<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 March 26, 2000 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 10, 2000, 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>
                                                                                              March 26,           December 26,
                                                                                                2000                  1999
                                                                                            --------------        --------------
                                                                                            (Unaudited)
ASSETS
<S>                                                                                         <C>                  <C>
Current assets:
      Cash and cash equivalents                                                              $     2,953           $     3,600
      Receivables                                                                                  2,284                 2,408
      Inventories                                                                                  2,525                 2,672
      Other current assets                                                                         2,029                 3,098
      Property held for sale                                                                      55,708                55,835
                                                                                            --------------        --------------
          Total current assets                                                                    65,499                67,613

 Property and equipment, net                                                                     134,101               137,460
 Costs in excess of net assets of business acquired, net                                          65,865                66,293
 Other assets                                                                                     14,959                15,267
                                                                                            --------------        --------------
                                                                                             $   280,424           $   286,633
                                                                                            ==============        ==============

 LIABILITIES AND STOCKHOLDERS' DEFICIT

 Current liabilities:
      Working capital borrowings                                                             $    26,500           $    21,850
      Current portion of long-term debt, including capitalized lease obligations                   2,023                 1,000
      Accounts payable                                                                            10,359                 9,228
      Current portion of self-insurance reserves                                                   3,046                 2,601
      Other accrued liabilities                                                                   51,957                57,711
      Income taxes payable                                                                         3,609                 3,638
                                                                                            --------------        --------------
          Total current liablities                                                                97,494                96,028


 Self-insurance reserves                                                                           6,592                 6,560
 Other long-term liabilities                                                                       3,875                 3,779
 Long-term debt, including capitalized lease obligations, less current portion                   236,812               237,871

 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 March 26, 2000 and on
        December 26, 1999                                                                          1,804                 1,804
      Additional paid-in capital                                                                 222,353               222,353
      Accumulated deficit                                                                       (288,506)             (281,762)
                                                                                            --------------        --------------
          Total stockholders' deficit                                                            (64,349)              (57,605)
                                                                                            --------------        --------------
                                                                                             $   280,424           $   286,633
                                                                                            ==============        ==============
</TABLE>


      See accompanying notes to condensed consolidated financial statements

                                     - 2 -
<PAGE>
<TABLE>
<CAPTION>


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

                                                                                     For the Quarters Ended
                                                                              ---------------------------------------
                                                                                   March 26,            March 28,
                                                                                     2000                 1999
                                                                              -------------------    ----------------

<S>                                                                       <C>                        <C>
Sales                                                                         $     133,114          $   134,258
                                                                              -------------------    ----------------
Product Costs                                                                        34,080               35,721
Payroll and related costs                                                            47,184               47,940
Occupancy and other operating expenses                                               35,059               35,143
Depreciation and amortization                                                         7,100                6,677
General and administrative expenses                                                   7,783                8,638
Opening costs                                                                            71                  687
Loss (gain) on disposition of properties, net                                         (112)                  426
                                                                              -------------------    ----------------

      Total costs and expenses                                                      131,165              135,232
                                                                              -------------------    ----------------
Operating income (loss)                                                               1,949                (974)

Interest expense, net                                                                 8,566                7,283
                                                                              -------------------    ----------------

Loss before income tax provision                                                    (6,617)              (8,257)

Income tax provision                                                                    127                  147
                                                                              -------------------    ----------------

Net loss                                                                      $     (6,744)          $   (8,404)
                                                                              ===================    ================
Net loss per share - basic and diluted                                        $      (0.04)          $    (0.05)
                                                                              ===================    ================
Weighted average shares outstanding - basic and diluted                         180,380,513          180,380,513
                                                                              ===================    ================

                               See accompanying notes to condensed consolidated financial statements
</TABLE>

                                      -3-
<PAGE>
                                      PRANDIUM, INC.
                                      --------------

                      CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -----------------------------------------------
                                     ($ in thousands)
                                        (Unaudited)
<TABLE>
<CAPTION>
                                                                                 For the Quarters Ended
                                                                             -----------------------------
                                                                              March 26,         March 28,
                                                                                2000               1999
                                                                             -----------       -----------
<S>                                                                          <C>               <C>
Decrease in Cash and Cash Equivalents

Cash flows from operating activities:
      Cash received from customers, franchisees and licensees                $   133,129       $   134,455
      Cash paid to suppliers and employees                                      (122,664)         (134,560)
      Interest paid, net                                                         (15,342)           (7,034)
      Opening costs                                                                  (71)             (687)
      Income taxes paid                                                             (156)             (326)
                                                                             -----------       -----------
        Net cash used in operating activities                                     (5,104)           (8,152)
                                                                             -----------       -----------
 Cash flows from investing activities:
      Proceeds from disposal of property and equipment                               902               604
      Proceeds from sale of notes receivable, net                                      -             3,246
      Proceeds from payments on notes receivable                                     169             1,645
      Cash required for Merger and Hamlet Acquisition                                  -            (1,556)
      Capital expenditures                                                        (1,422)           (4,687)
      Lease termination payments                                                    (186)             (331)
      Other divestment expenditures                                                 (653)             (495)
      Other                                                                         (289)             (214)
                                                                             -----------       -----------
        Net cash used in investing activities                                     (1,479)           (1,788)
                                                                             -----------       -----------
 Cash flows from financing activities:
      Proceeds from working capital borrowings, net                                4,650                 -
      Proceeds from equipment financing                                            2,298                 -
      Payment of debt issuance costs                                                   -               (60)
      Reductions of long-term debt, including capitalized lease obligations       (1,012)             (398)
                                                                             -----------       -----------
        Net cash provided by (used in) financing activities                        5,936              (458)
                                                                             -----------       -----------
 Net decrease in cash and cash quivalents                                           (647)          (10,398)
 Cash and cash equivalents at beginning of period                                  3,600            17,707
                                                                             -----------       -----------
 Cash and cash equivalents at end of period                                  $     2,953       $     7,309
                                                                             ===========       ===========
 Reconciliation of net loss to net cash used in operating activities:

 Net loss                                                                    $    (6,744)      $    (8,404)
 Adjustments to reconcile net loss to net cash used in operating
  activities:
      Depreciation and amortization                                                7,100             6,677
      Amortization of debt issuance costs and deferred gain                          190               197
      Loss (gain) on disposition of properties                                      (112)              426
      Accretion of interest on discount notes                                          -             3,228
      Decrease in receivables, inventories and other current assets                1,458               588
      Decrease in accounts payable, self-insurance reserves, other
        accrued liabilities and income taxes payable                              (6,996)          (10,864)
                                                                             -----------       -----------
 Net cash used in operating activities                                       $    (5,104)      $    (8,152)
                                                                             ===========       ===========
</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 March 26, 2000, the Company operated 307
restaurants in 27 states, approximately 69% of which are located in California,
Ohio, Pennsylvania, Indiana and Michigan, and franchised and licensed 21
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 26, 1999 included in the
Company's Annual Report on Form 10-K for the fiscal year ended December 26, 1999
(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 March 26, 2000 are not necessarily indicative of those for the
full year.

     3.  Sale of El Torito Division. On March 27, 2000, the Company entered into
         --------------------------
a definitive agreement (the "Sale Agreement") to sell substantially all of the
El Torito Division to Acapulco Acquisition Corp. ("Acapulco") in a transaction
with an enterprise value of approximately $130.0 million (the "El Torito Sale").
Consummation of the El Torito Sale is subject to customary terms and conditions,
and there can be no assurances that this transaction will be consummated. At
March 26, 2000, the El Torito Division operated 97 full-service restaurants and
four fast-casual restaurants in eight states and franchised and licensed eight
restaurants outside the United States. All but two full-service restaurants and
none of the four fast-casual restaurants are to be sold in the El Torito Sale.
Under the terms of the Sale Agreement, the Company will receive, subject to
certain post-closing adjustments based on a closing balance sheet, cash of
$130.0 million less the El Torito Division's long-term debt, consisting
primarily of capitalized lease obligations, which will be assumed by Acapulco at
the closing ($10.7 million at March 26, 2000). The Company expects the El Torito
Sale to be finalized in the second quarter of fiscal 2000 and to record a pretax
gain in fiscal 2000 as a result of this transaction. Cash proceeds from the El
Torito Sale are planned to be used to repay certain indebtedness with remaining
funds available for general corporate purposes.

     The 95 full-service El Torito Division restaurants to be sold generated
sales of $53,441,000 and $52,220,000 for the quarters ended March 26, 2000 and
March 28, 1999, respectively, and produced El Torito Division operating income
of $2,728,000 and $1,652,000, respectively. Such operating income includes
charges for allocated corporate general and administrative expenses of
$1,391,000 and $1,404,000 for the quarters ended March 26, 2000 and March 28,
1999, respectively.

                                      -5-
<PAGE>

     As a result of this transaction, the assets and liabilities of the El
Torito Division to be sold have been classified as property held for sale in the
accompanying condensed consolidated balance sheet.  The components of property
held for sale are as follows:

<TABLE>

                                                                   March 26,         Dec. 26,
                                                                    2000               1999
                                                                  --------           --------
<S>                                                             <C>              <C>
                                                                        ($ in thousands)

Current assets                                                  $  5,024           $  5,045
Property and equipment, net                                       57,083             59,370
Reorganization value, net                                         33,378             33,727
Other assets                                                       1,530              1,488
Current liabilities                                              (24,302)           (27,410)
Self-insurance reserves                                           (7,591)            (7,816)
Other long-term liabilities                                       (1,696)            (1,492)
Long-term debt, excluding current portion                         (7,718)            (7,077)
                                                                --------           --------
                                                                $ 55,708           $ 55,835
                                                                ========           ========
</TABLE>

     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 the quarter ended
March 26, 2000, these restaurants had sales of $424,000 and restaurant level
operating losses of $84,000. The restaurants are still in operation and
accordingly, none of the divestiture reserves have been utilized as of March 26,
2000.  The KKR Strategic Divestment Program is scheduled to be completed by the
end of fiscal 2000, and the 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, eight restaurants (including two restaurants
divested in the first quarter of 2000) with sales of $1,419,000 and restaurant
level operating losses of $209,000 during the quarter ended March 26, 2000,
remain in the CC Strategic Divestment Program. For the quarter ended March 26,
2000, the Company paid (i) $109,000 for severance costs associated with certain
restaurant and regional managers who were terminated in connection with the
restaurants divested and (ii) $600,000 for net costs associated with lease
terminations, subsidized subleases, brokerage fees and other divestment costs.
The CC Strategic Divestment Program is scheduled to be completed by the end of
fiscal 2000, and the operating results of the restaurants in the CC Strategic
Divestment Program

                                      -6-
<PAGE>

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

     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
operating income (loss) represents corporate general and administrative
expenses.  Corporate assets include corporate 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.

                                      -7-
<PAGE>
<TABLE>
<CAPTION>
                                                                         For the Quarters Ended
                                                                  ------------------------------------
                                                                   March 26,                March 28,
                                                                     2000                     1999
                                                                  -----------              -----------
                                                                               (Unaudited)
                                                                            ($ in thousands)
<S>                                                               <C>                      <C>
Sales
     El Torito Division                                           $    55,175              $    53,426
     Chi-Chi's Division                                                55,939                   58,778
     Koo Koo Roo Division                                              22,000                   22,054
                                                                  -----------              -----------
         Total Sales                                              $   133,114              $   134,258
                                                                  ===========              ===========

Depreciation and Amortization
     El Torito Division                                           $     2,808              $     2,434
     Chi-Chi's Division                                                 2,705                    2,518
     Koo Koo Roo Division                                               1,334                    1,472
     Corporate                                                            253                      253
                                                                  -----------              -----------
         Total Depreciation and Amoritzation                      $     7,100              $     6,677
                                                                  ===========              ===========

Operating Income (Loss)
     El Torito Division                                           $     2,655              $     1,563
     Chi-Chi's Division                                                  (421)                  (1,789)
     Koo Koo Roo Division                                                (319)                    (346)
     Corporate                                                             34                     (402)
                                                                  -----------              -----------
         Total Operating Loss                                     $     1,949              $      (974)
                                                                  ===========              ===========

Interest Expense, net
     El Torito Division                                           $       624              $       159
     Chi-Chi's Division                                                   404                       74
     Koo Koo Roo Division                                                  38                       24
     Corporate                                                          7,500                    7,026
                                                                  -----------              -----------
         Total Interest Expense, net                              $     8,566              $     7,283
                                                                  ===========              ===========

Capital Expenditures
     El Torito Division                                           $       372              $     2,548
     Chi-Chi's Division                                                   697                    1,587
     Koo Koo Roo Division                                                 181                      499
     Corporate                                                            172                       53
                                                                  -----------              -----------
         Total Capital Expenditures                               $     1,422              $     4,687
                                                                  ===========              ===========


                                                                   March 26,                 Dec. 26,
                                                                      2000                     1999
                                                                  -----------              -----------
                                                                  (Unaudited)
                                                                            ($ in thousands)
Total Assets
     El Torito Division                                           $    55,708              $    55,835
     Chi-Chi's Division                                               107,270                  111,077
     Koo Koo Roo Division                                              98,958                  100,607
     Corporate                                                         18,488                   19,114
                                                                  -----------              -----------
         Total Assets                                             $   280,424              $   286,633
                                                                  ===========              ===========
</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 continuing development of successful marketing strategies for each
        of the Company's concepts;

     .  the effect of national and regional economic conditions;

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

     .  consummation of the El Torito Sale;

     .  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; and

     .  increases in food and labor costs.

     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.

                                      -9-
<PAGE>

     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.

     Information relating to periods ending prior to October 30, 1998 included
in this report relates to the historical operations of the Company and, except
as otherwise indicated, does not reflect the operations of Koo Koo Roo, Inc., a
Delaware corporation, or The Hamlet Group, Inc., a California corporation
(collectively, "KKR"), which the Company acquired on October 30, 1998.

     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 2000.

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

     A.  Liquidity

     The Company reported net cash used in operating activities for the quarters
ended March 26, 2000 and March 28, 1999 of $5.1 million and $8.2 million,
respectively.  Cash needs are being funded by available cash balances,
supplemented, as necessary, by working capital advances available under the
Foothill Credit Facility (as defined below).  The Company's viability has been
and will continue to 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 its financing agreements.

     Statement of Cash Flows.  For the quarter ended March 26, 2000, net cash
used in operating activities was $5.1 million compared to $8.2 million for the
quarter ended March 28, 1999.  This decrease was primarily due to the $10.6
million improvement in cash received from customers, franchisees and licensees
net of cash paid to suppliers and employers, partially offset by $8.3 million in
additional interest paid.  For the first quarter of 2000, net cash used in
investing activities was $1.5 million compared to $1.8 million for the same
period in 1999.  A reduction in capital expenditures of $3.3 million and a
reduction of cash required for the acquisition of KKR of $1.6 million were, in
large part, offset by no additional proceeds from the sale of notes receivable
($3.2 million in 1999) and a reduction of $1.5 million in proceeds from payment
on notes receivable.  For the first quarter of 2000, net cash provided by
financing activities was $5.9 million compared to $0.5 million used in financing
activities for the same period in 1999.  During the first quarter of 2000, $4.7
million in net proceeds from working capital borrowings and $2.3 million in
equipment financing was received.

     EBITDA.  For the first quarter of 2000, the Company reported EBITDA
(defined as earnings (loss) before opening costs, gain (loss) on disposition of
properties, gain on sale of division, provision for divestitures and write-down
of long-lived assets, VCU termination expense, restructuring costs, interest,
taxes, depreciation and amortization and extraordinary items) of $9.0 million,
compared to $6.8 million for the same period in 1999.  The $2.2 million increase
was primarily due to improved operating margins, especially favorable commodity
pricing in the area of dairy, particularly cheese, and cost reductions in
general and administrative expenses.  This improved EBITDA is the continuation
of the trend that began in 1996 when new management was installed at both El
Torito and Chi-Chi's.  Since 1995, the divisional EBITDA of the Company's
ongoing operations is set forth in the following table.

                                      -10-
<PAGE>

<TABLE>
<CAPTION>
                                                                Divisional EBITDA
                                                -------------------------------------------------
                                                 El Torito     Chi-Chi's       Koo Koo Roo (b)
                                                -----------   ------------   --------------------
                                                                  ($ in thousands)
<S>                                              <C>         <C>             <C>

            December 31, 1995 (a)                   $13,508      $(10,455)       $        -
            December 29, 1996                        11,956        (4,278)                -
            December 28, 1997                        17,627            36                 -
            December 27, 1998                        22,869         1,426                364
            December 26, 1999                        22,000         5,942              4,384
</TABLE>

            (a)  Includes 53 weeks of operations and, in accordance with Company
                 policy at that time, excludes certain unallocated corporate
                 overhead.
            (b)  The Merger and Hamlet Acquisition were completed on October 30,
                 1998.

     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.

     Working Capital Deficiency.  The Company operates with a substantial
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 usually received before related accounts payable for
       food, beverages and supplies become due.

     The Company had a working capital deficiency of $61.2 million on March 26,
2000 (excluding the impact of $55.7 million in property held for sale discussed
in Note 3 of the Condensed Consolidated Financial Statements and the impact of
$26.5 million in working capital borrowings classified as a current liability).

     Credit Facility and Other Long-Term Debt.  The Company's credit facility
with Foothill Capital Corporation (the "Foothill Credit Facility"):

     . provides for up to $35 million in revolving cash borrowings and up to $55
       million in letters of credit (less the outstanding amount of revolving
       cash borrowings);

     . is secured by substantially all of the real and personal property of the
       Company;

                                      -11-
<PAGE>

      .    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.

      The Company was in compliance with all financial ratios at March 26, 2000.
Letters of credit are issued under the Foothill Credit Facility primarily to
provide security for future amounts payable under the Company's workers'
compensation insurance program ($18.8 million of such letters of credit were
outstanding as of May 10, 2000). $26.1 million of working capital borrowings
were outstanding as of May 10, 2000.

      Upon completion of the El Torito Sale, the Company will continue to be
highly leveraged and have significant annual debt service requirements.  In
addition to requirements under the Foothill Credit Facility, the Company's debt
service requirements are as follows:

<TABLE>
<CAPTION>
                                      Cash
                                    Interest       Principal
                                   -------------   ----------
                                          ($ in millions)
              <S>                  <C>             <C>
                 2000                  $28.7        $  1.4
                 2001                   28.5           1.2
                 2002                   15.7         203.6
                 2003                    3.5           0.5
                 2004                    1.8          31.1
</TABLE>

     Although management believes that the proceeds available to the Company as
a result of the El Torito Sale (assuming such transaction is consummated) should
be sufficient to meet its operating and debt service requirements for the next
two years, there can be no assurance that the Company will be able to repay or
refinance its 9-3/4% Senior Notes due 2002 and its 10-7/8% Senior Subordinated
Discount Notes due 2004, or that FRI-MRD Corporation will be able to repay or
refinance its 15% Senior Discount Notes due 2002 and its 14% Senior Secured
Discount Notes due 2002, at their respective maturities.  The Company will
continue to explore various alternatives to further reduce its debt.

     B.  Capital Expenditures

     Net cash used in investing activities was $1.5 million for the first
quarter of 2000, including $1.4 million for capital expenditures, as compared to
net cash used in investing activities of $1.8 million for the same period in
1999.  The decrease in net cash used in investing activities for the first
quarter of 2000 was primarily due to (i) sale of notes receivable, net in 1999
and (ii) reduced payments on notes receivable in 1999, offset by lower capital
expenditures in 2000.

     Capital expenditures of up to approximately $37.3 million (including
approximately $16.3 million for the El Torito Division) have been identified for
fiscal 2000, including approximately $9.2 million (including approximately $2.6
million for the El Torito Division) devoted to normal

                                      -12-
<PAGE>

improvements of the Company's restaurants. The Company is considering continuing
its remodeling of both El Torito and Chi-Chi's restaurants and is allocating
approximately $9.5 million (including approximately $3.8 million for the El
Torito Division) for this purpose in fiscal 2000. The Company anticipates that
up to three new El Torito restaurants and up to seven new Koo Koo Roo
restaurants (one of which opened in February 2000) could open in 2000 and that
it will begin to accelerate the Koo Koo Roo growth plan in 2001. During the
first quarter of 2000, capital expenditures were maintained at minimum
maintenance levels. Actual capital expenditures for fiscal 2000 will be
dependent on the availability of required funds and the timing of the
consummation of the El Torito Sale.

Year 2000
---------

     The Company believes it has successfully addressed the potential business
risks associated with the Year 2000.  The Year 2000 issue involved the use of a
two-digit year field instead of a four-digit year field in computer systems.  If
computer systems could not distinguish between the year 1900 and the year 2000,
system failures or other computer errors could have resulted.  To date, the
Company is not aware of the occurrence of any significant Year 2000 problems
being reported in connection with its business.  Some business risks associated
with the Year 2000 issue may remain throughout 2000.  However, it is not
anticipated that future Year 2000 issues, if any, will have a material adverse
effect on the Company.

     The total cost to the Company of addressing Year 2000 issues was
approximately $9.0 million, a significant portion of which was lease financed.
This amount was incurred for new software and related hardware and installation
costs during 1998 and 1999 in the Company's corporate offices and operating
restaurants.

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

     The Company's total sales of $133,114,000 for the first quarter of 2000
decreased by $1,144,000 or 0.9% as compared to the same period in 1999.  The
decrease was due to (i) sales decreases in comparable restaurants and (ii) sales
decreases for restaurants sold or closed, partially offset by sales from new
restaurants.  The breakdown of the sales decrease for the first quarter of 2000
is detailed below:

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

<S>                                                <C>
Decrease in Sales of Comparable Restaurants                $  (226)
Decrease in Sales of Restaurants Sold or Closed             (3,649)
Sales from New Restaurants                                   2,731
                                                           -------
                                                           $(1,144)
                                                           =======
</TABLE>

     Sales for comparable restaurants of $128,289,000 for the first quarter of
2000 decreased by $226,000 or 0.2% as compared to the same period in 1999.  As
shown below, this decrease was due

                                      -13-
<PAGE>

to decreased sales for comparable El Torito and Koo Koo Roo division
restaurants, partially offset by increased sales for comparable Chi-Chi's
restaurants.

<TABLE>
<CAPTION>
                                                      Change in
                                                  First Quarter Sales
                                           -------------------------------
                                              Amount          Percent
                                           ------------     -------------
<S>                                         <C>               <C>
                                                 ($ in thousands)

Comparable El Torito                         $(377)          (0.7)%
Comparable Chi-Chi's                           563            1.0
Comparable KKR/Hamlet                         (412)          (1.9)
                                             -----
           Total                             $(226)          (0.2)%
                                             =====           =====
</TABLE>

     El Torito comparable sales were down 0.7% in the first quarter of 2000
compared to the same period in 1999.  The first quarter marketing effort
consisted of a print campaign, utilizing predominately ADVO and freestanding
newspaper inserts, focusing on El Torito's "Classic Combos."  The advertising
included special discount offers.  The first quarter of 2000 alcoholic beverage
offer promoted a high-end tequila with a free snifter.  The first quarter of
2000 marketing campaign also included restaurant point-of-purchase materials
featuring the tequila promotion on one side and El Torito's made-from-scratch
Tableside Guacamole on the other.

     Comparable sales for Chi-Chi's in the first quarter of 2000 were up 1.0% as
compared to the same period in 1999.  The major promotion of the quarter
revolved around "Two Chi-Chi's Favorites Dinners for $10.99."  This offer was
supported by radio in selected markets and a freestanding newspaper insert
featuring a similar offer in the remaining markets.  Thirteen new items from the
Chi-Chi's forthcoming Menu 2000 were introduced in March and have captured a
significant amount of customers' orders.  The entire new menu will be introduced
in April with supporting media beginning in May.  Additionally, Chi-Chi's was
honored to be voted "America's Favorite Mexican Restaurant" for the eighth
consecutive year by consumers in a nationwide survey sponsored by Restaurants &
Institutions magazine.

     In the first quarter of 2000, comparable sales for Koo Koo Roo were down
3.8% as compared to the same period in 1999.  Koo Koo Roo's marketing activities
for the quarter included a featured promotion of its Original Skinless Flame
Broiled Chicken(TM).  This promotion was followed with the introduction of a new
product line--Koo Koo Roo Stuffers Baked Potatoes(TM). This product line
included three potato bowls--Chicken, Cheese and Broccoli; Santa Fe Chicken and
Sour Cream & Onion.  Both of these marketing programs included three product
offers designed to attract customers and were supported with print advertising
and in-store merchandising materials in all markets.  Comparable sales for
Hamburger Hamlet were up 1.1% for the first quarter of 2000.  The marketing
activity continued to focus on building dinner sales with the "Hamlet At Night"
dinner menus.

     Product costs of $34,080,000 for the first quarter of 2000 decreased by
$1,641,000 or 4.6% as compared to the same period in 1999 primarily due to
favorable commodity prices, most notably in cheese.  These commodity savings
were also reflected as a percentage of sales, as product costs decreased to
25.6% in the first quarter of 2000 as compared to 26.6% in the same period of
1999.

                                      -14-
<PAGE>

     Payroll and related costs of $47,184,000 for the first quarter of 2000
decreased by $756,000 or 1.6% as compared to the same period in 1999.  As a
percentage of sales, payroll and related costs decreased from 35.7% in the first
quarter of 1999 to 35.4% in the same period of 2000.  The decrease in payroll
and related costs was primarily due to reduced management costs related to
divested Chi-Chi's restaurants.

     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 California, the state's minimum
wage was increased to $5.75 on March 1, 1998. In response to the minimum wage
increase on March 1, 1998, the Company raised menu prices at its El Torito
restaurants in an effort to recover the higher payroll costs.  Similarly, in
March 1998, KKR also raised menu prices for its Koo Koo Roo restaurants. No
minimum wage increases are scheduled for 2000 at this time, but it is
anticipated that the Federal legislature will pass a minimum wage increase later
this year.

     Occupancy and other operating expenses of $35,059,000 for the first quarter
of 2000 decreased by $84,000 or 0.2% as compared to the same period in 1999.  As
a percentage of sales, occupancy and other operating expenses increased slightly
to 26.3% in the first quarter of 2000 as compared to 26.2% in the same period in
1999.

     Depreciation and amortization of $7,100,000 for the first quarter of 2000
increased by $423,000 or 6.3% as compared to the same period in 1999 due to the
impact of the Company's ongoing capital expenditure programs.

     General and administrative expenses of $7,783,000 for the first quarter of
2000 decreased by $855,000 or 9.9% as compared to the same period of 1999.  As a
percentage of sales, general and administrative expenses decreased to 5.8% in
the first quarter of 2000 as compared to 6.4% in the same period of 1999.
Management continues to closely evaluate the Company's general and
administrative cost structure for savings opportunities, especially in light of
the impending El Torito Sale.

     The Company reported a gain on disposition of properties of $0.1 million in
the first quarter of 2000 as compared to a loss of $0.4 million for the first
quarter in 1999. The gain in 2000 was due to the sale of a restaurant trade
name.

     Interest expense, net for the first quarter of 2000 of $8,566,000 increased
by $1,283,000 or 17.6% as compared to the same period in 1999.  The first
quarter increase is primarily the result of interest on working capital
borrowings, of which none were outstanding during the first quarter of 1999, and
on equipment financings.

                                      -15-
<PAGE>

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.

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
$26,500,000 was outstanding as of March 26, 2000. Borrowings under the Foothill
Credit Facility bear interest at the prime rate as announced by Wells Fargo &
Company plus 1.875% for borrowings less than $23,333,333 and at the prime rate
plus 2.875% for borrowings equal to or greater than $22,333,333 (averaging
10.58% in the first quarter of 2000). A hypothetical increase of 100 basis
points in short-term interest rates would result in an increase of approximately
$265,000 in annual pretax losses. The estimated increase is based upon the
outstanding balance of the Foothill Credit Facility, and assumes no change in
the volume, index or composition of debt at March 26, 2000.

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

     Until October 30, 1998, the Company primarily operated full-service Mexican
restaurants in two divisions under the El Torito, Chi-Chi's, Casa Gallardo and
other brand names.  On October 30, 1998, the Company acquired the Koo Koo Roo
and Hamburger Hamlet restaurant operations.  At March 26, 2000, the Company's El
Torito restaurant division operated 101 full-service and fast-casual
restaurants, the Company's Chi-Chi's restaurant division operated 148 full-
service restaurants and the Company's Koo Koo Roo restaurant division operated
58 fast-casual and full-service restaurants.

     The following table sets forth certain information regarding the Company,
its El Torito, Chi-Chi's, and Koo Koo Roo restaurant divisions.

                                      -16-
<PAGE>
<TABLE>
<CAPTION>
                                                                                     For the Quarters Ended
                                                     -------------------------------------------------------
                                                       March 26,            March 28,             March 29,
                                                          2000                 1999                 1998
                                                     --------------       -------------       --------------
                                                           ($ in thousands, except average check amount)
<S>                                                  <C>                  <C>                  <C>
El Torito Restaurant Division (a)
---------------------------------
Restaurants Open at End of Period:
       Owned/operated                                        101                   95                 94
       Franchised and Licensed                                 8                    8                 10
Sales                                                    $55,175              $53,426            $51,809
Restaurant Level Cashflow (b)                              8,459                8,222              7,087
Divisional EBITDA (c)                                      5,574                4,616              4,313
Percentage increase (decrease) in comparable
 restaurant sales                                           (0.7) %               3.0 %            (1.2) %
Average check (excluding alcoholic beverage sales)       $ 10.36              $ 10.53            $  9.32

Chi-Chi's Restaurant Division
-----------------------------
Restaurants Open at End of Period:
       Owned/operated                                        148                  163                179
       Franchised and Licensed                                13                   12                 16
Sales                                                    $55,939              $58,778            $61,497
Restaurant Level Cashflow (b)                              5,689                4,621              4,128
Divisional EBITDA (c)                                      2,386                1,004                102
Percentage increase in comparable restaurant sales           1.0  %               1.1 %              1.2 %
Average check (excluding alcoholic beverage sales)       $  9.78              $   9.06           $  8.23 (d)

Koo Koo  Roo Restaurant  Division (e)
-------------------------------------
Restaurants Open at End of Period:
       Owned/operated                                          58                   55                 0
       Franchised and Licensed                                  -                    2                 0
Sales                                                    $ 22,000             $ 22,054           $     0
Restaurant Level Cashflow (b)                               2,643                2,611                 0
Divisional EBITDA (c)                                       1,103                1,222                 0
Percentage decrease in comparable restaurant sales          (1.9) %               N.A.              N.A.
Average check (Koo Koo Roo restaurants only)             $   9.31             $   8.84           $  N.A.

Total Company
Restaurants Open at End of Period:
       Owned/operated                                         307                  313               273
       Franchised and Licensed                                 21                   22                26
Sales                                                    $133,114             $134,258          $113,306
EBITDA (f)                                                  9,008                6,816             4,371
</TABLE>

(a)    The El Torito Division (minus six restaurants) will be sold to Acapulco
       if the El Torito Sale is consummated.
(b)    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.
(c)    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.
(d)    Restated to conform to the 2000 and 1999 presentation.
(e)    Koo Koo Roo and Hamburger Hamlet restaurant operations were acquired on
       October 30, 1998.
(f)    EBITDA is defined as earnings (loss) before opening costs, gain (loss) on
       disposition of properties, gain on sale of division, provision for
       divestitures and write-down of long-lived assets, VCU termination
       expense, restructuring costs, interest, taxes, depreciation and
       amortization and extraordinary items. 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>

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

Item 1.  Legal Proceedings
------

     The Company is involved in various 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
------

     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

          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.
                  ("KKR").  (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.)

          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.)


                                      -18-
<PAGE>

          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.)

          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.)

                                      -19-
<PAGE>

           *27         Financial Data Schedule.


     (b)  Reports on Form 8-K.

          None.



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

                                      -20-
<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 10, 2000

                                      -21-