<PAGE>   1
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-Q




[x]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
     Act of 1934 for the Quarterly Period ended  September 29, 1996.

Commission File Number:   0-14968
                       --------------------------------------------------------

                               EATERIES, INC.
--------------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)

              Oklahoma                           73-1230348
--------------------------------------------------------------------------------
     (State or other jurisdiction of     (I.R.S. Employer Identification No.)
     incorporation or organization)

     3240 W. Britton Rd., Ste. 202,
     Oklahoma City, Oklahoma                   73120
--------------------------------------------------------------------------------
     (Address of principal executive offices)             (Zip Code)

                               (405) 755-3607
--------------------------------------------------------------------------------
            (Registrant's telephone number, including area code)


     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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

[X]Yes [ ]No

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.  3,844,558 common shares,
$.002 par value, were outstanding as of November 8, 1996.












<PAGE>   2


                       EATERIES, INC. AND SUBSIDIARIES
                                  FORM 10-Q

                                    INDEX


                                                                  Page
                                                                  ----

Part I.   FINANCIAL INFORMATION

         Item 1.  Financial Statements                             
                                                                   
         Condensed Consolidated Balance Sheets                     
              December 31, 1995 and                                     
              September 29, 1996 (unaudited) . . . . . . . . . . .  4   
                                                                   
         Condensed Consolidated Statements of                      
            Income (unaudited)                                        
              Three months ended September 30, 1995                     
              and September 29, 1996 . . . . . . . . . . . . . . .  5   
                                                                   
              Nine months ended September 30, 1995                      
              and September 29, 1996 . . . . . . . . . . . . . . .  6   

         Condensed Consolidated Statements of
            Cash Flows (unaudited)
              Nine months ended September 30, 1995
              and September 29, 1996 . . . . . . . . . . . . . . .  7

         Notes to Condensed Consolidated Financial
            Statements (unaudited) . . . . . . . . . . . . . . . .  8

     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of
              Operations . . . . . . . . . . . . . . . . . . . . . 11


Part II. OTHER INFORMATION


     Item 6.  Exhibits and Reports on Form 8-K . . . . . . . . . . 19












                                     -2-


<PAGE>   3













                                    PART I


                            FINANCIAL INFORMATION





































                                     -3-


<PAGE>   4


Item 1.  Financial Statements

                        EATERIES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                      December 31,   September 29,
                                         1995           1996
                   ASSETS                    (unaudited)
CURRENT ASSETS:
     Cash and cash equivalents       $ 1,001,954    $ 1,455,765
     Receivables                       1,353,099      1,645,599
     Deferred income taxes               389,000        329,000
     Inventories                       1,368,673      1,288,514
     Other                               179,020        220,104
                                     -----------    -----------
     Total current assets              4,291,746      4,938,982
                                     -----------    -----------

PROPERTY AND EQUIPMENT                26,819,081     32,851,065
Less landlord finish-out allowances  (12,409,951)   (14,442,487)
Less accumulated depreciation and
     amortization                     (4,047,414)    (5,356,879)
                                     -----------    -----------
     Net property and equipment       10,361,716     13,051,699
                                     -----------    -----------

DEFERRED INCOME TAXES                    991,000      1,115,000
LANDLORD FINISH-OUT ALLOWANCES
     RECEIVABLE                          429,000          -
OTHER ASSETS, net                        522,493        522,121
                                     -----------    -----------
                                     $16,595,955    $19,627,802
                                     ===========    ===========

     LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                $ 2,967,109    $ 4,482,297
     Accrued liabilities               2,963,564      2,487,949
     Notes payable to vendor              13,139          -
     Current portion of long-term
     obligations                          25,305         27,525
                                     -----------    -----------
     Total current liabilities         5,969,117      6,997,771
                                     -----------    -----------

OTHER NONCURRENT LIABILITIES             465,382        483,285
                                     -----------    -----------
LONG-TERM OBLIGATIONS, net of
     current portion                   1,249,023      3,128,093
                                     -----------    -----------

COMMITMENTS
STOCKHOLDERS' EQUITY:
     Preferred stock, none issued          -              -
     Common stock                          8,038          8,237
     Additional paid-in capital        9,154,420      9,279,658
     Retained earnings                 1,084,593      1,065,376
                                     -----------    -----------
                                      10,247,051     10,353,271
     Treasury stock, at cost,
     274,039 shares at December 31,
     1995 and September 29, 1996      (1,334,618)    (1,334,618)
                                     -----------    -----------
     Total stockholders' equity        8,912,433      9,018,653
                                     -----------    -----------
                                     $16,595,955    $19,627,802
                                     ===========    ===========

           See notes to condensed consolidated financial statements.

                                      -4-

<PAGE>   5


                        EATERIES, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (unaudited)

<TABLE>                                                   
<CAPTION>
                                     Three Months Ended     Thirteen Weeks
                                       September 30,      Ended September 29,
                                            1995               1996
                                     ------------------   -------------------
<S>                                     <C>                  <C>              
REVENUES:                                                 
  Food and beverage sales               $11,291,783          $13,851,215
  Franchise fees and royalties               71,796               64,058
  Other income                               85,837               83,572
                                        -----------          -----------
                                         11,449,416           13,998,845
                                        -----------          -----------
COSTS AND EXPENSES:                                          
  Cost of sales                           3,353,520            4,226,479
                                                             
  Operating expenses                      6,749,060            7,986,366
  Pre-opening costs                         223,000              230,000
  General and administrative                778,478              869,832
  Provision for restaurant                                   
    closures and other disposals            897,000                -
  Depreciation and amortization             347,879              480,772
  Interest expense                            2,962               51,042
                                        -----------          -----------
                                         12,351,899           13,844,491
                                        -----------          -----------
                                                             
INCOME (LOSS) BEFORE INCOME TAXES          (902,483)             154,354
                                                             
PROVISION (BENEFIT) FOR INCOME                               
     TAXES                                 (260,000)              45,000
                                        -----------          -----------
                                                             
                                                             
NET INCOME (LOSS)                       $  (642,483)         $   109,354
                                        ===========          ===========
                                                             
WEIGHTED AVERAGE COMMON AND                                  
     COMMON EQUIVALENT SHARES             3,732,684            4,086,807
                                        ===========          ===========
                                                             
                                                             
NET INCOME (LOSS) PER SHARE             $     (0.17)         $      0.03
                                        ===========          ===========
</TABLE>















           See notes to condensed consolidated financial statements.

                                      -5-

<PAGE>   6


                        EATERIES, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                  (unaudited)


<TABLE>
<CAPTION>
                                  Nine Months Ended    Thirty-nine Weeks
                                    September 30,     Ended September 29,
                                        1995                 1996
                                  -----------------   -------------------
<S>                                     <C>                  <C>              

REVENUES:
     Food and beverage sales         $31,970,599        $39,730,073
     Franchise fees and royalties        217,895            197,533
     Other income                        418,142            268,614
                                     -----------        -----------
                                      32,606,636         40,196,220
                                     -----------        -----------
COSTS AND EXPENSES:
     Cost of sales                     9,849,966         12,143,784
     Operating expenses               19,085,968         23,437,647
     Pre-opening costs                   564,000            504,000
     General and administrative        2,167,594          2,665,845
     Provision for restaurant
     closures and other disposals        897,000              -
     Depreciation and amortization       955,918          1,353,600
     Interest expense                     16,537            118,564
                                     -----------        -----------
                                      33,536,983         40,223,440
                                     -----------        -----------

LOSS BEFORE INCOME TAXES                (930,347)           (27,220)
                               
BENEFIT FOR INCOME
     TAXES                              (268,000)            (8,000)
                                     -----------        -----------

NET LOSS                             $  (662,347)       $   (19,220)
                                     ===========        ===========

WEIGHTED AVERAGE COMMON AND
     COMMON EQUIVALENT SHARES          3,789,320          3,954,108
                                     ===========        ===========

NET LOSS PER SHARE                   $     (0.17)       $     (0.00)

                                     ===========        ===========
</TABLE>
















           See notes to condensed consolidated financial statements.

                                      -6-

<PAGE>   7




                       EATERIES, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (unaudited)


<TABLE>
<CAPTION>                                                            
                                                                    Nine Months       Thirty-nine Weeks    
                                                                Ended September 30,  Ended September 29,   
                                                                      1995                 1996            
                                                                ------------------  --------------------   
                                                                                                           
<S>                                                                   <C>                    <C>               
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS:                                                                 
Cash flows from operating activities:                                                                             
  Net loss                                                            $ (662,347)            $  (19,220)       
  Adjustments to reconcile net loss to                                                                         
    net cash provided by (used in) operating                                                                   
    activities:                                                                                                
      Depreciation & amortization                                        955,918              1,353,600        
      Asset write-downs included in provision                                                                  
        for restaurant closures and other                                                                      
        disposals                                                        469,500                  -            
      Gain on sale of assets                                            (134,245)                (3,271)       
      Common stock bonuses                                                  -                     7,741        
      Deferred income taxes                                             (268,000)                (8,000)       
      (Increase) decrease in:                                                                                    
           Receivables                                                  (285,530)              (432,038)       
           Inventories                                                   (14,071)                80,159        
           Other                                                         (84,174)               (41,084)       
      Increase (decrease) in:                                                                                  
          Accounts payable                                              (431,588)             1,515,188        
          Accrued liabilities                                             87,373               (475,615)       
          Other noncurrent liabilities                                   251,645                 17,903        
                                                                      ----------             ----------        
            Total adjustments                                            546,828              2,014,583        
                                                                      ----------             ----------        
  Net cash provided by (used in) operating                                                                     
    activities                                                          (115,519)             1,995,363        
                                                                      ----------             ----------        
                                                                                                               
Cash flows from investing activities:                                                                             
  Capital expenditures                                                (5,987,320)            (6,096,471)       
  Landlord allowances                                                  1,501,160              2,601,074        
  Net cash payments for restaurant acquisitions                         (529,083)                 -            
  Proceeds from sale of property and equipment                           413,855                 36,379        
  Sales of marketable securities                                         514,737                  -            
  Increase in other assets                                               (31,609)               (12,381)       
                                                                      ----------             ----------        
   Net cash used in investing activities                              (4,118,260)            (3,471,399)       
                                                                      ----------             ----------        
                                                                                                               
Cash flows from financing activities:                                                                             
  Payments on notes payable to vendor                                   (380,395)               (13,139)       
  Net borrowings under revolving credit                                                                        
  agreements                                                           1,675,000              1,900,000        
  Payments on long-term obligations                                      (63,009)               (18,710)       
  Increase in bank overdraft                                           1,769,686                  -            
  Proceeds from exercise of stock options                                 27,832                 60,727        
  Proceeds from sale of common stock                                       -                        969        
                                                                      ----------             ----------        
   Net cash provided by financing                                                                               
    activities                                                         3,029,114              1,929,847        
                                                                      ----------             ----------        
                                                                                                                  
Net decrease in cash & cash equivalents                               (1,204,665)               453,811        
Cash and cash equivalents at beginning of period                       1,843,951              1,001,954        
                                                                      ----------             ----------        
Cash and cash equivalents at end of period                            $  639,286             $1,455,765        
                                                                      ==========             ==========        
</TABLE>

          See notes to condensed consolidated financial statements.

                                     -7-

<PAGE>   8



                       EATERIES, INC. AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 (unaudited)

Note 1 - Basis of Preparation.

The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and foot-notes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included.  The Company changed its fiscal
year-end in the first quarter of 1996 to a 52/53 week year ending on the last
Sunday in December.  As a result of this change, each of the Company's quarters
will consist of thirteen weeks.  In a 53 week fiscal year, the fourth quarter
will include fourteen weeks.  The first three quarters of 1995 and 1996, both
include 273 days (combined).  The third quarter of 1996 includes 91 days versus
92 days in the third quarter of 1995.  Operating results for thirteen and
thirty-nine week periods ended September 29, 1996, are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996.  For further information, refer to the financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.

Note 2 - Balance Sheet Information

     Receivables are comprised of the following:

                                           December 31,     September 29,
                                              1995              1996
                                           -----------       ----------
     Franchisees                           $   88,448        $   46,584
     Insurance refunds                        283,883           503,464
     Landlord finish-out allowances           748,288           608,750
     Other                                    232,480           486,801
                                           ----------        -----------
                                           $1,353,099        $1,645,599
                                           ----------        -----------

     Accrued liabilities are comprised of the following:

                                           December 31,     September 29,
                                              1995             1996
                                           ----------        -----------

     Compensation                          $1,259,896       $1,256,160
     Taxes, other than income                 395,930          425,285
     Other                                  1,307,738          806,504
                                           ----------        -----------
                                           $2,963,564       $2,487,949
                                           ----------        -----------

                                      -8-

<PAGE>   9


Note 3 - Supplemental Cash Flow Information

For the nine months ended September 30, 1995 and the thirty-nine weeks ended
September 29, 1996, the Company had the following non-cash investing and
financing activities:


<TABLE>
<CAPTION>
                                            Nine Months Ended    Thirty-Nine Weeks
                                               September 30,    Ended September 29,
                                                   1995                 1996
                                            -----------------   -------------------
<S>                                             <C>                 <C>
Net increase (decrease) in receivables
     for landlord finish-out allowances         $1,081,311          $(568,538)
Borrowings for capital expenditures                                           
     under notes payable to vendor                 112,295              -     
Acquisition of treasury stock                                                 
     upon exercise of stock options                  5,751              -     
Increase in additional paid-in capital                                        
     as a result of tax benefits from the                                     
     exercise of non-qualified stock options.       47,325             56,000 
</TABLE>

Note 4 - Impairment of Long-Lived Assets

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS 121") "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to tbe Disposed of,"
which requires impairment losses to be recorded on long-lived assets used in
operations when indicators of impairment are present and the undiscounted
future cash flows estimated to be generated by those assets are less than the
assets' carrying amount.  SFAS 121 also addresses the accounting for long-lived
assets that are expected to be disposed of.  The Company adopted SFAS 121 in
the first quarter of 1996, and based upon management's review of the Company's
long-lived assets, no impairment losses were recorded.  (See following Note 5
for discussion of the Company's provision for restaurant closures and other
disposals).

Note 5 - Provision For Restaurant Closures and Other Disposals

During the third quarter of 1995, the Company approved and began the
implementation of a plan to close certain underperforming restaurants.  As of
November 8, 1996, the Company had closed three of the four restaurants planned
for closure.  Management anticipates that the remaining restaurant closures and
negotiation and execution of lease termination agreements will be completed
during the remainder of 1996.  As a result of the completed and planned
restaurant closures, the Company recorded a pre-tax charge of $842,000 in the
third quarter of 1995, of which approximately $605,000 of lease termination
costs, litigation settlement costs and other exit costs had been incurred by
September 29, 1996.   Management  expects  the effect  of closing



                                      -9-



<PAGE>   10




these underperforming stores to result in improved margins and increased
profitability for the Company in future periods.  In the normal course of
business, management performs a regular review of the strength of its operating
assets.  It is management's plan to continue to make such decisions to close
underperforming restaurants and/or dispose of other assets it considers in the
best long-term interest of the Company's shareholders.










































                                      -10-
<PAGE>   11

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




Introduction

As of September 29, 1996 the Company owned, operated and franchised 52 (44
Company and eight franchised) casual theme, dinnerhouse restaurants. Subsequent
to that date, the Company has opened one new restaurant.  The Company currently
has two restaurants under development.  As of the date of this report, the
entire system includes 45 Company and eight franchise restaurants.

PERCENTAGE RESULTS OF OPERATIONS AND RESTAURANT DATA

The following table sets forth, for the periods indicated, (i) the percentages
that certain items of income and expense bear to total revenues, unless
otherwise indicated, and (ii) selected operating data:



<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED     NINE MONTHS ENDED   
                                                     1995         1996       1995        1996   
                                                   --------------------     ------------------
<S>                                                <C>            <C>        <C>        <C>
Statements of Income Data:                                                                       
Revenues:                                                                                        
     Restaurant sales......................           98.6%        98.9%      98.0%       98.8% 
     Franchise fees and royalties..........            0.5%         0.5%      0.7%         0.5%  
     Other income..........................             .7%         0.6%      1.3%         0.7%  
                                                   --------------------     ------------------
                                                     100.0%       100.0%    100.0%       100.0%  
                                                                                                 
Costs and Expenses:                                                                              
     Cost of sales (1).....................           29.7%        30.5%     30.8%        30.6% 
     Restaurant operating expenses(1) .....           59.8%        57.7%     59.7%        59.0% 
     Restaurant pre-opening costs(1).......            2.0%         1.7%      1.8%         1.3% 
     General and administrative expenses ..            6.8%         6.2%      6.6%         6.6% 
     Provision for restaurant                                                                     
     closures and other disposals...........           7.8%          -        2.8%          -   
     Depreciation and amortization                                                               
     expenses (1)...........................           3.1%         3.5%      3.0%         3.4% 
     Interest expense.......................            -           0.4%      0.1%         0.3% 
                                                   --------------------     ------------------
                                                     107.9%        98.9%    102.9%       100.1% 
                                                   --------------------     ------------------
                                                                                                 
Income (loss) before income taxes...........          (7.9%)        1.1%     (2.9%)       (0.1%)
Provision (benefit) for income taxes........          (2.3%)        0.3%     (0.8%)       (0.0%)
                                                   --------------------     ------------------
Net income (loss)...........................          (5.6%)        0.8%     (2.0%)       (0.0%)
                                                   ====================     ==================
                                                                                                 
Selected Operating Data:                                                                         
(Dollars in thousands)                                                                           
System-wide sales:                                                                               
     Company restaurants................           $11,292      $13,851     $31,971     $39,730 
     Franchise restaurants..............             2,003        2,085       5,686       6,155 
                                                   --------------------     ------------------
     Total..............................           $13,295      $15,936     $37,657     $45,855 
                                                   ===================      ==================
Number of restaurants (at end of period):                                                        
     Company restaurants................                38           44                           
     Franchise restaurants..............                 8            8                           
                                                   --------------------     ------------------
     Total..............................                46           52                           
                                                   ===================      ==================

</TABLE>


(1) As a percentage of restaurant sales.
----------------------




                                     -11-
<PAGE>   12




RESULTS OF OPERATIONS

For the three months ended September 29, 1996, the Company recorded net income
of $109,000 ($.03 per share) on revenues of $13,999,000.  This compares to net
loss of $(642,000) ($(.17) per share) for the three months ended September 30,
1995 on revenues of $11,449,000.  For the nine months ended September 29, 1996
and September 30, 1995, the Company reported net loss of $(19,000) $(.00) per
share) for 1996 compared to net loss of $(622,000) ($.17 per share) in 1995.
During the third quarter of 1995, the Company recorded a pre-tax charge of
$897,000 to establish a provision for restaurant closures and other disposals.
The effect of this provision on the reported net loss and per share data for
the three months and nine months ended September 30, 1995 was $(639,000) or
$(.17) per share.

REVENUES

Company revenues for the three and nine months ended September 29, 1995
increased 22% and 23%, respectively, over the revenues reported for the same
periods in 1995.  The revenue increase relates primarily to increased
restaurant sales during the three and nine month periods in 1996.  The number
of Company restaurants operating at the end of each respective three and nine
month periods and the number of operating months during each period were as
follows:
                           

<TABLE>
<CAPTION>
                                  Number of              Average Monthly
                                Operating Months           Sales Per Unit
                 Number of      ----------------           --------------
 September 30,  Units Open  Three Months  Nine Months  Three Months  Nine Months
 -------------  ----------  ------------  -----------  ------------  -----------
     <S>            <C>         <C>          <C>         <C>          <C>
     1996           44          128          378         $108,200     $105,100
     1995           38          113          334         $ 99,900     $ 95,700

</TABLE>



Average monthly sales per unit increased by $8,300 and $9,400, respectively,
for the three and nine months ended September 29, 1996 versus the previous
year's results.  These increases are attributable to the following items:

      A stronger, more experienced management team in place at the
      beginning of 1996.  (Several key examples follow).

      In November, 1995, the Company created and filled the position of
      Divisional Vice President of Operations/Garfield's.  The
      individual responsible for this position brings 17 years of senior
      operations' management experience with two nationally recognized
      restaurant chains.  The Divisional Vice President is responsible
      for improving service and sales of the Garfield's stores as well
      as recruiting and hiring experienced store management.



                                      -12-


<PAGE>   13

      In August, 1995 the Company hired a Vice President of Marketing, a
      new position at the Company.  The new Vice President of Marketing
      has over 17 years of marketing experience with a nationally
      recognized chain of dinnerhouse restaurants.  During the fourth
      quarter of 1995, a detailed marketing plan was developed for 1996,
      with the primary objectives being to improve same store sales and
      guest satisfaction.  The implementation of the marketing plan
      began during the first quarter of 1996 positively impacted the
      Company's same store sales results during the first nine months of
      1996.

      Following the November, 1995 successful introduction of regional
      newspaper advertising, the Company ran its second regional
      newspaper print program for Garfield's restaurants in February,
      1996.  A third regional program continued to drive sales during
      May and June, 1996.  A fourth regional program continued to yield
      the results of the first three programs during the third quarter
      of 1996.  These programs were used in the majority of the
      Company's restaurant markets and have all been successful in
      increasing revenues and customer visits.

      During the first nine months of 1996, the Company began testing
      radio and direct mail advertising campaigns in selective
      restaurant markets.  Initial results have been favorable and the
      Company plans to further utilize these campaigns in additional
      restaurant markets during the remainder of the year and into 1997.

      While these marketing programs resulted in increased
      short-term costs, management believes their effects, along with
      the local efforts of our restaurant management, contributed to the
      Company's significant average monthly sales per unit increases.
      (The Company experienced a 10% increase in average unit volumes
      during the first nine months of 1996 versus the comparable 1995
      period).  Management expects it will continue to experience
      improving sales trends for the balance of the year with higher
      marketing and promotion costs, of which management believes the
      long-term benefits outweigh the short-term costs.

      Franchise fees and continuing royalties decreased to $198,000 from
      $218,000 in the nine months ended September 29, 1996 versus the
      previous year. At September 29, 1996 and September 30, 1995, there
      were eight franchise restaurants in service.






                                      -13-


<PAGE>   14
COSTS AND EXPENSES

A comparison of food and beverage and labor costs (excluding payroll taxes and
fringe benefits) as a percentage of restaurant sales at Company-owned
restaurants is as follows for the three and nine month periods:


<TABLE>
<CAPTION>
                               Three months     Nine months
                               ------------     -----------
                               1995    1996     1995   1996
                               ----    ----     ----   ----
     <S>                      <C>     <C>      <C>    <C>
     Cost of sales            29.7%   30.5%    30.8%  30.6%
     Labor costs              28.2%   27.2%    28.4%  28.1%

     Combined Total           57.9%   57.9%    59.2%  58.7%

</TABLE>

The decrease in cost of sales percentages during the nine month period in 1996
reflects the Company's improving purchasing techniques, which has allowed the
Company to fix purchase prices for certain high volume food products, and other
purchasing efficiencies.  Where practical, such techniques will continue to be
used in the Company's purchasing methods.  The third quarter 1995 cost of sales
percentage of 29.7% was favorably impacted by several product rebates which
lowered overall cost of sales percent.  The third quarter 1996 cost of sales
percentage of 30.5% is in line with 1996 to date product costs.  Labor costs
experienced during the first nine months of 1996 have improved over comparable
1995 levels as a result of better store level monitoring of labor needs and
enhanced scheduling techniques.

Due to the increase in minimum wage laws, the Company is facing increasing labor
costs.  Likewise, meat, chicken and dairy prices are increasing nationally. 
While the Company has been able to absorb most of these increases to date,
management expects both food and labor to continue to increase which could
negatively impact earnings.

For the three months ended September 29, 1996, restaurant operating expenses as
a percentage of restaurant sales decreased to 57.7% from 59.8% in the 1995
three month period.  A decrease was experienced during the nine months ended
September 29, 1996, during which operating expenses were 59.0%, as compared to
the 1995 period level of 59.7%.  Both 1996 period decreases in operating
expenses as a percent to sales are attributable to lower occupancy costs
partially offset by higher advertising and promotional expenses.

Restaurant pre-opening costs, which are expensed as incurred, were $230,000 and
$223,000 for the three months ended 1996 and 1995, respectively, and $504,000
and $564,000 for the nine month periods ended 1996 and 1995, respectively.
Five restaurants were developed in the first nine months of 1996 while seven
restaurants were developed in the 1995 period.  There was no pre-opening costs
associated with the Company's purchase of the Pepperoni Grill restaurant in
January, 1995.  The Company plans to open three additional restaurants (for a
total of ten) in 1996.





                                      -14-

<PAGE>   15
Under the Company's policy of expensing pre-opening costs as incurred, income
from operations, on an annual and quarterly basis, could be adversely affected
during periods of restaurant development; however, the Company believes that
its initial investment in the restaurant pre-opening costs yields a long-term
benefit of increased operating income in subsequent periods.

During the three and nine month periods ended during 1996 and 1995, general and
administrative costs as a percentage of revenues were 6.2% and 6.6%,
respectively, and 6.8% and 6.6%, respectively. The higher absolute levels of
general and administrative costs in 1996 as compared to 1995 amounts are
related primarily to additional personnel costs and related costs of operating
the expanding restaurant system.  The Company anticipates that its costs of
supervision and administration of Company and franchise stores will increase at
a slower rate than revenue increases during the next few years.


PROVISION FOR RESTAURANT CLOSURES AND OTHER DISPOSALS

During the third quarter of 1995, the Company approved and began the
implementation of a plan to close certain underperforming restaurants.  As of
September 29, 1996 the Company has closed three of the four restaurants planned
for closure.

As a result of the completed and planned restaurant closures, the Company
recorded a pre-tax charge of $842,000 in the third quarter of 1995.  The
provision was comprised of the following:

     Estimated lease termination and exit costs           $427,500
     Write-down of property, equipment, and leasehold
         improvements to estimated net realizable value    414,500
                                                          --------

                                                          $842,000
                                                          ========

The Company also made a provision of $55,000 for equipment write-downs in the
third quarter of 1995 related to the Company's implementation plan for a new
point-of-sale system.


DEPRECIATION AND AMORTIZATION

Depreciation and amortization expense increased for the first nine months of
1996 to $1,354,000 (3.4% of restaurant sales) compared to $956,000 (3.0% of
restaurant sales) in 1995.  The cost increase relates principally to the
increase in net assets subject to depreciation and amortization in 1996 versus
1995 because of additional restaurants opened since October, 1995, and the
remodeling of existing restaurants.





                                      -15-

<PAGE>   16
INCOME TAXES

The Company's tax benefit for income taxes was $(8,000) during the first nine
months of 1996 versus a tax benefit for income taxes of $(268,000) for the 1995
comparable period.  The effective tax rates for the periods are as follows:

                                   Three Months     Nine Months
                                   ------------    -------------
                                   1995    1996    1995     1996
                                   ----    ----    ----     ----

     Effective income tax rates    28.8%   29.2%   28.8%    29.4%

NET INCOME (LOSS) PER SHARE AMOUNTS

Net income (loss) per share amounts are computed by dividing net income (loss)
by the weighted average number of common and dilutive common equivalent shares
outstanding during the period. Per share amounts are based on total outstanding
shares plus the assumed exercise of all dilutive stock options and warrants.
Common and common equivalent share amounts were 3,732,684 and 4,086,807 in the
three months ended September 30, 1995 and September 29, 1996, respectively, and
3,789,320 and 3,954,108 in the nine months ended September 30, 1995 and
September 29, 1996, respectively. There were no dilutive common equivalent
shares for the quarter ended September 30, 1995 as the Company incurred a net
loss for the period. Under the treasury stock method of computation,
outstanding stock options and warrants represented 242,256 dilutive common
equivalent shares for the quarter ended September 29, 1996.

IMPACT OF INFLATION

The impact of inflation on the costs of food and beverage products, labor and
real estate can affect the Company's operations.  Over the past few years,
inflation has had a lesser impact on the Company's operations due to the lower
rates of inflation in the nation's economy and economic conditions in the
Company's market area.

Management believes the Company has historically been able to pass on increased
costs through certain selected menu price increases and has offset increased
costs by increased productivity and purchasing efficiencies, but there can be
no assurance that the Company will be able to do so in the future. Management
anticipates that the average cost of restaurant real estate leases and
construction cost could increase in the future which could affect the Company's
ability to expand.  In addition, mandated health care could significantly
increase the Company's costs of doing business.






                                      -16-

<PAGE>   17

LIQUIDITY AND CAPITAL RESOURCES

At September 29, 1996 the Company's working capital ratio was .71 to 1 compared
to .72 to 1 at December 31, 1995.  Working capital decreased to $(2,059,000) at
September 29, 1996 versus $(1,677,000) at December 31, 1995.  As is customary
in the restaurant industry, the Company has operated with negative working
capital and has not required large amounts of working capital. Historically,
the Company has leased the majority of its restaurant locations and through a
strategy of controlled growth, financed its expansion principally from
operating cash flow, proceeds from the sale of common stock and utilizing the
Company's revolving line of credit.

During the nine months ended September 29, 1996, the Company had net cash
provided by operating activities of $1,995,000 as compared to net cash used by
operating activities of $(116,000) during the comparable 1995 period.

The Company had planned to open six units during 1996.  However, management has
elected to accelerate its scheduled openings to a total of eight new
restaurants to capitalize on two favorable real estate opportunities.  The two
additional restaurants will open late in the year and will have a negative
impact on fourth quarter and yearend earnings.  Historically, the Company has
earned the vast amount of its income in the fourth quarter. While this will
still be the case in 1996, earnings will likely be negatively impacted by the
start-up costs related to these two additional openings.

The Company believes the cash generated from its operations and borrowing
availability under its credit facility (described below), will be sufficient to
satisfy the Company's net capital expenditures and working capital requirements
during 1996.

In August, 1995, the Company entered into an agreement with a bank for a
revolving line of credit for $3,000,000.  This revolver is unsecured, has a
three year term and contains customary financial covenants.  This credit
facility provides the Company additional borrowing capacity to continue its
expansion plans over the next several years.

In July, 1996, the Company's $3,000,000 revolving line of credit was increased
to $5,000,000 and the term was extended by one year to August, 1999.





                                     -17-

<PAGE>   18










                                   PART II

                              OTHER INFORMATION


























                                     -18-
<PAGE>   19

Item 6.  Exhibits and Reports on Form 8-K.

     (a)  Exhibit 11.1 - Computation of net income per share.

     (b)  Exhibit 27.1 - Financial Data Schedule

     (c)  No reports on Form 8-K were filed during the thirteen weeks
          ended September 29, 1996.






















                                     -19-



<PAGE>   20

                                  SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                               EATERIES, INC.
                                               Registrant



Date:  November 12, 1996                       By: /s/ AUGUST A. HEHEMANN
                                                  --------------------------
                                                  August A. Hehemann      
                                                  Vice President/Treasurer
                                                  Principal Financial and 
                                                  Accounting Officer      







                                    -20-

<PAGE>   21

                                EXHIBIT INDEX




<TABLE>
<CAPTION>
         EXHIBIT 
         NUMBER                  DESCRIPTION
         ------                  -----------
       <S>                 <C>
       Exhibit 11.1      - Computation of net income per share.
     
       Exhibit 27.1      - Financial Data Schedule
</TABLE>