FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 2O549

(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 26, 1998
                               -------------------------------------

                                       OR

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

For the transition period from                  to
                               ----------------    -----------------

Commission file number   0-7166
                       --------------


                             DOUGHTIE'S FOODS, INC.
             (Exact name of Registrant as specified in its charter)


             VIRGINIA                                     54-0903892
  (State or other jurisdiction of                      (I.R.S. employer
   incorporation or organization)                   identification number)


                 2410 WESLEY  STREET,  PORTSMOUTH,  VIRGINIA  23707  
                    (Address of principal executive offices)

                                 (757) 393-6007
              (Registrant's telephone number, including area code)


             ------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)


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
   -----     -----


                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

Common Stock, $1 par value - 1,495,023 shares as of October 23,1998

<PAGE>
                 PART I.  FINANCIAL INFORMATION

Item 1.      Financial Statements

<TABLE>
                 DOUGHTIE'S FOODS, INC. AND SUBSIDIARY
               CONSOLIDATED BALANCE SHEETS (Unaudited) <F1>

<CAPTION>
                                         September 26,           December 27,
                                               1998                  1997
                                         -------------          ------------

<S>                                      <C>                    <C>

             ASSETS

CURRENT ASSETS:
 Cash                                    $      16,890          $     26,929
 Accounts receivable - trade, net            7,660,515             8,566,995
 Inventories                                 4,581,769             4,669,291
 Deferred income taxes                         372,220               372,220
 Prepaid expenses and other
  current assets                               139,434                68,166
                                         -------------          ------------

          Total Current Assets              12,770,828            13,703,601
                                         -------------          ------------

PROPERTY, PLANT AND EQUIPMENT -
 AT COST:
 Land                                          280,827               280,827
 Buildings                                   3,608,055             3,608,055
 Delivery equipment                            246,091               169,195
 Plant and refrigeration equipment           1,680,117             1,590,626
 Office equipment                              505,698               491,078
                                         -------------          ------------

                                             6,320,788             6,139,781

 Less - accumulated depreciation             3,714,917             3,513,216
                                         -------------          ------------

                                             2,605,871             2,626,565
                                         -------------          ------------

OTHER ASSETS                                   108,705               114,651
                                         -------------          ------------

                                         $  15,485,404          $ 16,444,817
                                         =============          ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
 Current portion of long-term debt       $     533,333          $    533,333
 Accounts payable                            3,489,350             3,198,641
 Income taxes payable                          404,788               891,657
 Accrued salaries, commissions and
  bonuses                                      136,965               182,965
 Other accrued liabilities                     106,661                63,948
                                         -------------          ------------

         Total Current Liabilities           4,671,097             4,870,544

LONG-TERM DEBT - less current portion        1,407,106             2,737,910
                                         -------------          ------------

         Total Liabilities                   6,078,203             7,608,454
                                         -------------          ------------

STOCKHOLDERS' EQUITY:
 Common stock - $1 par value;
  authorized 4,000,000 shares,
  issued and outstanding 1,495,023
  shares                                     1,495,023             1,495,023
 Additional paid-in capital                  2,807,037             2,807,037
 Retained earnings                           5,105,141             4,534,303
                                         -------------          ------------

         Total Stockholders' Equity          9,407,201             8,836,363
                                         -------------          ------------

                                         $  15,485,404          $ 16,444,817
                                         =============          ============

<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
                 DOUGHTIE'S FOODS, INC. AND SUBSIDIARY
            CONSOLIDATED STATEMENTS OF INCOME (Unaudited) <F1>

<CAPTION>

                                               QUARTERS ENDED                            NINE MONTHS ENDED
                                    ------------------------------------         -----------------------------------

                                    September 26,           September 27,        September 26,          September 27,
                                        1998                    1997                  1998                   1997
                                    -------------           ------------         -------------          ------------

<S>                                 <C>                     <C>                  <C>                   <C>

NET SALES                           $  23,596,821           $  24,172,942        $  65,892,880          $ 64,548,286

COST OF GOODS SOLD                     19,939,578              20,452,419           55,346,692            54,058,033
                                    -------------           -------------        -------------          ------------

GROSS PROFIT                            3,657,243               3,720,523           10,546,188            10,490,253
                                    -------------           -------------        -------------          ------------

SELLING, GENERAL AND ADMINISTRATIVE
 EXPENSES                               3,181,826               3,131,104            9,277,082             9,009,172

INTEREST EXPENSE                           40,227                  62,279              140,482               177,677
                                    -------------           -------------        -------------          ------------

                                        3,222,053               3,193,383            9,417,564             9,186,849
                                    -------------           -------------        -------------          ------------

INCOME BEFORE INCOME TAXES                435,190                 527,140            1,128,624             1,303,404

INCOME TAX EXPENSE                        163,196                 197,678              423,234               488,777
                                    -------------           -------------        -------------          ------------

NET INCOME                          $     271,994           $     329,462        $     705,390          $    814,627
                                    =============           =============        =============          ============

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                     1,495,023               1,495,091            1,495,023             1,496,415
                                    =============           =============        =============          ============

EARNINGS PER SHARE:

 BASIC                              $         .18           $         .22        $         .47          $        .54
                                    =============           =============        =============          ============

 DILUTED                            $         .18           $         .22        $         .47          $        .54
                                    =============           =============        =============          ============

CASH DIVIDENDS PER SHARE            $         .03           $        .027        $         .09          $       .081
                                    =============           =============        =============          ============


<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
<TABLE>

                 DOUGHTIE'S FOODS, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) <F1>

<CAPTION>

                                                     NINE MONTHS ENDED
                                          -----------------------------------

                                          September 26,           September 27,
                                              1998                    1997
                                          ------------           ------------

<S>                                      <C>                     <C>
Cash flows from operating activities:
 Net income                              $     705,390           $    814,627
 Adjustments to reconcile net income
  to net cash provided by
  (used for) operations:
  Depreciation                                 229,219                200,889
  (Gain) loss on sale of property, plant
   and equipment                                (4,389)                 5,408

(Increase) decrease in assets:
 Accounts receivable - trade, net              906,480             (1,839,273)
 Inventories                                    87,522               (505,994)
 Prepaid expenses and other current
  assets                                       (71,268)              (112,750)
 Other assets                                    5,946                (19,075)

Increase (decrease) in liabilities:
 Accounts payable                              290,709              2,333,697
 Income taxes payable                         (486,869)               413,777
 Accrued salaries, commissions and
  bonuses                                      (46,000)                38,050
 Other accrued liabilities                      42,713                 67,112
                                          ------------           ------------

                                             1,659,453              1,396,468
                                          ------------           ------------

Cash flows from investing activities:
 Additions to property, plant and
  equipment                                   (240,214)              (263,924)
 Proceeds from sale of property,
  plant and equipment                           36,078                924,758
                                          ------------           ------------

                                              (204,136)               660,834
                                          ------------           ------------

Cash flows from financing activities:
 Changes in long-term debt, including
  current portion                           (1,330,804)            (2,139,166)
 Acquisition of treasury stock                       0                 (6,459)
 Cash dividends                               (134,552)              (119,712)
                                          ------------           ------------

                                            (1,465,356)            (2,265,337)
                                          ------------           ------------

Net (decrease) in cash                         (10,039)              (208,035)
Cash at beginning of period                     26,929                372,687
                                          ------------           ------------

Cash at end of period                     $     16,890           $    164,652
                                          =============          =============
<FN>
<F1>
See Notes to Consolidated Financial Statements.
</FN>
</TABLE>
<PAGE>
                 DOUGHTIE'S FOODS, INC. AND SUBSIDIARY

          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)


NOTE 1
------

The consolidated  financial statements include the accounts of Doughtie's Foods,
Inc. (the "Company") and its wholly owned subsidiary.  All material intercompany
accounts and transactions have been eliminated in consolidation.

Although  the  accompanying  financial  statements  are  unaudited,   management
believes that they contain all adjustments  (consisting only of normal recurring
accruals) necessary to present fairly the financial position as of September 26,
1998 and  December  27,  1997,  results of  operations  for the  quarters  ended
September 26, 1998 and  September  27, 1997 and the nine months ended  September
26,  1998 and  September  27,  1997 and cash  flows  for the nine  months  ended
September  26, 1998 and September  27, 1997.  The results of operations  for the
periods cited above are not necessarily indicative of the results to be expected
for the full year.

NOTE 2
------

On  February  28,  1997,  the  Company  sold  the  assets  of its  manufacturing
division's  barbecue  and chili  business  for  approximately  $840,000 in cash.
Barbecue and chili sales accounted for less than 5% of  consolidated  1996 sales
volume. The net pretax gain on the sale was approximately $50,000.

On April 14, 1997, the Company sold the assets of its  manufacturing  division's
deli meats  business for  approximately  $486,000.  The terms of the sale were a
$286,000  cash down  payment  with the  $200,000  balance in the form of secured
notes.  Deli meat sales  accounted for less than 5% of  consolidated  1996 sales
volume. The net pretax gain on the sale was approximately $140,000.

NOTE 3
------

Inventories are stated at the lower of last-in, first-out (LIFO) cost or market.
Because  inventory  valuations  under  the LIFO  method  are  based on an annual
determination,  estimates  must be made at interim  dates of year-end  costs and
levels of inventories.  The possibility of variations between estimated year-end
costs  and  levels of LIFO  inventories  and the  actual  year-end  amounts  may
materially  affect the results of operations as finally  determined for the full
year.

NOTE 4
------

Cash paid for  interest  totaled  $40,227  and $62,279  for the  quarters  ended
September 26, 1998 and September 27, 1997 and $140,482 and $177,677 for the nine
months ended September 26, 1998 and September 27, 1997, respectively.

Cash paid for  income  taxes  totaled  $111,000  and $0 for the  quarters  ended
September  26, 1998 and September 27, 1997 and $910,000 and $73,000 for the nine
months ended September 26, 1998 and September 27, 1997, respectively.


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


Results of Operations
---------------------

         Sales for the quarter  ended  September  26, 1998 were $23.6 million or
2.4% lower than sales for the prior year's third quarter of $24.2 million. Sales
for the nine months ended  September  26, 1998 were $65.9 million or 2.1% higher
than sales of $64.5  million for the prior year's  first nine  months.  Sales to
multi-unit  customers account for the majority of the nine month increase.  This
increase was partially  offset by a reduction in sales caused by the disposition
of the manufacturing  division in the first and second quarters of 1997 and also
a decrease in  business  related to a reduction  in the  military  installations
served under the contract with the Department of Defense in the second and third
quarters of 1998.

         The Company's  gross profit margin (gross profit as a percentage of net
sales)  increased from 15.39% in the quarter ended September 27, 1997, to 15.50%
for the quarter ended September 26, 1998. The third quarter  increase was caused
by the decreased business with the Department of Defense which had a lower gross
profit margin. The gross profit margin for the nine months decreased from 16.25%
in 1997 to 16.01% in 1998. The slight  decline is due to the  disposition of the
manufacturing division, which had a higher markup.

         The Company's selling, general and administrative  expenses,  expressed
as a percentage  of net sales,  increased  from 12.95% for the third  quarter of
1997 to 13.47% for the  quarter  ended  September  26, 1998 and  increased  from
13.95% for the first nine  months of 1997 to 14.08%  for the nine  months  ended
September  26,  1998.  The  increase for the nine month period and quarter was a
result of the decrease in sales under the Department of Defense contract without
a corresponding decrease in selling, general and administrative expense.

         Interest  expense for the quarter ended September 26, 1998 decreased to
 .17% of  sales  compared  to .26% of sales  for the  third  quarter  of 1997 and
decreased to .21% of sales for the nine months ended September 26, 1998 compared
to .28% of sales for the first nine months of 1997.  Decreased  borrowing levels
and  lower  interest  rates  were the  cause of the  decreased  expense.  As the
interest on the Company's  debt is both London  Interbank  Offered Rates (LIBOR)
and prime  related,  interest  expense will  increase or decrease in  subsequent
periods based on  fluctuations  in these rates and the  borrowing  levels of the
Company.

         Income tax expense was $423,200 for the nine months ended September 26,
1998 compared to $488,800 for the corresponding  period of 1997. The decrease in
income tax expense relates to decreased earnings,  as the effective tax rate was
unchanged.

         The Company  reported  net income of $705,400 or $.47 per share for the
first nine  months of 1998  compared to net income of $814,600 or $.54 per share
in the first nine months of 1997.

Liquidity
---------

     The Company uses a number of liquidity  indicators for internal  evaluation
purposes.  Certain of these  measures  as of  September  26,  1998 and  December
27,1997 are set forth below:

                                   September 26,        December 27,
                                       1998                1997
                                   ------------        ------------

  Total Debt to Total Debt Plus
     Stockholders' Equity                .17                 .27

  Current Assets to Current
     Liabilities                        2.73                2.81

  Inventory Turnover (The
     Annualized Cost of Goods
     Sold to Ending Inventory)         16.11               15.23


     The total debt to total debt plus stockholders' equity ratio decreased from
 .27 on December  27, 1997 to .17 on  September  26, 1998 due to the  decrease in
accounts receivable, the proceeds of which were used to reduce long-term debt.

     The inventory  turnover rate increased from 15.23 in 1997 to 16.11 in 1998,
as a result of increased  sales and management  focus on inventory  levels,  due
primarily to warehouse constraints.

     On February  28,  1997,  the Company  sold the assets of its  manufacturing
division's  barbecue  and chili  business  for  approximately  $840,000 in cash.
Barbecue and chili sales accounted for less than 5% of  consolidated  1996 sales
volume. The net pretax gain on the sale was approximately $50,000.

     On April  14,  1997,  the  Company  sold the  assets  of its  manufacturing
division's deli meats business for approximately $486,000. The terms of the sale
were a  $286,000  cash down  payment  with the  $200,000  balance in the form of
secured notes.  Deli meat sales accounted for less than 5% of consolidated  1996
sales volume. The net pretax gain on the sale was approximately $140,000.


Capital Resources
-----------------

     The  Company's  debt  financing  at September  26,  1998,  consisted of the
following:

     A  $7,500,000  revolving  bank note at LIBOR plus 1.50%.  The LIBOR rate at
September  26,  1998 was  5.63%.  The note is due three  years  after the annual
renewal date,  currently July, 2001, subject to annual renewal.  As of September
26,  1998,  the Company had borrowed  $590,440  against this credit line and had
$6,909,560 of additional borrowing capacity.

     A  $2,000,000  Industrial  Revenue  Bond  from a bank  for the  purpose  of
expanding the Company's plant and office  facilities in Portsmouth,  Virginia at
an annual interest rate of 91.50% of prime. The prime rate at September 26, 1998
was 8.50%.  As of  September  26,  1998,  the  Company  had fully  utilized  the
Industrial Revenue Bond and the outstanding balance was $500,000.

     A $1,750,000  bank term loan at LIBOR plus 1.50%.  The loan is to be repaid
in quarterly installments of $100,000. As of September 26, 1998, the outstanding
balance was $850,000. The funds were used to finance the increased inventory and
accounts  receivable  required  to  service a one-year  contract  awarded to the
Company in January 1996 by the United  States  Department  of Defense to furnish
food items to various military installations. The contract contains three yearly
renewal options and was renewed for 1998.

     While the Company does not  anticipate  a material  increase in its capital
requirements in the near future, such an increase, if it occurs, is likely to be
met through additional long-term debt financing.

Year 2000 Compliance
--------------------

     Many  computer  systems,  programs,  components,  and other  hardware  with
embedded  microcontrollers  currently record years in a two-digit  format.  Such
systems, if not modified, will be unable to recognize properly dates beyond 1999
-- the  so-called  "Year  2000  Problem."  The  Company  relies on its  computer
systems, applications and devices in operating and monitoring various aspects of
its business.  The Company also relies,  directly and indirectly,  on systems of
customers,  suppliers,  and financial institutions.  Management has divided this
issue into three sections:  its own computer systems,  its own embedded systems,
and the computer systems of third party suppliers.

     With respect to the Company's  computer  systems,  Management  believes all
critical  hardware  and  third  party  software  to be  "Year  2000  Compliant."
Approximately  80% of the Company's  custom  software has been modified with the
remaining  20%  scheduled  to be  completed  by January 1, 1999.  Testing of the
computer  system has begun and should be  completed  by March  1999.  Management
believes its computer  systems will be "Year 2000  Compliant" at that time.  The
Company  estimates  the total cost of modifying its computers and software to be
about  $50,000,  with about $20,000 having been expensed in the second and third
quarters of 1998. The Company has been and expects to continue to fund the costs
of Year 2000 compliance through operating cash flows.

     The Company  uses several  systems  containing  embedded  microcontrollers.
Management is in the process of evaluating such systems.

     The Company  relies on the computer  systems of third party  suppliers  and
customers. While the Company is querying major suppliers and customers regarding
their readiness for the Year 2000,  Management  cannot guarantee the accuracy of
the  representations.  The Company  expects to have contacted  approximately  50
suppliers and customers by March 1999. The Company  purchases its inventory from
numerous  vendors and believes that the failure of a limited number of suppliers
to be Year 2000 Compliant would not materially  affect the Company's  operations
given the number of alternative  suppliers.  The Company has also considered the
possibility of one or more major customers being temporarily  unable to meet its
financial  obligations  because  of the Year  2000  Problem  and  believes  that
existing  lines of  credit  are  sufficient  to  compensate  for such  potential
temporary shortfall in cash flow.

     There are numerous  uncertainties  relating to addressing Year 2000 issues,
including the actual cost and effort of implementing  corrective  measures,  the
degree to which outside  parties  appropriately  address their Year 2000 issues,
and other factors,  some of which are beyond the Company's  control,  and all of
which may cause results to be different from those currently  anticipated by the
Company.  Doughtie's is developing  contingency  plans to minimize any potential
problems.

                           ---------------------------
                           Forward-Looking Information
                           ---------------------------

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for forward- looking statements. This Quarterly Report on Form 10-Q, the
Company's  Annual Report to  Shareholders,  the Company's  Annual Report on Form
10-K or any Form 8-K of the Company or any other written or oral statements made
by or on behalf of the  Company  may include  forward-looking  statements  which
reflect the Company's  current views with respect to future events and financial
performance.   Forward-looking   statements  are   inherently   subject  to  the
uncertainties of future events,  so that actual results could differ  materially
from expectations which are stated or implied in, or could be inferred from such
forward-looking statements. Among the kinds of uncertainties that can affect and
should be considered in evaluating the Company's forward-looking  statements are
uncertainties   related  to  economic  conditions,   government  and  regulatory
policies,  customer  plans  and  commitments,  changes  in the  capital  markets
affecting the Company's capital structure and cost of capital, and the Company's
competitive  environment.  Readers are  therefore  cautioned  not to place undue
reliance on any forward-looking statement, which speaks only as of the date such
statement is made.


Item 3.  Quantitative and Qualitative Disclosures about Market Risk

     Not applicable.

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

         There are no material  pending legal  proceedings,  other than ordinary
routine  litigation  incidental  to the  business,  to which the  Company or its
subsidiary is a party or to which any of their property is the subject.

Item 2.  Changes in Securities

     Not applicable.

Item 3.  Defaults upon Senior Securities

     Not applicable.

Item 4.  Submission of Matters to a Vote of Security Holders

     Not applicable.

Item 5.  Other Information

     Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits

           27.  Financial Data Schedule.

     (b) Reports on Form 8-K

     The Company filed no reports on Form 8-K during the quarter ended September
26, 1998.

         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.

                               DOUGHTIE'S FOODS, INC.



                                  /s/ Marion S. Whitfield, Jr.
                               -----------------------------------------
November 10, 1998                   By:   Marion S. Whitfield, Jr.
                                       (Signature)
                                        Senior Vice President
                                       (Principal Financial and
                                        Accounting Officer)