UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                        Washington, D.C. 20549

                              FORM 10-Q

     (Mark One)

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

For the quarterly period ended August 30, 1998.

[ ]  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 1-7013

                       GRISTEDE'S SLOAN'S, INC.
        ------------------------------------------------------
        (Exact Name of Registrant as Specified in its Charter)

        Delaware                                13-1829183
  -------------------------------              ----------------
  (State or Other Jurisdiction of              (I.R.S. Employer
   Incorporation or Organization)             Identification No.)

            823 Eleventh Avenue, New York, New York 10019
               ----------------------------------------
               (Address of Principal Executive Offices)



                            (212) 956-5803
         ----------------------------------------------------
         (Registrant's Telephone Number, Including Area Code)

                                 N/A
       -------------------------------------------------------
          (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 to be
filed  by  Section  13 or 15 (d) of  the  Securities  Exchange  Act  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 October 13, 1998, the registrant had issued and outstanding 19,636,574 shares
of common stock.


<PAGE>


                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES


                          PART I-FINANCIAL INFORMATION


Item 1. Financial Statements


            Consolidated Balance Sheets as of
                 August 30, 1998 and November 30, 1997                   Page 3

            Consolidated Statements of Operations for
                     the quarters and nine months ended
                     August 30, 1998 and August 31, 1997                 Page 4

            Consolidated Statements of Stockholders'
                     Equity for the nine months ended
                     August 30, 1998                                     Page 5


            Consolidated Statements of Cash Flows for
                     the nine months ended
                     August 30, 1998 and August 31, 1997                 Page 6

            Notes to Consolidated Financial Statements                   Page 7



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



                                      - 2 -


<PAGE>
<TABLE>
<CAPTION>

Item 1
Financial Statements
                                                      GRISTEDE'S SLOAN'S, INC.
                                                UNAUDITED CONSOLIDATED BALANCE SHEETS

ASSETS                                                                                           August 30,          November 30,
                                                                                                   1998                 1997    
                                                                                               ============         ============
<S>                                                                                            <C>                  <C>         
CURRENT ASSETS:
          Cash .........................................................................       $    102,551         $     88,970
          Accounts receivable - net of allowance for doubtful accounts
            of $0 at August 30, 1998 and $300,000 at November 30, 1997 .................          6,082,536            5,110,026
          Inventory ....................................................................         17,874,128           16,221,465
          Prepaid expenses and other current assets ....................................          1,213,231              914,544
          Notes receivable- current portion ............................................            557,880              584,912
                                                                                               ------------         ------------

          Total current assets .........................................................         25,830,326           22,919,917
                                                                                               ------------         ------------

PROPERTY AND EQUIPMENT:
          Furniture, fixtures and equipment ............................................         15,433,155           13,393,803
          Capitalized equipment leases .................................................          6,970,706            5,574,369
          Leaseholds and leasehold improvements ........................................         33,928,505           30,296,510
                                                                                               ------------         ------------
                                                                                                 56,332,366           49,264,682

          Less accumulated depreciation and amortization ...............................         26,500,091           23,567,986
                                                                                               ------------         ------------


          Net property and equipment ...................................................         29,832,275           25,696,696


          Due from affiliate ...........................................................                  0              351,778
          Deposits and other assets ....................................................            719,429              717,429
          Deferred costs ...............................................................          1,923,719            1,515,004
          Notes receivable - noncurrent portion ........................................          1,145,733            1,504,731
                                                                                               ------------         ------------


                                                                                               $ 59,451,482         $ 52,705,555
                                                                                               ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
          Accounts payable, trade ......................................................       $ 13,483,836         $ 15,671,962
          Accrued payroll, vacation and withholdings ...................................            564,770            1,276,535
          Accrued expenses and other current liabilities ...............................            936,378              947,395
          Capitalized lease obligation - current portion ...............................            535,404              389,809
          Current portion of long term debt ............................................          3,014,284            1,714,284
                                                                                               ------------         ------------

          Total current liabilities ....................................................         18,534,672           19,999,985

          Long-term debt ...............................................................         18,939,171           11,285,716
          Due to affiliate .............................................................          4,000,000            4,000,000
          Deferred advertising .........................................................            281,154              378,654
          Capitalized lease obligation - non current portion ...........................          2,224,181            1,377,194
          Deferred rent ................................................................          1,516,450              993,984
                                                                                               ------------         ------------

            Total liabilities ..........................................................         45,495,628           38,035,533
                                                                                               ------------         ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
          Preferred stock, $50 par, - shares authorized 500,000; none issued
          Common stock, $.02 par, - shares authorized 25,000,000; outstanding
            19,636,574 shares issued at August 30, 1998 and November 30, 1997 ..........            392,732              392,732
          Additional paid-in capital ...................................................         14,167,595           14,136,674
          Retained earnings ............................................................           (604,473)             140,616
                                                                                               ------------         ------------

             Total stockholders' equity ................................................         13,955,854           14,670,022
                                                                                               ------------         ------------

                                                                                               $ 59,451,482         $ 52,705,555
                                                                                               ============         ============

See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                                                 -3-
<PAGE>

<TABLE>
<CAPTION>
                                                      GRISTEDE'S SLOAN'S, INC.
                                           UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                              FOR THE NINE MONTHS AND QUARTER ENDED AUGUST 30, 1998 AND AUGUST 31, 1997


                                                          39 weeks             13 weeks             39 weeks             13 weeks
                                                           ended                ended                ended                ended
                                                         August 30,           August 30,           August 31,           August 31,
                                                            1998                 1998                 1997                 1997
                                                       =============        =============        =============        =============
<S>                                                    <C>                  <C>                  <C>                  <C>          
Sales ..........................................       $ 116,296,764        $  37,631,409        $  72,191,581        $  22,248,918
Cost of sales ..................................          70,211,045           23,006,331           44,379,937           13,732,202
                                                       -------------        -------------        -------------        -------------

Gross profit ...................................          46,085,719           14,625,078           27,811,644            8,516,716

Store operating, general and
  administrative expenses ......................          39,167,716           13,164,251           26,269,667            8,856,770

Depreciation and amortization ..................           2,973,525              862,422            1,612,803              571,739
                                                       -------------        -------------        -------------        -------------

                                                           3,944,478              598,405              (70,826)            (911,793)

Non-store operating expenses ...................           3,445,472            1,252,052            5,115,552            2,081,461
                                                       -------------        -------------        -------------        -------------

Operating profit/(loss) ........................             499,006             (653,647)          (5,186,378)          (2,993,254)
                                                       -------------        -------------        -------------        -------------

Other income (expense)
Interest income ................................             142,298               43,611              121,302               60,651
Interest expense ...............................          (1,386,393)            (533,453)            (700,787)            (328,744)
                                                       -------------        -------------        -------------        -------------

                                                          (1,244,095)            (489,842)            (579,485)            (268,093)
                                                       -------------        -------------        -------------        -------------

Loss before provision for income taxes .........            (745,089)          (1,143,489)          (5,765,863)          (3,261,347)

Provision for income taxes .....................                   0              (42,500)                   0                    0
                                                       -------------        -------------        -------------        -------------

Net  loss ......................................       $    (745,089)       $  (1,100,989)       $  (5,765,863)       $  (3,261,347)
                                                       =============        =============        =============        =============

Net loss per share .............................              ($0.04)              ($0.06)                 N/A                  N/A
                                                       =============        =============        =============        =============

Weighted average number of shares and
equivalents outstanding ........................          19,636,574           19,636,574                  N/A                  N/A
                                                       =============        =============        =============        =============


See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                                                 -4-


<PAGE>

<TABLE>
<CAPTION>

                                                      GRISTEDE'S SLOAN'S , INC.
                                      UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                                  NINE MONTHS ENDED AUGUST 30, 1998


                                                                                    Additional                           Total
                                                         Common stock                Paid-In          Retained        Stockholders'
                                                     Shares         Amount           Capital          Earnings           Equity
                                                  ===========    ===========       ===========      ===========       ===========

<S>                                                <C>           <C>               <C>              <C>               <C>        
Balance at November 30 , 1997 ..............       19,636,574    $   392,732       $14,136,674      $   140,616       $14,670,022

To reflect acquisition of new store
    #53 on February 6, 1998 ................           30,921         30,921

Net loss for the nine months
   ended August 30, 1998 ...................         (745,089)      (745,089)
                                                  -----------    -----------       -----------      -----------       -----------

Balance at August 30, 1998 .................       19,636,574    $   392,732       $14,167,595      $  (604,473)      $13,955,854
                                                  ===========    ===========       ===========      ===========       ===========


See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                                                 -5-


<PAGE>

<TABLE>
<CAPTION>

                                                      GRISTEDE'S SLOAN'S, INC.
                                           UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    FOR THE NINE MONTHS ENDED AUGUST 30, 1998 AND AUGUST 31, 1997

                                                                                                     39 weeks             39 weeks
                                                                                                      ended                ended
                                                                                                    August 30,           August 31,
                                                                                                      1998                 1997
                                                                                                   ===========          ===========
<S>                                                                                                <C>                  <C>         
Net loss .................................................................................         $  (745,089)         $(5,765,863)

Adjustments  to reconcile  net loss to net cash  provided by operating
activities:

Depreciation and amortization ............................................................           2,973,252            1,612,803

Changes in operating assets and liabilities:

Accounts receivable - net ................................................................            (972,510)          (2,341,213)
          Inventory ......................................................................          (1,652,663)             694,404
Prepaid expenses and other current assets ................................................            (298,687)
   Notes receivable ......................................................................             386,030
Receivable from officer ..................................................................             351,778
       Other assets ......................................................................            (451,862)
Accounts payable, trade ..................................................................          (2,188,126)           3,055,444
Accrued payroll, vacation and withholdings ...............................................            (711,765)
Accrued expenses and other current liabilities ...........................................             (11,017)
Accrued rent leveling ....................................................................             522,466
Capitalized lease obligations ............................................................             992,582
      Other credits ......................................................................             (97,500)
                                                                                                   -----------          -----------

Net cash (used) / provided by operating activities .......................................          (1,903,111)          (2,744,425)
                                                                                                   -----------          -----------

Capital expenditures - net ...............................................................          (7,036,763)          (1,501,893)
                                                                                                   -----------          -----------

Net cash used in investing activities ....................................................          (7,036,763)          (1,501,893)
                                                                                                   -----------          -----------

Proceeds from bank loan ..................................................................           8,953,455
Repayments of bank loan ..................................................................                   0
                                                                                                   -----------          -----------

Net cash provided / (used) in financing activities .......................................           8,953,455                    0
                                                                                                   -----------          -----------

NET INCREASE  IN CASH AND CASH EQUIVALENTS ...............................................              13,581                    0

CASH AND CASH EQUIVALENTS, beginning of period ...........................................              88,970                    0
                                                                                                   -----------          -----------

CASH AND CASH EQUIVALENTS, end of period .................................................         $   102,551          $         0
                                                                                                   ===========          ===========

INCREASE IN NET ASSETS PURCHASED .........................................................                              $    93,258*

*  The  Unaudited  Consolidated  Statement  of Cash Flows for the Nine
   Months Ended August 31, 1997  reflects the  difference  between the
   Statement of Assets to be Purchased and Liabilities  to  be Assumed
   at August 31, 1997 as compared  to  December  1, 1996.  No cash was
   transferred as part of the acquisition.  The increase in Net Assets
   Purchased was $ 93,258 


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
-------------------------------------------------

Cash paid for interest ...................................................................         $ 1,277,535          $   590,518
Cash paid for taxes ......................................................................         $    22,056          $    20,951

NONCASH TRANSACTIONS
--------------------

Acquisition of new store .................................................................         $    30,921                 --


See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                                                 -6-


<PAGE>


                                      - 2 -

                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS - On November 4, 1997, Sloan's  Supermarkets,  Inc. ("Sloan's") changed
its name to Gristede's Sloan's,  Inc. ("GRI" or the "Company").  On November 10,
1997,  GRI  acquired  certain  assets,  net  of  liabilities,   of  29  selected
supermarkets and a wholesale distribution business ("The Food Group") controlled
by  Mr.  John  Catsimatidis,  Chairman  and  37%  stockholder  of  Sloan's.  The
transaction  was accounted for as the  acquisition  of Sloan's by The Food Group
pursuant  to  Emerging  Issues  Task  Force  90-13 as a result of The Food Group
obtaining  control of Sloan's after the transaction.  The assets and liabilities
of The Food Group were recorded at their  historical  cost.  Sloan's  assets and
liabilities   were  recorded  at  their  fair  value  to  the  extent  acquired.
Consideration  for the  transaction  was based on an aggregate of $36,000,000 in
market value of the Company's  common stock and the  assumption of $4,000,000 of
liabilities.  16,504,298  shares of common  stock were issued on the date of the
acquisition based on a market price of $2.18 per share.

The Company  presently  operates 41 supermarkets  and one health and beauty aids
store (the "Supermarkets").  36 Supermarkets are located in Manhattan, New York,
three   Supermarkets   are  located  in  Westchester   County,   New  York,  two
Supermarkets,  are located in Brooklyn,  New York and one Supermarket is located
in Long  Island,  New  York.  23 of the  Supermarkets  are  operated  under  the
"Sloan's"  name and 19 are operated  under the  "Gristede's"  name.  The Company
leases all of its Supermarket locations.

The Company also owns City Produce Operating Corp., a corporation which operates
a  warehouse  and  distribution  center  primarily  for fresh  produce on leased
premises in the Bronx, New York.

PRINCIPLES OF CONSOLIDATION - The consolidated  financial statements include the
accounts  of  the  Company  and  its  wholly-owned  subsidiaries.  All  material
intercompany accounts and transactions have been eliminated in consolidation.

QUARTER END - The Company  operates  using the  conventional  retail  52/53 week
fiscal year.  The fiscal  quarter  ends on the Sunday  closest to the end of the
quarter.  The Company's  fiscal year ends on the Sunday  closest to November 30.

INVENTORY - Store  inventories  are valued  principally  at the lower of cost or
market with cost determined under the retail first in, first out (FIFO) method.

PROPERTY AND EQUIPMENT -  Depreciation  of furniture,  fixtures and equipment is
computed by the  straight-line  method over the  estimated  useful  lives of the
assets.

LEASES - The Company charges the cost of noncancelable  operating lease payments
and beneficial  leaseholds to operations on a straight-line basis over the lives
of the leases.


                                      -7-


<PAGE>

                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS


1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING 
POLICIES  (Continued)

PROVISION FOR INCOME TAXES - Income taxes reflect Federal and State  alternative
minimum tax only, as all regular income taxes have been offset by utilization of
the Company's net operating loss carry forward.

INCOME PER SHARE - Per share data are based on the  weighted  average  number of
shares of common stock and equivalents  outstanding during each quarter.  Income
per share is computed by the treasury  stock  method;  primary and fully diluted
income per share are the same.

In the opinion of management, the information furnished reflects all adjustments
(consisting  of normal  recurring  adjustments)  which are  necessary for a fair
statement  of the  results of  operations  for the interim  period.  The interim
figures are not  necessarily  indicative  of the results to be expected  for the
fiscal year.

The Company's Annual Report on Form 10-K for the transition 9 month period ended
November  30, 1997  contains  information  which  should be read in  conjunction
herewith.


2. RELATED PARTY TRANSACTIONS

As of November  30,  1997,  the Company had  advanced an  aggregate  $351,778 in
principal  and  accrued  interest  to a  company  owned by the  Chairman  of the
Company.  These  advances  were fully repaid during the quarter ended August 30,
1998.

Advertising  services are provided to the Company by an affiliated company,  MCV
Advertising  Associates,  Inc.  For the quarter and nine months ended August 30,
1998 the costs  incurred  were  $232,279  and  $818,616,  respectively.  For the
quarter and nine months ended August 31, 1997 the costs  incurred  were $290,315
and $697,339, respectively.

Legal fees  incurred  by the  Company to a law firm,  of which a director of the
Company is a member,  were  $75,252 and $157,047 for the quarter and nine months
ended  August 30,  1998,  respectively.  For the quarter  and nine months  ended
August 31, 1997 these legal fees were $71,957 and $125,807, respectively.


                                      - 8 -


<PAGE>

                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES


                                     PART I

ITEM 2.      MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
             RESULTS OF OPERATIONS FOR THE QUARTERS AND NINE MONTHS ENDED AUGUST
             30, 1998 AND AUGUST 31, 1997

RESULTS OF OPERATIONS

As a result of the reverse  acquisition  which occurred on November 10, 1997 the
following discussion of the Results of Operations  encompasses the operations of
29 Supermarkets  plus the City Produce operation for the quarter and nine months
ended August 31, 1997 and the  operations of such 29  Supermarkets  and the City
Produce operation  combined with the operations of an additional 15 Supermarkets
for the quarter and nine months ended August 30, 1998.

Sales for the quarter and nine months ended August 30, 1998 were $37,631,409 and
$116,296,764,  respectively.  Sales for the quarter and nine months ended August
31, 1997 were $22,248,918 and $72,191,581,  respectively. The sales increase was
mainly  attributable  to the 15 additional  stores included in the 1998 periods.
Sales for the same 29 stores were  $23,441,819  and  $75,072,497 for the quarter
and  nine  months  ended  August  30,  1998 as  compared  with  $21,864,336  and
$70,334,002  for the quarter and nine months ended August 31, 1997,  an increase
of 7.21% and 6.74%, respectively.  The increase in sales in the 1998 periods was
primarily the result of the Company's remodeling program, which is continuing.

Gross profit as a percentage  of sales was 38.86% and 39.63% for the quarter and
nine months  ended  August 30,  1998 as compared  with 38.28% and 38.52% for the
quarter and nine months  ended August 31,  1997.  The 1998  periods  include the
results of the additional 15 Sloan's stores which traditionally  achieved higher
gross margins.

Store operating,  general and  administrative  expenses as a percentage of sales
were 34.98% and 33.68% for the quarter and nine months  ended August 30, 1998 as
compared with 39.81% and 36.39% for the quarter and nine months ended August 31,
1997.  The  decrease in the 1998  period was mainly due to better cost  controls
resulting from the combining of the operations in the reverse acquisition.

Nonstore  operating  expenses as a percentage  of sales were 3.33% and 2.96% for
the  quarter and nine months  ended  August 30, 1998 as compared  with 9.36% and
7.09% for the quarter and nine months  ended  August 31,  1997.  The decrease in
nonstore   operating   expenses  were  mainly  the  result  of  a  reduction  in
administrative personnel and the reduced need for outside professional services.

Interest  income was $43,611 and  $142,298 for the quarter and nine months ended
August 30, 1998 as compared  to $ 60,651 and  $121,302  for the quarter and nine
months  ended August 31,  1997.  The increase  during the 1998 nine month period
reflects interest on the notes received for the sale of various stores.


                                      - 9 -


<PAGE>

Interest  expense  for the quarter  and nine  months  ended  August 30, 1998 was
$533,453 and $1,386,393, respectively. Interest expense for the quarter and nine
months  ended  August 31, 1997 was  $328,744  and  $700,787,  respectively.  The
increase in the 1998 periods were primarily attributable to the borrowings under
the new bank credit facility which became effective November 10, 1997.

As a result of the items  reviewed  above the net loss for the  quarter and nine
months ended  August 30, 1998 were  $1,100,989  and  $745,089,  respectively  as
compared to a net loss of  $3,261,347  and  $5,765,863  for the quarter and nine
months ended August 31, 1997.


LIQUIDITY AND CAPITAL RESOURCES

On November 10, 1997,  the Company  entered into an aggregate  $25,000,000  five
year  credit  facility  with a group of banks.  The  Company  believes that this
facility,  together  with  commitments  it has obtained from third party leasing
companies,  is  sufficient  to finance the  Company's store  remodeling  program
through the next fiscal year. It is  anticipated  that the Company will generate
sufficient cash flow to finance its future working capital needs.


YEAR 2000 ISSUE

The Company has  initiated  an  automation  program to install  state of the art
computerized  point-of-sale  terminals ("POS") which are year 2000 compliant, in
all its supermarkets.  Approximately  one-third of the supermarkets already have
POS systems installed.  The Company  anticipates that all supermarkets will have
POS systems installed by the year 2000.

Corporate level systems are being developed and implemented  using client server
technology  to make  efficient  and  timely  use of the data  supplied  by store
automation  systems for management,  marketing and general  corporate  purposes.
Management  believes  that all  such  systems  will be in place so as to  ensure
corporate wide year 2000 functionality  from its systems.  The Company estimates
that the cost to implement  corporate level systems that are year 2000 compliant
will not exceed $100,000.

The Company purchases  merchandise sold in its stores from multiple vendors. The
Company is not dependent on these supplier  relationships  since  merchandise is
readily available from numerous sources under different brand names,  subject to
conditions  affecting  food  supplies  generally.  The Company has requested its
primary vendors to confirm in writing that they are Year 2000 compliant.


                                     - 10 -


<PAGE>

                    GRISTEDE'S SLOAN=S, INC. AND SUBSIDIARIES


                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

                      None.

Item 2.       Changes in Securities and Use of Proceeds

                      None.

Item 3.       Defaults Upon Senior Securities

                      None.

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

                      None.

Item 5.       Other Information

                      None.

Item 6.       Exhibits and Reports on Form 8-K

              (a) Exhibits

                      27. Financial Data Schedule

              (b) No Current Reports on Form 8-K were filed for  the quarter for
              which this report is being filed.


                                     - 11 -


<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.

                                             Gristede's Sloan's, Inc.

                                        By:  /s/ John A. Catsimatidis

                                             John A. Catsimatidis
                                             Chairman of the Board and
                                             Chief Executive Officer


Dated: October 14, 1998



                                        By:  /s/ Stuart Spivak

                                             Stuart Spivak
                                             Executive Vice President and
                                             Chief Financial Officer


Dated: October 14, 1998



                                                           - 12 -