<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
                     of the Securities Exchange Act of 1934

                    For the fiscal year ended March 28, 1998

                         Commission File Number: 0-1532

                            MARSH SUPERMARKETS, INC.
             (Exact name of registrant as specified in its charter)

            INDIANA                                           35-0918179
(State or other jurisdiction of                             (IRS Employer
 incorporation or organization)                           Identification No.)

                            9800 CROSSPOINT BOULEVARD
       INDIANAPOLIS, INDIANA                                 46256-3350
(Address of principal executive offices)                     (Zip Code)
  
                                  317-594-2100
              (Registrant's telephone number, including area code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:  None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
         Class A Common Stock
         Class B Common Stock
         7% Convertible Subordinated Debentures, due 2003

       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.

       Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of the Registrant's knowledge, in the definitive proxy statement
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: X

       Aggregate market value of Class A Common Stock held by non-affiliates
of the Registrant as of June 1, 1998: $44,802,371. This calculation assumes all
shares of Common Stock beneficially held by officers and members of the Board of
Directors of the Registrant are owned by "affiliates", a status which each of
the officers and directors individually disclaims.

       At June 1, 1998, there were 3,943,963 shares of Class A Common Stock
and 4,484,830 shares of Class B Common Stock outstanding.

       Portions of the 1998 Annual Report to Shareholders for the year ended
March 28, 1998 are incorporated by reference into Part I.

       Portions of the Proxy Statement for the Annual Shareholders' Meeting to
be held August 4, 1998 are incorporated by reference into Part III.


<PAGE>   2


                                     PART I

ITEM 1.  BUSINESS

GENERAL
At March 28, 1998, Marsh Supermarkets, Inc. (the "Company" or "Marsh") operated
89 supermarkets and 181 Village Pantry convenience stores in central Indiana and
western Ohio. The Company believes that Marsh supermarkets have one of the
largest market shares of supermarket chains operating in its market area and
Village Pantry has one of the largest market shares of convenience stores in its
market area. Marsh owns and operates a specialized convenience store
distribution business which serves its Village Pantry stores as well as over
1,290 unaffiliated convenience stores in a seven state area. Marsh also owns and
operates a food services division which provides upscale catering, vending,
concession and business cafeteria management services.

SUPERMARKETS
At March 28, 1998, the Company operated 75 supermarkets in central Indiana and
14 in western Ohio. The 37 stores in the Indianapolis metropolitan market area
constitute the Company's major market. The remaining supermarkets operate in 37
other communities. Revenues from supermarket operations represent approximately
68% of the Company's fiscal 1998 consolidated sales and other revenues.

The Company's supermarket merchandising strategy emphasizes service, quality and
convenient one-stop shopping at competitive prices. Of the Company's
supermarkets, 53 are open 24 hours a day and 12 are open until midnight, with
the remainder having various other schedules. All stores are open seven days a
week.

The Company believes providing quality merchandise is an important factor in
maintaining and expanding its customer base. In recent years, the Company has
devoted a greater proportion of new and remodeled stores to fresh, high quality
perishables, such as produce, delicatessen items, baked goods, prepared foods,
seafood and floral items. The Company believes fresh produce is an important
customer draw; therefore, it focuses on buying premium quality produce
worldwide. The geographic concentration of the Company's supermarkets enables
the Company to deliver fresh items to its stores quickly and frequently. An
extension of this theme is convenient, high quality, ready to eat meals. The
"Chef Fresh" program offers take-home items for immediate consumption in 36
stores. These products are prepared in the Company's central kitchen, which is
now a shared facility, providing fresh items to most of the Company's divisions.

The Company's new and expanded large superstore format offers customers
convenient one-stop shopping. Its Marsh supermarkets feature an extended line of
traditional grocery store items as well as service and specialty departments
such as delicatessens, bakeries, prepared foods, prime cut meats, fresh seafood,
floral and video rental. The Company features nationally advertised and
distributed merchandise along with products under its own trademarks, service
marks and trade names. Service and specialty departments included in Marsh
supermarkets include delicatessens (89 stores), hot prepared foods (57),
bakeries (89), prime cut service meat (58), fresh seafood (60), floral shops
(58), imported cheese shops (51), wines and beer (84), salad bars (31), video
rental (66), cosmetic counters (12) and shoe repair (19). Twenty-five of the
Company's supermarkets include pharmacies in food and drug combination stores.
To combat increasing competition from other retail formats, such as wholesale
clubs, 38 of the Company's supermarkets also include warehouse-type sections
offering large size and multi-pack products typically featured by wholesale
clubs, priced competitively with club prices. In addition, banks or savings
institutions operate branch facilities in 34 of the Company's stores, and 37
stores offer ATM machines. Home delivery of orders placed by customers via
telephone, fax or the Internet is offered to the Indianapolis metropolitan
market.

The Company's superstore format is in excess of 75,000 square feet, and its
modern conventional supermarket format is approximately 55,000 to 65,000 square
feet. The Company currently operates five superstores and 8 modern conventional
supermarkets. Approximately one-third of the sales area in these stores is
devoted to merchandising fresh, high quality perishable products such as
delicatessens, bakeries, prepared foods and produce, and approximately 5,000
square feet are devoted to warehouse-type merchandising of bulk club pack
merchandise.



<PAGE>   3


The Company has developed a smaller, low-price supermarket format with limited
service and specialty departments as an alternative to the large, full service
Marsh supermarket. As of March 28, 1998, the Company operated 16 of its
supermarkets under this concept. Subsequent to March 28, 1998, a conventional
Marsh supermarket was converted to this format. The stores operate under the
trade name LoBill Foods. There is an ongoing development program to remodel
selected Marsh supermarkets to the LoBill format. The Company believes the
LoBill format offers an opportunity to maximize its market area by expanding
into smaller communities and inner city metropolitan areas that can be better
served by that format and to appeal to the price motivated consumer in markets
currently serviced by traditional Marsh stores.

The Company's supermarkets range in size from 15,000 to 81,500 square feet. The
average size is approximately 38,100 square feet. The Company has an ongoing
development program of constructing larger Marsh supermarkets within its market
area and remodeling, enlarging and replacing existing supermarkets. Future
development will continue to focus on a food and drug combination store format
of approximately 55,000 to 65,000 square feet, with superstores in excess of
75,000 square feet in select locations. The Company believes a larger store
format enables it to offer a wider variety of products and expanded service and
specialty departments, thereby strengthening its competitive position. The
following summarizes the number of stores by size categories:

<TABLE>
<CAPTION>
                                                               Number
         Square Feet                                          of Stores
         -----------                                          ---------
         <S>                                                  <C>
         More than 75,000 .................................       5
         55,000 - 75,000 ..................................       8
         45,000 - 55,000 ..................................       7
         35,000 - 45,000 ..................................      21
         25,000 - 35,000 ..................................      42
         Less than 25,000 .................................       6
                                                                 --
                                                                 89
                                                                 ==
</TABLE>

The Company advertises through various media, including circulars, newspapers,
radio and television. Printed circulars are used extensively on a weekly basis
to advertise featured items. The focus of the television campaign promotes a
quality and service image rather than specific products and prices. The
Indianapolis television market covers approximately 80% of the Company's
supermarkets. Various sales enhancement promotional activities, including free
grocery and other programs designed to encourage repeat shoppers, are conducted
as an important part of the Company's merchandising strategy. The Company
utilizes a frequent shopper card program, "Fresh I.D.E.A(R)." This card
functions as a check cashing card, video rental card and automatically provides
electronic coupons. Further, a customer may select a VISA(R) co-branded credit
card option for their Fresh I.D.E.A. card and earn rebates on all credit card
purchases regardless of the merchant. The credit card rebates are funded by the
Company's bank partner.

CONVENIENCE STORES
At March 28, 1998, the Company operated 181 convenience stores under the Village
Pantry trade name. These self-service stores offer a broad selection of grocery,
bakery, dairy and delicatessen items, including fresh pastry products and
sandwiches prepared in the stores. Approximately 52% of the stores also offer
petroleum products. Revenues from the convenience stores represented
approximately 12% of the Company's fiscal 1998 consolidated sales and other
revenues. Carry-out cold beer, a high-volume item typically found in convenience
stores in other states, may be sold only by package liquor stores and taverns in
Indiana; accordingly, it is not sold in the Company's convenience stores in
Indiana. In Indiana, all but 12 of the Company's convenience stores are open 24
hours a day; the remaining stores close at 11:00 P.M. or midnight. All stores
are open seven days a week.

The Company has added higher margin food and beverage products, such as
store-prepared pizza (37 stores), chicken (42), and self-service fountain
drinks, as well as sit-down eating areas in 45 stores. The Company is a Taco
Bell Express franchisee in three stores which increases the variety of available
fast food. These stores include drive-thru service. The Company has also
partnered with Shell Oil Company in the Kokomo, Indiana and Anderson, Indiana
markets whereby the Company receives a fixed fee and a commission based on fuel
sales above a base level without investing capital in the fuel inventory or
dispensing equipment. The Company also added drive-thru car washes at three
store locations.

The Company has an ongoing program of remodeling, upgrading and replacing
existing Village Pantry stores with particular emphasis on developing locations
that will yield a high volume of gasoline sales. New stores generally average
3,700-4,500 square feet, compared to 1,800-2,500 square feet for older stores.
The larger size accommodates the aforementioned new food products. In
constructing new stores, and remodeling and expanding existing stores, the
Company tailors the format to each specific market, with heavy emphasis on food
service in areas which the Company believes to be less susceptible to intense
competition from major fast food operators, such as smaller towns and high
density neighborhoods.

CONVENIENCE STORE DISTRIBUTING COMPANY ("CSDC")

<PAGE>   4


CSDC serves the Company's Village Pantry stores and over 1,290 unaffiliated
stores in a seven state area. CSDC distributes a wide range of products
typically sold in convenience stores, including groceries, cigarette and other
tobacco products, snack items, housewares and health and beauty care products.
Customers have the opportunity to order most product lines in single units. CSDC
owns a 210,000 square foot warehouse and distribution facility in Richmond,
Indiana, which the Company estimates is operating at 70% of capacity. CSDC
utilizes its own trucks and drivers for its transportation needs. The CSDC sales
and marketing staff of approximately 43 employees services existing customers
and actively solicits new customers. CSDC accounted for approximately 18% of the
Company's fiscal 1998 consolidated sales and other revenues.

CRYSTAL FOOD SERVICES
The Company's food service operation does business under the trade name Crystal
Food Services. It offers a range of services including banquet hall catering,
special events catering, concession services, vending and cafeteria management.
The Company focuses on presenting expertly prepared cuisine of unsurpassed
freshness and quality in all of its food service operations. The Company began
its food service operations in 1993 with ALLtimate Catering and expanded in
January 1995 with the acquisition of Crystal Catering. In May 1995, the Company
expanded again with the acquisition of Martz and Associates Food Services. The
Company intends to expand the food services operations through the solicitation
of new customers and possible acquisition of businesses that will complement the
existing operations.

The combination of these operations has created a unique range of services,
products and facilities. The Company's banquet hall facilities include the
Crystal Yacht Club, the Indiana Roof Ballroom and the Murat Shrine Centre. The
Company does special event catering at the Indianapolis Motor Speedway, Conner
Prairie Museum, Indianapolis Museum of Art, the Eiteljorg Western Museum of Art,
the RCA Tennis Championships and the Horizon Convention Center in Muncie,
Indiana. The Company also provides concession services at the Indianapolis Zoo,
Conner Prairie, the Indiana State Fairgrounds and Prairie View Golf Club, and
cafeteria management to 10 major employers and vending services to over 100
clients throughout the greater Indianapolis area. The Company's food service
operation also provides meals at the child development centers for Marsh and Eli
Lilly and Company in Indianapolis.

SUPPLY AND DISTRIBUTION
The Company supplies its supermarkets from three Company-operated distribution
facilities. Dry grocery and frozen food products are distributed from a 409,000
square foot leased facility in Indianapolis. Produce and meat products are
distributed from a 191,000 square foot perishable products facility in Yorktown,
Indiana. Non-food products are distributed from 180,000 square feet of a 388,000
square foot Company owned warehouse in Yorktown. In addition, the Company leases
a 172,000 square foot warehouse for storage of forward purchases of merchandise
and seasonal items. Additional outside warehouse space is leased as needed to
meet seasonal demand.

The Company's distribution centers are modern and highly automated. Merchandise
is controlled through an on-line computerized buying and inventory control
system. In fiscal 1997, the perishable products facility was expanded by
approximately 67,000 square feet to provide additional capacity. The receiving
dock was modified to enhance product flow. Also, new state-of-the-art banana
rooms were added to ensure high quality bananas with consistent color. The
Company believes its distribution centers are adequate for its needs for the
foreseeable future without major additional capital investment. The Company
estimates the supermarket distribution centers currently operate at
approximately 75% of capacity. Approximately 80% of the delivery trips from
distribution centers to supermarkets are 75 miles or less. The Company also
operates a commissary and a central kitchen to produce products sold through the
delicatessen departments of its supermarkets and convenience stores and to third
parties through CSDC. The Company believes centralized direct buying from major
producers and growers and its purchasing and distribution functions provide it
with advantages compared to purchasing from a third-party wholesaler. Direct
buying, centralized purchasing, and controlled distribution reduce merchandise
cost by allowing the Company to minimize purchases from wholesalers and
distributors and to take advantage of volume buying opportunities and forward
purchases of merchandise. Centralized purchasing and distribution promote a
consistent merchandising strategy throughout the Company's supermarkets. Rapid
inventory turnover at the warehouse permits the Company's stores to offer
consistently fresh, high-quality products. Through frequent deliveries to the
stores, the Company is able to reduce in-store stockroom space and increase
square footage available for retail selling.

Some products, principally bakery, dairy and beverage items, and snack foods are
delivered directly to the supermarkets and convenience stores by distributors of
national and regional brands.

CSDC supplies grocery, produce, housewares, health and beauty care, and
cigarette and tobacco products to the Company's convenience stores. Also, CSDC
supplies cigarette and tobacco products to the Company's supermarkets.

The Company's supermarket transportation function is performed through a
subsidiary which leases most of its tractor/trailer fleet under long term, full
service leases with by Ruan Transportation Management Systems ("Ruan"), an
unaffiliated 

<PAGE>   5

transportation management and equipment leasing company. This service is
provided under a seven year contract, dated September 18, 1987, which is
automatically renewed for successive one year terms unless canceled by Ruan or
the Company at least 60 days prior to the anniversary date, subject to early
cancellation in stages under certain conditions. Under the arrangement, Ruan
employs the drivers, dispatchers and maintenance personnel who perform the
Company's distribution function.

MANAGEMENT INFORMATION SYSTEMS
All of the Company's supermarkets are equipped with electronic scanning checkout
systems to minimize item pricing, provide more efficient and accurate checkout
line operation, and provide product movement data for merchandising decisions
and other purposes. The checkout systems are integrated with the Company's
frequent shopper card program to provide customer specific data to facilitate
individualized marketing programs. Additionally, the Company plans to upgrade
supermarket front-end systems and scale equipment, and is implementing new
inventory/procurement distribution software. Point-of-sale electronic funds
transfer and credit card systems are in place in the supermarkets. Through the
use of a bank debit card, a customer can authorize the immediate transfer of
funds from their account to the Company at the point of purchase.

The Company utilizes in-store micro-computers in the supermarkets to automate
various tasks, such as electronic messaging, processing the receiving and
billing of vendor direct-store-delivered (DSD) merchandise, processing of video
rentals, processing pharmacy records in the 25 food and drug combination stores,
and time keeping for payroll processing. Future supermarket applications
currently under development include computer-assisted reordering and an
electronic shelf tag program. All convenience stores are equipped with
micro-computers for electronic transmission of accounting and merchandising data
to headquarters, electronic messaging and processing DSD merchandise receiving
and billing.

In 1998, the Company began broadcasting live video communications by satellite
to its supermarkets from the corporate office. The Company believes this medium
has greater appeal to a generation of employees accustomed to learning from
television. In addition, the immediacy of live broadcasts reduces the barriers
of time, distance and consistency in communicating competitive strategies and
other information to retail operations. These communications are further
enhanced through a toll free telephone line which permits questions to be asked
and answered during each broadcast. The network is currently used for
merchandising, training and employee benefits communications.



<PAGE>   6


COMPETITION
The retail food industry is highly competitive. Marsh believes competitive
factors include quality perishable products, service, price, location, product
variety, physical layout and design of store interior, ease of ingress and
egress to the store and minimal out-of-stock conditions. Marsh endeavors to
concentrate its efforts on all of these factors with special emphasis on
maintaining high quality store conditions, high quality perishable products,
expanded service and specialty departments, and competitive pricing.

The Company believes it is one of the largest supermarket chains operating in
its market area. The Company's supermarkets are subject to competition from
local, regional and national supermarket chains, independent supermarkets, and
other retail formats, such as discount stores and wholesale clubs. The number of
competitors and degree of competition experienced by the Company's supermarkets
vary by location, with the Indianapolis metropolitan market generally being
subject to more price competition than the smaller markets. The principal
supermarket chain competitors are The Kroger Co., Super Valu Food Stores, Inc.,
operating in the Indianapolis market through its "Cub Foods" stores, and Meijer,
Inc.

The Company believes Village Pantry is one of the largest convenience store
chains in its market area. Major competitors are petroleum marketing companies
which have converted or expanded gasoline locations to include convenience food
operations. National convenience store chains do not have a significant presence
in the Company's marketing area. The Company believes the principal competitive
factor for convenience stores is location, and it actively pursues the
acquisition of attractive sites for replacing existing stores and future
development of new stores.

The Company believes the primary competitive factors in CSDC's wholesale
distribution business are pricing, and the timeliness and accuracy of
deliveries. CSDC's major competitors are McLane Company, Inc. and several
regional wholesale distributors.

SEASONALITY
Marsh's supermarket sales are subject to some seasonal fluctuation, as are other
retail food chains. Traditionally, higher sales occur during the third quarter
holiday season, and lower sales occur in the warm weather months of the second
quarter. Convenience store sales traditionally peak in the summer months.

EMPLOYEES
The Company has approximately 12,800 employees. Approximately 7,360 employees
are employed on a part-time basis. All employees are non-union, except
approximately 200 supermarket distribution facility employees who are unionized
under two three-year collective bargaining agreements which extend to May, 2001.
The Company considers its employee relations to be excellent.

The Company opened a child development center in fiscal 1997 in an effort to
help employees meet day care needs. The operation is located in a 12,500 square
foot facility near one of the Company's supermarkets in Carmel, Indiana. Marsh
owns the building and the equipment. The operations are run by an unaffiliated
child care firm. The service is limited to the Company's employees and immediate
family members and operates five days a week.

REGULATORY MATTERS
As a retailer of alcoholic beverages, tobacco products and gasoline, the Company
is subject to federal and state statutes, ordinances and regulations concerning
the storage and sale of these products. The Company is aware of the existence of
petroleum contamination at 23 Village Pantry locations and has commenced
remediation at each of these sites. The cost of remediation varies significantly
depending on the extent, source and location of the contamination, geological
and hydrological conditions and other factors.


<PAGE>   7


ITEM 2.  PROPERTIES

The following table summarizes the per unit and aggregate size of the retail
facilities operated by Marsh, together with an indication of the age of the
total square footage operated.

<TABLE>
<CAPTION>
                                         Per Store
                     Footage Operated     Average       0-5 Years    5-10 Years    Over 10 Years
                     ----------------     -------       ---------    ----------    -------------
<S>                  <C>                 <C>            <C>          <C>           <C>
Supermarkets            3,397,000         38,100           35%          33%            32%
Convenience Stores        510,000          2,800           18%          38%            44%
                        ---------
                        3,835,000
                        =========
</TABLE>

Owned and leased retail facilities are summarized as follows:

<TABLE>
<CAPTION>
                                                              Convenience
                                             Supermarkets       Stores
                                             ------------       ------
          <S>                                <C>              <C>
          Owned                                   34             128
          Leased:
            Fixed rentals only                    28              27
            Fixed plus contingent rentals         27              26
                                                 ---             ---
                                                  55              53
                                                 ---             ---
                                                  89             181
                                                 ===             ===
</TABLE>

All leases, except for three supermarkets and 18 Village Pantry stores, have one
to four renewal options for periods of two to five years each. The majority of
leases provide for payment of property taxes, maintenance and insurance by the
Company. In addition, the Company is obligated under leases for 11 closed
stores, of which eight were subleased at March 28, 1998.

One supermarket (considered owned for purposes of the foregoing analysis) is
leased under an equity lease arrangement pursuant to which ownership is
transferred to the Company at the expiration of the lease.

The non-perishable grocery products warehouse in Indianapolis is leased with an
initial lease term expiring in 2000 and options available through 2014. The
facility, constructed in 1969, is located on a 44 acre site and has a total of
409,000 square feet, of which 382,000 are utilized for grocery warehousing
operations. The remainder consists of a floral design center and office space.

A 191,000 square foot refrigerated perishable products handling facility in
Yorktown, Indiana, serves as the distribution center for meat, produce and
delicatessen items. The facility was completed in 1981 and was financed by an
economic development bond . Ownership of the warehouse was reconveyed to the
Company in 1996, and the facility was expanded and updated in fiscal 1997.

Marsh owns an additional 388,000 square foot facility in Yorktown, Indiana.
Approximately 180,000 square feet of this facility is used as a distribution
center for non-food products, approximately 21,000 square feet is used by the
retail maintenance department, and an additional 55,000 square feet of warehouse
space is leased to third parties. The portion of this facility formerly utilized
for the Company's corporate offices currently is vacant.

The Company leases a 172,000 square foot warehouse in Indianapolis for storage
of forward purchases of merchandise and seasonal items as well as housing the
Company's product reclamation center.

The 160,000 square foot corporate headquarters in Indianapolis is owned by the
Company. This facility was completed and occupied in May 1991.

CSDC owns a 210,000 square foot warehouse and distribution facility in Richmond,
Indiana.



<PAGE>   8


ITEM 3.  LEGAL PROCEEDINGS

There are no pending legal proceedings to which Marsh is a party which are
material to its business, financial condition or results of operations or which
would otherwise be required to be disclosed under this item.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the security holders during the fourth
quarter of fiscal 1998.

EXECUTIVE OFFICERS OF REGISTRANT

Information required by Item 10 with respect to the Registrant's executive
officers is set forth below. Each officer has been elected for a term to expire
in August 1998 or upon election of the officer's successor by the Board of
Directors.

<TABLE>
<CAPTION>
     NAME                                         POSITION                AGE        FAMILY RELATIONSHIP
     ----                                         --------                ---        -------------------
<S>                                 <C>                                   <C>      <C>    
DON E. MARSH                        Chairman of the Board, President       60      Son of Garnet R. Marsh,
                                    and Chief Executive Officer                    brother of C. Alan Marsh
                                                                                   and of William L. Marsh
</TABLE>

Mr. Don E. Marsh has held his current position as Chairman of the Board of
Directors, President and Chief Executive Officer of the Company for more than
the past five years. He has been employed by the Company in various supervisory
and executive capacities since 1961.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                     <C>    <C>    
C. ALAN MARSH                       Vice Chairman of the Board and          56     Son of Garnet R. Marsh,
                                    Senior Vice President-Corporate                brother of Don E. Marsh
                                    Development                                    and William L. Marsh
</TABLE>

Mr. C. Alan Marsh has held his current position for more than the past five
years. Prior thereto, he served as President and Chief Operating Officer, Marsh
Village Pantries, Inc. He has been employed by the Company in various
supervisory and executive capacities since 1965.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                     <C>                <C>    
FRANK J. BRYJA                      President and Chief Operating           56                 None
                                    Officer, Supermarket Division
</TABLE>

Mr. Frank J. Bryja has held his current position since August 1996. For more
than five years prior thereto, he served as Vice President-Merchandising. He has
been employed by the Company in various supervisory and executive capacities
since 1965.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                     <C>                <C>    
P. LAWRENCE BUTT                    Senior Vice President, Counsel          56                 None
                                    and Secretary
</TABLE>

Mr. P. Lawrence Butt has held his current position since August 1997. For more
than the five years prior thereto, he served as Vice President, Counsel and
Secretary. He has been employed by the Company in various executive capacities
since 1977.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                       <C>              <C>    
DOUGLAS W. DOUGHERTY                Senior Vice President, Chief Financial    54               None
                                    Officer and Treasurer
</TABLE>

Mr. Douglas W. Dougherty has held his current position since August 1997. He has
been employed by the Company as Chief Financial Officer since March 1994. His
prior experience includes senior financial executive positions with Hartmarx,
Inc. from November 1990 to March 1994. Prior experience includes senior
management positions at Dayton Hudson Corp. and The May Department Stores
Company.

--------------------------------------------------------------------------------

<PAGE>   9


<TABLE>
<S>                                 <C>                                     <C>    <C>    
WILLIAM L. MARSH                    Senior Vice President - Property        54     Son of Garnet R. Marsh,
                                    Management                                     brother of Don E. Marsh
                                                                                   and C. Alan Marsh
</TABLE>


Mr. William L. Marsh has held his current position since August 1997. For more
than five years prior thereto, he served as Vice President-General Manager,
Property Management. In May 1991, he was elected a director of the Company. He
has been employed by the Company in various supervisory and executive capacities
since 1974.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                     <C>                <C>    
RONALD R. WALICKI                   President and Chief Operating           60                 None
                                    Officer, Village Pantry Division
</TABLE>

Mr. Ronald R. Walicki has held his current position since August 1996. Prior
thereto, he served as Executive Vice President, Supermarket Division, since
February 1994, and President and Chief Operating Officer of Marsh Village
Pantries, Inc. since February 1992. For more than five years prior to February
1992, he served as Vice President General Manager, Supermarket Division. He has
been employed by the Company in various supervisory and management positions
since 1965.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                     <C>                <C>    
THEODORE R. VARNER                  President and Chief Operating           62                 None
                                    Officer, Convenience Store
                                    Distributing Company Division
</TABLE>

Mr. Theodore R. Varner has held his current position since August 1994. For more
than five years prior thereto, he served as Vice President - General Manager,
Convenience Store Distributing Company Division.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                       <C>              <C>    
JACK J. BAYT                        President and Chief Operating             41               None
                                    Officer, Crystal Food Services Division
</TABLE>

Mr. Jack J. Bayt has held his current position since January 1995. For more than
five years prior thereto, he was President and Chief Executive Officer of
Crystal Catering of Indiana, Inc.

--------------------------------------------------------------------------------

<TABLE>
<S>                                 <C>                                     <C>                <C>    
MARK A. VARNER                      Corporate Controller                    48                 None
</TABLE>

Mr. Mark A. Varner has held his current position since 1990. He has been
employed by the Company in various accounting positions since 1971.

--------------------------------------------------------------------------------

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER
         MATTERS

Information on Common Stock and Shareholder Matters on pages 17 and 36 of
the 1998 Annual Report to Shareholders for the year ended March 28, 1998 is
incorporated herein by reference.

ITEM 6.  SELECTED FINANCIAL DATA

Selected Financial Data on page 16 of the 1998 Annual Report to Shareholders is
incorporated herein by reference.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of
Operations on pages 18 through 21 of the 1998 Annual Report to Shareholders for
the year ended March 28, 1998 is incorporated herein by reference.



<PAGE>   10


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated financial statements and notes thereto on pages 23 to 35 of the
1998 Annual Report to Shareholders are incorporated herein by reference.

Quarterly Financial Data on page 17 of the 1998 Annual Report to Shareholders is
incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND 
         FINANCIAL DISCLOSURE

None.
                                    PART III

In accordance with Instruction G(3), except as indicated in the following
sentence, the information called for by Items 10, 11, 12 and 13 is incorporated
by reference from the Registrant's definitive Proxy Statement pursuant to
Regulation 14A, to be filed with the Commission not later than 120 days after
March 28, 1998, the end of the fiscal year covered by this report. As permitted
by instruction G(3), the information on executive officers called for by Item 10
is included in Part I of this Annual Report on Form 10-K under the caption
"Executive Officers of Registrant".

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)      (1)      The following consolidated financial statements of Marsh
                  Supermarkets, Inc. and subsidiaries, included in the 1998
                  Annual Report to Shareholders for the year ended March 28,
                  1998 are incorporated by reference in Item 8:

                  Consolidated Balance Sheets as of March 28, 1998 and March 29,
                  1997.

                  Consolidated Statements of Income for each of the three years
                  in the period ended March 28, 1998.

                  Consolidated Statements of Changes in Shareholders' Equity for
                  each of the three years in the period ended March 28, 1998.

                  Consolidated Statements of Cash Flows for each of the three
                  years in the period ended March 28, 1998.

                  Notes to consolidated financial statements.

                  Report of Independent Auditors.

         (2)      The following consolidated financial statement schedules of
                  Marsh Supermarkets, Inc. and subsidiaries are included in Item
                  14(d):

                  Note:    All schedules for which provision is made in the
                           applicable accounting regulation of the Securities
                           and Exchange Commission are not required under the
                           related instructions, or are inapplicable, and
                           therefore have been omitted.

         (3)      The following exhibits are included in Item 14(c):

Exhibit 3 (a)   -   Restated Articles of Incorporation, as amended as of May
                    15, 1991 - Incorporated by reference to Form 10-K for the
                    year ended March 30, 1991.

          (b)   -   By-Laws as amended as of November 26, 1997 - Incorporated
                    by reference to Form 10-Q for the quarter ended January 3,
                    1998.

Exhibit 4 (a)   -   Articles V, VI and VII of the Company's Restated Articles
                    of Incorporation, as amended as of May 15, 1991 -
                    Incorporated by reference to Form 10-K for the year ended
                    March 30, 1991.

          (b)   -   Articles I and IV of the Company's By-Laws, as amended as
                    of August 7, 1990 Incorporated by reference to Form 10-Q for
                    the quarter ended January 5, 1991.

          (c)   -   Agreement of the Company to furnish a copy of any agreement 
                    relating to certain long-term debt and leases to the
                    Securities and Exchange Commission upon its request
                    Incorporated by reference to Form 10-K for the year ended
                    March 27, 1987.

<PAGE>   11

           (d)  -   Note Agreement, dated as of May 1, 1988, for $25,000,000
                    9.48% Senior Notes due June 30, 2003 - Incorporated by
                    reference to Form 10-Q for the quarter ended June 25, 1988.

           (e)  -   Rights Agreement, dated as of August 1, 1989, between
                    Marsh Supermarkets, Inc. and National City Bank, as
                    successor to Merchants National Bank and Trust Company of
                    Indianapolis - Incorporated by reference to Form 10-Q for
                    the quarter ended October 14, 1989.

           (f)  -   Amendment No. 1, dated as of May 1, 1991, to Rights
                    Agreement, dated as of August 1, 1989 - Incorporated by
                    reference to Form 10-K for the year ended March 30, 1991.

           (g)  -   Note Agreement, dated as of October 15, 1992, for
                    $35,000,000 8.54% Senior Notes, Series A, due December 31,
                    2007, and $15,000,000 8.13% Senior Notes, Series B, due
                    December 31, 2004 - Incorporated by reference to
                    Registration Statement on Form S-2 (File No. 33-56738).

           (h)  -   Indenture, dated as of February 15, 1993, between Marsh
                    Supermarkets, Inc. and Society National Bank, as trustee,
                    including form of Indenture, for $17,500,000 7% Convertible
                    Subordinated Debentures, due 2003 - Incorporated by
                    reference to Registration Statement on Form S-2 (File No.
                    33-56738).

           (i)  -   Amendment to Note Agreements and Assumption Agreement,
                    dated March 29, 1997, for $35,000,000 8.54% Senior Notes,
                    Series A, due December 31, 2007, and $15,000,000 8.13%,
                    Series B, due December 31, 2004 - Incorporated by reference
                    to form 10-K for the year ended March 29, 1997.

           (j)  -   Amendment to Note Agreements and Assumption Agreement,
                    dated March 29, 1997, for $25,000,000 9.48% Senior Notes,
                    due June 20, 2003 - Incorporated by reference to Form 10-K
                    for the year ended March 29, 1997.

           (k)  -   Indenture, dated August 5, 1997, between Marsh Supermarkets,
                    Inc. and certain of its subsidiaries and State Street Bank
                    and Trust Company, as trustee, for $150,000,000 8-7/8%
                    Senior Subordinated Notes, due 2007 - Incorporated by
                    reference to Registration Statement on Form S-4 (File No.
                    333-34855).

           (l)  -   First Supplemental Indenture between Marsh Supermarkets,
                    Inc. and certain of its subsidiaries and State Street Bank
                    and Trust Company, as trustee, dated December 31, 1997.

Exhibit 10 (a)  -   Agreements between Ruan Leasing Company and Marsh
                    Supermarkets, Inc., dated September 18, 1987 - Incorporated
                    by reference to Registration Statement on Form S-2 (File No.
                    33-17730).

           (b)  -   Lease agreements relating to warehouse located at 333
                    South Franklin Road, Indianapolis, Indiana - Incorporated by
                    reference to Registration Statement on Form S-2 (File No.
                    33-17730).

                    Management Contracts and Compensatory Plans.

           (c)  -   Marsh Supermarkets, Inc. 1987 Stock Option Plan -
                    Incorporated by reference to Registration Statement on Form
                    S-8 (File No. 33-33427).

           (d)  -   Amendment to the Marsh Supermarkets, Inc. 1987 Stock
                    Option Plan - Incorporated by reference to Proxy Statement,
                    dated March 22, 1991, for a Special Meeting of Shareholders
                    held May 1, 1991.

           (e)  -   Amended and Restated Employment and Severance Agreements,
                    dated December 3, 1992 - Incorporated by reference to
                    Registration Statement on Form S-2 (File No. 33-56738).

           (f)  -   Marsh Supermarkets, Inc. 1980 Marsh Stock Plan -
                    Incorporated by reference to Registration Statement on Form
                    S-8 (File No. 2-74859).

           (g)  -   Amendment to the Marsh Supermarkets, Inc. 1980 Marsh Stock
                    Plan - Incorporated by reference to Proxy Statement, dated
                    March 22, 1991, for a Special Meeting of Shareholders held
                    May 1, 1991.

           (h)  -   Supplemental Retirement Plan of Marsh Supermarkets, Inc.
                    and Subsidiaries Incorporated by reference to Registration
                    Statement on Form S-2 (File No. 33-17730).

           (i)  -   Indemnification Agreements - Incorporated by reference to
                    Form 10-Q for quarter ended January 6, 1990.

           (j)  -   Marsh Supermarkets, Inc. 1991 Employee Stock Incentive
                    Plan - Incorporated by reference to Proxy Statement, dated
                    March 22, 1991, for a Special Meeting of Shareholders held
                    May 1, 1991.


<PAGE>   12

          (k)   -   Marsh Supermarkets, Inc. Executive Life Insurance Plan -
                    Incorporated by reference to Form 10-K for the year ended
                    March 30, 1991.

          (l)   -   Marsh Supermarkets, Inc. Executive Supplemental Long-Term
                    Disability Plan Incorporated by reference to Form 10-K for
                    the year ended March 30, 1991.

          (m)   -   Marsh Supermarkets, Inc. 1992 Stock Option Plan for
                    Outside Directors - Incorporated by reference to Proxy
                    Statement, dated June 25, 1992, for the Annual Meeting of
                    Shareholders held August 4, 1992.

          (n)   -   Employment contracts, dated January 1, 1995 - Incorporated
                    by reference to Form 10-Q for the quarter ended January 7,
                    1995.

          (o)   -   Amendment to Marsh Supermarkets, Inc. 1991 Employee Stock
                    Incentive Plan Incorporated by reference to Proxy Statement,
                    dated June 22, 1995, for Annual Meeting of Shareholders held
                    August 1, 1995.

          (p)   -   Severance Benefits Agreements, dated as of January 1, 1996
                    - Incorporated by reference to Form 10-K for the year ended
                    March 29, 1997.

          (q)   -   Form of Split Dollar Insurance Agreement for the benefit
                    of Don E. Marsh - Incorporated by reference to Form 10-K for
                    the year ended March 29, 1997.

          (r)   -   Form of Restricted Stock Agreement, dated as of September
                    15, 1997 - Incorporated by reference to Form 10-Q for the
                    quarter ended October 11, 1997.

          (s)   -   Form of Employment Contract, dated as of June 1, 1997
                    --Incorporated by reference to Form 10-Q for the quarter
                    ended October 11, 1997.

          (t)   -   Marsh Supermarkets, Inc. Outside Directors' Stock Plan, as
                    adopted November 26, 1997 Incorporated by reference to Form
                    10-Q for the quarter ended January 3, 1998.

    Exhibit 13  -   1998 Annual Report to Shareholders (only portions
                    specifically incorporated by reference are included herein).

    Exhibit 21  -   Subsidiaries of the Registrant.

    Exhibit 23  -   Consent of Independent Auditors.

    Exhibit 27 (a) -  Financial Data Schedule for the year for which this report
                      is filed (for SEC use only).

    Exhibit 27 (b) -  Financial Data Schedule for the year ended March 29, 1997
                      (for SEC use only).

    Exhibit 27 (c) -  Financial Data Schedule for the year ended March 30, 1996
                      (for SEC use only).

 (b)     Reports on Form 8-K:
         There were no reports on Form 8-K filed by the Registrant with respect
to the fourth quarter of its fiscal year ended March 28, 1998.



<PAGE>   13


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                             MARSH SUPERMARKETS, INC.


June 25, 1998                                By: /s/ Don E. Marsh
                                                 ---------------------------
                                                 Don E. Marsh, President and
                                                 Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.


<TABLE>
<S>                                                        <C>
June 25, 1998                                                     /s/ Don E. Marsh
                                                           -----------------------------------
                                                           Don E. Marsh, Chairman of the Board, 
                                                           President and Chief Executive Officer
                                                           and Director

June 25, 1998                                                    /s/ Douglas W. Dougherty
                                                           -----------------------------------
                                                           Douglas W. Dougherty, Senior Vice President,
                                                           Chief Financial Officer and Treasurer

June 25, 1998                                                    /s/ Mark A. Varner
                                                           -----------------------------------
                                                           Mark A. Varner, Corporate Controller

June 25, 1998                                                    /s/ C. Alan Marsh
                                                           -----------------------------------
                                                           C. Alan Marsh, Vice Chairman of the Board and
                                                           Senior Vice President-Corporate Development,
                                                           and Director

June 25, 1998                                                    /s/ William L. Marsh
                                                           -----------------------------------
                                                           William L. Marsh, Senior Vice President-Property
                                                           Management, and Director

June 25, 1998                                                    /s/ Garnet R. Marsh
                                                           -----------------------------------
                                                           Garnet R. Marsh, Director

June 25, 1998                                                    /s/ J. Michael Blakley
                                                           -----------------------------------
                                                           J. Michael Blakley, Director

June 25, 1998                                                    /s/ Charles R. Clark
                                                           -----------------------------------
                                                           Charles R. Clark, Director

June 25, 1998                                                    /s/ Stephen M. Huse
                                                           -----------------------------------
                                                           Stephen M. Huse, Director

June 25, 1998                                                  /s/ Catherine A. Langham
                                                           -----------------------------------
                                                           Catherine A. Langham, Director

June 25, 1998                                                    /s/ James K. Risk
                                                           -----------------------------------
                                                           James K. Risk, III, Director

June 25, 1998                                                     /s/ K. Clay Smith
                                                           -----------------------------------
                                                           K. Clay Smith, Director
</TABLE>



<PAGE>   14


<TABLE>
<CAPTION>
                                  Exhibit Index                                      Page No.
                                  -------------                                      --------
<S>                 <C>                                                              <C>    
Exhibit 3  (a)  -   Restated Articles of Incorporation, as amended as of May
                    15, 1991 - Incorporated by reference to Form 10-K for the
                    year ended March 30, 1991.

           (b)  -   By-Laws as amended as of November 26, 1997 - Incorporated
                    by reference to Form 10-Q for the quarter ended January 3,
                    1998.

Exhibit 4  (a)  -   Articles V, VI and VII of the Company's Restated Articles
                    of Incorporation, as amended as of May 15, 1991 -
                    Incorporated by reference to Form 10-K for the year ended
                    March 30, 1991.

           (b)  -   Articles I and IV of the Company's By-Laws, as amended as
                    of August 7, 1990 Incorporated by reference to Form 10-Q for
                    the quarter ended January 5, 1991.

           (c)  -   Agreement of the Company to furnish a copy of any agreement 
                    relating to certain long-term debt and leases to the
                    Securities and Exchange Commission upon its request
                    Incorporated by reference to Form 10-K for the year ended
                    March 27, 1987.

           (d)  -   Note Agreement, dated as of May 1, 1988, for $25,000,000
                    9.48% Senior Notes due June 30, 2003 - Incorporated by
                    reference to Form 10-Q for the quarter ended June 25, 1988.

           (e)  -   Rights Agreement, dated as of August 1, 1989, between
                    Marsh Supermarkets, Inc. and National City Bank, as
                    successor to Merchants National Bank and Trust Company of
                    Indianapolis - Incorporated by reference to Form 10-Q for
                    the quarter ended October 14, 1989.

           (f)  -   Amendment No. 1, dated as of May 1, 1991, to Rights
                    Agreement, dated as of August 1, 1989 - Incorporated by
                    reference to Form 10-K for the year ended March 30, 1991.

           (g)  -   Note Agreement, dated as of October 15, 1992, for
                    $35,000,000 8.54% Senior Notes, Series A, due December 31,
                    2007, and $15,000,000 8.13% Senior Notes, Series B, due
                    December 31, 2004 - Incorporated by reference to
                    Registration Statement on Form S-2 (File No. 33-56738).

           (h)  -   Indenture, dated as of February 15, 1993, between Marsh
                    Supermarkets, Inc. and Society National Bank, as trustee,
                    including form of Indenture, for $17,500,000 7% Convertible
                    Subordinated Debentures, due 2003 - Incorporated by
                    reference to Registration Statement on Form S-2 (File No.
                    33-56738).

           (i)  -   Amendment to Note Agreements and Assumption Agreement,
                    dated March 29, 1997, for $35,000,000 8.54% Senior Notes,
                    Series A, due December 31, 2007, and $15,000,000 8.13%,
                    Series B, due December 31, 2004 - Incorporated by reference
                    to form 10-K for the year ended March 29, 1997.

           (j)  -   Amendment to Note Agreements and Assumption Agreement,
                    dated March 29, 1997, for $25,000,000 9.48% Senior Notes,
                    due June 20, 2003 - Incorporated by reference to Form 10-K
                    for the year ended March 29, 1997.

           (k)  -   Indenture, dated August 5, 1997, between Marsh Supermarkets,
                    Inc. and certain of its subsidiaries and State Street Bank
                    and Trust Company, as trustee, for $150,000,000 8-7/8%
                    Senior Subordinated Notes, due 2007 - Incorporated by
                    reference to Registration Statement on Form S-4 (File No.
                    333-34855).

           (l)  -   First Supplemental Indenture between Marsh Supermarkets,
                    Inc. and certain of its subsidiaries and State Street Bank
                    and Trust Company, as trustee, dated December 31, 1997.

Exhibit 10 (a)  -   Agreements between Ruan Leasing Company and Marsh
                    Supermarkets, Inc., dated September 18, 1987 - Incorporated
                    by reference to Registration Statement on Form S-2 (File No.
                    33-17730).

           (b)  -   Lease agreements relating to warehouse located at 333
                    South Franklin Road, Indianapolis, Indiana - Incorporated by
                    reference to Registration Statement on Form S-2 (File No.
                    33-17730).

                    Management Contracts and Compensatory Plans.

           (c)  -   Marsh Supermarkets, Inc. 1987 Stock Option Plan -
                    Incorporated by reference to Registration Statement on Form
                    S-8 (File No. 33-33427).

           (d)  -   Amendment to the Marsh Supermarkets, Inc. 1987 Stock
                    Option Plan - Incorporated by reference to Proxy Statement,
                    dated March 22, 1991, for a Special Meeting of Shareholders
                    held May 1, 1991.

           (e)  -   Amended and Restated Employment and Severance Agreements,
                    dated December 3, 1992 - Incorporated by reference to
                    Registration Statement on Form S-2 (File No. 33-56738).
</TABLE>


<PAGE>   15

<TABLE>
<S>                 <C>                    
           (f)  -   Marsh Supermarkets, Inc. 1980 Marsh Stock Plan -
                    Incorporated by reference to Registration Statement on Form
                    S-8 (File No. 2-74859).

           (g)  -   Amendment to the Marsh Supermarkets, Inc. 1980 Marsh Stock
                    Plan - Incorporated by reference to Proxy Statement, dated
                    March 22, 1991, for a Special Meeting of Shareholders held
                    May 1, 1991.

           (h)  -   Supplemental Retirement Plan of Marsh Supermarkets, Inc.
                    and Subsidiaries Incorporated by reference to Registration
                    Statement on Form S-2 (File No. 33-17730).

           (i)  -   Indemnification Agreements - Incorporated by reference to
                    Form 10-Q for quarter ended January 6, 1990.

           (j)  -   Marsh Supermarkets, Inc. 1991 Employee Stock Incentive
                    Plan - Incorporated by reference to Proxy Statement, dated
                    March 22, 1991, for a Special Meeting of Shareholders held
                    May 1, 1991.

           (k)  -   Marsh Supermarkets, Inc. Executive Life Insurance Plan -
                    Incorporated by reference to Form 10-K for the year ended
                    March 30, 1991.

           (l)  -   Marsh Supermarkets, Inc. Executive Supplemental Long-Term
                    Disability Plan Incorporated by reference to Form 10-K for
                    the year ended March 30, 1991.

           (m)  -   Marsh Supermarkets, Inc. 1992 Stock Option Plan for
                    Outside Directors - Incorporated by reference to Proxy
                    Statement, dated June 25, 1992, for the Annual Meeting of
                    Shareholders held August 4, 1992.

           (n)  -   Employment contracts, dated January 1, 1995 - Incorporated
                    by reference to Form 10-Q for the quarter ended January 7,
                    1995.

           (o)  -   Amendment to Marsh Supermarkets, Inc. 1991 Employee Stock
                    Incentive Plan Incorporated by reference to Proxy Statement,
                    dated June 22, 1995, for Annual Meeting of Shareholders held
                    August 1, 1995.

           (p)  -   Severance Benefits Agreements, dated as of January 1, 1996
                    - Incorporated by reference to Form 10-K for the year ended
                    March 29, 1997.

           (q)  -   Form of Split Dollar Insurance Agreement for the benefit
                    of Don E. Marsh - Incorporated by reference to Form 10-K for
                    the year ended March 29, 1997.

           (r)  -   Form of Restricted Stock Agreement, dated as of September
                    15, 1997 - Incorporated by reference to Form 10-Q for the
                    quarter ended October 11, 1997.

           (s)  -   Form of Employment Contract, dated as of June 1, 1997
                    --Incorporated by reference to Form 10-Q for the quarter
                    ended October 11, 1997.

           (t)  -   Marsh Supermarkets, Inc. Outside Directors' Stock Plan, as
                    adopted November 26, 1997 Incorporated by reference to Form
                    10-Q for the quarter ended January 3, 1998.

    Exhibit 13  -   1998 Annual Report to Shareholders (only portions
                    specifically incorporated by reference are included herein).

    Exhibit 21  -   Subsidiaries of the Registrant.

    Exhibit 23  -   Consent of Independent Auditors.

    Exhibit 27 (a) -  Financial Data Schedule for the year for which this report
                      is filed (for SEC use only).

    Exhibit 27 (b) -  Financial Data Schedule for the year ended March 29, 1997
                      (for SEC use only).

    Exhibit 27 (c) -  Financial Data Schedule for the year ended March 30, 1996
                      (for SEC use only).
</TABLE>


<PAGE>   16
REPORT OF MANAGEMENT ON RESPONSIBILITY FOR FINANCIAL REPORTING

The management of Marsh Supermarkets, Inc. is responsible for the preparation
and integrity of the consolidated financial statements included in this annual
report. The financial statements were prepared in accordance with generally
accepted accounting principles and necessarily include some amounts based on
management's best estimates and judgment. All financial information appearing in
this annual report is consistent with that in the financial statements.

The Company maintains a system of internal controls designed to provide
reasonable assurance, on a cost-effective basis, that assets are safeguarded and
transactions are properly authorized and recorded accurately in the financial
records. The Company believes its control system is enhanced by its
long-standing emphasis on conducting business in accordance with the highest
standards of conduct and ethics.

Independent auditors, Ernst & Young LLP, have audited the accompanying financial
statements. Their report is included herein. Their audits, conducted in
accordance with generally accepted auditing standards, included the review and
evaluation of selected internal accounting controls for purposes of designing
their audit tests.

The Audit Committee of the Board of Directors meets periodically with the
independent auditors to discuss the scope and results of their audit work, their
assessment of internal controls, and the quality of financial reporting. The
independent auditors are engaged by the Board of Directors, upon recommendation
of the Audit Committee.





Don E. Marsh               Douglas Dougherty               Mark Varner
Chairman of the Board,     Senior Vice President,          Corporate Controller
President and              Chief Financial Officer and
Chief Executive Officer    Treasurer



<PAGE>   17




REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

To the Shareholders and Board of Directors of Marsh Supermarkets, Inc.

We have audited the accompanying consolidated balance sheets of Marsh
Supermarkets, Inc. and subsidiaries as of March 28, 1998 and March 29, 1997, and
the related consolidated statements of income, changes in shareholders' equity
and cash flows for each of the three years in the period ended March 28, 1998.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Marsh
Supermarkets, Inc. and subsidiaries at March 28, 1998 and March 29, 1997, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended March 28, 1998, in conformity with generally
accepted accounting principles.


                                                               Ernst & Young LLP

Indianapolis, Indiana
May 15, 1998



<PAGE>   18




CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
YEAR ENDED                                                                 March 28, 1998    March 29, 1997     March 30, 1996
------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>               <C>                <C>       
Sales and other revenues ...............................................    $ 1,505,133       $ 1,451,730         $1,390,543
Cost of merchandise sold, including warehousing and transportation .....      1,132,296         1,096,586          1,047,193
                                                                            -----------       -----------         ----------
Gross profit ...........................................................        372,837           355,144            343,350
Selling, general and administrative expenses ...........................        321,977           318,634            297,022
Depreciation and amortization ..........................................         20,019            23,729             18,957
                                                                            -----------       -----------         ----------
Operating profit .......................................................         30,841            12,781             27,371
Interest and debt expense amortization .................................         17,745            13,030             13,087
                                                                            -----------       -----------         ----------
Income (loss) before income taxes and extraordinary item ...............         13,096              (249)            14,284
Income taxes (credit) ..................................................          3,651                (5)             5,251
                                                                            -----------       -----------         ----------
Income (loss) before extraordinary item ................................          9,445              (244)             9,033
Extraordinary item, net of tax .........................................         (3,278)               --                 --
                                                                            -----------       -----------         ----------
       NET INCOME (LOSS) ...............................................    $     6,167       $      (244)        $    9,033
                                                                            ===========       ===========         ==========

Earnings (loss) per common share
  Before effect of extraordinary item ..................................    $      1.13       $      (.03)        $     1.07
  Extraordinary item ...................................................           (.39)               --                 --
                                                                            -----------       -----------         ----------
  Net income (loss) per common share ...................................    $       .74       $      (.03)        $     1.07
                                                                            ===========       ===========         ==========

Earnings (loss) per common share - assuming dilution
  Before effect of extraordinary item ..................................    $      1.07       $      (.03)        $     1.02
  Extraordinary item ...................................................           (.34)               --                 --
                                                                            -----------       -----------         ----------
  Net income (loss) per common share ...................................    $       .73       $      (.03)        $     1.02
                                                                            ===========       ===========         ==========

Dividends per share ....................................................    $       .44       $       .44         $      .44
                                                                            ===========       ===========         ==========
</TABLE>





See Notes to Consolidated Financial Statements.



<PAGE>   19




CONSOLIDATED BALANCE SHEETS  (in thousands)

<TABLE>
<CAPTION>
ASSETS                                                                        March 28, 1998  March 29, 1997
------------------------------------------------------------------------------------------------------------
<S>                                                                           <C>             <C>     
Current Assets
   Cash and equivalents ....................................................    $ 33,546        $ 12,529
   Accounts receivable, less allowances $1,053 in 1998, and $848 in 1997 ...      27,315          25,634
   Inventories .............................................................      98,828          88,262
   Prepaid expenses ........................................................       4,477           5,362
   Recoverable income taxes ................................................       3,867             941
   Deferred income taxes ...................................................          --             650
                                                                                --------        --------
       TOTAL CURRENT ASSETS ................................................     168,033         133,378

Property and Equipment
  Land .....................................................................      52,799          48,565
  Buildings ................................................................     147,500         144,201
  Fixtures and equipment ...................................................     117,300         103,220
  Leasehold improvements ...................................................      50,402          47,910
  Construction in progress .................................................       7,650           2,430
  Property under capital leases ............................................      12,139           9,214
                                                                                --------        --------
                                                                                 387,790         355,540
  Allowances for depreciation and amortization .............................     138,995         122,859
                                                                                --------        --------
       TOTAL PROPERTY AND EQUIPMENT ........................................     248,795         232,681

Other Assets ...............................................................      43,211          29,572
                                                                                --------        --------
                                                                                $460,039        $395,631
                                                                                ========        ========
</TABLE>







See Notes to Consolidated Financial Statements.


<PAGE>   20



<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY                               March 28, 1998   March 29, 1997
--------------------------------------------------------------------------------------------------
<S>                                                                <C>              <C>      
Current Liabilities
   Notes payable to banks .......................................   $      --         $  10,755
   Accounts payable .............................................      60,503            54,132
   Employee compensation and other liabilities ..................      13,563            11,957
   State and local taxes ........................................      10,852            10,786
   Other accounts payable and accrued expenses ..................      19,259            18,474
   Dividends payable ............................................         933               923
   Deferred income taxes ........................................         687                --
   Current maturities of long-term liabilities ..................       2,806             7,097
                                                                    ---------         ---------
         TOTAL CURRENT LIABILITIES ..............................     108,603           114,124

Long-term Liabilities
   Long-term debt ...............................................     206,004           141,264
   Capital lease obligations ....................................       6,457             4,165
                                                                    ---------         ---------
         TOTAL LONG-TERM LIABILITIES ............................     212,461           145,429

Deferred Items
   Income taxes .................................................      10,219             7,865
   Other ........................................................      12,677            12,765
                                                                    ---------         ---------
         TOTAL DEFERRED ITEMS ...................................      22,896            20,630

Shareholders' Equity
   Series A Junior Participating Cumulative Preferred stock:
      Authorized: 5,000,000 shares; Issued:  None
   Class A Common Stock, no par value:
      Authorized: 15,000,000 shares; Issued: 4,695,253 ..........       8,552             8,552
   Class B Common Stock, no par value:
        Authorized: 15,000,000 shares; Issued: 5,265,158 ........      16,232            16,232
   Retained earnings ............................................     100,917            98,474
   Cost of Common Stock in treasury
      Class A:  1998 - 750,866; 1997 - 844,662 shares ...........      (2,620)           (3,977)
      Class B:  1998 - 780,057; 1997 - 720,586 shares ...........      (4,648)           (3,511)
   Deferred cost - restricted stock .............................      (2,022)               --
   Notes receivable - stock options .............................        (332)             (322)
                                                                    ---------         ---------
         TOTAL SHAREHOLDERS' EQUITY .............................     116,079           115,448
                                                                    ---------         ---------
                                                                    $ 460,039         $ 395,631
                                                                    =========         =========
</TABLE>





<PAGE>   21






CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands)

<TABLE>
<CAPTION>
                                                           Class A    Class B                   Cost of
                                                           Common     Common      Retained     Stock in
                                                            Stock      Stock      Earnings     Treasury     Other        Total
--------------------------------------------------------------------------------------------------------------------------------
<S>              <C>                                       <C>        <C>        <C>           <C>         <C>         <C>      
Balance at April 1, 1995 ................................  $ 8,552    $15,974    $  97,078     $(6,978)    $  (312)    $ 114,314
  Net income ............................................                            9,033                                 9,033
  Cash dividends declared ...............................                           (3,696)                               (3,696)
  Issuance of shares - Martz & Associates acquisition ...                 258                      198                       456
  Repurchase of 62,250 shares ...........................                                         (696)                     (696)
  Additional minimum pension liability ..................                                                   (1,258)       (1,258)
  Other .................................................                               (1)                      6             5
                                                           -------    -------    ---------     -------     -------     ---------
Balance at March 30, 1996 ...............................    8,552     16,232      102,414      (7,476)     (1,564)      118,158
  Net loss ..............................................                             (244)                                 (244)
  Cash dividends declared ...............................                           (3,694)                               (3,694)
  Restricted stock grant of 500 shares ..................                               (2)          2                        --
  Repurchase of 2,390 shares ............................                                          (28)                      (28)
  Exercise of stock options - 1,500 shares ..............                                           14                        14
  Minimum pension liability reversal ....................                                                    1,258         1,258
  Other .................................................                                                      (16)          (16)
                                                           -------    -------    ---------     -------     -------     ---------
Balance at March 29, 1997 ...............................    8,552     16,232       98,474      (7,488)       (322)      115,448
  Net income ............................................                            6,167                                 6,167
  Cash dividends declared ...............................                           (3,724)                               (3,724)
  Restricted stock grant of 150,750 shares ..............                                        2,336      (2,022)          314
  Repurchase of 205,150 shares ..........................                                       (3,189)                   (3,189)
  Exercise of stock options - 88,725 shares .............                                        1,073                     1,073
  Other .................................................                                                      (10)          (10)
                                                           -------    -------    ---------     -------     -------     ---------
Balance at March 28, 1998 ...............................  $ 8,552    $16,232    $ 100,917     $(7,268)    $(2,354)    $ 116,079
                                                           =======    =======    =========     =======     =======     =========
</TABLE>






See Notes to Consolidated Financial Statements.


<PAGE>   22






CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)

<TABLE>
<CAPTION>
YEAR ENDED                                                              March 28, 1998   March 29, 1997  March 30, 1996
-----------------------------------------------------------------------------------------------------------------------
<S>                                                                     <C>              <C>            <C>     
OPERATING ACTIVITIES
   Net income (loss) ................................................    $   6,167         $   (244)        $  9,033
   Adjustments to reconcile net income (loss) to net cash
     provided by operating activities:
       Depreciation and amortization ................................       20,019           23,729           18,957
       Amortization of other assets .................................        4,743            5,343            5,488
       Increase (decrease) in deferred income taxes .................        3,691           (1,724)             219
       Debt extinguishment costs ....................................        3,278               --               --
       Changes in operating assets and liabilities:
         Accounts receivable ........................................       (1,681)          (1,844)          (5,673)
         Inventories ................................................      (10,565)           1,484           (7,338)
         Prepaid expenses and recoverable income taxes ..............       (2,041)          (1,178)             916
         Accounts payable and accrued expenses ......................        8,828            5,895            5,148
       Other operating activities ...................................         (673)           1,085            1,432
                                                                         ---------         --------         --------
       NET CASH PROVIDED BY OPERATING ACTIVITIES ....................       31,766           32,546           28,182

INVESTING ACTIVITIES
   Acquisition of property, equipment and land held for expansion ...      (42,450)         (33,594)         (22,736)
   Disposition of property, equipment and land held for expansion ...        7,653            1,673              959
   Other investing activities .......................................       (9,987)          (3,400)          (4,397)
                                                                         ---------         --------         --------
       NET CASH USED FOR INVESTING ACTIVITIES .......................      (44,784)         (35,321)         (26,174)

FINANCING ACTIVITIES
   Proceeds (repayments) of short-term borrowings ...................      (10,755)          (4,245)           8,000
   Proceeds of long-term borrowings .................................      172,000           47,580           68,200
   Payments of long-term debt and capital lease obligations .........     (112,183)         (37,141)         (76,357)
   Debt acquisition costs ...........................................       (5,918)              --               --
   Debt extinguishment costs ........................................       (3,278)              --               --
   Purchase of Class A and Class B Common Stock for treasury ........       (3,189)             (28)            (696)
   Cash dividends paid ..............................................       (3,715)          (3,697)          (3,699)
   Stock options exercised ..........................................        1,073               --               --
   Other financing activities .......................................           --               13               --
                                                                         ---------         --------         --------
       NET CASH PROVIDED BY (USED FOR)
            FINANCING ACTIVITIES ....................................       34,035            2,482           (4,552)

INCREASE (DECREASE) IN CASH AND EQUIVALENTS .........................       21,017             (293)          (2,544)
Cash and equivalents at beginning of year ...........................       12,529           12,822           15,366
                                                                         ---------         --------         --------
CASH AND EQUIVALENTS AT END OF YEAR .................................    $  33,546         $ 12,529         $ 12,822
                                                                         =========         ========         ========
</TABLE>





--------------------------------------------------------------------------------
See Notes to Consolidated Financial Statements.


<PAGE>   23


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share amounts or as otherwise noted)


NOTE A -- SIGNIFICANT ACCOUNTING POLICIES
Significant accounting policies followed in preparation of the consolidated
financial statements are:

FISCAL YEAR
The Company's fiscal year ends on Saturday of the thirteenth week of each
calendar year. All references herein to "1998", "1997" and "1996" relate to the
fiscal years ended March 28, 1998, March 29, 1997, and March 30, 1996,
respectively.

PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Marsh
Supermarkets, Inc. and all majority-owned subsidiaries ("the Company").
Investments in partnerships are accounted for by the equity method. Significant
intercompany accounts and transactions have been eliminated. The Company is
principally involved in a single significant business segment: the distribution
and retail sale of food and related products through supermarkets, convenience
stores and food services.

CASH AND EQUIVALENTS
Cash equivalents consist of highly liquid investments with a maturity of three
months or less when purchased. The carrying amount approximates fair value of
these assets.

INVENTORIES
Inventories are stated at the lower of cost or market. Cost is determined by the
last-in, first-out ("LIFO") method for the principal components of inventories,
and by the first-in, first-out ("FIFO") method for the remainder (see Note B).

PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, including a provision for capitalized
interest. For financial reporting purposes, depreciation is computed by the
straight-line method over the estimated useful lives of the assets. For income
tax purposes, accelerated methods and statutory lives are used to compute
depreciation.

CAPITALIZED LEASE PROPERTY
Capitalized lease assets are amortized using the straight-line method over the
term of the lease, or in accordance with practices established for similar owned
assets if ownership transfers to the Company at the end of the lease term.
Amortization is included with depreciation expense.

INCOME TAXES
Deferred tax assets and liabilities result from differences between financial
reporting and tax bases of assets and liabilities, measured using enacted tax
rates and laws expected to be in effect when the differences reverse.

EXCISE TAXES
Sales and cost of merchandise sold include state and federal excise taxes on
tobacco, gasoline and alcohol products of approximately $100 million, $97
million and $91 million in 1998, 1997 and 1996, respectively.

ADVERTISING COSTS
Advertising communication costs are expensed in the period incurred and
production costs are expensed the first time the advertising is distributed.
Advertising expenses in the amounts of $16.4 million, $16.0 million, and $16.6
million were recorded for 1998, 1997 and 1996, respectively.



<PAGE>   24

COST OF OPENING STORES
Non-capital expenditures associated with opening new stores are expensed as
incurred.

RECLASSIFICATIONS
Certain items in the 1997 and 1996 consolidated financial statements were
reclassified to conform with the 1998 presentation.

USE OF ESTIMATES
Preparation of the consolidated financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. The more significant estimates include allowances
for doubtful accounts, provisions for self-insurance losses and income taxes.
Actual results could differ from those estimates.



<PAGE>   25


ACCOUNTING CHANGES
Accounting for the Impairment of Long-Lived Assets
The Company adopted FAS 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of," in the first quarter of 1997. The
Statement establishes accounting standards for recognizing and measuring
impairment of long-lived assets, and requires reducing the carrying amount of
any impaired assets to fair value. Adoption of FAS 121 resulted in a charge to
earnings of $4.6 million, net of tax, primarily related to the adjustment of
building and equipment carrying costs and leases of eight supermarkets and 12
convenience stores. The Company estimated fair value based on its experience in
the acquisition and disposal of similar assets. The charge was reflected in
income as follows: $2.6 million ($1.6 million net of tax) in selling, general
and administrative expenses, and $4.9 million ($3.0 million net of tax) in
depreciation and amortization. The Company continues to expect prospective
earnings to improve approximately $0.9 million annually ($0.6 million after tax,
or $.06 per diluted share) as a result of adopting FAS 121.

Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement No. 130,
"Reporting Comprehensive Income" (FAS 130), and Statement No. 131, "Disclosure
About Segments of an Enterprise and Related Information" (FAS 131). Both
statements are effective for the Company in 1999. FAS 130 requires separate
reporting of certain items already disclosed by the Company. FAS 131 establishes
requirements for reporting information about operating segments in annual and
interim reports. FAS 131 may require a change in the Company's financial
reporting, however, the extent of the change, if any, has not been determined.

ENVIRONMENTAL LIABILITIES
The Company recognizes environmental liabilities when environmental assessments
indicate remedial efforts are required and the costs can be reasonably
estimated. Estimates of liability are based on all currently known facts, prior
remediation experience, existing technology, and presently enacted federal and
state statutes, ordinances and regulations concerning the storage and dispensing
of petroleum products. These estimated liabilities are subject to revision in
future periods as actual costs and new information becomes known. The
liabilities are recorded in the balance sheet at their undiscounted amounts, and
do not consider any potential recovery the Company may receive from either the
Indiana Underground Storage Tank Excess Liability fund, which reimburses owners
and operators of underground storage tanks ("USTs") for approved costs incurred
in connection with the remediation of soil and groundwater contamination, or
from third parties that may be responsible for all or part of the contamination.

Current environmental laws and regulations require the removal or abandonment of
USTs at 19 Village Pantry locations by December 1998. Earlier removal or
abandonment is required in the event any UST fails any leak detection test,
which the Company performs at least annually. All USTs at these locations passed
the most recent leak detection tests in calendar 1997, which results were
consistent with data from the Company's established petroleum product inventory
control program.

The Company is aware of the existence of petroleum contamination at 23 Village
Pantry locations and has commenced remediation at each of these sites. The
Company currently estimates the maximum aggregate cost to be incurred in
connection with compliance with existing environmental laws and regulations
applicable to USTs will not exceed approximately $0.9 million and has charged
this amount to earnings.

NOTE B -- INVENTORIES
Inventories valued by the LIFO method represented approximately 75% and 76% of
consolidated inventories at March 28, 1998 and March 29, 1997, respectively.
Current inventory cost exceeded the carrying amount of LIFO inventories by $15.1
million at March 28, 1998, and $17.6 million at March 29, 1997.


<PAGE>   26

NOTE C -- DEBT ARRANGEMENTS 

Long-term debt consisted of the following:

<TABLE>
<CAPTION>
                                                  1998              1997
                                               ---------         ---------
<S>                                            <C>               <C>      
8 7/8% Senior Subordinated Notes .........     $ 150,000         $      --
  Less discount ..........................        (1,144)               --
Notes payable to insurance companies:
      8.54% Senior Notes, unsecured ......            --            35,000
      8.13% Senior Notes, unsecured ......            --            10,909
      9.48% Senior Notes, unsecured ......            --            17,500
     10.05% notes ........................        18,116            18,897
      9.05% notes ........................        18,882            19,630
7% convertible subordinated debentures ...        19,909            19,909
Revolving credit agreements ..............            --            20,000
Other ....................................         2,391             5,661
Less current maturities ..................        (2,150)           (6,242)
                                               ---------         ---------
                                               $ 206,004         $ 141,264
                                               =========         =========
</TABLE>



<PAGE>   27


The 8 7/8% Senior Subordinated Notes were issued in August 1997. Proceeds from
the issuance were used to prepay the 8.54%, 8.13% and 9.48% senior notes and
related prepayment penalties, and amounts outstanding under existing revolving
credit agreements. Interest is payable semi-annually and the principal matures
in August 2007. The discounted effective interest rate is 9.0%.

The 10.05% notes are payable in monthly installments (principal and interest) of
$220,000 through 2009.

The 9.05% notes are payable in quarterly installments (principal and interest)
of $625,000 through 2011. In 2000, the Company or lender may initiate an
interest rate renegotiation or require retirement of the notes.

The 7% convertible subordinated debentures mature February 15, 2003. They are
convertible, at the holder's option at any time, into Class B Common Stock at a
conversion price of $15.50 per share. They are redeemable, at the Company's
option, at declining prices which started at 103.5% of the principal amount in
1996. The debentures are subordinate to all present and future senior
indebtedness.

A portion of the proceeds from the issuance of the 8 7/8% Senior Subordinated
Notes was used to repay $60.9 million in principal amount of senior unsecured
indebtedness and $5.0 million in related prepayment penalties. The prepayment
penalties, plus $0.2 million in unamortized debt acquisition costs, were charged
to income as an extraordinary item during the second quarter of 1998. The after 
tax charge of $3.3 million represents $.34 per diluted share.

Land and buildings with a net carrying amount of approximately $39.0 million are
pledged as collateral to the 10.05% notes and the 9.05% notes. Subsequent to
March 28, 1998, a lender released the Company's guarantee of a $1.5 million
portion of two mortgages for a 25% owned, unconsolidated subsidiary.

At March 28, 1998, the fair market value of the Company's long-term debt was
approximately $217.5 million. The fair market value was estimated using quoted
market rates for publicly traded debt and current incremental borrowing rates
for non-public debt.

Several of the loan agreements require maintenance of minimum working capital
and limit cash dividends, repurchases of common stock, future indebtedness,
lease obligations, investments, and disposition of assets. Under the most
restrictive covenant, the amount available for payment of dividends and
purchases of treasury shares was approximately $5 million at March 28, 1998.

The Company's revolving credit agreements permit borrowings up to $50 million.
Interest is based on various money market rates selected by the Company at the
time of borrowing. The Company pays commitment fees of from 0.15% to 0.25% on
unused amounts. No amounts were borrowed at March 28, 1998.

The Company has commitments from various banks for short-term borrowings of up
to $20 million at rates at or below the prime rates of the committed banks. At
March 29, 1997, $11.0 million was utilized, at an average rate of 6.2%. No
amounts were borrowed at March 28, 1998.

Aggregate principal payments of long-term debt outstanding at March 28, 1998 for
the succeeding five years and thereafter are:

<TABLE>
           <S>                                <C>     
           1999 ........................      $  2,150
           2000 ........................         2,225
           2001 ........................         2,209
           2002 ........................         2,426
           2003 ........................         2,675
           Thereafter ..................       196,469
</TABLE>

Interest expense consisted of:

<TABLE>
<CAPTION>
                                    1998          1997            1996
                                  -------        -------        -------
<S>                               <C>            <C>            <C>    
Long-term debt .................  $16,802        $12,141        $12,016
Capital lease obligations ......      543            641            991
Other ..........................      400            248             80
                                  -------        -------        -------
Total interest expense .........  $17,745        $13,030        $13,087
                                  =======        =======        =======

Interest capitalized ...........  $   413        $   528        $   714
                                  =======        =======        =======

Cash payments for interest .....  $17,004        $13,511        $13,632
                                  =======        =======        =======
</TABLE>



<PAGE>   28


NOTE D - GUARANTOR SUBSIDIARIES
Other than three inconsequential subsidiaries, all of the Company's subsidiaries
(the "Guarantors") have guaranteed on a joint and several basis the Company's
obligations under the $150.0 million 8 7/8% Senior Subordinated Notes. The
Guarantors are 100% wholly-owned subsidiaries of the Company. The Guarantors
comprise all of the direct and indirect subsidiaries of the Company (other than
three inconsequential subsidiaries). The Company has not presented separate
financial statements and other disclosures concerning each Guarantor because
management has determined that such information is not material to investors.

Summarized combined financial information (in accordance with Rule 1-02(bb) of
Regulation S-X) for 1998, 1997 and 1996 for the Guarantors is set forth below:

<TABLE>
<CAPTION>
                                1998            1997
                              --------        --------
<S>                           <C>             <C>     
Current assets ...........    $164,316        $132,964
Current liabilities ......     104,486         110,892
Noncurrent assets ........     244,400         216,590
Noncurrent liabilities ...      49,188          45,152
</TABLE>

<TABLE>
<CAPTION>
                                1998             1997              1996
                            ----------        ----------        ----------
<S>                         <C>               <C>               <C>       
Total revenues ..........   $1,498,045        $1,445,870        $1,383,720
Gross profit ............      365,749           349,284           336,527
Income before
  extraordinary item ....       10,549               534             9,285
Net income ..............        7,271               534             9,285
</TABLE>

NOTE E -- LEASES
Of the Company's 270 retail stores, 108 are leased under commercial lease
agreements providing for initial terms generally from 15 to 20 years with
options to extend the initial terms up to an additional 20 years. The Company
also leases a portion of its transportation and store equipment for periods 
from three to eight years plus renewal and purchase options.

Capitalized lease property consisted of store facilities having a net carrying
cost of $5.6 million at March 28, 1998 and $3.1 million at March 29, 1997.

Future minimum lease payments for capital and operating leases with terms in
excess of one year, and the present value of capital lease obligations, at March
28, 1998, were as follows:

<TABLE>
<CAPTION>
                                                    Capital    Operating
                                                    Leases      Leases
                                                    ------     -------
<C>                                                <C>         <C>    
1999...........................................    $ 1,220     $17,647
2000...........................................      1,332      14,199
2001...........................................      1,152      11,113
2002...........................................        912       7,553
2003...........................................        912       4,990
Later years....................................      6,840      11,102
                                                   -------     -------
                                                    12,368     $66,604
                                                               =======
Less:
   Estimated executory costs...................         42
   Amounts representing interest...............      5,213
                                                   -------
Present value of net minimum
   lease payments..............................    $ 7,113
                                                   =======
</TABLE>
<PAGE>   29

Minimum annual lease payments will be reduced by $4.6 million from future
sublease rentals due over the term of the subleases.

Rental expense consisted of:

<TABLE>
<CAPTION>
                                1998             1997            1996
                              --------         --------         --------
<S>                           <C>              <C>              <C>     
Minimum rentals .........     $ 20,900         $ 21,719         $ 22,017
Contingent rentals ......          125              151              147
Sublease rental income ..       (1,895)          (1,715)          (2,217)
                              --------         --------         --------
                              $ 19,130         $ 20,155         $ 19,947
                              ========         ========         ========
</TABLE>


NOTE F -- RETIREMENT PLANS
Historically, the Company provided a qualified defined benefit pension plan
covering the majority of its non-union employees and an unfunded supplemental
retirement plan for corporate officers designated by the Board of Directors. The
benefit formula under the qualified plan is based upon years of service and the
highest consecutive four years of earnings during the last ten years worked. The
benefits under both plans are similar; however, the supplemental plan takes into
consideration compensation in excess of amounts that can be recognized under the
qualified plan.

On December 31, 1996, the Company froze benefit accruals under its qualified
defined benefit pension plan and concurrently amended one of the Company's
defined contribution savings plans to permit discretionary Company
contributions. As a result of freezing the pension plan, the Company recorded a
pretax net pension curtailment loss of $2.4 million in the first quarter of
1997, in addition to the $1.8 million net pension expense reported for 1997.

The Company's funding policy with regard to the qualified defined benefit
pension plan is consistent with federal laws and regulations. The Company
contributed $1.0 million and $2.2 million to the plan in 1998 and 1997,
respectively. Plan assets consist principally of listed stocks, corporate and
government notes and bonds, and 92,675 shares each of Class A and Class B Common
Stock of the Company. At March 28, 1998, the Company's Common Stock in the
qualified plan had a market value of $2.9 million. The supplemental plan is
unfunded. The actuarial present value of the projected benefit obligation under
the supplemental plan was $5.5 million and $4.9 million at March 28, 1998 and
March 29, 1997, respectively.


<PAGE>   30

The funded status of the plans and amounts recognized in the consolidated
balance sheets were as follows:

<TABLE>
<CAPTION>
                                              1998              1997
                                             --------         --------
<S>                                          <C>              <C>     
Actuarial present value of obligations:
   Vested benefits .......................   $ 44,124         $ 38,962
   Nonvested benefits ....................      2,993            2,083
                                             --------         --------
Accumulated benefit obligation ...........     47,117           41,045
Effect of future salary increases ........      2,334            2,016
                                             --------         --------
Projected benefit obligation .............     49,451           43,061
Plan assets at fair value ................     46,324           38,649
                                             --------         --------
   Funded status .........................     (3,127)          (4,412)
Unrecognized net gain from past
  experience different from assumed ......     (1,008)            (637)
Unrecognized net obligation
   at adoption ...........................         52               89
Unrecognized prior service cost ..........      1,106            1,238
                                             --------         --------
Accrued pension cost .....................   $ (2,977)        $ (3,722)
                                             ========         ========
</TABLE>


The components of net pension expense included:

<TABLE>
<CAPTION>
                                                     1998           1997            1996
                                                   -------         -------         -------
<S>                                                <C>             <C>             <C>    
Service cost of benefits earned ..............     $   192         $ 1,510         $ 1,784
Interest on projected benefit
  obligation .................................       3,312           3,267           3,154
Actual return on plan assets .................      (8,515)         (3,590)         (5,161)
Net amortization and deferral ................       5,253             606           2,703
                                                   -------         -------         -------
Net pension expense...........................     $   242         $ 1,793         $ 2,480
                                                   =======         =======         =======
</TABLE>

The following actuarial assumptions were used to compute net pension expense and
funded status of the plans:

<TABLE>
<CAPTION>
                                         1998         1997         1996
                                         ----         ----         ---- 
<S>                                      <C>          <C>          <C>  
Discount rate ......................     7.00%        8.00%        7.65%
Rate of increase in compensation ...     3.50         3.50         3.50
Expected long-term rate of return
   on assets .......................     9.00         9.00         9.00
</TABLE>

The 1.00% change in discount rate increased the projected benefit obligation at
March 28, 1998 by approximately $5.2 million.

The Company participates in a multi-employer plan that provides defined benefits
to its union employees. The Company expense for this plan amounted to $0.7 
million in both 1998 and 1997, and $0.6 million in 1996.

The Company provides two defined contribution savings plans. These plans allow
401(k) contributions covering employees who work a minimum of 1,000 hours per
year, are age 21 or older and elect to participate. The plans provide the
opportunity for additional financial security during retirement by offering
employees an incentive to make tax advantaged contributions to a savings plan.
The Company expense for these plans was $3.4 million in 1998, $1.3 million in
1997 and $1.3 million in 1996. The $2.1 million increase in 1998 is the
estimated Company discretionary contribution to the plan amended concurrent with
the December 1996 benefit freeze under the defined benefit plan.

NOTE G  -- POSTRETIREMENT HEALTH BENEFITS
The Company provides certain post retirement health care benefits for its
non-union retirees and their eligible spouses. The plans are contributory with
retiree contributions adjusted annually and certain other cost sharing features,
such as deductibles and co-insurance. Eligibility for these benefits is
generally limited to retirees, who are at least age 55 and less than age 65,
with ten or more years of vested service. Optional spousal coverage continues
for the lesser of five years after retirement or until the spouse reaches age
65. Benefits generally cease after reaching age 65, at which time the retiree or
spouse is generally eligible for Medicare.


<PAGE>   31

The amounts recognized in the consolidated balance sheets for the Company's
contributory defined benefit postretirement plans were as follows:

<TABLE>
<CAPTION>
                                                     1998          1997
                                                    ------        ------
<S>                                                 <C>           <C>   
Accumulated participants benefit obligation:
   Current retirees ............................    $  622        $  534
   Fully eligible active plan participants .....     1,051           915
   Other active plan participants ..............     1,066           810
                                                    ------        ------
     Total benefit obligation ..................     2,739         2,259
Unrecognized gain ..............................       717         1,144
                                                    ------        ------
Accrued postretirement benefit cost ............    $3,456        $3,403
                                                    ======        ======
</TABLE>

Net postretirement benefit expense included:

<TABLE>
<CAPTION>
                                      1998          1997         1996
                                     -----         -----         -----
<S>                                  <C>           <C>             <C>
Service cost of benefits earned
  during the year ................   $ 215         $ 215           185
Interest cost on projected
  benefit obligation .............     169           161           167
Net amortization and deferral ....     (89)          (73)          (68)
                                     -----         -----         -----
                                     $ 295         $ 303         $ 284
                                     =====         =====         =====
</TABLE>

For measurement purposes, the weighted average discount rate used in determining
the accumulated postretirement benefit obligation and related expense was 7.00%
for 1998, 8.00% for 1997 and 7.65% for 1996. The Company's assumed healthcare
cost trend rate is 11.00% for 1999, decreasing gradually to 6.00% by 2013, and
thereafter. If these trend rates increased by one percentage point each year,
the accumulated postretirement benefit obligation and expense would have
increased by approximately 9.00% and 11.00%, respectively.

NOTE H -- INCOME TAXES
The following are components of deferred tax assets and liabilities:

<TABLE>
<CAPTION>
                                              1998             1997
                                            --------         --------
<S>                                         <C>              <C>     
Deferred tax assets:
   Compensation and benefit accruals ..     $  3,565         $  3,406
   Self insurance reserves ............        1,967            2,593
   Other ..............................        2,873            2,757
                                            --------         --------
      Total deferred tax assets .......        8,405            8,756
Deferred tax liabilities:
   Property and equipment, including
      leased property .................      (14,764)         (12,330)
   Inventory ..........................       (2,531)          (3,023)
   Other ..............................       (2,016)            (617)
                                            --------         --------
      Total deferred tax liabilities ..      (19,311)         (15,970)
                                            --------         --------
Net deferred tax liability ............     $(10,906)        $ (7,214)
                                            ========         ========
</TABLE>

Income tax expense (credit) consisted of the following:

<TABLE>
<CAPTION>
                            1998           1997            1996
                          -------         -------         -------
<S>                       <C>             <C>             <C>    
Current  - Federal ....   $  (230)        $   526         $ 4,209
           State ......       189             445             887
Deferred - Federal ....     4,431            (849)            158
           State ......      (739)           (127)             (3)
                          -------         -------         -------
                          $ 3,651         $    (5)        $ 5,251
                          =======         =======         =======

Cash payments .........   $ 1,340         $ 1,807         $ 5,428
                          =======         =======         =======
</TABLE>

A reconciliation of income tax expense (credit) is as follows:

<TABLE>
<CAPTION>
                                             1998          1997           1996
                                           -------         -----         -------
<S>                                        <C>             <C>           <C>    
Federal statutory tax rate ............    $ 4,584         $ (96)        $ 4,999
State and local, net of federal tax ...       (357)          206             575
Other .................................       (576)         (115)           (323)
                                           -------         -----         -------
Total income tax expense (credit) .....    $ 3,651         $  (5)        $ 5,251
                                           =======         =====         =======
</TABLE>


<PAGE>   32

NOTE I - EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued FAS 128, "Earnings per
Share". FAS 128 simplifies the standards for computing earnings per share by
replacing primary and fully diluted earnings per share with basic and diluted
earnings per share. Unlike primary earnings per share, basic earnings per share
excludes any dilutive effects of options, warrants and convertible securities.
Diluted earnings per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts presented on the
income statement conform to
FAS 128.

The following table sets forth the computation of the numerators and
denominators used in the computation of basic and diluted earnings per share
(amounts in thousands):

<TABLE>
<CAPTION>
                                             1998            1997          1996
                                           -------         -------         ------
<S>                                        <C>             <C>             <C>   
Numerator for basic EPS -
  net income (loss) ...................    $ 6,167         $  (244)        $9,033
Effect of convertible debentures ......        999              --            882
                                           -------         -------         ------
Numerator for diluted EPS - income
 (loss) after assumed conversions .....    $ 7,166         $  (244)        $9,915
                                           =======         =======         ======

Weighted average shares outstanding ...      8,438           8,395          8,403
  Non-vested restricted shares ........        (80)             --             --
                                           -------         -------         ------
Denominator for basic EPS .............      8,358           8,395          8,403
Effect of dilutive securities:
  Employee stock options ..............        117              37             37
  Convertible debentures ..............      1,290              --          1,290
                                           -------         -------         ------
Denominator for diluted EPS -                                               
  adjusted weighted average shares ....      9,765           8,432          9,730
                                           =======         =======         ======
</TABLE>

Convertible debentures were not included in the computation of 1997 earnings per
share because the effect would be antidilutive.

NOTE J -- SHAREHOLDERS' EQUITY AND EMPLOYEE STOCK PLANS

COMMON STOCK
Class A Common Stock has one vote per share; Class B Common Stock is non-voting
except with respect to certain matters affecting the rights and preferences of
that class. Each class is entitled to equal per share dividends and
consideration in any merger, consolidation or liquidation of the Company. A
person who, subsequent to May 15, 1991, acquires 10% or more of outstanding
Class A Common Stock without acquiring a like percentage of Class B Common Stock
must make a public tender offer to acquire additional Class B Common Stock.
Failure to do so results in suspension of the voting rights of the Class A
Common Stock held by such person.



<PAGE>   33


STOCK OPTION PLANS AND SHARES RESERVED
The 1991 Employee Stock Incentive Plan (as amended in May 1995) reserves 750,000
shares of common stock, in any combination of Class A and Class B, for the grant
of stock options, stock appreciation rights, restricted stock, deferred stock,
stock purchase rights and/or other stock-based awards. Grants of options made
under this plan are non-qualified. Substantially all grants were at the market
value of the underlying common stock at date of grant. They become exercisable
pro-rata over a four year period beginning one year from date of grant and
expire 10 years from date of grant.

Grants made prior to 1992 were under the 1987 Stock Option Plan at prices equal
to 85% of market value of the underlying common stock at the date of grant. They
are exercisable pro-rata over a four year period and expire 10 years from date
of grant. The 1987 plan authorized 375,000 shares for grants of options; no
further grants may be made under the 1987 Plan.

At the 1992 Annual Meeting, shareholders approved the 1992 Stock Option Plan for
Outside Directors under which 50,000 shares of Class B Common Stock were
reserved for the grant of stock options and restricted stock to non-employee
directors. Options are granted upon election of each of the directors by the
shareholders at the market value of the underlying common stock at date of
grant. The options become exercisable and restrictions lapse in equal
installments, on the date of each of the two Annual Meetings following the date
of grant and expire 10 years from date of grant. Additionally, 3,500 shares of
restricted stock have been issued to outside directors upon their first election
as a director.

A summary of the Company's stock option activity follows (price is weighted
average; options are in thousands):

<TABLE>
<CAPTION>
                                     Class A shares             Class B shares
                                     -------------------        ------------------
                                     Price       Options        Price       Options
                                     -----       -------        -----       -------
<S>                                  <C>         <C>            <C>         <C>
Outstanding at April 1, 1995 ...     $12.71         163         $12.10         458
Granted ........................      13.50         355          12.25           5
                                                    ---                        ---
Outstanding at March 30, 1996 ..      13.26         518          12.10         463
Granted ........................      13.50          10          10.50           4
Exercised ......................         --          --           9.50          (2)
Forfeited ......................      12.86         (33)         12.73         (53)
                                                    ---                        ---
Outstanding at March 29, 1997 ..      13.28         495          12.01         412
Granted ........................         --          --          14.75           2
Exercised ......................      10.91         (35)         10.40         (54)
Forfeited ......................      13.50         (18)         11.35          (3)
                                                    ---                        ---
Outstanding at March 28, 1998 ..     $13.46         442         $12.27         357
                                                    ===                        ===
</TABLE>

Related stock option information is as follows (options are in thousands):

<TABLE>
<CAPTION>
                                        1998           1997           1996
                                       -------        -------        -------
<S>                                    <C>            <C>            <C>    
Exercisable at the end of the year
    Class A shares .................       272            227            163
    Class B shares .................       328            345            361
Weighted average exercise price
    Class A shares .................   $ 13.44        $ 13.03        $ 12.71
    Class B shares .................     12.48          12.47          12.79
Weighted average exercise price
    of options granted during
       the year
    Class A shares .................   $    --        $ 13.50        $ 13.50
    Class B shares .................     14.75          10.50          12.25
</TABLE>


<PAGE>   34

At March 28, 1998, the range of option exercise prices for Class A shares was
$12.75 to $13.81 and for Class B shares was $9.50 to $15.50 and the
weighted-average remaining contractual life of those options for Class A and
Class B shares was 6.2 years and 4.0 years, respectively.

The Company has adopted the disclosure only provisions of FAS 123, "Accounting
for Stock Based Compensation". In accordance with the provisions of FAS 123, the
Company applies APB Opinion 25 and related interpretations in accounting for its
stock option plans and, accordingly, does not recognize compensation cost if the
exercise price of the options granted is equal to the market price of the
underlying common stock at the date of grant. If the Company had elected to
recognize compensation cost based on the fair value of the options granted at
grant date as prescribed by FAS 123, net income would have been reduced by
$234,000 in 1998, $201,000 in 1997 and $79,000 in 1996. Earnings per share would
have been reduced by $.03 in 1998, $.02 in 1997 and $.01 in 1996. Diluted
earnings per share would have been reduced $.02 in 1998 and 1997, and $.01 in
1996. The fair value of options granted were estimated using a Black-Scholes
option pricing model with the following assumptions for 1998, 1997 and 1996; a
risk-free interest rate of 6.8%; dividend yield of 3.3%, a volatility factor of
the expected market price of the Company's common stock of .26; and a
weighted-average expected life of the options of nine years. Because the
Company's employee stock options have characteristics significantly different
from those typically valued using the Black-Scholes option pricing model, and
changes in the subjective input assumptions can materially affect the fair
market estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

The Company presently holds notes receivable totaling $332,000 from three
employees of the Company. The notes arose when the Company loaned the employees
money to exercise stock options under the 1987 plan and an expired 1980 plan.
The notes under the 1980 plan bear interest at 6% per annum, are due on May 28,
2000, and are collateralized by the shares. The amount of the receivable is
shown on the balance sheet as a reduction of equity.

In September 1997, 150,750 shares of restricted Class A Common Stock were
granted under the 1991 Employee Stock Incentive Plan to certain key employees.
The shares will vest ratably on each of the first four anniversaries of the date
of grant and are subject to restrictions on their sale or transfer.

As of March 28, 1998, a total of 1,290,323 shares of Class B Common Stock is
reserved for conversion of debentures, 4,425 shares in any combination of Class
A and Class B are reserved for future awards under the 1991 Plan, and 27,000
shares of Class B are reserved under the Stock Option Plan for Outside
Directors.

<PAGE>   35

CHANGES IN SHARES OUTSTANDING
Changes in shares issued and treasury shares during the three years ended March
28, 1998, were as follows:

<TABLE>
<CAPTION>
Issued shares:                             Class A             Class B
--------------                             ---------           --------- 
<S>                                        <C>                 <C>      
Balance at March 30, 1996, March 29,
  1997 and March 28, 1998 ..............    4,695,253          5,265,158

Treasury shares:
----------------
Balance at April 1, 1995 ...............      817,530            728,494
  Acquisition of shares ................       27,025             35,225
  Issuance of shares -
   Martz & Associates acquisition ......           --            (43,416)
                                           ----------         ----------
Balance at March 30, 1996 ..............      844,555            720,303
  Acquisition of shares ................          107              2,283
  Stock options exercised ..............           --             (1,500)
  Restricted stock grant ...............           --               (500)
                                           ----------         ----------
Balance at March 29, 1997 ..............      844,662            720,586
  Acquisition of shares ................       91,604            113,546
  Stock options exercised ..............      (34,650)           (54,075)
  Restricted stock grant ...............     (150,750)                --
                                           ----------         ----------
Balance at March 28,1998 ...............      750,866            780,057
                                           ----------         ----------
Net outstanding at March 28, 1998 ......    3,944,387          4,485,101
                                           ==========         ==========
</TABLE>

SHAREHOLDER RIGHTS PLAN
Under the 1989 Shareholder Rights Plan, preferred stock purchase rights
("Rights") were distributed as a dividend at the rate of one Right for each
common share held. Each Right entitles a shareholder to buy one one-hundredth of
a share of Series A Junior Participating Cumulative Preferred Stock of the
Company at an exercise price of $65. The Rights will be exercisable only if a
person or group acquires beneficial ownership of 20% or more of either class of
the Company's common stock or commences a tender or exchange offer upon
consummation of which such person or group would beneficially own 20% or more of
either class of the Company's common stock. If any person becomes the beneficial
owner of 20% or more of either class of the Company's common stock, or if a 20%
or more shareholder engages in certain self-dealing transactions or a merger
transaction with the Company in which the Company is the surviving corporation
and its common shares are not changed or converted, then each Right not owned by
such person or related parties will entitle its holder to purchase, at the
Right's then-current exercise price, shares of common stock (or, in certain
circumstances as determined by the Board, cash, property or other securities of
the Company) having a value of twice the Right's exercise price.

In addition, if the Company is involved in a merger or other business
combination transaction with another person in which its common stock is changed
or converted, or sells 50% or more of its assets or earning power to another
person, each Right will entitle its holder to purchase, at the Right's
then-current exercise price, common shares of such other person having a value
of twice the Right's exercise price. 

The Company will generally be entitled to redeem the rights at $.01 per Right,
at any time until the 15th day following public announcement that a 20% position
has been acquired. The Rights expire on July 31, 1999.

NOTE K -- ACQUISITIONS
On January 1, 1995, the Company purchased the assets of Crystal Catering and its
affiliated companies, the largest caterer in Indianapolis. The purchase price of
$4.8 million included: (i) $2.4 million cash, (ii) a $1.4 million note payable
to Crystal, and (iii) issuance of 97,810 shares of Class B Common Stock, valued
at $1.0 million. Additionally, a $1.0 million adjustment earned based on the
catering division achieving specified profitability levels for 1996, 1997 and
1998 was treated as a purchase price adjustment. Goodwill, resulting from this
acquisition in the amount of $5.0 million, is being amortized using the
straight-line method over a twenty year life.

On May 1, 1995, the Company purchased the assets of Martz & Associates Food
Services, an Indianapolis vending and cafeteria management services firm. The
purchase price included $1.0 million cash and 43,416 shares of Class B Common
Stock, valued at $456,000. Goodwill resulting from this acquisition in the
amount of $568,000 is being amortized using the straight-line method over a
twenty year life.