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 JUNE 1, 2003

[ ]       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 FOODS, 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
    ---     ---
Indicate  by  check  mark  whether  the  registrant  is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

Yes      No  X
    ---     ---


At  July  15,  2003,  registrant had issued and outstanding 19,636,574 shares of
common  stock.


<PAGE>
                     GRISTEDE'S FOODS, INC. AND SUBSIDIARIES



PART  I  -  FINANCIAL  INFORMATION

   ITEM 1.   FINANCIAL  STATEMENTS


          Consolidated Balance Sheets as of
               June 1, 2003 and December 1, 2002                      Page 3

          Consolidated Statements of Operations for
               the 13 weeks and the 26 weeks ended
               June 1, 2003 and June 2, 2002                          Page 4

          Consolidated Statements of Stockholders'
               Equity for the 52 weeks ended
               December 1, 2002 and the
               26 weeks ended June 1, 2003                            Page 5

          Consolidated Statements of Cash Flows for
               the 13 weeks and the 26 weeks ended
               June 1, 2003 and June 2, 2002                          Page 6

          Notes to Consolidated Financial Statements                  Page 7


   ITEM  2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS                               Page 13

   ITEM  3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
             MARKET RISK                                             Page 18

   ITEM  4.  CONTROLS  AND  PROCEDURES                               Page 18


PART II - OTHER  INFORMATION                                         Page 20


                                        2
<PAGE>
<TABLE>
<CAPTION>
ITEM  1
FINANCIAL  STATEMENTS

                                          GRISTEDE'S FOODS, INC.
                                       CONSOLIDATED BALANCE SHEETS


                                                                                (Unaudited)
                                                                                  June 1,      December 1,
ASSETS                                                                             2003           2002
                                                                               -------------  -------------
CURRENT ASSETS:
<S>                                                                            <C>            <C>
    Cash                                                                       $    669,496   $    576,358
    Accounts receivable - net of allowance for doubtful accounts
       of $516,000 at June 1, 2003 and $481,000 at December 1, 2002               6,923,036      7,659,552
    Inventories                                                                  41,541,412     37,601,170
    Due from related parties - trade                                                225,000        251,665
    Prepaid expenses and other current assets                                     1,760,654      2,825,984
                                                                               -------------  -------------

          Total current assets                                                   51,119,598     48,914,729
                                                                               -------------  -------------

PROPERTY AND EQUIPMENT:
    Furniture, fixtures and equipment                                            21,105,043     20,159,016
    Capitalized equipment leases                                                 36,243,911     34,300,805
    Leaseholds and leasehold improvements                                        62,504,955     59,323,240
                                                                               -------------  -------------
                                                                                119,853,909    113,783,061
    Less accumulated depreciation and amortization                               52,382,515     48,474,655
                                                                               -------------  -------------

          Net property and equipment                                             67,471,394     65,308,406
                                                                               -------------  -------------

    Deposits and other assets                                                     1,110,488      1,120,028
    Due from related party - trade                                                1,414,436      1,225,000
    Other assets                                                                  3,990,860      4,043,978
                                                                               -------------  -------------

TOTAL                                                                          $125,106,776   $120,612,141
                                                                               =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable, trade                                                    $ 36,336,654   $ 33,438,962
    Accrued payroll, vacation and withholdings                                    2,657,542      3,177,933
    Accrued expenses and other current liabilities                                2,135,234      2,343,654
    Due to affiliates - trade                                                       415,585        398,913
    Capitalized lease obligations - current portion                               5,628,372      4,892,101
    Current portion of long term debt                                             2,650,740      2,500,740
                                                                               -------------  -------------

          Total current liabilities                                              49,824,127     46,752,303

    Long-term debt - noncurrent portion                                          27,049,803     28,349,802
    Due to affiliates                                                            19,948,931     14,842,437
    Capitalized lease obligations - noncurrent portion                           14,305,905     14,945,257
    Deferred rent                                                                 5,609,161      5,056,248
                                                                               -------------  -------------

          Total liabilities                                                     116,737,927    109,946,047
                                                                               -------------  -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
    Preferred stock, $50 Par, -shares authorized 500,000; none issued                    --             --
    Common stock, $0.02 par value - shares authorized 25,000,000; outstanding
       19,636,574 shares at June 1, 2003 and December 1, 2002                       392,732        392,732
    Additional paid-in capital                                                   14,136,674     14,136,674
    Retained deficit                                                             (6,160,557)    (3,863,312)
                                                                               -------------  -------------

          Total stockholders' equity                                              8,368,849     10,666,094
                                                                               -------------  -------------

TOTAL                                                                          $125,106,776   $120,612,141
                                                                               =============  =============
</TABLE>

See notes to consolidated financial statements (unaudited).


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                               GRISTEDE'S FOODS, INC.
                                   UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                          FOR THE 26 WEEKS AND 13 WEEKS ENDED JUNE 1, 2003 AND JUNE 2, 2002



                                                            26 weeks       13 weeks      26 weeks        13 weeks
                                                             ended          ended         ended           ended
                                                             June 1,        June 1,       June 2,        June 2,
                                                              2003           2003          2002           2002
                                                          =============  ============  =============  ============
<S>                                                       <C>            <C>           <C>            <C>

Sales                                                     $145,586,712   $70,991,953   $121,669,727   $61,879,067
Cost of sales                                               87,492,327    42,047,905     73,000,752    36,971,207
                                                          -------------  ------------  -------------  ------------

Gross profit                                                58,094,385    28,944,048     48,668,975    24,907,860

Store operating, general and administrative expenses        48,386,141    24,065,494     37,646,244    19,506,222

Pre-store opening startup costs and store closing costs        495,633       260,626        130,041       130,041

Depreciation and amortization                                4,759,168     2,379,142      3,869,590     1,960,937

Insurance proceeds                                            (500,000)     (500,000)      (100,000)           --

Non-store operating expenses:

    Administrative payroll and fringes                       4,047,510     2,040,846      3,323,397     1,696,928
    General office expense                                   1,176,879       590,436      1,033,734       522,645
    Professional fees                                          296,191       190,673        266,536       141,729
    Corporate expense                                          122,021        62,912        105,515        50,341
                                                          -------------  ------------  -------------  ------------

Total non-store operating expenses                           5,642,601     2,884,867      4,729,182     2,411,643
                                                          -------------  ------------  -------------  ------------

Operating income (loss)                                       (689,158)     (146,081)     2,393,918       899,017
                                                          -------------  ------------  -------------  ------------

Other income (expense):

    Interest expense                                        (1,610,435)     (767,786)    (1,406,154)     (694,325)
    Interest income                                              2,348         1,111          3,744           830
    Other income                                                    --            --             --            --
                                                          -------------  ------------  -------------  ------------

Total other income (expense) - net                          (1,608,087)     (766,675)    (1,402,410)     (693,495)
                                                          -------------  ------------  -------------  ------------

Income (loss) before income taxes                           (2,297,245)     (912,756)       991,508       205,522

Provision for income taxes                                          --            --         25,000            --
                                                          -------------  ------------  -------------  ------------

Net income (loss)                                         $ (2,297,245)  $  (912,756)  $    966,508   $   205,522
                                                          =============  ============  =============  ============

Income (loss) per share, basic and diluted                      ($0.12)       ($0.05)  $       0.05   $      0.01
                                                          =============  ============  =============  ============

Weighted average number of shares and
equivalents outstanding                                     19,636,574    19,636,574     19,636,574    19,636,574
                                                          =============  ============  =============  ============
</TABLE>

See notes to consolidated financial statements (unaudited).


                                        4
<PAGE>
<TABLE>
<CAPTION>
                                              GRISTEDE'S FOODS, INC.
                             UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                      FOR THE 52 WEEKS ENDED DECEMBER 1, 2002
                                      AND FOR THE 26 WEEKS ENDED JUNE 1, 2003



                                                       Additional    Retained         Total
                                      Common stock       Paid-In     earnings     Stockholders'
                                   Shares     Amount     Capital     (deficit)       Equity
                                 ----------  --------  -----------  ------------  ------------
<S>                              <C>         <C>       <C>          <C>           <C>
Balance at December 2, 2001      19,636,574  $392,732  $14,136,674  $(2,936,905)  $11,592,501

Net loss for the 52 weeks ended
   December 1, 2002                      --        --           --     (926,407)     (926,407)

                                 ----------  --------  -----------  ------------  ------------

Balance at December 1, 2002      19,636,574  $392,732  $14,136,674  $(3,863,312)  $10,666,094

Net loss for the 26 weeks
   ended June 1, 2003                    --        --           --   (2,297,245)   (2,297,245)
                                 ----------  --------  -----------  ------------  ------------

Balance at June 1, 2003          19,636,574  $392,732  $14,136,674  $(6,160,557)  $ 8,368,849
                                 ==========  ========  ===========  ============  ============
</TABLE>


See notes to consolidated financial statements (unaudited).


                                        5
<PAGE>
<TABLE>
<CAPTION>
                                     GRISTEDE'S FOODS, INC.
                        UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                  FOR THE TWENTY SIX WEEKS ENDED JUNE 1, 2003 AND JUNE 2, 2002



                                                                 26 weeks       26 weeks
                                                                  ended          ended
                                                                  June 1,       June 2,
                                                                   2003          2002
                                                               ============  ============
<S>                                                              <C>           <C>
Cash flows from operating activities:

   Net income (loss)                                           $(2,297,245)  $   966,508

   Adjustments to reconcile net income (loss) to net cash
   provided by operating activities:

     Depreciation and amortization                               4,759,168     3,869,590
     Change in allowance for bad debts                              35,168        36,000
     Changes in operating assets and liabilities:

       Accounts receivable                                         701,349      (196,515)
       Inventory                                                (3,940,243)   (1,576,885)
       Due from related parties - trade                           (162,771)     (256,225)
       Prepaid expenses and other current assets                 1,065,330       786,381
       Other assets                                               (505,192)     (295,530)
       Accounts payable, trade                                   2,897,692      (326,484)
       Accrued payroll, vacation and withholdings                 (520,392)       77,460
       Accrued expenses and other current liabilities             (208,419)     (805,285)
       Due to related parties - trade                               16,673       297,599
       Deferred rent                                               552,914       360,791
       Current and other assets acquired via capital lease         700,000             -
                                                               ------------  ------------

         Net cash provided by operating activities               3,094,032     2,937,405
                                                               ------------  ------------

Cash flows from investing activities:
   Capital expenditures                                         (4,413,649)   (2,562,528)
                                                               ------------  ------------

         Net cash used in investing activities                  (4,413,649)   (2,562,528)
                                                               ------------  ------------

Cash flows from financing activities:

    Repayments of bank loan                                     (1,149,999)     (461,538)
    Proceeds from bank loans                                            --     2,900,000
    Repayment of capitalized lease obligations                  (2,543,739)   (1,934,735)
    Advances from (repayments to) affiliates                     5,106,493      (816,963)
                                                               ------------  ------------

         Net cash provided by (used in) financing activities     1,412,755      (313,236)
                                                               ------------  ------------

Net increase in cash                                                93,138        61,641

Cash, begining of period                                           576,358       475,873
                                                               ------------  ------------

Cash, end of period                                            $   669,496   $   537,514
                                                               ============  ============

Supplemental disclosures of cash flow information:

    Cash paid for interest                                     $ 1,734,300   $ 1,613,271
    Cash paid (refunded) for taxes                             $    23,590   $   (83,198)


Supplemental schedule of non cash financing activity:
    Assets acquired under capitalized lease obligations        $ 2,640,659   $ 3,598,845
</TABLE>


See notes to consolidated financial statements (unaudited).


                                        6
<PAGE>
                     GRISTEDE'S FOODS, INC. AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING  POLICIES

Business  -
--------

The  Company's  corporate predecessor was originally incorporated in 1956 in New
York under the name Designcraft Industries, Inc., and was engaged in the jewelry
business  until 1992, when the Company commenced its supermarket operations. The
Company became a public company in 1968, listed its common stock on the American
Stock  Exchange  in  1972,  and  reincorporated in Delaware in 1985. The Company
changed  its  name  to  Sloan's  Supermarkets,  Inc.  in  September  1993 and to
Gristede's  Sloans,  Inc.  in  November  1997.  The  Company changed its name to
Gristede's  Foods,  Inc.  in August 1999 to reflect its strategy of changing its
"Sloan's"  banner  locations  to  "Gristede's" subsequent to a store remodeling.

On  November  10, 1997, 29 supermarkets that were owned by John A. Catsimatidis,
the  Company's  majority  stockholder,  Chairman  of  the Board and CEO (such 29
supermarkets  hereinafter  referred to as the "Food Group") were merged into the
Company's  existing  15  supermarkets.  The  transaction was accounted for as an
acquisition  of  the  Company by the Food Group pursuant to Emerging Issues Task
Force 90-13 as a result of the Food Group obtaining control of the Company after
the  transaction.  The assets and liabilities of the Food Group were recorded at
their  historical  cost.  The  Company'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  operates  a  total  of  49  stores;  40  supermarkets  and  three
free-standing  pharmacies  in  Manhattan,  New  York,  three  supermarkets  in
Westchester County, New York, and one supermarket in each of Brooklyn, New York,
Bronx,  New  York  and  Long  Island,  New  York.  All  of  the supermarkets and
pharmacies  are  leased  and  operated  under  the  "Gristede's"  banner.

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

Basis of presentation - The unaudited consolidated financial statements included
---------------------
herein  have  been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission ("SEC"). 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 and financial position of the Company for the interim period. The
interim figures are not necessarily indicative of the results to be expected for
the  fiscal  year.

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  and Depreciation - Property and equipment is stated at
------------------------------------------
cost.  Depreciation  of  furniture,  fixtures  and  equipment is computed by the
straight-line method over the estimated useful lives of the assets.


                                        7
<PAGE>
Leases  and  Amortization  -  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.

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(loss)per  share - Per share data are based on the weighted average number
----------------------
of  shares  of  common  stock  and  equivalents outstanding during each quarter.
Income  (loss)  per  share  is  computed by the treasury stock method; basic and
diluted  income  per  share  are  the  same.

The  Company's  Annual Report on Form 10-K for the 52 week period ended December
1,  2002  contains  information  which  should  be read in conjunction herewith.

2.  RELATED  PARTY  TRANSACTIONS

Under  a  management  agreement dated November 10, 1997, Namdor Inc., one of the
Company's  subsidiaries,  performs  consulting  and  managerial  services  for a
supermarket  owned  by  a  corporation  controlled  by  John A. Catsimatidis. In
consideration  of  such  services,  Namdor  Inc.  is  entitled  to receive, on a
quarterly  basis,  a  cash payment of one and one-quarter percent (1.25%) of all
sales  of inventory and merchandise made at, in or from the managed supermarket.
For  the 13 weeks and the 26 weeks ended June 1, 2003, there were no amounts for
such  services  included  in  income.


The  Company  leases  the  following locations from affiliates: a portion of its
warehouse  and  distribution  facility comprising 25,000 square feet, its office
facilities  and  ten  store  locations (two of which commenced operations in the
second  fiscal quarter). During the 13 weeks and the 26 weeks ended June 1, 2003
the  Company  paid $786,895 and $1,548,790 respectively, to these affiliates for
rent  and real estate taxes under such leases. The leases are triple net whereby
the  tenant  pays  all  real  estate  taxes,  insurance  and  maintenance.


Certain  of  the  Company's supermarkets have entered into capital and operating
leases  with  an  affiliate,  Red  Apple Lease Corporation, a corporation wholly
owned  by  John  A. Catsimatidis. These leases are primarily for store operating
equipment. Obligations under these leases at June 1, 2003 were $3,075,564. These
leases  require  that  monthly  payments  of  $76,790 be made to Red Apple Lease
Corporation  through  March  2007.


Certain  of  the  Company's  supermarkets  have entered into capital leases with
United  Acquisition  Leasing  Corp.,  a  company  wholly  owned  by  John  A.
Catsimatidis.  These leases are primarily for store equipment. Obligations under
these  leases at June 1, 2003 were $6,287,030. These leases require that monthly
payments  of  $130,389  be made to United Acquisition Leasing Corp. with various
expirations  through  February  2008.


Amounts  due  to United Acquisition Corp., a corporation wholly owned by John A.
Catsimatidis  represent  liabilities  in  connection  with  the  1997 merger and
additional  advances  made  to the Company by United Acquisition Corp. since the
merger.  United  Acquisition  Corp.  has  agreed  not to demand payment of these
liabilities  in the next year. Accordingly, the liability has been classified as
noncurrent.  As  part  of  post-closing  adjustments in connection with the 1997
merger,  approximately  $3,600,000  that  is  due  from certain of the Company's
affiliates  has  been offset against the amounts due to United Acquisition Corp.
The net amount due to affiliates at June 1, 2003 was $19,948,931, $16,800,000 of
which  was subordinated to the Company's banks. The liability presently does not
bear  interest.  However,  the Company's credit agreement with its banks permits
the Company to pay interest on such subordinated debt provided the Company has a
positive  net  income.


                                        8
<PAGE>
In  October  2002,  the  Company  and  an  affiliate of the Company acquired the
fixtures, leasehold improvements and store leases of three stores from the Great
Atlantic  &  Pacific  Tea  Company for a total purchase price of $5,500,000. The
affiliate  has  leased  the  acquired  assets  to the Company. The affiliate has
leased the assets acquired by it to the Company. Such stores had been closed for
more  than  six months prior to the transaction. Obligations under these capital
leases  at  June 1, 2003 were $4,763,956 and require monthly payments of $79,156
through  February  2008  and  a  balloon  payment  of  $1,629,156  at such time.


In  addition, in connection with the foregoing, Gristedes NY LLC received a term
loan  of  $5,000,000  from  Commerce  Bank,  N.A.,  which  loan is guaranteed by
Gristedes  Foods  NY  Inc.,  Namdor  Inc.  and  City Produce Operating Corp. and
secured  by  a  pledge  of  all of the capital stock of Gristedes Foods NY, Inc.


Due  from  related  parties  -  trade,  represents  amounts  due from affiliated
companies  for  merchandise  shipped  from the Company's subsidiary City Produce
Operating  Corp.  in  the ordinary course of business and for which payments are
made  to  such subsidiary on a continuous basis under extended terms, as well as
management  fees receivable for administrative and managerial services performed
for  the  affiliated companies by the Company. During the 26 weeks ended June 1,
2003, merchandise sales to affiliates were approximately $163,000. There were no
sales  to  affiliates  in  the  13  weeks ended June 1, 2003. Of the total trade
receivable  due from an affiliate, $1,414,436 has been classified as non-current
on  the  balance  sheet  due  to  the  extended  payment  terms  granted.

On  February  6,  1998,  the Company agreed to purchase substantially all of the
assets  and  assumed certain of the liabilities of a supermarket located at 1644
York  Avenue,  New York City, that was owned by a corporation controlled by John
Catsimatidis.  On  March  1,  2000  the  Company and the affiliate determined to
restructure  the transaction by rescinding the purchase effective as of February
6,  1998,  and entering into an operating agreement which gives the Company full
control  of  the  supermarket  and  the right to operate the supermarket for the
account of the Company. The operating agreement presently terminates on December
1,  2003,  but the term shall be extended for additional one year periods unless
either party gives notice of termination not later than 90 days prior to the end
of  the  then  current term of the agreement. Under the operating agreement, the
Company  shall  pay  to  the  affiliate  $1.00  per  annum,  plus  such  other
consideration  as  may  be  approved  by the Company's directors (excluding John
Catsimatidis).  Pursuant  to the operating agreement the Company or any designee
of  the  Company,  also  has  the option until December 31, 2005 to purchase the
supermarket  for  $2,778,000,  which  price  is  the  fair  market  price of the
supermarket  established  on  October  11,  1999  by  the  Company's  directors
(excluding  John  Catsimatidis).

In  May 2000, another affiliate and the Company entered into a similar operating
agreement  for  a  store owned by the affiliate. As consideration, the affiliate
receives  the  nominal  amount of $1 per annum, plus such other consideration as
may  be  approved  by the Company's directors (excluding John Catsimatidis). The
operating  agreement presently terminates on May 10, 2004, but the term shall be
extended  for  additional  one  year periods unless either party gives notice of
termination  not later than 90 days prior to the end of the then current term of
the agreement. Pursuant to the operating agreement, the Company, or any designee
of  the  Company,  also  has  the option until December 31, 2005 to purchase the
supermarket  for  the fair market price of the supermarket as established by the
Company's  directors  (excluding  John Catsimatidis) using a valuation criterion
similar to that issued for valuing the store at 1644 York Avenue, New York City.
It  is  management's  opinion  that  the  fair  market  value  of  this store is
approximately  $3  million.

The  affiliates' intention in entering into these two operating agreements where
the  Company  enjoys full benefits of ownership for the nominal consideration of
$1 per annum per store was to effect post closing adjustments in connection with
the  Food  Group  acquisition.  If  the  option  to purchase the supermarkets is
exercised,  the  excess  of  the  purchase  price over the net book value of the
assets  will  be  shown  as  a  charge  to  equity.

The  Company  uses the services of an affiliate Red Apple Medical, a corporation
wholly-owned  by John Catsimatidis, as an agent for self-insurance purposes. All
employee  medical  claims  are  submitted  to  a  third  party administrator who
processes  claims  to be remitted through a controlled account. Such amounts are
reimbursed  by  the  Company to the agent. No fees have been paid to this entity
for  the  fiscal  years  2002  or  2003  to  date.


                                        9
<PAGE>
3.  LITIGATION

No substantive changes from the preceding quarter.



4.  COSTS  RELATING  TO  THE  KINGS  ACQUISITION

The  Company  has  incurred  costs  in an effort to acquire Kings Super Markets,
Inc.,  a  chain of 27 stores, mainly located in Northern New Jersey. The Company
intends  to  continue  such efforts to acquire this company. No assurance can be
given that this acquisition will be consummated. In connection with the proposed
acquisition  and  related  financing,  the  Company  incurred  certain  costs
(principally  professional  fees) in the amount of $1,218,380 (included in other
assets  on the accompanying balance sheet). Approximately $750,000 of such costs
are  reimbursable  to  the Company by its affiliate United Acquisition Corp. The
deferred  costs  will  be  allocated  to  the  purchase price and financing upon
completion  of  the  transaction.  Should  the  transaction be unsuccessful, the
deferred  costs  will  be  charged  to  operations.  Any costs reimbursed by the
affiliate  will  be  reflected  as  a  capital  contribution.

5.  RECENT  ACCOUNTING  PRONOUNCEMENTS

In  July  2001,  the FASB issued Statement of Financial Accounting Standards No.
141,  "Business Combinations" ("SFAS 141") and Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141
eliminates  the  pooling-of-interests  method  of  accounting  for  business
combinations  initiated  after June 30, 2001 and modifies the application of the
purchase  accounting  method effective for transactions that are completed after
June  30,  2001.  SFAS  142  eliminates the requirement to amortize goodwill and
intangible  assets  having  indefinite  useful  lives  but requires that they be
assessed  at  least  annually for impairment. Intangible assets that have finite
lives  will  continue  to  be amortized over their useful lives. The adoption of
SFAS  141  and  142  did  not  have a material effect on the Company's financial
position  or  operations.

In  October  2001,  the  FASB issued Statement of Financial Accounting Standards
144,  "Accounting  for  the  Impairment or Disposal of Long-Lived Assets" ("SFAS
144"). SFAS No. 144 addresses the accounting and reporting for the impairment or
disposal  of long-lived assets. The statement provides a single accounting model
for  long-lived  assets  to be disposed of. New criteria must be met to classify
the  asset  as  an asset held-for-sale. This statement also focuses on reporting
the  effects of a disposal of a segment of business. This statement is effective
for fiscal years beginning after December 15, 2001. The Company adopted SFAS 144
as  of  December 2, 2002, and the adoption did not have a material impact on the
Company's  financial  position  or  results  of  operations.

In April 2002, Statement of Financial Accounting Standards, No. 145, "Rescission
of  FASB  Statements  No.  4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS 145") was issued. SFAS 145 rescinds SFAS 4 and 64,
which  required gains and losses from extinguishment of debt to be classified as
extraordinary  items.  SFAS  also  rescinds  SFAS 44 since the provisions of the
Motor Carrier Act of 1980 are complete. SFAS 145 also amends SFAS 13 eliminating
inconsistencies  in  certain sale-leaseback transactions. The provisions of SFAS
145  are  effective  for  fiscal years beginning after May 15, 2002. Any gain or
loss  on  extinguishment of debt that was classified as an extraordinary item in
prior  periods presented shall be reclassified to interest expense. The adoption
of  SFAS  145 did not have a material effect on the Company's financial position
or  results  of  operations.

Statement  of  Financial  Accounting  Standards,  No. 146, "Accounting for Costs
Associated  with  Exit  or Disposal Activities" ("SFAS 146"), was issued in July
2002.  SFAS  146  requires  companies to recognize costs associated with exit or
disposal  activities  when  they  are  incurred  rather  than  at  the date of a
commitment to an exit or disposal plan. SFAS 146 supercedes EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (Including Certain


                                       10
<PAGE>
Costs  Incurred in a Restructuring)." SFAS 146 is to be applied prospectively to
exit  or  disposal  activities  initiated  after  December  31,  2002.  This
pronouncement did not have a material effect on the Company's financial position
or  results  of  operations.

On  December  31,  2002,  the  FASB  issued  Statement  of  Financial Accounting
Standards  No.  148,  "Accounting  for  Stock-Based Compensation -Transition and
Disclosure"  ("SFAS  148").  This  standard  amends  SFAS  No.  123,  to provide
alternative methods of transition for a voluntary change to the fair value based
method  of  accounting  for stock-based employee compensation. In addition, SFAS
148  amends the disclosure requirements of SFAS 123 to require more frequent and
prominent  disclosures  in  financial  statements  of the effects of stock-based
compensation.  The  transition guidance and annual disclosure provisions of SFAS
148  are  effective for fiscal years ending after December 15, 2002. The interim
disclosure  provisions  are effective for financial reports containing financial
statements  for  interim periods beginning after December 15, 2002. SFAS 148 did
not  have  a  material  impact on the Company's results of operations, financial
position or cash flows, and the Company has adopted the disclosure provisions of
SFAS  148  as  of  March  3,  2003,  as  required.

In  November  2002,  the  Financial  Accounting  Standards Board ("FASB") issued
Interpretation  No.  45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees,  Including Indirect Guarantees of Indebtedness of Others ("FIN 45").
FIN 45 requires the recognition of a liability for certain guarantee obligations
issued  or  modified  after  December  31,  2002.  It  also clarifies disclosure
requirements  to  be  made by a guarantor for certain guarantees. The disclosure
provisions  of  FIN  45 are effective for fiscal years ending after December 15,
2002.  FIN  45  did  not  have  a  material  impact  on the Company's results of
operations,  financial  position  or cash flows, and the Company has adopted the
disclosure  provisions  of  FIN  45  as  of  December  2,  2002.

On  January  17,  2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable  Interest  Entities"  ("FIN  46").  FIN  46  requires  certain variable
interest entities to be consolidated by the primary beneficiary of the entity if
the  equity  investors  in  the  entity  do  not  have  the characteristics of a
controlling  financial interest or do not have sufficient equity at risk for the
entity  to  finance  its  activities  without  additional subordinated financial
support  from  other  parties. FIN 46 is effective for all new variable interest
entities  created  or  acquired  after  January  31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN 46
must  be applied for the first interim or annual period beginning after June 15,
2003.  The  Company  has not yet evaluated whether FIN 46 will have an impact on
the  Company's  results  of  operations,  financial  position  or  cash  flows.

In  February  2003,  the  Emerging  Issues  Task  Force  ("EITF") addressed EITF
Statement  No.  02-16  ("EITF  02-16"),  "Accounting  by  a  Reseller  for  Cash
Consideration  Received  From a Vendor." EITF 02-16 provides accounting guidance
on  how  a reseller should characterize consideration given by a vendor and when
to recognize and how to measure that consideration in its income statement. EITF
02-16  is effective for all agreements entered into after December 31, 2002. The
Company  has  evaluated  the  provisions  of EITF 02-16 and determined that this
statement  did  not  have  a  material  effect  on  its  consolidated  financial
statements.

In  April  2003,  the  FASB  issued  SFAS  149,  "Amendment  of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS 149"). SFAS 149 amends and
clarifies  accounting  for  derivative instruments, including certain derivative
instruments  embedded  in other contracts, and for hedging activities under SFAS
133.  The  new  guidance  amends SFAS 133 for decisions made: (a) as part of the
Derivatives Implementation Group process that effectively required amendments to
SFAS  133,  (b)  in  connection with other Board projects dealing with financial
instruments,  and  (c) regarding implementation issues raised in relation to the
application  of  the  definition  of  a  derivative,  particularly regarding the
meaning of an "underlying" and the characteristics of a derivative that contains
financing  components.  The  amendments  set forth in SFAS 149 improve financial
reporting  by  requiring  that  contracts  with  comparable  characteristics  be
accounted  for  similarly. SFAS 149 is generally effective for contracts entered
into  or  modified  after  June 30, 2003 (with a few exceptions) and for hedging
relationships  designated  after  June  30,  2003. The guidance is to be applied
prospectively.  The Company does not expect the provisions of SFAS 149 to have a
material impact on its financial position or results of operations.

In  May  2003,  the  FASB  issued  Statement  No.  150,  "Accounting for Certain
Financial  Instruments  with  Characteristics  of  both  Liabilities and Equity"
("SFAS 150"). SFAS 150 improves the accounting for certain financial instruments
that,  under  previous  guidance,  issuers  could account for as equity. The new
Statement  requires  that  those  instruments  be  classified  as liabilities in
statements  of financial position. The Company does not expect the provisions of
SFAS  150  to  have  a  material  impact on its financial position or results of
operations.


                                       11
<PAGE>
6.  ACCOUNTING  FOR  STOCK-BASED  COMPENSATION

The  Company  complies  with Statement of Financial Accounting Standards No. 123
"Accounting  for  Stock-Based  Compensation"  ("SFAS  No.  123"). This statement
defines  a  fair value based method whereby compensation cost is measured at the
grant  date  based  on  the  fair  value of the award and is recognized over the
service  period,  which  is  usually  the  vesting  period.  Under SFAS No. 123,
companies  are  encouraged, but are not required, to adopt the fair value method
of  accounting  for  employee stock-based transactions. The Company accounts for
such  transactions  under Accounting Principles Board Opinion No. 25, Accounting
for  Stock  Issued to Employees, but discloses pro forma net income (loss) as if
the  Company  had  applied  the  SFAS  No.  123  method  of  accounting.

Pro forma information, assuming the Company had accounted for its employee stock
options  granted  under  the  fair  value  method prescribed by SFAS No. 123, as
amended  by  Financial Accounting Standards Board Statement No. 148, "Accounting
for  Stock  Based Compensation - Transition and Disclosure, an Amendment of FASB
Statement  No.  123"  is presented below. The fair value of each option grant is
estimated  on  the  date  of  each  grant using the Black-Scholes option-pricing
model. There were no stock options granted in fiscal 2003 or in fiscal 2002. The
fair  value  generated  by  the Black-Scholes model may not be indicative of the
future  benefit,  if  any,  that  may  be  received  by  the  option  holder.

<TABLE>
<CAPTION>
                                                          26 WEEKS ENDED     13 WEEKS ENDED
                                                         -----------------  -----------------
                                                              ($000S)            ($000S)
                                                              -------            -------
                                                          6/1/03   6/2/02    6/1/03   6/2/02
                                                         --------  -------  --------  -------
<S>                                                      <C>       <C>      <C>       <C>

     Net income/(loss):                                  $(2,297)  $   967  $  (912)  $   206
     Less: stock-based employee compensation
     expense determined under fair value based
     method for all awards, net of related tax effects         3         3        3         3
                                                         --------  -------  --------  -------

     Pro forma net income/(loss)                         $(2,300)  $   964  $  (915)  $   203
                                                         ========  =======  ========  =======

     Earnings (loss) per share:

     Basic, as reported                                  $ (0.12)  $  0.05  $ (0.05)  $  0.01
     Basic, pro forma                                    $ (0.12)  $  0.05  $ (0.05)  $  0.01
     Diluted, as reported                                $ (0.12)  $  0.05  $ (0.05)  $  0.01
     Diluted, pro forma                                  $ (0.12)  $  0.05  $ (0.05)  $  0.01
</TABLE>



This  pro forma information may not be representative of the amounts to expected
in  future  years  as the fair value method of accounting prescribed by SFAS No.
123  has  not  been  applied  to  options  granted  prior  to  fiscal  1996.

7.  PROCEEDS  FROM  INSURANCE  COMPANY

The  Company  has  received $500,000 from its insurance carrier as reimbursement
against  legal  fees  incurred  in  the case referred to in the Company's annual
report  on  Form 10-K as "Ansoumana v. various defendants". This amount has been
included  as  a  reduction  of  expenses  in  the  13  weeks ended June 1, 2003.


                                       12
<PAGE>
                     GRISTEDE'S FOODS, INC. AND SUBSIDIARIES

PART  I

ITEM 2.   MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
          RESULTS  OF OPERATIONS FOR THE 26 WEEKS AND THE 13 WEEKS ENDED JUNE 1,
          2003  AND  JUNE  2,  2002


CRITICAL  ACCOUNTING  POLICIES

Financial  Reporting  Release  No.  60,  which  was  recently  released  by  the
Securities  and  Exchange  Commission,  requires  all  companies  to  include  a
discussion of critical accounting policies or methods used in the preparation of
financial  statements.  Note  1  of  the  Notes  to  the  Consolidated Financial
Statements includes a summary of the significant accounting policies and methods
used  in the preparation of our Consolidated Financial Statements. The following
is  a  brief  discussion of the more significant accounting policies and methods
used  by  us.

General

The  preparation  of  financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets and liabilities and the disclosure of
contingent  assets  and liabilities at the dates of the financial statements and
the  reported amounts of revenues and expenses during the reporting periods. The
most  significant  estimates  and  assumptions  relate  to the recoverability of
internally  developed  software  costs,  fixed  assets  and  other  intangibles,
inventories, realization of deferred income taxes and the adequacy of allowances
for  doubtful  accounts.  Actual  amounts  could differ significantly from these
estimates.

Accounts  Receivable

We continuously monitor collections and payments from our customers, third party
and  vendor  receivables  and  maintain  a provision for estimated credit losses
based  upon our historical experience and any specific collection issues that we
have  identified.  While  such  credit  losses have historically been within our
expectations  and  the  provisions established, we cannot guarantee that we will
continue  to  experience  the  same  credit loss rates that we have in the past.

Inventories

We value our inventory at the lower of cost or market with cost determined under
the retail method. We regularly review inventory quantities on hand and record a
provision for excess and obsolete inventory where appropriate based primarily on
our  historical  shrink  and  spoilage  rates.

Intangibles and Other Long-Lived Assets

Property,  plant  and  equipment, intangible and certain other long-lived assets
are  amortized  over  their useful lives. Useful lives are based on management's
estimates of the period that the assets will generate revenue. Intangible assets
are reviewed for impairment whenever events or changes in circumstances indicate
that  the  carrying  amount  of  an  asset  may  not  be  recoverable.

Accrued  Self-Insurance

Insurance  expense for employee-related health care benefits are estimated using
historical  experience.


                                       13
<PAGE>
RESULTS  OF  OPERATIONS
-----------------------

The  following  table  sets  forth,  as a percentage of sales, components of our
Results  of  Operations:

<TABLE>
<CAPTION>
                                       26 weeks  26 weeks  13 weeks  13 weeks
                                        ended     ended     ended     ended
                                        6/1/03    6/2/02    6/1/03    6/2/02
                                       --------  --------  --------  --------
<S>                                    <C>       <C>       <C>       <C>
Sales                                     100.0     100.0     100.0     100.0
Cost of sales                              60.1      60.0      59.2      59.7
                                       --------  --------  --------  --------
Gross profit                               39.9      40.0      40.8      40.3
Store operating, general and
  administrative expenses                  33.2      30.9      33.9      31.5
Pre-store opening startup costs             0.3       0.1       0.4       0.2
Depreciation and amortization               3.3       3.2       3.4       3.2
Insurance and grant proceeds               -0.3        --      -0.7        --
Non-store operating expense                 3.9       3.8       4.1       3.9
                                       --------  --------  --------  --------
Operating income (loss)                    -0.5       2.0      -0.2       1.5
Other income (expense)                     -1.1      -1.2      -1.1      -1.1
                                       --------  --------  --------  --------
Income (loss) from operations before
  income taxes                             -1.6       0.8      -1.3       0.4
Provisions for income taxes                  --        --        --        --
                                       --------  --------  --------  --------
Net income (loss)                          -1.6       0.8      -1.3       0.4
                                       --------  --------  --------  --------
</TABLE>

Sales  were  $145,586,712  and $70,991,953 for the 26 weeks and for the 13 weeks
ended  June  1,  2003, respectively, as compared to $121,669,727 and $61,879,067
for  the  26 weeks and for the 13 weeks ended June 2, 2002, respectively. During
the  13  weeks  ended  June  1, 2003, we re-opened one store that was closed for
remodeling;  opened two new stores and closed two stores. The increases in sales
for the 2003 periods primarily resulted from new stores opened during the latter
part  of  fiscal  2002  and  in  fiscal  2003.

Same  store  sales decreased 0.2% and 3.2% for the 26 weeks and for the 13 weeks
ended June 1, 2003, respectively, as compared to the 26 weeks and 13 weeks ended
June  2,  2002.  Same store sales are calculated using stores that were open for
business  both  in  the  current  period  and  in  the  same  period  last year.

Gross profit was $58,094,385 or 39.9% of sales and $28,944,048 or 40.8% of sales
for  the  26  weeks  and  for  the 13 weeks ended June 1, 2003, respectively, as
compared  to $48,668,975 or 40.0% of sales and $24,907,860 or 40.3% of sales for
the 26 weeks and for the 13 weeks ended June 2, 2002, respectively. The increase
in  gross profit as a percentage of sales during the 13 weeks ended June 1, 2003
was  primarily  due  to  increased sales of perishables, which have higher gross
margins  and  an  overall  improvement  in  margins.

Store  operating,  general and administrative expenses were $48,386,141 or 33.2%
of sales and $24,065,494 or 33.9% of sales for the 26 weeks and for the 13 weeks
ended  June 1, 2003, respectively, as compared $37,646,244 or 30.9% of sales and
$19,506,222  or  31.5% of sales for the 26 weeks and for the 13 weeks ended June
2,  2002,  respectively.  Store


                                       14
<PAGE>
operating,  general  and  administrative  expenses  increased as a percentage of
sales  during  the  2003 periods mainly due to higher labor costs resulting from
the  new  and  remodeled stores which opened or re-opened since the 2002 period.

Pre-store  opening  startup  costs  and  store  closing  costs were $495,633 and
$260,626 for the 26 weeks and for the 13 weeks ended June 1, 2003 as compared to
$130,041  for  both  the  26  weeks  and  for  the  13 weeks ended June 2, 2002,
respectively. Two new stores were opened, one store was re-opened and two stores
were  closed  during the 13 weeks ended June 1, 2003, compared to no new and two
remodeled  stores  which  re-opened  during  the  13  weeks  ended June 2, 2002.

Non-store  operating expenses were $5,642,601 or 3.9% of sales and $2,884,867 or
4.1%  of  sales  for  the  26  weeks  and  for  the 13 weeks ended June 1, 2003,
respectively,  as  compared  with  $4,729,182 or 3.8% of sales and $2,411,643 or
3.9%  of  sales  for  the  26  weeks  and  for  the 13 weeks ended June 2, 2002,
respectively.  Administrative  payroll and fringes were 2.8% of sales for the 26
weeks  and 2.9% of sales for the 13 weeks ended June 1, 2003 as compared to 2.7%
of  sales  for  both  the  26  weeks  and  for  the 13 weeks ended June 2, 2002,
respectively.  The  increase in the 2003 periods primarily reflects the addition
of  supervisory  personnel  as  a result of additional business generated by the
store  remodeling  and  new  store program. General office expenses were 0.8% of
sales  for  the 26 weeks and the 13 weeks ended June 1, 2003 and also for the 26
weeks  and the 13 weeks ended June 2, 2002, respectively. Professional fees were
0.2%  of  sales for the 26 weeks and 0.2% for the 13 weeks ended June 1, 2003 as
compared  to 0.2% of sales for both the 13 weeks and for the 26 weeks ended June
2,  2002.  Corporate expenses were 0.1% of sales for each of the 26 weeks and 13
weeks  ended  June  1,  2003 and for the 26 weeks and the 13 weeks ended June 2,
2002.

Depreciation  and  amortization  expense  was  $4,759,168  or  3.3% of sales and
$2,379,142 or 3.4% of sales for the 26 weeks and the 13 weeks ended June 1, 2003
as  compared  to $3,869,590 or 3.2% of sales and $1,960,937 or 3.2% of sales for
the  26  weeks  and  for  the  13  weeks  ended  June  2,  2002. The increase in
depreciation  and  amortization  expense was primarily the result of significant
capital  expenditures  incurred  in  connection  with  our  store remodeling and
expansion  program.

Interest  expense  was  $1,610,435 and $767,786 or 1.1% of sales for both the 26
weeks  and  for  the  13  weeks ended June 1, 2003 as compared to $1,406,154 and
$694,325  or 1.2% of sales for both the 26 weeks and for the 13 weeks ended June
2,  2002.  The  increases  in  the  2003  periods  was primarily attributable to
increased  borrowings  under  the  bank  line  and  capital leases for equipment
financing,  partially  offset  by  lower  interest  rates.

As  a  result  of  the  items reviewed above, income (loss) before provision for
income  taxes were ($2,297,245) and ($912,756) for the 26 weeks and for 13 weeks
ended June 1, 2003 as compared to $991,508 and $205,522 for the 26 weeks and for
the  13  weeks  ended  June  2,  2002.


LIQUIDITY  AND  CAPITAL  RESOURCES

Liquidity:
----------

     Our consolidated financial statements indicate that at June 1, 2003 current
assets  exceed  current  liabilities  by $1,295,471 and stockholders' equity was
$8,368,849.  Management  believes  that  cash  flows  generated from operations,
supplemented  by financing from our bank facility, third party leasing companies
and/or  additional  financing  from  the Company's majority shareholder, will be
sufficient  to  pay  our  debts  as  they  may come due, provide for our capital
expenditure  program  and  meet  our  other  cash  requirements.

Debt  and  Debt  Service:
-------------------------

     Effective  October  2001,  our  credit  agreement with a group of banks was
amended  and  increased  to  an  aggregate total of $32,500,000, consisting of a
$15,500,000  term loan and a $17,000,000 revolving line of credit. As of June 1,
2003,  our  credit  facility,  as  amended,  provides for (i) a maturity date of
November 28, 2004 for the revolving line of credit, and December 3, 2006 for the
term  loan,  at  which  time  all  amounts  outstanding thereunder are due, (ii)
certain  financial covenants, and (iii) amortization of the term loan in monthly
amortizations  totaling  $2,000,000,  $2,300,000,


                                       15
<PAGE>
$2,600,000,  $2,900,000  and  $3,200,000,  respectively, in each year during its
term,  and  a  $2,500,000  balloon  payment  at  maturity.

     Borrowings  under our credit facility bear interest at a spread over either
the  prime  rate  of  the bank acting as agent for the group of banks or a LIBOR
rate, with the spread dependent on the ratio of our funded debt to EBITDA ratio,
as  defined  in  our  credit  facility.  The  average  interest  rate on amounts
outstanding  under our credit facility during the quarter ended June 1, 2003 was
4.53%  per  annum.

     Our  credit  facility  contains  covenants,  representations  and events of
default  typical  of  credit  agreements,  including  financial  covenants which
require  us  to  meet,  among  other  things, a minimum tangible net worth, debt
service  coverage  ratios  and  fixed  charge  coverage  ratios, and which limit
transactions  with  affiliates.  Our  credit  facility  is secured by equipment,
inventories  and  accounts  receivable.

     The  Company's  majority  shareholder,  through affiliates, has contributed
$19,948,931  through June 1, 2003, in the form of unsecured non-interest bearing
loans,  of  which  $16,800,000  is  subordinated  to  the  Company's  banks. The
liability  presently  does  not  bear  interest.  However,  the Company's credit
agreement  with  its  banks  permits  the  Company  to  pay  interest  on  such
subordinated  debt  provided  the  Company  has  a  positive  net  income.

     The  Company  has available affiliate leasing lines of credit sufficient to
lease  finance equipment for its ongoing store remodeling and expansion program.

Capital  Expenditures:
----------------------

     Capital expenditures were $6.4 million for the 26 weeks ended June 1, 2003,
including  property  acquired  under capital leases, as compared to $6.2 million
for  the  26  weeks  ended  June  2,  2002.

     We  have  not  incurred  any material commitments for capital expenditures,
although  we  anticipate  spending  approximately  $8  million  to  $10  million
inclusive of new capital leases on our store remodeling and expansion program in
fiscal  2003.  Such amount is subject to adjustment based on the availability of
funds.

Cash  Flow:
-----------

     Cash  provided  by  operating  activities amounted to $3,094,032 for the 26
weeks  ended  June 1, 2003 as compared to $2,937,405 for the 26 weeks ended June
2,  2002. The change in cash flow from operating activities was primarily due to
increasing  accounts payable to support an increase of inventory, primariliy due
to  new  stores opened in the period. Net cash used for investing activities was
$4,413,649 in 2003 as compared to $2,562,528 in 2002. Cash provided by (used in)
financing  activities  was  $1,412,755  for  the  26 weeks ended June 1, 2003 as
compared  to  $(313,236) for the 26 weeks ended June 2, 2002 reflecting the bank
financing  drawn  upon  in  2002  and  the  additional  proceeds  provided by an
affiliate of the Company, offset by repayments of bank loans and capital leases.

Recent  Accounting  Pronouncements:
-----------------------------------

In  July  2001,  the FASB issued Statement of Financial Accounting Standards No.
141,  "Business Combinations" ("SFAS 141") and Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 141
eliminates  the  pooling-of-interests  method  of  accounting  for  business
combinations  initiated  after June 30, 2001 and modifies the application of the
purchase  accounting  method effective for transactions that are completed after
June  30,  2001.  SFAS  142  eliminates the requirement to amortize goodwill and
intangible  assets  having  indefinite  useful  lives  but requires that they be
assessed  at  least  annually for impairment. Intangible assets that have finite
lives  will  continue  to  be amortized over their useful lives. The adoption of
SFAS  141  and  142  did  not  have a material effect on the Company's financial
position  or  operations.


                                       16
<PAGE>
In  October  2001,  the  FASB issued Statement of Financial Accounting Standards
144,  "Accounting  for  the  Impairment or Disposal of Long-Lived Assets" ("SFAS
144"). SFAS No. 144 addresses the accounting and reporting for the impairment or
disposal  of long-lived assets. The statement provides a single accounting model
for  long-lived  assets  to be disposed of. New criteria must be met to classify
the  asset  as  an asset held-for-sale. This statement also focuses on reporting
the  effects of a disposal of a segment of business. This statement is effective
for fiscal years beginning after December 15, 2001. The Company adopted SFAS 144
as  of  December 2, 2002, and the adoption did not have a material impact on the
Company's  financial  position  or  results  of  operations.

In April 2002, Statement of Financial Accounting Standards, No. 145, "Rescission
of  FASB  Statements  No.  4, 44 and 64, Amendment of FASB Statement No. 13, and
Technical Corrections" ("SFAS 145") was issued. SFAS 145 rescinds SFAS 4 and 64,
which  required gains and losses from extinguishment of debt to be classified as
extraordinary  items.  SFAS  also  rescinds  SFAS 44 since the provisions of the
Motor Carrier Act of 1980 are complete. SFAS 145 also amends SFAS 13 eliminating
inconsistencies  in  certain sale-leaseback transactions. The provisions of SFAS
145  are  effective  for  fiscal years beginning after May 15, 2002. Any gain or
loss  on  extinguishment of debt that was classified as an extraordinary item in
prior  periods presented shall be reclassified to interest expense. The adoption
of  SFAS  145 did not have a material effect on the Company's financial position
or  results  of  operations.

Statement  of  Financial  Accounting  Standards,  No. 146, "Accounting for Costs
Associated  with  Exit  or Disposal Activities" ("SFAS 146"), was issued in July
2002.  SFAS  146  requires  companies to recognize costs associated with exit or
disposal  activities  when  they  are  incurred  rather  than  at  the date of a
commitment to an exit or disposal plan. SFAS 146 supercedes EITF Issue No. 94-3,
"Liability Recognition for Certain Employee Termination Benefits and Other Costs
to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." SFAS
146  is  to  be  applied  prospectively to exit or disposal activities initiated
after  December  31,  2002. This pronouncement did not have a material effect on
the  Company's  financial  position  or  results  of  operations.

On  December  31,  2002,  the  FASB  issued  Statement  of  Financial Accounting
Standards  No.  148,  "Accounting  for  Stock-Based Compensation -Transition and
Disclosure"  ("SFAS  148").  This  standard  amends  SFAS  No.  123,  to provide
alternative methods of transition for a voluntary change to the fair value based
method  of  accounting  for stock-based employee compensation. In addition, SFAS
148  amends the disclosure requirements of SFAS 123 to require more frequent and
prominent  disclosures  in  financial  statements  of the effects of stock-based
compensation.  The  transition guidance and annual disclosure provisions of SFAS
148  are  effective for fiscal years ending after December 15, 2002. The interim
disclosure  provisions  are effective for financial reports containing financial
statements  for  interim periods beginning after December 15, 2002. SFAS 148 did
not  have  a  material  impact on the Company's results of operations, financial
position or cash flows, and the Company has adopted the disclosure provisions of
SFAS  148  as  of  March  3,  2003,  as  required.

In  November  2002,  the  Financial  Accounting  Standards Board ("FASB") issued
Interpretation  No.  45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees,  Including Indirect Guarantees of Indebtedness of Others ("FIN 45").
FIN 45 requires the recognition of a liability for certain guarantee obligations
issued  or  modified  after  December  31,  2002.  It  also clarifies disclosure
requirements  to  be  made by a guarantor for certain guarantees. The disclosure
provisions  of  FIN  45 are effective for fiscal years ending after December 15,
2002.  FIN  45  did  not  have  a  material  impact  on the Company's results of
operations,  financial  position  or cash flows, and the Company has adopted the
disclosure  provisions  of  FIN  45  as  of  December  2,  2002.

On  January  17,  2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable  Interest  Entities"  ("FIN  46").  FIN  46  requires  certain variable
interest entities to be consolidated by the primary beneficiary of the entity if
the  equity  investors  in  the  entity  do  not  have  the characteristics of a
controlling  financial interest or do not have sufficient equity at risk for the
entity  to  finance  its  activities  without  additional subordinated financial
support  from  other  parties. FIN 46 is effective for all new variable interest
entities  created  or  acquired  after  January  31, 2003. For variable interest
entities created or acquired prior to February 1, 2003, the provisions of FIN 46
must  be applied for the first interim or annual period beginning after June 15,
2003.  The  Company  has not yet evaluated whether FIN 46 will have an impact on
the  Company's  results  of  operations,  financial  position  or  cash  flows.

In  February  2003,  the  Emerging  Issues  Task  Force  ("EITF") addressed EITF
Statement  No.  02-16  ("EITF  02-16"),  "Accounting  by  a  Reseller  for  Cash
Consideration  Received  From a Vendor." EITF 02-16 provides accounting guidance
on  how  a reseller should characterize consideration given by a vendor and when
to  recognize  and  how  to  measure  that  consideration  in  its  income


                                       17
<PAGE>
statement.  EITF  02-16  is  effective  for  all  agreements  entered into after
December  31,  2002.  The  Company  evaluated  the  provisions of EITF 02-16 and
determined  that  this  statement  did  not  have  a  material  effect  on  its
consolidated  financial  statements.

In  April  2003,  the  FASB  issued  SFAS  149,  "Amendment  of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS 149"). SFAS 149 amends and
clarifies  accounting  for  derivative instruments, including certain derivative
instruments  embedded  in other contracts, and for hedging activities under SFAS
133.  The  new  guidance  amends SFAS 133 for decisions made: (a) as part of the
Derivatives Implementation Group process that effectively required amendments to
SFAS  133,  (b)  in  connection with other Board projects dealing with financial
instruments,  and  (c) regarding implementation issues raised in relation to the
application  of  the  definition  of  a  derivative,  particularly regarding the
meaning of an "underlying" and the characteristics of a derivative that contains
financing  components.  The  amendments  set forth in SFAS 149 improve financial
reporting  by  requiring  that  contracts  with  comparable  characteristics  be
accounted  for  similarly. SFAS 149 is generally effective for contracts entered
into  or  modified  after  June 30, 2003 (with a few exceptions) and for hedging
relationships  designated  after  June  30,  2003. The guidance is to be applied
prospectively.  The Company does not expect the provisions of SFAS 149 to have a
material impact on its financial position or results of operations.

In  May  2003,  the  FASB  issued  Statement  No.  150,  "Accounting for Certain
Financial  Instruments  with  Characteristics  of  both  Liabilities and Equity"
("SFAS 150"). SFAS 150 improves the accounting for certain financial instruments
that,  under  previous  guidance,  issuers  could account for as equity. The new
Statement  requires  that  those  instruments  be  classified  as liabilities in
statements  of financial position. The Company does not expect the provisions of
SFAS  150  to  have  a  material  impact on its financial position or results of
operations.

Forward-looking  information:
-----------------------------

     This report and documents incorporated by reference contain both historical
and  "forward-looking  statements"  within the meaning of the Private Securities
Litigation  Reform  Act  of  1995.  Words  such  as  "anticipates",  "believes",
"expects", "intends", "future", and similar expressions identify forward-looking
statements.  Any  such  "forward-looking"  statements in this report reflect the
Company's current views with respect to future events and financial performance,
and  are  subject to a variety of factors that could cause the actual results or
performance to differ materially from historical results or from the anticipated
results  or performance expressed or implied by such forward-looking statements.
Because  of  such  factors, there can be no assurance that the actual results or
developments  anticipated  by  the  Company  will  be  realized  or,  even  if
substantially  realized,  that they will have the anticipated results. The risks
and  uncertainties  that  may affect the Company's business include, but are not
limited  to:  economic  conditions,  governmental  regulations,  technological
advances,  pricing  and  competition,  acceptance  by  the  marketplace  of  new
products,  retention of key personnel, the sufficiency of financial resources to
sustain and expand the Company's operations, and other factors described in this
report and in prior filings with the Securities and Exchange Commission. Readers
should  not place undue reliance on such forward-looking statements, which speak
only  as of the date hereof, and should be aware that except as may be otherwise
legally  required  of  the  Company,  the  Company  undertakes  no obligation to
publicly  revise  any  such  forward-looking  statements  to  reflect  events or
circumstances  that may arise after the date hereof. A more detailed description
of  some of the risk factors is set forth in the Company's Annual Report on Form
10-K,  dated  December  1,  2002.

ITEM  3.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK.

Market  risk  represents  the  risk  of  loss  that  may impact the consolidated
financial  position,  results  of  operations or cash flow of the Company due to
adverse changes in financing rates. The Company is exposed to market risk in the
area  of  interest rates. This exposure is directly related to its term loan and
borrowing  activities  under  the working capital facility. The Company does not
currently  maintain any interest rate hedging arrangements due to the reasonable
risk  that  near-term interest rates will not rise significantly. The Company is
continuously  evaluating  this risk and will consider implementing interest rate
hedging  arrangements  when  deemed  appropriate.

ITEM  4.     CONTROLS  AND  PROCEDURES

     (a)  Evaluation  of  Disclosure  Controls  and  Procedures.


                                       18
<PAGE>
Within  the 90 days prior to the date of this report, the Company carried out an
evaluation,  under  the  supervision and with the participation of the Company's
management, including the Company's Chairman and Chief Executive Officer and its
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  "disclosure  controls  and  procedures,"  which are defined under SEC
rules  as controls and other procedures of a company that are designed to ensure
that  information  required  to be disclosed by a company in the reports that it
files  under  the  Exchange  Act is recorded, processed, summarized and reported
within required time periods. Based upon that evaluation, the Company's Chairman
and  Chief  Executive Officer and its Chief Financial Officer concluded that the
Company's  disclosure  controls  and  procedures  were  effective.

     (b)  Changes  in  Internal  Controls

There  were  no  significant changes in the Company's internal controls or other
factors that could significantly affect these controls subsequent to the date of
their  evaluation.


                                       19
<PAGE>

                     GRISTEDE'S FOODS INC. AND SUBSIDIARIES


                           PART II - OTHER INFORMATION


ITEM  1.     LEGAL  PROCEEDINGS
             ------------------

             None.

ITEM  2.     CHANGE  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

             Number                Description
             ------                -----------
             *99.1                 Certification pursuant to 18 U.S.C. Section
                                   1350, as adopted pursuant to Section 906 of
                                   the Sarbanes-Oxley Act of 2002.

* filed herewith

             (b)  There were no Current Reports on Form 8-K filed during the 13
                  weeks ended June 1, 2003.


                                       20
<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 Foods, Inc.

                                  By:   /s/  John A. Catsimatidis
                                        -------------------------

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


Dated: July 16, 2003



                                  By:   /s/  Gary Pokrassa
                                        ------------------

                                        Gary Pokrassa
                                        Chief Financial Officer


Dated: July 16, 2003


                                       21
<PAGE>
                       ANNUAL AND QUARTERLY CERTIFICATIONS
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John A. Catsimatidis, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of Gristede's
          Foods, Inc.

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:
               a) designed such disclosure controls and procedures to ensure
          that material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;
               b) evaluated the effectiveness of the registrant's disclosure
          controls and procedures as of a date within 90 days prior to the
          filing date of this quarterly report (the "Evaluation Date"); and
               c) presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):
          a) all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and
          b) any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.


/s/ John A. Catsimatidis

Date: July 16, 2003
Title: Chief Executive Officer


                                       22
<PAGE>
                       ANNUAL AND QUARTERLY CERTIFICATIONS
            PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gary Pokrassa, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of Gristede's
          Foods, Inc.

     2.   Based on my knowledge, this quarterly report does not contain any
          untrue statement of a material fact or omit to state a material fact
          necessary to make the statements made, in light of the circumstances
          under which such statements were made, not misleading with respect to
          the period covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
          information included in this quarterly report, fairly present in all
          material respects the financial condition, results of operations and
          cash flows of the registrant as of, and for, the periods presented in
          this quarterly report;

     4.   The registrant's other certifying officers and I are responsible for
          establishing and maintaining disclosure controls and procedures (as
          defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant
          and we have:
               a) designed such disclosure controls and procedures to ensure
          that material information relating to the registrant, including its
          consolidated subsidiaries, is made known to us by others within those
          entities, particularly during the period in which this quarterly
          report is being prepared;
               b) evaluated the effectiveness of the registrant's disclosure
          controls and procedures as of a date within 90 days prior to the
          filing date of this quarterly report (the "Evaluation Date"); and
               c) presented in this quarterly report our conclusions about the
          effectiveness of the disclosure controls and procedures based on our
          evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on our most recent evaluation, to the registrant's auditors and the
          audit committee of registrant's board of directors (or persons
          performing the equivalent function):
          a) all significant deficiencies in the design or operation of internal
          controls which could adversely affect the registrant's ability to
          record, process, summarize and report financial data and have
          identified for the registrant's auditors any material weaknesses in
          internal controls; and
          b) any fraud, whether or not material, that involves management or
          other employees who have a significant role in the registrant's
          internal controls; and

     6.   The registrant's other certifying officers and I have indicated in
          this annual report whether or not there were significant changes in
          internal controls or in other factors that could significantly affect
          internal controls subsequent to the date of our most recent
          evaluation, including any corrective actions with regard to
          significant deficiencies and material weaknesses.

/s/ Gary Pokrassa

Date: July 16, 2003
Title: Chief Financial Officer


                                       23
<PAGE>