<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 FORM 10-Q


[X]  Quarterly report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the quarterly period ended April 1, 2001 or

[_]  Transition report pursuant to section 13 or 15(d) of the Securities
     Exchange Act of 1934

For the transition period from _______________________ to ____________________

                        Commission file number 33-14051
                                               --------

                                Prandium, Inc.
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

               Delaware                                   33-0197361
    ---------------------------------       ------------------------------------
    (State or other jurisdiction of         (I.R.S. Employer Identification No.)
     incorporation or organization)

           18831 Von Karman Avenue, Irvine, California        92612
           -------------------------------------------     ----------
           (Address of principal executive offices)        (Zip Code)


      Registrant's telephone number, including area code:  (949) 757-7900
                                                           --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
                          Yes  [X]        No  [_]

As of May 11, 2001, the registrant had issued and outstanding 180,380,513 shares
of common stock, $.01 par value per share.

                                      -1-
<PAGE>

                         PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

                                PRANDIUM, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                               ($ in thousands)
<TABLE>
<CAPTION>
                                                               April 1,       December 31,
                                                                 2001             2000
                                                            -------------    --------------
                                                              (Unaudited)
<S>                                                         <C>              <C>
ASSETS
------
Current assets:
  Cash and cash equivalents                                 $      47,628    $       53,505
  Restricted cash                                                   4,882             2,500
  Receivables                                                       2,257             2,075
  Inventories                                                       2,137             2,386
  Other current assets                                              2,960             2,574
                                                            -------------    --------------
     Total current assets                                          59,864            63,040

Property and equipment, net                                       122,281           124,922
Costs in excess of net assets of business acquired, net            16,703            16,814
Other assets                                                       13,216            15,736
                                                            -------------    --------------
                                                            $     212,064    $      220,512
                                                            =============    ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities:
  Current portion of long-term debt, including capitalized
   lease obligations                                        $     235,295    $        2,060
  Accounts payable                                                  8,927             8,150
  Current portion of self-insurance reserves                        3,382             2,812
  Other accrued liabilities                                        62,623            58,760
  Income taxes payable                                              3,361             3,523
                                                            -------------    --------------
     Total current liablities                                     313,588            75,305

Self-insurance reserves                                             4,819             5,298
Other long-term liabilities                                         3,531             3,590
Long-term debt, including capitalized lease obligations,
 less current portion                                               1,916           235,696

Commitments and contingencies

Stockholders' deficit:
  Common stock - authorized 300,000,000 shares, par value
   $.01 per share, 180,380,513 shares issued and
   outstanding on April 1, 2001 and on December 31, 2000            1,804             1,804
  Additional paid-in capital                                      222,353           222,353
  Accumulated deficit                                            (335,947)         (323,534)
                                                            -------------    --------------
     Total stockholders' deficit                                 (111,790)          (99,377)
                                                            -------------    --------------
                                                            $     212,064    $      220,512
                                                            =============    ==============
</TABLE>

 See accompanying notes to condensed consolidated financial statements

                                      -2-
<PAGE>

                                PRANDIUM, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  ($ in thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                      For the Quarters Ended
                                                                  -----------------------------
                                                                    April 1,        March 26,
                                                                      2001             2000
                                                                  ------------     ------------
 <S>                                                              <C>              <C>
 Sales                                                            $     75,982     $    133,114
                                                                  ------------     ------------

 Product costs                                                          20,461           34,080
 Payroll and related costs                                              27,607           47,184
 Occupancy and other operating expenses                                 22,388           35,059
 Depreciation and amortization                                           4,177            7,100
 General and administrative expenses                                     5,873            7,783
 Opening costs                                                              50               71
 Loss (gain) on disposition of properties, net                             402             (112)
 Provision for divestitures                                                189                -
 Restructuring costs                                                       496                -
                                                                  ------------     ------------

      Total costs and expenses                                          81,643          131,165
                                                                  ------------     ------------

 Operating income (loss)                                                (5,661)           1,949

 Interest expense, net                                                   6,646            8,566
                                                                  ------------     ------------

 Loss before income tax provision                                      (12,307)          (6,617)

 Income tax provision                                                      106              127
                                                                  ------------     ------------

 Net loss                                                         $    (12,413)    $     (6,744)
                                                                  ============     ============

 Net loss per share - basic and diluted                           $      (0.07)    $      (0.04)
                                                                  ============     ============

 Weighted average shares outstanding - basic and diluted           180,380,513      180,380,513
                                                                  ============     ============
</TABLE>

     See accompanying notes to condensed consolidated financial statements

                                      -3-
<PAGE>

                                PRANDIUM, INC.
                                --------------

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
               -----------------------------------------------
                               ($ in thousands)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                            For the Quarters Ended
                                                                           ------------------------
                                                                            April 1,     March 26,
                                                                              2001         2000
                                                                           ----------   -----------
<S>                                                                        <C>          <C>
Cash flows from operating activities:
    Cash received from customers, franchisees and licensees                $  76,144    $  133,129
    Cash paid to suppliers and employees                                     (77,212)     (122,664)
    Interest received (paid), net                                                252       (15,342)
    Opening costs                                                                (50)          (71)
    Restructuring costs                                                         (496)            -
    Income taxes paid                                                           (268)         (156)
                                                                           ----------   -----------
           Net cash used in operating activities                              (1,630)       (5,104)
                                                                           ----------   -----------
 Cash flows from investing activities:
    Proceeds from disposal of property and equipment                              75           902
    Proceeds from payments on notes receivable                                   175           169
    Capital expenditures                                                      (1,713)       (1,422)
    Lease termination payments                                                  (268)         (186)
    Other divestment expenditures                                               (751)         (653)
    Cash required for the El Torito Sale                                        (573)             -
    Other                                                                       (854)         (289)
                                                                           ----------   -----------
           Net cash used in investing activities                              (3,909)       (1,479)
                                                                           ----------   -----------
 Cash flows from financing activities:
    Proceeds from working capital borrowings, net                                  -         4,650
    Proceeds from equipment financing                                              -         2,298
    Reductions oflong-term debt, including capitalized lease obligations        (338)       (1,012)
                                                                           ----------   -----------
           Net cash provided by (used in) financing activities                  (338)        5,936
                                                                           ----------   -----------
 Net decrease in cash and cash equivalents                                    (5,877)         (647)
 Cash and cash equivalents at beginning of period                             53,505         3,600
                                                                           ----------   -----------
 Cash and cash equivalents at end of period                                $  47,628    $    2,953
                                                                           ==========   ===========
 Reconciliation of net loss to net cash used in operating activities:

 Net loss                                                                  $ (12,413)   $   (6,744)
 Adjustments to reconcile net loss to net cash used in operating
  activities:
   Depreciation and amortization                                               4,177         7,100
   Amortization of debt issuance costs and deferred gain                          93           190
   Loss (gain) on disposition of properties                                      402          (112)
   Provision for divestitures                                                    189             -
   (Increase) decrease in receivables, inventories and other
    current assets                                                              (529)        1,458
   Increase (decrease) in accounts payable, self-insurance reserves,
    other accrued liabilities and income taxes payable                         6,451        (6,996)
                                                                           ----------   -----------
  Net cash used in operating activities                                    $  (1,630)   $   (5,104)
                                                                           ==========   ===========
</TABLE>

     See accompanying notes to condensed consolidated financial statements

                                      -4-
<PAGE>

                                PRANDIUM, INC.
                                --------------

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
             ----------------------------------------------------
                                 (Unaudited)

     1.   Company.  Prandium, Inc. (together with its subsidiaries, the
          -------
"Company"), was incorporated in Delaware in 1986.  The Company is primarily
engaged in the operation of restaurants in the full-service and fast-casual
segments, through its subsidiaries.  At April 1, 2001, the Company operated 198
restaurants in 22 states, approximately 64% of which are located in California,
Ohio, Pennsylvania, Indiana and Michigan, and franchised and licensed 13
restaurants outside the United States.

     2.   Financial Statements.  The Condensed Consolidated Financial Statements
          --------------------
in this Form 10-Q have been prepared in accordance with Securities and Exchange
Commission Regulation S-X. Reference is made to the Notes to the Consolidated
Financial Statements for the Fiscal Year Ended December 31, 2000 included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2000
(the "Form 10-K") for information with respect to the Company's significant
accounting and financial reporting policies, as well as other pertinent
information.  The Company believes that all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the results
of the interim periods presented have been made.  The results of operations for
the quarter ended April 1, 2001 are not necessarily indicative of those for the
full year.

     3.   Going Concern Matters and Recapitalization Plan.  The Company's
          -----------------------------------------------
consolidated financial statements have been presented on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business. As shown in its Consolidated Financial Statements
included in the Form 10-K, the Company incurred losses of $41,772,000,
$36,491,000 and $63,133,000 for the fiscal years ended December 31, 2000,
December 26, 1999 and December 27, 1998, respectively. As further shown in the
Condensed Consolidated Financial Statements in this Form 10-Q, the Company
incurred an additional loss of $12,413,000 for the quarter ended April 1, 2001
and had a stockholders' deficit of $111,790,000 on April 1, 2001.

     During 1999 and the first half of fiscal 2000, the Company explored several
financing transactions and other strategic alternatives in an effort to meet its
debt service requirements.  This process culminated in the completion of the
sale of the El Torito restaurant division on June 28, 2000 (the "El Torito
Sale").  A portion of the net cash proceeds from that transaction was used to
pay indebtedness outstanding under the Company's credit facility with Foothill
Capital Corporation (the "Foothill Credit Facility") of $25.9 million.  In
addition, Acapulco Acquisition Corp. assumed $9.8 million of long-term debt,
consisting primarily of capitalized lease obligations, as part of the El Torito
Sale.  After completion of the El Torito Sale, however, the Company has
continued to be highly leveraged and  has significant annual debt service
requirements.

     During the second half of fiscal 2000, the Company began considering other
alternatives to address its debt service requirements.  As a result of
discussions and deliberation among the Company and its legal and financial
advisors, the Company's subsidiary FRI-MRD Corporation ("FRI-MRD") elected not
to pay the semi-annual interest payments due January 31, 2001 on its

                                      -5-
<PAGE>

outstanding long-term debt (the "FRI-MRD Notes"). The Company also elected not
to pay the semi-annual interest payments due February 1, 2001 on its outstanding
long-term debt (the "Prandium Notes"). Under the terms of the note agreements
governing the FRI-MRD Notes and the indentures governing the Prandium Notes,
these non-payments became "Events of Default" and the holders of all such debt
have become entitled to certain rights, including the right to accelerate the
debt. In addition, the vesting of the right (whether or not exercised) of the
noteholders to accelerate the debt caused an "Event of Default" to occur under
the Foothill Credit Facility and Foothill Capital Corporation ("Foothill")
became entitled to certain additional rights. As a result of these "Events of
Default," the Company has classified all debt outstanding under the FRI-MRD
Notes and the Prandium Notes (approximately $233.4 million at April 1, 2001) as
current in the condensed consolidated balance sheet. The Company is currently
negotiating with its creditors to reach agreement on an acceptable capital
restructuring of the Company and its subsidiaries. There can be no assurances,
however, that the Company will be able to successfully negotiate with its
creditors. These factors raise substantial doubt about the Company's ability to
continue as a going concern for a reasonable period of time.

     The accompanying consolidated financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or the amounts and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent on its ability to generate
sufficient cash flow to meet its obligations on a timely basis, to obtain
modifications in its financial and capital structure and ultimately to attain
profitable operations.  Management is continuing its efforts to restructure its
existing debt so that the Company can meet its obligations and sustain
operations.  There can be no assurances, however, that the Company will be able
to successfully negotiate with its creditors.

     4.   Strategic Divestment Programs.  In the fourth quarter of 1999, three
          -----------------------------
non-strategic Koo Koo Roo restaurants were designated for divestment (the "KKR
Strategic Divestment Program"). In conjunction with the KKR Strategic Divestment
Program, the Company recorded a provision for divestitures of $904,000. This
provision consisted of costs associated with lease terminations, subsidized
subleases, brokerage fees and other divestment costs. During 2000, two of the
restaurants were subleased and the third restaurant's lease was terminated. In
the fourth quarter of 2000, ten additional non-strategic Koo Koo Roo restaurants
were designated for divestment. In conjunction with the KKR Strategic Divestment
program, the Company recorded a provision for divestitures of $4,510,000 in
2000. This provision consisted of (i) $2,765,000 for the write-down to net
realizable value of the property and equipment associated with such restaurants
and (ii) $1,745,000 for costs associated with lease terminations, subsidized
subleases, brokerage fees and other divestment costs. In the first quarter of
2001, the Company recorded a provision for severance costs of $189,000
associated with certain restaurant managers in connection with the restaurants
to be divested. During the quarter ended April 1, 2001, these restaurants
(including one restaurant divested in February 2001) had sales of $1,738,000 and
restaurant level operating losses of $252,000. For the quarter ended April 1,
2001, the Company paid (i) $3,000 for severance costs associated with certain
restaurant managers who were terminated in connection with the restaurants
divested and (ii) $539,000 for net costs associated with lease terminations,
brokerage fees and other divestment costs. For the quarter ended March 26, 2000
no amounts were paid for such costs. The KKR Strategic Divestment Program is
scheduled to be completed by the end of fiscal 2001, and the designated

                                      -6-
<PAGE>

restaurants' operating results will be included in the Company's consolidated
statement of operations until the divestments are completed.

     In the fourth quarter of 1998, 48 non-strategic Chi-Chi's restaurants were
designated for divestment (the "CC Strategic Divestment Program").  In
conjunction with the CC Strategic Divestment Program, the Company recorded a
provision for divestitures of $22,884,000, including divestment reserves of
$12,256,000.  During the fourth quarter of 1999, the Company determined that it
would not be able to satisfactorily negotiate lease terminations or subleases
for 20 operating restaurants of the 48 Chi-Chi's restaurants designated for
divestment.  As a result, these 20 restaurants were removed from the CC
Strategic Divestment Program, and $1,048,000 previously recorded in conjunction
with the provision for divestitures was reversed during the fourth quarter of
1999.  After this reversal, the eight restaurants remaining in the CC Strategic
Divestment Program were divested during 2000. For the quarters ended April 1,
2001 and March 26, 2000, the Company paid (i) $25,000 and $109,000,
respectively, for severance costs associated with certain restaurant and
regional managers who were terminated in connection with the restaurants
divested and (ii) $440,000 and $600,000, respectively, for net costs associated
with lease terminations, subsidized subleases, brokerage fees and other
divestment costs.

     Three other non-strategic restaurants were identified for divestment during
2000. The Company recorded a provision for divestitures with respect to such
restaurants of $1,805,000 in 2000. This provision consisted of (i) $1,730,000
for the write-down to fair value of the property and equipment associated with
such restaurants and (ii) $75,000 for costs associated with broker commissions
and other divestment costs. During the quarter ended April 1, 2001, these
restaurants were divested and had sales of $99,000 and restaurant level
operating losses of $99,000. For the quarter ended April 1, 2001, the Company
(i) paid $1,000 for severance costs associated with certain restaurant managers
who were terminated in connection with these divested restaurants and (ii)
received $2,000 in net divestment proceeds.

     5.   Segment Information.  The Company operates exclusively in the food-
          -------------------
service industry. Substantially all revenues result from the sale of menu
products at restaurants operated by the Company.  The Company's reportable
segments are based on restaurant operating divisions.  Operating income (loss)
includes the operating results before interest.  The corporate component of
sales, depreciation and amortization and operating income (loss) represents
operating results of the two full-service and four fast-casual restaurants not
included in the El Torito Sale, as well as corporate general and administrative
expenses.  Corporate assets include corporate cash, restricted cash,
investments, receivables, asset portions of financing instruments and the two
full-service and four fast-casual restaurants not included in the El Torito
Sale.  Fiscal year 2000 segment information for the El Torito restaurant
division has been restated to exclude the results of the two full-service and
four fast-casual restaurants not included in the El Torito Sale.

                                      -7-
<PAGE>

<TABLE>
<CAPTION>
                                                  For the Quarters Ended
                                               ---------------------------
                                                 April 1,       March 26,
                                                   2001           2000
                                               ------------    -----------
                                                       (Unaudited)
                                                     ($ in thousands)
<S>                                            <C>             <C>
 Sales
     El Torito Division                        $         -     $     53,441
     Chi-Chi's Division                             53,457           55,939
     Koo Koo Roo Division                           21,226           22,000
     Corporate                                       1,299            1,734
                                               -----------     ------------
        Total Sales                            $    75,982     $    133,114
                                               ===========     ============

 Depreciation and Amortization
     El Torito Division                        $         -     $      2,715
     Chi-Chi's Division                              2,774            2,705
     Koo Koo Roo Division                            1,054            1,334
     Corporate                                         349              346
                                               -----------     ------------
        Total Depreciation and Amortization    $     4,177     $      7,100
                                               ===========     ============

 Operating Income (Loss)
     El Torito Division                        $         -     $      2,770
     Chi-Chi's Division                             (2,537)            (421)
     Koo Koo Roo Division                           (1,033)            (319)
     Corporate                                      (2,091)             (81)
                                               -----------     ------------
        Total Operating Income (Loss)          $    (5,661)    $      1,949
                                               ===========     ============

 Interest Expense, net
     El Torito Division                        $         -     $        607
     Chi-Chi's Division                                106              404
     Koo Koo Roo Division                               42               38
     Corporate                                       6,498            7,517
                                               -----------     ------------
        Total Interest Expense, net            $     6,646     $      8,566
                                               ===========     ============

 Capital Expenditures
     El Torito Division                        $         -     $        318
     Chi-Chi's Division                                578              697
     Koo Koo Roo Division                              967              181
     Corporate                                         168              226
                                               -----------     ------------
        Total Capital Expenditures             $     1,713     $      1,422
                                               ===========     ============
<CAPTION>
                                                 April 1,      December 31,
                                                   2001           2000
                                               ------------    ------------
                                                (Unaudited)
                                                   ($ in thousands)
<S>                                            <C>             <C>
 Total Assets
     Chi-Chi's Division                        $   102,048     $    104,387
     Koo Koo Roo Division                           46,279           46,202
     Corporate                                      63,737           69,923
                                               -----------     ------------
        Total Assets                           $   212,064     $    220,512
                                               ===========     ============
</TABLE>

                                      -8-
<PAGE>

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

     Certain information and statements included in this Management's Discussion
and Analysis of Financial Condition and Results of Operations, including,
without limitation, statements containing the words "believes," "anticipates,"
"expects," "intends," "plans," "estimates" and words of similar import,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve known and unknown risks and
uncertainties that could cause actual results of the Company or the restaurant
industry to differ materially from expected results expressed or implied by such
forward-looking statements.  Although it is not possible to itemize all of the
factors and specific events that could affect the outlook of a restaurant
company operating in a competitive environment, factors that could significantly
impact expected results include:

     .  the ability of the Company to satisfy or restructure its debt
        obligations;

     .  the continuing development of successful marketing strategies for each
        of the Company's concepts;

     .  the effect of national and regional economic conditions;

     .  the availability of adequate working capital;

     .  competitive products and pricing;

     .  changes in legislation;

     .  demographic changes;

     .  the ability to attract and retain qualified personnel;

     .  changes in business strategy or development plans;

     .  business disruptions;

     .  changes in consumer preferences, tastes and eating habits;

     .  increases in food and labor costs; and

     .  increases in utility costs and the impact of potential utility
        interruptions.

     The Company disclaims any obligation to update any such factors or to
publicly announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future events or developments.

     The following should be read in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations" presented in the
Form 10-K.

                                      -9-
<PAGE>

     As used herein, "comparable restaurants" means restaurants operated by the
Company for at least eighteen months and that continued in operation through the
end of the first quarter of 2001.

Liquidity and Capital Resources
-------------------------------

     A.  Liquidity

     The Company reported net cash used in operating activities of $1.6 million
for the quarter ended April 1, 2001 and $5.1 million for the quarter ended March
26, 2000. Cash needs are being funded by available cash balances which resulted
from the El Torito Sale. The Company's viability is dependent upon its ability
to restructure its capital structure. The Company is currently negotiating with
its creditors to reach agreement on an acceptable capital restructuring of the
Company and its subsidiaries. The Company cannot provide any assurance that an
agreement can be reached or on the terms of an agreement or its effects on the
Company's operations and interests. If the Company cannot reach agreement with
Foothill, the holders of the FRI-MRD Notes and the holders of the Prandium
Notes, the Company will need to consider other alternatives, including but not
limited to, a federal bankruptcy filing. Even if the Company does reach an
agreement with its creditors, the filing of a Chapter 11 case may become
necessary to implement the terms of such an agreement. Assuming the Company is
able to work out an acceptable capital structure, its continuing viability will
be dependent upon its ability to generate sufficient operating cash flow or cash
flow from other sources to meet its obligations on a timely basis and to comply
with the terms of any new financing agreements or to be able to renegotiate such
obligations and terms.

     Statement of Cash Flows.  For the quarter ended April 1, 2001, net cash
used in operating activities was $1.6 million compared to $5.1 million for the
same period in 2000.  This change was primarily due to the $15.6 million in
reduced interest paid, partially offset by the $11.5 million decline in cash
received from customers, franchisees and licensees net of cash paid to suppliers
and employers and $0.5 million in restructuring costs.  For the first quarter of
2001, net cash used in investing activities was $3.9 million compared to $1.5
million used in investing activities for the same period in 2000.  This change
was primarily due to (i) a $0.8 million decrease in proceeds from disposal of
property and equipment; (ii) a $0.3 million increase in capital expenditures;
(iii) a $0.1 million increase in lease termination payments; (iv) a $0.6 million
increase in cash required for the El Torito Sale and (v) a $0.6 million increase
in other .  For the first quarter of 2001, net cash used in financing activities
was $0.3 million compared to $5.9 million provided by financing activities for
the same period in 2000.  During the first quarter of 2000, $4.7 million in
proceeds from working capital borrowings and $2.3 million in proceeds from
equipment financing were received.

     EBITDA.  For the first quarter of 2001, the Company reported  EBITDA
(defined as earnings (loss) before opening costs, loss (gain) on disposition of
properties,  provision for divestitures , restructuring costs, interest, taxes,
and depreciation and amortization) of negative $347,000, compared to positive
$9.0 million in the  same period of 2000.  The $9.3 million decrease was
composed of (i) a $5.6 million decrease as the result of the sale of the El
Torito Division on June 28, 2000; (ii) a $2.1 million decrease in the Chi-Chi's
Division; (iii) a $0.6 million decrease in the Koo Koo Roo Division; and (iv)
$1.1 million of general and administrative expenses that were previously
allocated to the El Torito Division which have not been eliminated.  As a result
of the sale of the El Torito Division, the Company will be operating at lower
EBITDA levels for the foreseeable future.

                                      -10-
<PAGE>

     The Company has included information concerning EBITDA herein because it
understands that such information is used by certain investors as one measure of
an issuer's historical ability to service debt.  EBITDA should not be considered
as an alternative to, or more meaningful than, operating income (loss) as an
indicator of operating performance or cash flows from operating activities as a
measure of liquidity.  Furthermore, other companies may compute EBITDA
differently, and therefore, EBITDA amounts among companies may not be
comparable.

     Working Capital Deficiency.  The Company normally operates with a working
capital deficiency because:

     .  restaurant operations are conducted primarily on a cash (and cash
        equivalent) basis with a low level of accounts receivable;

     .  rapid turnover allows a limited investment in inventories; and

     .  cash from sales is applied to the payment of related accounts payable
        for food, beverages and supplies which are generally purchased on trade
        credit terms.

     The Company had a working capital deficiency of $253.7 million on April 1,
2001.  This amount includes the classification of approximately $233.4 million
in debt outstanding under the FRI-MRD Notes and Prandium Notes as current.

     Credit Facility and Other Long-Term Debt.   On January 10, 1997, the
Company entered into the Foothill Credit Facility which called for a five-year,
$35 million credit facility to provide for the ongoing working capital needs of
the Company.  As a result of the acquisition of Koo Koo Roo, Inc. and The Hamlet
Group, Inc. ("Hamlet") on October 30, 1998, the Company increased the Foothill
Credit Facility to $55 million.  In connection with the El Torito Sale, (i) the
Company used a portion of the cash proceeds from the sale to repay $25.9 million
outstanding under the Foothill Credit Facility and (ii) the Foothill Credit
Facility was amended and restated to adjust all restrictive covenants to reflect
the El Torito Sale and reduce the credit facility to a maximum of $20 million
(subject to certain limitations) of letters of credit and revolving cash
borrowings. The Foothill Credit Facility:

     .  is secured by substantially all of the real and personal property of the
        Company (other than the capital stock of Hamlet);

     .  contains covenants which restrict, among other things, the Company's
        ability to incur debt, pay dividends on or redeem capital stock, make
        certain types of investments, make dispositions of assets and engage in
        mergers and consolidations; and

     .  expires on January 10, 2002, however, if by October 2, 2001 the
        Company's senior and subordinated debt maturities for those issues that
        currently mature in 2002 are not extended by at least one year, then (i)
        any revolving borrowings must be repaid and (ii) letters of credit must
        be cash collateralized on October 2, 2001.

                                      -11-
<PAGE>

     The Company was not in compliance with certain financial ratios at April 1,
2001 and December 31, 2000. In addition, the non-payment of interest on the FRI-
MRD Notes is considered a default under the provisions of the Foothill Credit
Facility. The Company has notified Foothill of all such defaults. Letters of
credit are issued under the Foothill Credit Facility in large part to provide
security for future amounts payable under the Company's workers' compensation
insurance program ($11.5 million of letters of credit were outstanding as of May
11, 2001, $4.0 million of which were cash collateralized as described below). No
working capital borrowings were outstanding as of May 11, 2001.

     After completion of the El Torito Sale, the Company continues to be highly
leveraged and has significant annual debt service requirements. During the
second half of fiscal 2000, the Company began considering various alternatives
to address its debt service requirements. As a result of discussions and
deliberations among the Company and its legal and financial advisors, the
Company's subsidiary FRI-MRD elected not to pay the semi-annual interest
payments due January 31, 2001 on the FRI-MRD Notes. The Company also elected not
to pay the semi-annual interest payments due February 1, 2001 on the Prandium
Notes. Under the terms of the note agreements governing the FRI-MRD Notes and
the indentures governing the Prandium Notes, these non-payments became "Events
of Default" and the holders of all such debt have become entitled to certain
rights, including the right to accelerate the debt. In addition, the vesting of
the right (whether or not exercised) of the noteholders to accelerate the debt
caused an "Event of Default" to occur under the Foothill Credit Facility and
Foothill became entitled to certain additional rights. Foothill, FRI-MRD and
Chi-Chi's entered into a letter agreement as of March 29, 2001 whereby FRI-MRD
and Chi-Chi's acknowledged certain specified events of default and acknowledged
that as a result of such events of default, Foothill has no further obligation
to make advances under the Foothill Credit Facility, and Foothill agreed that,
subject to certain conditions, it would forbear from exercising its remedies
relative to the events of default specified in the letter agreement until May
15, 2001. On May 15, 2001, Foothill, FRI-MRD and Chi-Chi's entered into a
subsequent letter agreement, whereby FRI-MRD and Chi-Chi's acknowledged certain
specified events of default and acknowledged that as a result of such events of
default, Foothill has no further obligation to make advances under the Foothill
Credit Facility. In addition, pursuant to such letter agreement, Foothill agreed
that, subject to certain conditions, it would forbear from exercising its
remedies relative to the events of default specified in the letter agreement
until the earliest to occur of: (i) June 15, 2001 (or such later date as
Foothill may designate in writing in its sole discretion); and (ii) the
occurrence of any Event of Default under the Foothill Credit Facility (other
than those defaults set forth in the letter agreement). As a condition to
receiving Foothill's forbearance, on May 15, 2001, FRI-MRD paid a forbearance
fee in the amount of $100,000 and transferred $4,000,000 in cash to be held as
cash collateral and as additional security for the outstanding letters of
credit. The Company is currently negotiating with its creditors to reach
agreement on an acceptable capital restructuring of the Company and its
subsidiaries. There can be no assurances that the Company will be able to
successfully reach an agreement with its creditors or successfully resolve its
capital structure. In such an event, the Company's ability to continue to
operate in the ordinary course may be materially adversely affected.

     B.  Capital Expenditures

     Net cash used in investing activities was $3.9 million for the first
quarter of 2001, including $1.7 million used for capital expenditures, as
compared to net cash used in investing activities of $1.5 million for the same
period in 2000.  The change in net cash used in investing activities for the
first quarter of 2001 was primarily due to (i) a $0.8 million decrease in
proceeds from disposal of property and equipment; (ii) a $0.3 million increase
in capital expenditures; (iii) a $0.1 million increase in lease termination
payments; (iv) a $0.6 million increase in cash required for the El Torito Sale
and (v) a $0.6 million increase in other.

     Capital expenditures of up to approximately $10.0 million have been
identified for fiscal 2001.  In fiscal 2001, the Company anticipates opening up
to two new Koo  Roo restaurants and expanding a new Koo Koo Roo menu test to
six restaurants.  Actual capital expenditures for 2001

                                      -12-
<PAGE>

will be dependent on the availability of required funds. During the first
quarter of 2001, total capital expenditures were $1.7 million, which were used
to construct a new Koo Koo Roo in Woodland Hills, California and to repair and
replace equipment in the normal course of business.

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

     In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133").  SFAS 133 establishes accounting and
reporting standards for derivative instruments, including derivative instruments
embedded in other contracts, and hedging activities.  SFAS 133, as amended by
SFAS 137 and SFAS 138, is effective for all fiscal quarters of fiscal years
beginning after  June 15, 2000. The Company does not believe it has any
instruments or transactions subject to SFAS 133, as amended.

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

     The Company's total sales of $75,982,000 for the first quarter of 2001
decreased by $57,132,000 or 42.9% as compared to the same period in 2000.  The
decrease was the result of (i) the sale of the El Torito Division on June 28,
2000; (ii) sales decreases for restaurants sold or closed, other than those
included in the sale of the El Torito Division; and (iii) declines in comparable
restaurant sales for Chi-Chi's and Koo Koo Roo, partially offset by increases in
comparable restaurant sales for Hamburger Hamlet and sales from new Koo Koo Roo
restaurants.  The breakdown of the sales decrease for the first quarter of 2001
is shown in the following table:

<TABLE>
<CAPTION>
                                                                    Change in
                                                                  First Quarter
                                                                    2001 Sales
                                                               -------------------
                                                                 ($ in thousands)

<S>                                                            <C>
Decrease in Sales From the Sale of the El Torito Division            $(53,441)
Decrease in Sales from Restaurants Sold or Closed Other Than
  Those Included in the Sale of the El Torito Division                 (3,201)
Net Decrease in Sales of Comparable Restaurants                        (1,007)
Sales from New Restaurants                                                517
                                                                     --------
     Total                                                           $(57,132)
                                                                     ========
</TABLE>

     Overall, sales for comparable restaurants were $73,365,000 for the first
quarter of 2001, a $1,007,000 or 1.4% decline from the same period in 2000. As
shown in the following table, this decline resulted from decreased sales in
comparable Chi-Chi's and comparable Koo Koo Roo

                                      -13-
<PAGE>

restaurants, partially offset by increased sales in comparable Hamburger Hamlet
restaurants.

<TABLE>
<CAPTION>
                                              Change in First
                                            Quarter 2001 Sales
                                    -----------------------------------
                                        Amount             Percent
                                    ---------------   -----------------
                                              ($ in thousands)
     <S>                            <C>               <C>
     Comparable Chi-Chi's                  $  (382)              (0.7)%
     Comparable Koo Koo Roo                   (773)               (6.2)
     Comparable Hamburger Hamlet               148                 1.8
                                           -------
                Total                      $(1,007)              (1.4)%
                                           =======               =====
</TABLE>

     Sales for comparable Chi-Chi's restaurants declined 0.7% in the first
quarter of 2001 compared to the same period in 2000. The first promotion for the
year was a freestanding newspaper insert with coupons valid during the last week
of January 2001. A broadcast media campaign began on March 5 with selected
markets receiving television, radio or cable media support and promoting the
"Create-a-Combo" section of the menu. The last time Chi-Chi's used broadcast
media was six months ago. As a result of this campaign, sales for comparable
restaurants were positive during the last four weeks of the first quarter of
2001.

     During the first quarter of 2001, Koo Koo Roo launched its new spicy
Buffalo Wings product.  Unlike many competitors, the Koo Koo Roo Buffalo Wings
are baked, not fried.  This new product launch was supported with print
advertising and in-store merchandising materials.  Also, during the first
quarter of 2001, Hamburger Hamlet introduced a new Hamlet At Night menu with new
entrees including Grilled Thai Chicken, Blackened Mahi Mahi and a Sizzling
Fajita Combo Platter. The featured appetizer was Asian Pacific Lettuce Wraps and
the featured dessert was a Caramel Banana Sundae.  The new menu was supported
with print advertising, four-color menus and in-store merchandising materials.

     In the following discussion of the Company's operating results, one of the
major components of the variance of 2001 versus 2000 was the El Torito Sale.
Reported results for  2001 included no operations for El Torito, while results
for 2000 included a full quarter of operations for El Torito.  Therefore, when
the discussion references the impact of the El Torito Sale, the impact to which
it refers is this absence of the El Torito restaurant division's operating
results in 2001.

     Product costs of $20,461,000 for the first quarter of 2001 decreased
$13,619,000 or 40.0% compared to the same period in 2000.  Product costs as a
percentage of sales increased 1.3% points from 25.6% in 2000 to 26.9% in 2001.
The sale of the El Torito Division accounted for $12,853,000 (94.4%) of the
decrease. The remainder of the product costs decrease was related to the sales
declines from comparable and closed restaurants.  If the results of the El
Torito Division were excluded from 2000, product costs as a percentage of sales
only increased 0.3% points, from 26.6% to 26.9%.

     Payroll and related costs of $27,607,000 decreased $19,577,000 or 41.5% for
the first quarter of 2001 as compared to the first quarter of 2000.  As a
percentage of sales, payroll and related costs were 36.3% in the first quarter
of 2001, 0.9% points higher than the same period in 2000.  The sale of the El
Torito Division accounted for $18,731,000 (95.7%) of the total variance and 0.3%
points

                                      -14-
<PAGE>

of the 0.9% points variance related to payroll and related costs as a percentage
of sales. The remainder of the payroll and related costs decrease was related to
the sales declines from comparable and closed restaurants. The primary component
of the remaining percentage of sales increase was increased claims expense in
employee health insurance.

     The Company is subject to Federal and state laws governing matters such as
minimum wages, overtime and other working conditions.  Approximately half of the
Company's employees are paid at rates related to the minimum wage.  Therefore,
increases in the minimum wage or decreases in the allowable tip credit (tip
credits reduce the minimum wage that must be paid to tipped employees in certain
states) increase the Company's labor costs.  This is especially true in
California, where there is no tip credit. In October 2000, the California
Industrial Welfare Commission voted to increase the state's minimum wage by 50c
to $6.25 on January 1, 2001 with another 50c increase to occur on January 1,
2002.  No increases to the $5.15 Federal minimum wage are currently scheduled
for 2001.  In response to previous minimum wage increases, the Company has
implemented various menu price increases, and each of the Company's concepts
raised prices in early 2001.

     Occupancy and other operating expenses were $22,388,000 for the first
quarter of 2001, $12,671,000 or 36.1% lower than the same period in 2000.  As a
percentage of sales, occupancy and other operating expenses were 29.5% in 2001,
3.2% points higher than 2000.  The sale of the El Torito Division contributed
$13,452,000 (106.2%) of the total amount variance and 0.8% points of the
percentage of sales variance.  The remainder of the variance was primarily
related to (i) utilities expense, particularly natural gas for Chi-Chi's; (ii)
the expense associated with two system-wide menu distributions and added
plateware in Chi-Chi's; and (iii) added advertising expense in both Chi-Chi's
and Koo Koo Roo.

     Depreciation and amortization of $4,177,00 for the first quarter of 2001
decreased by $2,923,000 or 41.2% as compared to the same period in 2000.  This
decrease was primarily due to the El Torito Sale which accounts for $2,715,000
(92.9%) of the decrease.

     General and administrative expenses for the first quarter of 2001 were
$5,873,000, $1,910,000 or 24.5% lower than the same period in 2000.  As a
percentage of sales, general and administrative expenses were 7.7% in 2001, 1.9%
points higher than 2000.  $2,815,000 or 147.4% of the variance was related to
the sale of the El Torito Division, offset by approximately $1.1 million of
certain general and administrative expenses that were previously allocated to
the El Torito Division that have not been eliminated.  This is in spite of the
elimination of over 100 positions in the Company's support center since the end
of 1999.  Management continues to closely evaluate the Company's general and
administrative cost structure for additional savings opportunities.

     Opening costs of $50,000 in 2001 decreased $21,000 or 29.6% from 2000 as
the Company reduced the number of new openings and remodels.  Opening costs are
incurred in connection with the opening or remodeling of a restaurant and are
principally related to stocking the restaurant and training its staff.

     The Company reported a loss on disposition of properties of $402,000 in the
first quarter of 2001 as compared to a gain of $112,000 for the first quarter in
2000.  In addition, the Company

                                      -15-
<PAGE>

recorded a $189,000 provision for divestitures in the first quarter of 2001
which represents severance costs for the KKR Strategic Divestment Program.

     The Company reported restructuring costs of $496,000 in the first quarter
of 2001.  These costs are primarily related to amounts paid to legal and
financial advisors in connection with the Company's proposed debt restructuring.

     Interest expense, net for the first quarter of 2001 of $6,646,000 decreased
by $1,920,000 or 22.4% as compared to the same period in 2000. The decrease is
primarily the result of no working capital borrowings required during the first
quarter of 2001 and increased interest income on invested cash balances.

Seasonality.
-----------

     The Company, as a whole, does not experience significant seasonal
fluctuations in sales.   However, the Company's sales tend to be slightly
greater during the spring and summer months.


Selected Division Operating Data.
--------------------------------

     The following table sets forth certain information regarding (i) the
Company; (ii) its ongoing Chi-Chi's restaurant division, Koo Koo Roo restaurant
division and other operating restaurants; and (iii) the El Torito restaurant
division divested on June 28, 2000. At April 1, 2001, the Company's Chi-Chi's
restaurant division operated 140 full-service restaurants and the Company's Koo
Koo Roo restaurant division operated 55 fast-casual and full-service
restaurants.

                                      -16-
<PAGE>

<TABLE>
<CAPTION>
                                                                       For the Quarters Ended
                                                    ----------------------------------------------------
                                                      April 1,            March 26,           March 28,
                                                        2001                2000                1999
                                                    -----------         ----------         -------------
                                                        ($ in thousands, except average check amount)
<S>                                                 <C>                 <C>                <C>
Chi-Chi's Restaurant Division
-----------------------------
Restaurants Open at End of Period:
       Owned/operated                                       140                  148                  163
       Franchised and Licensed                               13                   13                   12
Sales                                               $    53,457           $   55,939           $   58,778
Restaurant Level Cashflow (a)                             3,481                5,689                4,621
Divisional EBITDA (b)                                       329                2,386                1,004
Percentage increase (decrease) in comparable
  restaurant sales                                         (0.7)%                1.0%                 1.1%
Average check (excluding alcoholic beverage
  sales)                                            $     10.79           $     9.78           $     9.06

Koo Koo Roo Restaurant Division (c)
-----------------------------------
Restaurants Open at End of Period:
       Owned/operated                                        55                   58                   55
       Franchised and Licensed                                -                    -                    2
Sales                                               $    21,226           $   22,000           $   22,054
Restaurant Level Cashflow (a)                             2,074                2,643                2,611
Divisional EBITDA (b)                                       540                1,103                1,222
Percentage increase (decrease) in comparable
  restaurant sales                                         (3.0)%               (1.9)%               N.A.
Average check (Koo Koo Roo restaurants only)        $      9.75           $     9.31           $     8.84

Other Operating Restaurants
---------------------------
Restaurants Open at End of Period:
       Owned/operated                                         3                    6                    3
       Franchised and Licensed                                -                    -                    -
Sales                                               $     1,299           $    1,734           $    1,205
Restaurant Level Cashflow (a)                               (29)                  54                  128
Divisional EBITDA (b)                                    (1,192)                 (16)                  33

Ongoing Operations
------------------
Restaurants Open at End of Period:
       Owned/operated                                       198                  212                  221
       Franchised and Licensed                               13                   13                   14
Sales                                               $    75,982           $   79,673           $   82,037
Restaurant Level Cashflow (a)                             5,526                8,386                7,360
Divisional EBITDA (b)                                      (323)               3,473                2,259

Divested Operations (d)
-----------------------
Restaurants Open at End of Period:
       Owned/operated                                         -                   95                   92
       Franchised and Licensed                                -                    8                    8
Sales                                               $         -           $   53,441           $   52,221
Restaurant Level Cashflow (a)                                 -                8,405                8,094
Divisional EBITDA (b)                                         -                5,590                4,583

Total Company
-------------
Restaurants Open at End of Period:
       Owned/operated                                       198                  307                  313
       Franchised and Licensed                               13                   21                   22
Sales                                               $    75,982           $  133,114           $  134,258
EBITDA (e)                                                 (347)               9,008                6,816
</TABLE>

(a)  Restaurant Level Cashflow with respect to any operating division represents
     Divisional EBITDA (as defined below) before general and administrative
     expenses and any net franchise profit or miscellaneous income (expense)
     reported by the respective division.
(b)  Divisional EBITDA with respect to any operating division is defined as
     earnings (loss) before opening costs, gain (loss) on disposition of
     properties, interest, taxes, depreciation and amortization. Corporate
     general and administrative expenses that would have been allocated to the
     El Torito Division prior to the sale of that division are being charged to
     Other Operating Restaurants in 2001 so as not to distort the year-over-year
     comparisons of the Chi-Chi's and Koo Koo Roo Restaurant Divisions.
(c)  Includes both Koo Koo Roo and Hamburger Hamlet restaurant operations
     which were acquired on October 30, 1998.
(d)  Divested Operations represents the results of the El Torito Division
     until it was divested on June 28, 2000.
(e)  EBITDA is defined as earnings (loss) before opening costs, gain (loss) on
     disposition of properties, provision for divestitures, restructuring costs,
     interest, taxes, and depreciation and amortization. The Company has
     included information concerning EBITDA herein because it understands that
     such information is used by certain investors as one measure of an issuer's
     historical ability to service debt. EBITDA should not be considered as an
     alternative to, or more meaningful than, operating income (loss) as an
     indicator of operating performance or to cash flows from operating
     activities as a measure of liquidity. Furthermore, other companies may
     compute EBITDA differently, and therefore, EBITDA amounts among companies
     may not be comparable.

                                     -17-
<PAGE>

Item 3.  Quantitive and Qualitative Disclosure about Market Risk
------

Interest Rate Risk
------------------

     The Company's primary exposure to financial market risks is the impact that
interest rate changes could have on the Foothill Credit Facility, of which no
working capital borrowings were outstanding as of May 11, 2001.  Borrowings
under the Foothill Credit Facility bear interest at the prime rate as announced
by Wells Fargo Bank plus 1.875% for borrowings less than or equal to $10 million
and at the prime rate plus 2.875% for borrowings greater than $10 million.

                                      -18-
<PAGE>

                          PART II.  OTHER INFORMATION
                          ---------------------------

Item 1.  Legal Proceedings
------

     On January 26, 2001, a purported stockholder of the Company initiated a
stockholder derivative suit against the Company and Mr. Relyea, in the Superior
Court of the State of California for the County of Orange, seeking, among other
things, compensatory damages, a constructive trust, punitive damages and
attorneys' fees.  The suit arises out of the sale by AIF II, L.P. on December
29, 2000, of  95,831,997 shares of the Company's common stock to Mr. Relyea for
a cash purchase price of $15,000.  Mr. Relyea is the Company's Chief Executive
Officer, President and Chairman of the Board of Directors.  The suit alleges
that Mr. Relyea improperly usurped the stock purchase opportunity from the
Company and also alleges constructive fraud.  The Company and Mr. Relyea deny
any wrongdoing or impropriety and intend to defend the suit vigorously on among
other grounds that the purchase of stock was not a corporate opportunity.

     On February 13, 2001, a similar stockholder derivative suit was filed in
the Superior Court of the State of California for the County of Orange by
another purported stockholder against the Company and Mr. Relyea. This suit
arose out of the same set of facts as the suit filed on January 26, 2001 and
sought similar damages and fees. On April 25, 2001, the court ruled that the two
cases are related and would proceed before the same judge. However, on May 8,
2001, the plaintiff in the case filed on February 13, 2001 requested that the
court dismiss his complaint with prejudice.

     The Company is involved in various other litigation matters incidental to
its business.  The Company does not believe that any of the existing claims or
actions will have a material adverse effect upon the consolidated financial
position or results of operations of the Company.

Item 2.  Changes in Securities and Use of Proceeds
------

     None.

Item 3.  Defaults Upon Senior Securities
------

     The Company has failed to pay the interest that came due February 1, 2001
with respect to the Prandium Notes.  Under the terms of the Prandium Notes, the
grace period for the failure to pay interest has expired.  In addition, the
Company's subsidiary FRI-MRD Corporation has failed to pay the interest due
January 31, 2001 with respect to the FRI-MRD Notes .  Under the terms of  the
FRI-MRD Notes, the grace period for the failure to pay interest has expired.
Under the terms of the note agreements governing the FRI-MRD  Notes and the
indentures governing the Prandium Notes, these non-payments became "Events of
Default" and the holders of all such debt have become entitled to certain
rights, including the right to accelerate the debt. The unpaid principal amount
on the FRI-MRD Notes as of May 16, 2001 amounted to $99,000,000 and the amount
of interest due and not paid on the FRI-MRD Notes as of May 16, 2001 amounted to
$11,566,000. The unpaid principal amount on the Prandium Notes as of May 16,
2001 amounted to $134,356,000 and the amount of interest due and not paid on the
Prandium Notes as of May 16, 2001 amounted to $10,646,000.

                                      -19-
<PAGE>

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

          2  (a)  Agreement and Plan of Merger, dated as of June 9, 1998 by and
                  among the Company, Fri-Sub, Inc. and Koo Koo Roo, Inc.  (Filed
                  as Exhibit 2.1 to the Company's Form S-4 filed with the SEC on
                  July 1, 1998.)

          2  (b)  Stock Purchase Agreement dated as of March 27, 2000, by and
                  among the Company, FRI-MRD Corporation and Acapulco
                  Acquisition Corp. (Filed as Exhibit 2(b) to the Company's Form
                  10-K filed with the SEC on March 29, 2000.)

          2  (c)  Amendment No. 1 to Stock Purchase Agreement dated as of June
                  28, 2000, by and among the Company, FRI-MRD Corporation and
                  Acapulco Acquisition Corp. (Filed as Exhibit 2.2 to the
                  Company's Form 8-K filed with the SEC on July 5, 2000.)

          3  (a)  Sixth Restated Certificate of Incorporation of the Company.
                  (Filed as Exhibit 3(a) to the Company's Form 10-Q filed with
                  the SEC on May 12, 1999.)

          3  (b)  Second Amended and Restated Bylaws of the Company. (Filed as
                  Exhibit 3(c) to the Company's Form 10-K filed with the SEC on
                  March 29, 1999.)

          4  (a)  Indenture Dated as of January 27, 1994
                  Re: $300,000,000 9-3/4% Senior Notes Due 2002.  (Filed as
                  Exhibit 4(a) to the Company's Form 10-K filed with the SEC on
                  March 28, 1994.)

          4  (b)  Indenture Dated as of January 27, 1994
                  Re: $150,000,000 10-7/8% Senior Subordinated Discount Notes
                  Due 2004.  (Filed as Exhibit 4(b) to the Company's Form 10-K
                  filed with the SEC on March 28, 1994.)

          4  (c)  First Supplemental Indenture, dated as of July 3, 1996,
                  between the Registrant and IBJ Schroder Bank & Trust Company,
                  a New York Banking corporation, as Trustee.  (Filed as Exhibit
                  10.1 to the Company's Form 8-K filed with the SEC on July 9,
                  1996.)

                                      -20-
<PAGE>

          4  (d)  First Supplemental Indenture, dated as of July 3, 1996,
                  between the Registrant and Fleet National Bank, as successor
                  by merger to Fleet National Bank of Massachusetts, formerly
                  known as Shawmut Bank, N.A., as Trustee.  (Filed as Exhibit
                  10.2 to the Company's Form 8-K filed with the SEC on July 9,
                  1996.)

          4  (e)  Note Agreement Dated as of August 12, 1997
                  Re: Up to $75,000,000 FRI-MRD Corporation Senior Discount
                  Notes Due January 24, 2002.  (Filed as Exhibit 4(e) to the
                  Company's Form 10-Q filed with the SEC on November 12, 1997.)

          4  (f)  Joinder Agreement Dated as of January 14, 1998
                  Re: FRI-MRD Corporation Senior Discount Notes due January 24,
                  2002.  (Filed as Exhibit 4(f) to the Company's Form 10-K filed
                  with the SEC on March 30, 1998.)

          4  (g)  First Amendment dated as of June 9, 1998 to the Note Agreement
                  dated August 12, 1997.  (Filed as Exhibit 4.7 to the Company's
                  Form S-4 filed with the SEC on July 1, 1998.)

          4  (h)  Note Agreement dated as of June 9, 1998 Re: $24,000,000 FRI-
                  MRD Corporation Senior Secured Discount Notes due January 24,
                  2002.  (Filed as Exhibit 4.8 to the Company's Form S-4 filed
                  with the SEC on July 1, 1998.)

          4  (i)  First Amendment dated as of October 30, 1998 to the Note
                  Agreement dated as of June 9, 1998.  (Filed as Exhibit 4(i) to
                  the Company's Form 10-Q filed with the SEC on November 12,
                  1998.)

          4  (j)  Waiver dated as of January 29, 1999 to the Note Agreements
                  dated as of August 12, 1997 and June 9, 1998.  (Filed as
                  Exhibit 4(j) to the Company's Form 10-K filed with the SEC on
                  March 29, 1999.)

          10 (a)  Letter Agreement as of March 29, 2001 by and among Foothill
                  Capital Corporation, FRI-MRD Corporation and Chi-Chi's, Inc.
                  (Filed as Exhibit 10 (x) to the Company's Form 10-K filed with
                  the SEC on April 2, 2001.)

         *10 (b)  Letter Agreement as of May 15, 2001 by and among Foothill
                  Capital Corporation, FRI-MRD Corporation and Chi-Chi's, Inc.

---------------
* Filed herewith.


                                      -21-
<PAGE>

     (b)  Reports on Form 8-K.

          On January 5, 2001, the Company filed a report on Form 8-K announcing
          that Mr. Kevin S. Relyea had acquired approximately 53.1% of the
          Company's outstanding capital stock.

          On February 5, 2001, the Company filed a report on Form 8-K announcing
          that it had elected to delay interest payments on certain of its debt
          and the debt of FRI-MRD Corporation.

          On February 20, 2001, the Company filed a report on Form 8-K
          announcing that certain non-payments of interest had become or would
          become "Events of Default."

                                      -22-
<PAGE>

                                   SIGNATURE
                                   ---------

     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.


                                      Prandium, Inc.
                                      (Registrant)


                                      By: /S/ Robert T. Trebing, Jr.
                                          --------------------------
                                            Robert T. Trebing, Jr.
                                        Executive Vice President and
                                           Chief Financial Officer
                                        (Duly Authorized Officer and
                                        Principal Financial Officer)

Date:  May 16, 2001

                                      -23-