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 May 31, 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 July 14, 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
                 May 31, 1998 and November 30, 1997                       Page 3


            Consolidated  Statements of Operations  for the
                     quarters  and six months ended May 31,
                     1998 and June 1, 1997                                Page 4


            Consolidated Statements of Stockholders'
                     Equity for the six months ended
                     May 31, 1998                                         Page 5


            Consolidated  Statements  of Cash Flows for the
                     six months ended May 31, 1998 and June
                     1, 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>

Item 1
Financial Statements

<TABLE>
<CAPTION>
                                                      GRISTEDE'S SLOAN'S, INC.
                                                UNAUDITED CONSOLIDATED BALANCE SHEETS

ASSETS                                                                                                 May 31,          November 30,
                                                                                                         1998               1997
                                                                                                     ===========         ===========
<S>                                                                                                  <C>                 <C>        
CURRENT ASSETS:
          Cash .............................................................................         $   127,199         $    88,970
          Accounts receivable - net of allowance for doubtful accounts
             of $300,000 at May 31, 1998 and November 30, 1997 .............................           5,679,991           5,110,026
          Inventory ........................................................................          17,427,855          16,221,465
          Prepaid expenses and other current assets ........................................           1,162,558             914,544
          Notes receivable- current portion ................................................             583,288             584,912
                                                                                                     -----------         -----------

                   Total current assets ....................................................          24,980,891          22,919,917
                                                                                                     -----------         -----------

PROPERTY AND EQUIPMENT:
          Furniture, fixtures and equipment ................................................          14,956,707          13,393,803
          Capitalized equipment leases .....................................................           6,516,812           5,574,369
          Leaseholds and leasehold improvements ............................................          32,606,226          30,296,510
                                                                                                     -----------         -----------
                                                                                                      54,079,745          49,264,682
          Less accumulated depreciation and amortization ...................................          25,679,089          23,567,986
                                                                                                     -----------         -----------

                   Net property and equipment ..............................................          28,400,656          25,696,696

          Due from affiliate ...............................................................             361,428             351,778
          Deposits and other assets ........................................................             719,430             717,429
          Deferred costs ...................................................................           2,013,658           1,515,004
          Notes receivable - noncurrent portion ............................................           1,247,093           1,504,731
                                                                                                     -----------         -----------

                                                                                                     $57,723,156         $52,705,555
                                                                                                     ===========         ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
          Accounts payable, trade ..........................................................         $12,916,718         $15,671,962
          Accrued payroll, vacation and withholdings .......................................             569,755           1,276,535
          Accrued expenses and other current liabilities ...................................           1,596,441             947,395
          Capitalized lease obligation - current portion ...................................             459,891             389,809
          Current portion of long term debt ................................................           2,384,280           1,714,284
                                                                                                     -----------         -----------

                   Total current liabilities ...............................................          17,927,085          19,999,985

          Long-term debt ...................................................................          17,058,578          11,285,716
          Due to affiliate .................................................................           4,000,000           4,000,000
          Deferred advertising .............................................................             313,654             378,654
          Capitalized lease obligation - non current portion ...............................           1,980,675           1,377,194
          Deferred rent ....................................................................           1,386,321             993,984
                                                                                                     -----------         -----------

                   Total liabilities .......................................................          42,666,313          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 May 31, 1998 and November 30, 1997 ..............             392,732             392,732
          Additional paid-in capital .......................................................          14,167,595          14,136,674
          Retained earnings ................................................................             496,516             140,616
                                                                                                     -----------         -----------

                   Total stockholders' equity ..............................................          15,056,843          14,670,022
                                                                                                     -----------         -----------

                                                                                                     $57,723,156         $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 SIX MONTHS AND QUARTER ENDED MAY 31, 1998 AND JUNE 1, 1997


                                                                 26 weeks          13 weeks          26 weeks             13 weeks
                                                                   ended            ended              ended                ended
                                                                  May 31,           May 31,           June 1,              June 1,
                                                                   1998              1998               1997                1997
                                                              ============       ============       ============       ============
<S>                                                           <C>                <C>                <C>                <C>         
Sales ..................................................      $ 78,665,355       $ 39,244,475       $ 49,942,663       $ 23,818,792
Cost of sales ..........................................        47,204,714         23,690,767         30,647,735         14,402,404
                                                              ------------       ------------       ------------       ------------

Gross profit ...........................................        31,460,641         15,553,708         19,294,928          9,416,388

Store operating, general and
  administrative expenses ..............................        26,003,465         12,712,514         17,412,897          8,632,311

Depreciation and amortization ..........................         2,111,103          1,057,143          1,041,064            589,981
                                                              ------------       ------------       ------------       ------------

                                                                 3,346,073          1,784,051            840,967            194,096

Non-store operating expenses ...........................         2,193,420          1,002,496          3,034,091          1,531,243
                                                              ------------       ------------       ------------       ------------

Operating profit/(loss) ................................         1,152,653            781,555         (2,193,124)        (1,337,147)
                                                              ------------       ------------       ------------       ------------

Other income (expense)
Interest income ........................................            98,687             47,680             60,651             42,860
Interest expense .......................................          (852,940)          (473,373)          (372,043)          (245,418)
                                                              ------------       ------------       ------------       ------------

                                                                  (754,253)          (425,693)          (311,392)          (202,558)
                                                              ------------       ------------       ------------       ------------

Income/(loss) before provision for income taxes ........           398,400            355,862         (2,504,516)        (1,539,705)

Provision for income taxes .............................            42,500             30,000                  0                  0
                                                              ------------       ------------       ------------       ------------

Net  income/(loss) .....................................      $    355,900       $    325,862       $ (2,504,516)      $ (1,539,705)
                                                              ============       ============       ============       ============

Net income per share ...................................      $       0.02       $       0.02                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
                                                    SIX MONTHS ENDED MAY 31, 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 income for the six months
   ended May 31, 1998 .........................                                                             355,900          355,900
                                                     -----------      -----------      -----------      -----------      -----------

Balance at May 31, 1998 .......................       19,636,574      $   392,732      $14,167,595      $   496,516      $15,056,843
                                                     ===========      ===========      ===========      ===========      ===========


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 SIX MONTHS ENDED MAY 31, 1998 AND JUNE 1, 1997

                                                                                                     26 weeks             26 weeks
                                                                                                       ended                ended
                                                                                                      May 31,              June 1,
                                                                                                       1998                 1997
                                                                                                   ===========          ===========

<S>                                                                                                <C>                  <C>         
Net  income/(loss) .......................................................................         $   355,900          $(2,504,516)

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

Depreciation and amortization ............................................................           2,111,103            1,041,064

Changes in operating assets and liabilities:

Accounts receivable - net ................................................................            (569,965)              64,416
Inventory ................................................................................          (1,206,390)             886,571
Prepaid expenses and other current assets ................................................            (248,014)
Notes receivable .........................................................................             259,262
Receivable from officer ..................................................................              (9,650)
Other assets .............................................................................            (500,655)
Accounts payable, trade ..................................................................          (2,755,244)          (2,385,297)
Accrued payroll, vacation and withholdings ...............................................            (706,780)
Accrued expenses and other current liabilities ...........................................             649,046
Accrued rent leveling ....................................................................             392,337
Capitalized lease obligations ............................................................             673,563
Other credits ............................................................................             (65,000)
                                                                                                   -----------          -----------

        Net cash (used) / provided by operating activities ...............................          (1,620,487)          (2,897,762)
                                                                                                   -----------          -----------

Capital expenditures - net ...............................................................          (4,784,142)             661,593
                                                                                                   -----------          -----------

        Net cash used in investing activities ............................................          (4,784,142)             661,593
                                                                                                   -----------          -----------

Proceeds from bank loan ..................................................................           7,350,000
Repayments of bank loan ..................................................................            (907,142)
                                                                                                   -----------          -----------

         Net cash provided / (used) in financing activities ..............................           6,442,858                    0
                                                                                                   -----------          -----------

NET INCREASE  IN CASH AND CASH EQUIVALENTS ...............................................              38,229                    0

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

CASH AND CASH EQUIVALENTS, end of period .................................................         $   127,199          $         0
                                                                                                   ===========          ===========

INCREASE IN NET ASSETS PURCHASED .........................................................                   *          $   772,717

* The  Unaudited  Consolidated  Statement  of Cash  Flows  for the Six
Months  Ended  June  1,  1997  reflects  the  difference  between  the
Statement of Assets to be Purchased and  Liabilities  to be Assumed at
June 1, 1997 as compared to December 1, 1996. No cash was  transferred
as part of the acquisition. The increase in Net Assets Purchased was $
772,717.


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

       Cash  paid for interest ...........................................................         $   805,339          $   492,906
       Cash paid for taxes ...............................................................         $    18,180          $     9,572

NONCASH TRANSACTIONS

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


See accompanying notes to unaudited consolidated financial statements.

</TABLE>

                                       -6-

<PAGE>


                    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 42 supermarkets  and one health and beauty aids
store (the "Supermarkets").  37 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 20
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

The Company has advanced  funds to a company  owned by the Chairman of the Board
who is also the principal  stockholder  of the Company.  As of May 31, 1998, the
Company is owed $361,428  including accrued  interest.  As of November 30, 1997,
advances and accrued interest totaled $351,778.

Advertising  services are provided to the Company by an affiliated company,  MCV
Advertising  Associates,  Inc. For the quarter and six months ended May 31, 1998
the costs incurred were $290,579 and $586,337, respectively. For the quarter and
six months ended June 1, 1997 the costs  incurred  were  $232,903 and  $407,024,
respectively.

The Company leases sundry operating equipment from C&S Acquisition Corp. ("C&S",
formerly  Red  Apple  Leasing,  Inc.),  which is wholly  owned by the  Company's
Chairman.  C&S recently  refinanced its bank credit facility upon more favorable
terms.  In conjunction  with such  refinancing  C&S extended its operating lease
agreements  with the  Company  by an  average  of 3 years,  and  passed  through
benefits of its  refinancing  by lowering  the average  monthly  payments on the
equipment leases for the six months ended May 31, 1998 to approximately $45,000.

Legal fees  incurred  by the  Company to a law firm,  of which a director of the
Company is a member,  were  $46,618  and  $81,795 for the quarter and six months
ended May 31, 1998,  respectively.  For the quarter and six months ended June 1,
1997 these legal fees were $27,816 and $53,850, 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 SIX MONTHS ENDED MAY 31,
            1998 AND JUNE 1, 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 six months
ended  June 1,  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 six months ended May 31, 1998.

Sales for the quarter and six months  ended May 31,  1998 were  $39,244,475  and
$78,665,355,  respectively.  Sales for the quarter and six months  ended June 1,
1997 were  $23,818,792  and  $49,942,663,  respectively.  The sales increase was
mainly  attributable  to the 15 additional  stores included in the 1998 periods.
Sales for the same 29 stores were  $25,408,371  and  $51,630,678 for the quarter
and six months ended May 31, 1998 as compared with  $23,574,699  and $48,469,666
for the  quarter  and six months  ended June 1, 1997,  an  increase of 7.78% and
6.52%, 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  39.63% and 39.99% for the quarter and
six months ended May 31, 1998 as compared with 39.53% and 38.63% for the quarter
and six months ended June 1, 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  32.39% and 33.06% for the  quarter  and six months  ended May 31,  1998 as
compared  with 36.24% and 34.87% for the  quarter  and six months  ended June 1,
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 2.55% and 2.79% for
the quarter and six months  ended May 31, 1998 as compared  with 6.39% and 6.08%
for the  quarter  and six months  ended June 1, 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 $47,680 and $98,687 for the quarter and six months ended May
31, 1998 as compared to $42,860 and $60,651 for the quarter and six months ended
June 1, 1997. The increase during the 1998 period reflects interest on the notes
received for the sale of various stores.


                                     - 9 -


<PAGE>


Interest  expense for the quarter and six months ended May 31, 1998 was $473,373
and  $852,940,  respectively.  Interest  expense  for the quarter and six months
ended June 1, 1997 was $245,418 and $372,043  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 income for the quarter and six
months ended May 31, 1998 were $325,862 and $355,900,  respectively  as compared
to a loss of $1,539,705 and $2,504,516 for the quarter and six months ended June
1, 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 credit facility is comprised of
(i) a $12,000,000  five year term loan to refinance debt and for general working
capital  purposes,  (ii) a  $8,000,000  five year term loan to  finance  capital
improvements  to the  Company's  supermarkets,  and (iii) a $5,000,000  two year
revolving credit for general working capital  purposes.  As of May 31, 1998, the
Company had drawn down the  $12,000,000  term loan and the $5,000,000  under the
revolving credit  facility.  As of May 31, 1998, the Company still had available
$4,650,000 under the capital  improvements  line to finance the continuing major
store  remodeling  program.  It is  anticipated  that the Company will  generate
sufficient cash flow to finance its future working capital needs.


                                     - 10 -


<PAGE>


                    GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES


                           PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

                      None.

Item 2.       Change in Securities

                      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: July 15, 1998



                                        By:  /s/ Stuart Spivak

                                             Stuart Spivak
                                             Executive Vice President and
                                             Chief Financial Officer


Dated: July 15, 1998


                                     - 12 -