institute of
CPAs Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-up
Activities," which requires entities to expense all start-up and pre-opening
costs as they are incurred. The Company previously deferred commissary start-up
costs and amortized them over a period of one year from the facility's opening
date. The cumulative effect of this change in accounting principle, net of tax,
was $181 thousand or $.03 per share and has been recorded in the first quarter
of 1999 as required by the SOP.

                                       5
<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 54% to $21.9 million for the
three months ended March 28, 1999, from $14.2 million for the comparable period
in 1998. This increase was primarily due to a 65% increase in the number of
equivalent restaurants open during the three months ended March 28, 1999 as
compared to 1998. "Equivalent restaurants" represents the number of restaurants
open at the beginning of a given period, adjusted for restaurants opened or
acquired during the period on a weighted average basis. Also, comparable sales
increased 3.1% for the three months ended March 28, 1999 over the comparable
period in 1998. The total average unit sales decreased 6% due to the significant
increase in new and acquired restaurants in the Company's "New Markets", which
primarily are restaurants located in Utah, California, Oregon, and Puerto Rico.

     Costs and Expenses. Cost of sales, which consists of food, beverage and
paper costs, decreased as a percentage of restaurant sales to 30.3% for the
three months ended March 28, 1999, from 31.5% for the comparable period in 1998.
This decrease is primarily attributable to a slight shallowing of discounts,
lower meat and box prices, and a higher proportion of restaurants in New
Markets. All of the Company's restaurants in the domestic United States receive
product from PJI, and each restaurant is charged the same price for product,
regardless of the location of the restaurant.
 
     Salaries and benefits, which consist of all store level employee wages,
taxes, and benefits increased as a percentage of restaurant sales to 27.8% for
the three months ended March 28, 1999, from 26.6% for the comparable period in
1998. The increase in salaries and benefits as a percentage of restaurant sales
was primarily due to the increase in the proportion of new and acquired
restaurants in New Markets.

     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, pre-opening expenses and
advertising expenses. Other operating expenses increased as a percentage of
restaurant sales to 24.0% for the three months ended March 28, 1999, from 23.6%
for the comparable period in 1998. This increase is primarily attributable to a
higher proportion of newer restaurants and higher occupancy costs in New
Markets, partially offset by increased leverage of expenses as a result of
comparable store sales increases and increased purchasing power for various
expenses.

                                       6
<PAGE>
 
     Depreciation and amortization increased as a percentage of restaurant sales
to 3.2% for the three months ended March 28, 1999, from 2.8% for the comparable
period in 1998. This increase is primarily attributable to amortization of
goodwill of acquired businesses in 1998 and a higher proportion of newer
restaurants.

     General and administrative expenses increased slightly as a percentage of
restaurant sales to 5.2% for the three months ended March 28, 1999, from 5.1%
for the comparable period in 1998. This slight increase was primarily due to the
leveraging of general and administrative expenses as a result of increased
sales, partially offset by additional corporate infrastructure necessary to
support current and future growth.

     Other Income. Other income which consists primarily of investment income
decreased $.1 million for the three months ended March 28, 1999. The decrease in
investment income is a result of a lower investment balance due to the acquired
businesses in 1998. Investment balances are considered available to fund growth
and acquisitions.

Liquidity and Capital Resources

     The Company requires capital primarily for the development and acquisition
of new restaurants. Capital expenditures of approximately $2.4 million for the
three months ended March 28, 1999, were funded by maturity of investments and
cash flow from operations.

     Cash flow from operations decreased to $.8 million for the three months
ended March 28, 1999 from $1.8 million for the comparable period in 1998,
primarily due to the payment of a $1.35 million payable to Papa John's
International.

     Capital expenditures are expected to be approximately $9 million for 1999,
all of which is expected to be for restaurant development and existing
restaurant improvements. The Company also may acquire the operations of other
Papa John's franchisees if such operations become available on terms
satisfactory to the Company. Capital resources at March 28, 1999 include $17.1
million of cash and investments. The Company plans to fund its capital
expenditures through 1999 from available cash, investments, and cash generated
from operations. The Company has not sought and does not have any commitments
for any credit facilities.

Impact of Year 2000

     Some of the Company's older purchased software programs were written using
two digits rather than four to define the applicable year. As a result, time-
sensitive software or hardware recognizes a date using "00" as the year 1900
rather than the year 2000. This could cause a system failure or miscalculations
resulting in disruptions of important administrative processes, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities. The Company has completed an
assessment of its computer systems and will have to modify or replace certain
software and hardware so that they will function properly in the year 2000 and
thereafter. Based on the Company's assessment or representations from software
suppliers, or both, the Company believes the total Year 2000 project cost will
be less than $25,000 and costs incurred to date have been less than $5,000. Much
of the cost related to Year 2000 coincides with existing management plans to
replace certain systems (principally the financial accounting system) in order
to accommodate the Company's planned growth. The Company expects the new
accounting system to be implemented by June 1999. The timing of implementation
was not materially affected by Year 2000 concerns.

                                       7
<PAGE>
 
     The Company believes that with the planned modifications to existing
software and/or conversions to new software and hardware as described above, the
Year 2000 issue will not pose significant operational problems. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 issue could have a material impact on certain administrative
processes, but would not be expected to have a material impact on restaurant
operating processes.

     The Company's payroll system interfaces directly with a significant third
party vendor. The Company has completed the testing and implementation of the
Year 2000 compliant software utilized to interface directly with this third
party vendor. The Company is in the process of querying its significant vendors
with respect to Year 2000 issues. Based on the responses received from vendors,
the Company is not aware of any vendors with a Year 2000 issue that would
materially impact results of operations, liquidity, or capital resources.
However, the Company has no means of ensuring that vendors will be Year 2000
ready. The inability of vendors to complete their Year 2000 resolution process
in a timely fashion could materially impact the Company, although the actual
impact of non-compliance by vendors is not determinable.

     The Company has no contingency plans in place in the event it does not
complete all phases of its Year 2000 program. The Company plans to evaluate the
status of completion in June 1999 to determine whether such contingency plans
are necessary, although at this time the Company knows of no reason its Year
2000 program will not be completed in a timely manner.


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

                  There were no reports filed on Form 8-K during the quarterly
                  period ended March 28, 1999.

                                       8
<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.



                                   PJ AMERICA, INC.




Date:  May 7, 1999                            /s/ D. Ross Davison  
                                   -----------------------------------------
                                                D. Ross Davison
                                    Vice President, Chief Financial Officer
                                   and Treasurer (Principal Financial Officer)

                                       9
<PAGE>
 
                                   EXHIBIT 11

                Statement Re:  Computation of Earnings Per Share


<TABLE>
<CAPTION>
                                                             Three Months           Three Months
                                                                Ended                   Ended
                                                            March 28, 1999         March 29, 1998
                                                            --------------         --------------  
<S>                                                        <C>                     <C>
(In thousands, except per share amounts)
 
Average shares outstanding - Basic                                    5,779                   5,782
 
Shares issuable upon the exercise of
  outstanding stock options and warrants                                217                     127
                                                            ---------------        ----------------
 
Weighted average shares outstanding - Diluted                         5,996                   5,909
                                                            ===============        ================
 
Income before cumulative effect of change in
  accounting principle                                               $1,475                  $1,168
 
Cumulative effect of change in accounting principle,
  net of taxes                                                         (181)                     --
                                                            ---------------        ----------------
 
Net income                                                           $1,294                  $1,168
                                                            ===============        ================
 
Basic earnings per share:
     Income before cumulative effect of change in
     accounting principle                                            $ 0.25                  $ 0.20
 
     Cumulative effect of accounting change, net of
         taxes                                                        (0.03)                     --
                                                            ---------------        ----------------
 
     Net income per share - Basic                                    $ 0.22                  $ 0.20
                                                            ===============        ================
 
Diluted earnings per share:
     Income before cumulative effect of change in
      accounting principle                                           $ 0.25                  $ 0.20
 
     Cumulative effect of accounting change, net
       of taxes                                                       (0.03)                     --
                                                            ---------------        ----------------
 
     Net income per share - Diluted                                  $ 0.22                  $ 0.20
                                                            ===============        ================
</TABLE>

                                       10