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 30, 1999.

[ ]    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 13, 1999, 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 30,1999 and November 29, 1998
                                                                          Page 3

            Consolidated Statements of Operations for
                     the quarters and six months ended
                     May 30,1999 and May 31,1998
                                                                          Page 4

            Consolidated  Statements of  Stockholders'
                     Equity for the year ended
                     November 29, 1998 and the six months
                     ended May 30, 1999
                                                                          Page 5

            Consolidated  Statements  of Cash Flows for
                     the six months  ended May
                     30, 1999 and May 31, 1998
                                                                          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. AND SUBSIDIARIES
                                   UNAUDITED CONSOLIDATED BALANCE SHEETS


                                                                                  May 30,     November 29,
                                                                                   1999           1998
                                                                               ============   ============
ASSETS
CURRENT ASSETS:
<S>                                                                            <C>            <C>
   Cash ....................................................................   $     93,697   $     53,794
   Accounts receivable - net of allowance for doubtful accounts
     of $0 at May 30, 1999 and $0 November 29, 1998 ........................      6,129,311      5,091,174
   Inventory ...............................................................     22,097,694     18,425,802
   Prepaid expenses and other current assets ...............................      1,406,542      1,320,931
   Notes receivable - current portion ......................................        293,124      1,032,203
                                                                               ------------   ------------

        Total current assets ...............................................     30,020,368     25,923,904
                                                                               ------------   ------------

PROPERTY AND EQUIPMENT:
   Furniture, fixtures and equipment .......................................     14,854,433     14,610,788
   Capitalized equipment leases ............................................      9,977,119      8,267,999
   Leaseholds and leasehold improvements ...................................     38,644,998     34,388,652
                                                                               ------------   ------------
                                                                                 63,476,550     57,267,439
   Less accumulated depreciation and amortization ..........................     27,848,300     25,716,915
                                                                               ------------   ------------

      Net property and equipment ...........................................     35,628,250     31,550,524

   Deposits and other assets ...............................................        735,696        719,429
   Deferred costs ..........................................................      2,408,783      1,968,859
   Notes receivable - noncurrent portion ...................................        403,307        543,793
                                                                               ------------   ------------

TOTAL ......................................................................   $ 69,196,404   $ 60,706,509
                                                                               ============   ============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
   Accounts payable, trade .................................................   $ 13,630,781   $ 11,951,436
   Accrued payroll, vacation and withholdings ..............................        660,994      1,543,748
   Accrued expenses and other current liabilities ..........................      1,014,398        896,716
   Note payable ............................................................        319,138        319,138
   Capitalized lease obligation - current portion ..........................        984,285        695,665
   Current portion of long term debt .......................................      1,200,000      3,314,283
                                                                               ------------   ------------

        Total current liabilities ..........................................     17,809,596     18,720,986

   Long-term debt - noncurrent portion .....................................     19,832,744     18,663,935
   Due to Affiliate ........................................................      8,551,394      4,031,394
   Deferred advertising ....................................................      1,818,654        248,654
   Capitalized lease obligation - noncurrent portion .......................      3,941,695      2,986,007
   Deferred rents ..........................................................      2,017,613      1,673,850
                                                                               ------------   ------------

        Total liabilities ..................................................     53,971,696     46,324,826
                                                                               ------------   ------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY:
   Common stock, $0.02 par value - shares authorized 25,000,000;
     outstanding 19,636,574 shares at May 30, 1999 and November 29, 1998 ...        392,732        392,732
   Additional paid-in capital ..............................................     14,136,674     14,136,674
   Retained eanings/ (deficit) .............................................        695,302       (147,723)
                                                                               ------------   ------------

        Total stockholders' equity .........................................     15,224,708     14,381,683
                                                                               ------------   ------------

TOTAL ......................................................................   $ 69,196,404   $ 60,706,509
                                                                               ============   ============
</TABLE>

See accompanying notes.

                                                    -3-


<PAGE>

<TABLE>
<CAPTION>
                                              GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES
                                           UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  FOR THE 26 WEEKS AND 13 WEEKS ENDED MAY 30, 1999 AND MAY 31, 1998


                                                                   26 weeks          13 weeks          26 weeks          13 weeks
                                                                     ended             ended             ended             ended
                                                                    May 30,           May 30,           May 31,           May 31,
                                                                     1999              1999              1998              1998
                                                                 ============      ============      ============      ============
<S>                                                              <C>               <C>               <C>               <C>
Sales ......................................................     $ 88,543,266      $ 44,355,475      $ 78,665,355      $ 39,244,475
Cost of sales ..............................................       53,683,555        26,547,669        47,204,714        23,690,767
                                                                 ------------      ------------      ------------      ------------

Gross profit ...............................................       34,859,711        17,807,806        31,460,641        15,553,708

Store operating, general and administrative expense ........       27,790,393        14,352,379        26,003,465        12,712,514

Depreciation and amortization ..............................        2,307,979         1,169,495         2,111,103         1,057,143

Non-store operating expenses:

  Administrative payroll and fringes .......................        1,861,176           881,759         1,465,036           684,654
  General office expense ...................................          605,371           284,306           527,611           210,368
  Professional fees ........................................          293,408            97,219           127,997            71,511
  Corporate expense ........................................          115,083            75,833            72,776            35,963
                                                                 ------------      ------------      ------------      ------------

Total non-store operating expense ..........................        2,875,038         1,339,117         2,193,420         1,002,496
                                                                 ------------      ------------      ------------      ------------

Operating profit ...........................................        1,886,301           946,815         1,152,653           781,555
                                                                 ------------      ------------      ------------      ------------

Other income (expense):

  Interest expense .........................................       (1,062,501)         (517,647)         (852,940)         (473,373)
  Interest income ..........................................           47,562            18,774            98,687            47,680
                                                                 ------------      ------------      ------------      ------------

Total other expense - net ..................................       (1,014,939)         (498,873)         (754,253)         (425,693)
                                                                 ------------      ------------      ------------      ------------

Income before income taxes .................................          871,362           447,942           398,400           355,862

Provision for income taxes .................................           28,337            11,613            42,500            30,000
                                                                 ------------      ------------      ------------      ------------

Net income .................................................     $    843,025      $    436,329      $    355,900      $    325,862
                                                                 ============      ============      ============      ============

Income per share ...........................................     $       0.04      $       0.02      $       0.02      $       0.02
                                                                 ============      ============      ============      ============

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

</TABLE>


See accompanying notes



                                                                 -4-


<PAGE>

<TABLE>
<CAPTION>
                                              GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES
                                      UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                FOR THE YEAR ENDED NOVEMBER 29, 1998 AND 26 WEEKS ENDED MAY 30, 1999




                                                                                      Additional        Retained          Total
                                                          Common stock                 Paid-In          earnings       Stockholders'
                                                      Shares          Amount           Capital         (Deficit)          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


Net loss for the year ended
   November  29, 1998 .......................                                                            (288,339)         (288,339)
                                                  ------------     ------------     ------------     ------------      ------------

Balance at November 29, 1998 ................       19,636,574          392,732       14,136,674         (147,723)       14,381,683

Net income for the twenty-six weeks
   ended May 30, 1999 .......................                                                             843,025           843,025
                                                  ------------     ------------     ------------     ------------      ------------

Balance at May 30, 1999 .....................       19,636,574     $    392,732     $ 14,136,674     $    695,302      $ 15,224,708
                                                  ============     ============     ============     ============      ============

</TABLE>


See accompanying notes.





                                                                 -5-


<PAGE>

<TABLE>
<CAPTION>
                         GRISTEDE'S SLOAN'S, INC. AND SUBSIDIARIES
                      UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        26 WEEKS ENDED MAY 30, 1999 AND MAY 31, 1998


                                                                 26 weeks       26 weeks
                                                                  ended          ended
                                                                  May 30,        May 31,
                                                                   1999           1998
                                                                ===========    ===========
<S>                                                             <C>            <C>
Cash flows from operating activities:

  Net income ................................................   $   843,025    $   355,900

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

    Depreciation and amortization ...........................     2,307,979      2,111,103

    Changes in operating assets and liabilities:

      Accounts receivable - net .............................    (1,038,137)      (569,965)
      Inventory .............................................    (3,671,892)    (1,206,390)
      Prepaid expenses and other current assets .............       (85,611)      (248,014)
      Notes receivable ......................................       879,565        259,262
      Receivable from officer ...............................             0         (9,650)
      Due to related party ..................................     4,520,000              0
      Other assets ..........................................      (632,785)      (500,655)
      Accounts payable, trade ...............................     1,679,345     (2,755,244)
      Accrued payroll, vacation and withholdings ............      (882,754)      (706,780)
      Accrued expenses and other current liabilities ........       117,682        649,046
      Deferred rents ........................................       343,763        392,337
      Other credits .........................................     1,570,000        (65,000)
                                                                -----------    -----------

        Net cash provided by / (used) in operating activities     5,950,180     (2,294,050)
                                                                -----------    -----------

Cash flows from investing activities:

  Capital expenditures - net ................................    (6,209,111)    (4,784,142)
                                                                -----------    -----------

        Net cash used in investing activities ...............    (6,209,111)    (4,784,142)
                                                                -----------    -----------

Cash flows from financing activities:

    Repayments of bank loan .................................    (1,645,473)      (907,142)
    Repayment capitalized lease obligations .................      (414,780)      (268,875)
    Proceeds from bank loans ................................       700,000      7,350,000
    Proceeds from capitalized lease obligations .............     1,659,087        942,438
                                                                -----------    -----------

        Net cash provided by financing activities ...........       298,834      7,116,421
                                                                -----------    -----------

NET INCREASE  IN CASH AND CASH EQUIVALENTS ..................        39,903         38,229

CASH AND CASH EQUIVALENTS, begining of period ...............        53,794         88,970
                                                                -----------    -----------

CASH AND CASH EQUIVALENTS, end of period ....................   $    93,697    $   127,199
                                                                ===========    ===========

Supplemental disclosures of cash flow information:

    Cash paid for interest ..................................   $   904,843    $   805,339
    Cash paid for taxes .....................................   $    13,337    $    18,180


</TABLE>



See accompanying notes.



                                            -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  41  supermarkets  (the  "Supermarkets").   36
Supermarkets are located in Manhattan,  New York, three Supermarkets are located
in Westchester  County,  New York, one  Supermarket is located in Brooklyn,  New
York  and one  Supermarket  is  located  in Long  Island,  New  York.  10 of the
Supermarkets are operated under the "Sloan's" name and 31 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 12 month period ended November
29, 1998 contains information which should be read in conjunction herewith.

2. RELATED PARTY TRANSACTIONS

Under a management  agreement dated November 10, 1997, Namdor Inc., a subsidiary
of  the  Company,   performs   consulting  and  managerial  services  for  three
supermarkets  owned  by  corporations   controlled  by  John  Catsimatidis.   In
consideration  of such  services,  Namdor  Inc.  is  entitled  to  receive  on a
quarterly basis a cash payment of 1.25% of all sales of merchandise  made at the
managed  supermarkets.  During the quarter and six months ended May 30, 1999 the
management fee income was $25,340 and $52,881, respectively. For the quarter and
six months ended May 31, 1998 the management fee income was $29,012 and $58,791,
respectively.

C&S Acquisition Corp.  (formerly Red Apple Leasing,  Inc.) a corporation  wholly
owned by John  Catsimatidis,  leases  equipment to the Company.  Such leases are
primarily for store operating equipment. Obligations under capital leases at May
30, 1999 were $644,287 and require monthly  payments of $35,114 through March 1,
2001.  Obligations  under  operating  leases were  $41,676 per month  during the
quarter ended May 30, 1999.

Advertising  services are provided to the Company by an affiliated company,  MCV
Advertising  Associates  Inc., a  company  owned by John  Catsimatidis.  For the
quarter and six months ended May 30, 1999 the costs  incurred  were $334,217 and
$619,249  respectively.  For the quarter  and six months  ended May 31, 1998 the
costs incurred were $290,579 and $586,337, respectively.


                                      - 8 -


<PAGE>


The Company leases three  locations from Red Apple Real Estate,  Inc., a company
solely owned by John  Catsimatidis.  During the quarter and six months ended May
30, 1999 the Company paid to Red Apple Real Estate,  Inc. $404,200 and $629,866,
respectively.  During the quarter and six months  ended May 31, 1998 the Company
paid $204,019 and $374,119, respectively.

Wolf,  Block,  Schorr and  Solis-Cohen  LLP, a law firm of which Martin Bring, a
director  of the  Company is a partner,  received  fees of $57,520  and  $94,164
during the quarter and six months ended May 30, 1999,  respectively.  During the
quarter and six months ended May 31,  1998,  they  received  fees of $46,618 and
$81,795, respectively.


                    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 30, 1999 AND MAY 31, 1998

RESULTS OF OPERATIONS
The following table sets forth items from the Company's Consolidated  Statements
of Operations as a percentage of sales.

                                     26 weeks   13 weeks    26 weeks    13 weeks
                                      ended      ended       ended       ended
                                     5/30/99    5/30/99     5/31/98     5/31/98
                                     --------   --------    --------    --------
Sales ...........................       100.0      100.0      100.0      100.0
Cost of sales ...................        60.6       59.9       60.0       60.4
                                      -------    -------    -------    -------
Gross profit ....................        39.4       40.1       40.0       39.6
Store operating, general and
    administrative expense ......        31.4       32.4       33.1       32.4
Depreciation and amortization ...         2.6        2.6        2.7        2.7
Non-store operating expense .....         3.2        3.0        2.8        2.5
                                      -------    -------    -------    -------
Operating profit ................         2.2        2.1        1.4        2.0
Other income (expense) ..........        (1.2)      (1.1)      (0.9)      (1.1)
                                      -------    -------    -------    -------
Income from operations
    before income taxes .........         1.0        1.0        0.5        0.9
Provisions for income taxes .....        --         --          0.1        0.1
                                      -------    -------    -------    -------
Net income ......................         1.0        1.0        0.4        0.8
                                      =======    =======    =======    =======


                                      - 9 -


<PAGE>


Sales for the quarter and six months  ended May 30,  1999 were  $44,355,475  and
$88,543,266  respectively.  Sales for the quarter  and six months  ended May 31,
1998 were  $39,244,475  and  $78,665,355,  respectively.  The  increase in sales
during  the 1999  periods  were  primarily  the  result of  Company's remodeling
program,  which is continuing and a new store which was in operation  during the
last three weeks of the 1999 period.

Gross profit was  $17,807,806  or 40.15% of sales and  $34,859,711  or 39.37% of
sales for the  quarter  and six  months  ended May 30,  1999,  respectively,  as
compared with  $15,553,708 or 39.63% of sales and $31,460,641 or 39.99% of sales
for the quarter and six months ended May 31, 1998, respectively. The increase in
gross  profit as a  percentage  of sales  during the 1999  quarter  reflects the
benefit of increased bulk  purchases on a direct basis,  utilizing the Company's
distribution  center.  The  decrease in gross  profit as a  percentage  of sales
during the 1999 six month period was primarily due to selected promotional price
reductions in connection with the grand reopening periods of the newly remodeled
stores.

Store operating,  general and administrative expenses were $14,352,377 or 32.36%
of sales and $27,790,391 or 31.39% of sales for the quarter and six months ended
May 30, 1999,  respectively, as compared to $ 12,712,514  or 32.39% of sales and
$26,003,465  or 33.06% of sales for the  quarter  and six  months  ended May 31,
1998, respectively.  The decrease in store operating, general and administrative
expense as a  percentage  of sales in the 1999  periods was mainly due to better
cost controls in relation to the increased sales.

Non-store operating expenses were $1,339,417 or 3.02% of sales and $2,875,038 or
3.24% of sales for the quarter and six months ended May 30, 1999,  respectively,
as compared to $1,002,496 or 2.55% of sales and $2,193,420 or 2.79% of sales for
the  quarter  and six months  ended May  31,1998,  respectively.  Administrative
payroll and  fringes  were 1.99% of sales and 2.10% of sales for the quarter and
six months ended May 30,1999,  respectively  as compared with 1.75% and 1.86% of
sales for the  quarter  and six months  ended May 31,  1998,  respectively.  The
increase  reflects the addition of supervisory and data processing  personnel to
handle  the  additional  business  generated  by the store  remodeling  program.
General  office  expenses as a percentage  of sales were 0.64% and 0.68% for the
quarter and six months  ended May 30, 1999,  respectively,  as compared to 0.54%
and 0.67% for the quarter and six months ended May 31, 1998,  respectively.  The
increase  during the 1999 periods was primarily  due to  additional  supervisory
related expenses in connection with the remodeled stores. Professional fees were
0.22% and 0.33% of sales for the  quarter  and six  months  ended May 30,  1999,
respectively,  as  compared  to 0.18% and 0.16% of sales for the quarter and six
months  ended May 31, 1998,  respectively.  The increase in the 1999 periods was
due to the additional need for outside accounting and legal services.  Corporate
expenses as a  percentage  of sales were 0.17% and 0.13% for the quarter and six
months ended May 30, 1999, respectively, as compared to 0.09% and 0.09% of sales
for the quarter and six months  ended May 31, 1998,  respectively.  The increase
during the 1999 periods was primarily due to increased  American  Stock Exchange
fees and increased  directors  fees due to the addition of several new directors
to the Company's Board.


                                     - 10 -


<PAGE>


Interest  expense for the quarter and six months ended May 30, 1999 was $517,647
and  $1,062,501,  respectively,  as compared to $473,373  and  $852,940  for the
quarter and six months  ended May 31,  1998,  respectively.  The increase in the
1999  periods was  primarily  attributable  to  increased  borrowings  under the
Company's bank credit facility and increased capitalized equipment leasing.

Interest  income for the quarter  and six months  ended May 30, 1999 was $18,774
and $47,562, respectively, as compared  with $47,680 and $98,687 for the quarter
and six  months  ended May 31,  1998,  respectively.  The  decrease  in the 1999
periods was due to the reduction in outstanding  notes receivable as compared to
the 1998 periods.

As a result of the items  reviewed  above,  the net income before  provision for
income  taxes for the quarter and six months  ended May 30,  1999  increased  to
$447,944 and  $871,364,  respectively,  as compared to $355,862 and $398,400 for
the quarter and six months ended May 31,1998, respectively.

LIQUIDITY AND CAPITAL RESOURCES

On November 10, 1997, the Company  completed its financial  arrangements  with a
group of banks for a credit  facility in the  aggregate  amount of  $25,000,000.
Under the credit  agreement  the  Company  obtained a term loan in the amount of
$12,000,000  to  refinance  prior bank debt,  an  improvement  term loan line of
credit in the  amount of  $8,000,000  to  finance  capital  improvements  to its
supermarkets  and a  revolving  line of credit in the  amount of  $5,000,000  to
provide working capital. Effective May 29, 1999, the credit facility was amended
to (i) extend the  maturity  date until  November  30,  2003,  at which time all
amounts  outstanding  thereunder are due, (ii) amend certain financial covenants
and (iii) reduce the  amortization  of the term loan and  improvement  term loan
facilities  and increase the  revolving  line of credit to  $14,000,000,  all as
follows: the term loan amortization was reduced to $100,000 per month until June
2000, and thereafter is $142,857 per month; amortization on the improvement term
loan is $50,000 per month  commencing July 2000 until June 2001 and $133,333 per
month thereafter;  the revolving credit commitment reduces by $466,667 per month
commencing July 1, 2001.  Presently  $5,500,000 is available under the revolving
line of credit;  the term loan facility and the  improvement  term loan facility
are fully utilized.

Borrowings  under the credit  facility bear interest at a spread over either the
prime rate of the agent bank or a LIBOR rate,  with the spread  dependent on the
ratio of the  Company's  funded debt to EBITDA  ratio,  as defined in the credit
agreement.  The average interest rate on amounts  outstanding under the facility
during the 13 weeks ended May 30, 1999 was 7.6 % per annum.

The credit facility contains  covenants,  representations  and events of default
typical of credit  facility  agreements,  including  financial  covenants  which
require the Company 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. The facility is secured by equipment,  inventories
and accounts receivable.


                                     - 11 -


<PAGE>


The Company has not incurred any material commitments for capital  expenditures,
although  it  anticipates spending   approximately   $10,000,000  on  its  store
remodeling and expansion program in fiscal 1999.

The Company has  available  approximately  $1.5  million in third party  leasing
lines  of  credit  to lease  finance  equipment  for its  store  remodeling  and
expansion program.

YEAR 2000 ISSUE

The Company has assessed  its  information  technology  ("IT")  systems for Year
2000  readiness  and has given  the  highest  priority  to those IT  systems  it
considers mission  critical.  The systems the Company considers mission critical
are its store  automation  systems  (including  point of sale  systems)  and its
computer systems at its main office which support these store systems.

As of March 1, 1999, the Company, working with the original vendor, successfully
tested and  implemented  the Year 2000  compliant  version of the systems at its
main office,  which support the in store automation systems.  During March 1999,
the  Company,  working  with  the  original  vendor,   successfully  tested  and
implemented the Year 2000 complaint  version of its store  automation  system in
one of its automated  stores.  This Year 2000 compliant  version of the in store
automation  system is currently being  implemented in the remaining  stores,  as
required.

No  additional  expense  has or will be  incurred  by the Company to bring these
systems into Year 2000  compliance as any necessary  changes are provided by the
vendors under software maintenance programs in place.

The Company has assessed the other IT systems,  including accounting and payroll
systems, deployed at its main office and its City Produce warehouse facility for
Year 2000 compliance and has identified the steps necessary to ensure that these
systems will be Year 2000 compliant.

The  Company  has decided to  substantially  expand and enhance its  information
technology  systems to further  leverage the  investment the Company has made on
in-store  automation and  networking in the last few years.  The Company will be
implementing  state of the art client  server  systems on  Microsoft  Windows NT
platforms,  using best of breed applications from selected vendors, for time and
attendance,   payroll,   inventory  control  and  distribution,   and  financial
applications.  The Company  switched  all payroll  processing  to the new system
during June 1999 and  additional  systems will go "live" in August and September
1999. These systems will allow for better decision tools and quicker information
flows between the stores,  the main office,  and the Company owned  distribution
facility.

The cost of this program,  including new network  enabled time clocks,  computer
hardware,  software, and implementation services is budgeted to be approximately
$850,000 and will be completed by the end of fiscal 1999 (11/28/99). The Company
had  previously  expected to spend  $100,000 out of cash flow generated from its
operations to modify its existing systems to be Year 2000 compliant. The Company
will redirect those  resources  towards this new effort and plans on leasing the
systems, where appropriate, in a manner similar to the way the


                                     - 12 -


<PAGE>


Company currently leases its store automation  systems.  The new systems will be
Year 2000 compliant.

The Company does not currently  intend to hire an outside firm to  independently
verify that its systems are Year 2000 compliant.

The  Company  has  assessed  the  majority  of its non-IT  systems for Year 2000
readiness  and has  identified  a small  number of  systems,  including  certain
equipment  at store  level,  which may not be Year 2000  ready.  The  Company is
working with the vendor of these  systems to identify the best  approach.  While
these systems have an internal clock and date, the date is not necessary for the
systems to be productive.  Such systems could therefore  continue to function as
needed and  management  does not  anticipate  that these  systems  will pose any
significant Year 2000 problem or expense.

The Company is continuing to review the Year 2000  readiness  plans of its major
vendors in an effort to ensure that  operations  remain  unaffected by Year 2000
related  failures.  The Company  will place  preset  orders with  certain  major
vendors  to help  ensure  product  deliveries  in the event  that the  vendor is
affected  by  failures  at some  level of its  operations  but is still  able to
deliver  merchandise.  In the event a major vendor is unable to provide products
the Company will increase  purchases  from other vendors from which it currently
buys.

The Company  purchases  merchandise sold in its stores from multiple vendors and
is not reliant on any one vendor for the normal conduct of its  operations.  The
Company is not dependent on these supplier  relationships  since  merchandise is
readily available from numerous sources under different brand names,  subject to
conditions affecting food supplies generally.

The  Company  believes  that its efforts  will  result in year 2000  compliance.
However,  the impact on business operations of failure by the Company to achieve
compliance or failure by external  entities  which the Company  cannot  control,
such as vendors,  to achieve  compliance,  could be  material  to the  Company's
consolidated results of operations.


                                     - 13 -


<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 (filed herewith)

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



                                     - 14 -


<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 14, 1999



                                              By: /s/ Stuart Spivak
                                                  ------------------------
                                                  Stuart Spivak
                                                  Executive Vice President and
                                                  Chief Financial Officer

Dated: July 14, 1999






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