MORRISON FRESH COOKING, INC.


MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 
AND RESULTS OF OPERATIONS

For  an  understanding of the significant factors that influenced
the Company's performance during the past three fiscal years, the
following  discussion  should be read  in  conjunction  with  the
Financial Statements and related Notes found on pages 18 to 31.

RESULTS OF OPERATIONS

      On  March  9, 1996, Morrison Restaurants Inc.,  a  Delaware
corporation  (MRI), distributed to its shareholders  all  of  the
issued  and  outstanding shares of common stock of  the  Company,
which  held  the family dining assets and business  of  MRI  (the
"Distribution").   As   a   result  of  the   Distribution,   MRI
shareholders received one share of Company common stock for every
four  shares of MRI common stock held. The effective date of  the
Distribution for accounting purposes was March 3, 1996, the first
day of the fiscal 1996 fourth quarter of the Company.

Effects of Distribution on Results of Operations

      The effect of the Distribution on the results of operations
of  the Company for the fiscal years ended June 1, 1996 and  June
3,  1995,  are  presented in the Unaudited  Pro  Forma  Financial
Information  in  Note  12 of the Financial Statements.  Such  pro
forma  financial information is presented as if the  Distribution
had been effected as of the dates indicated.
     The following table sets forth selected restaurant operating
data  as  a  percentage of sales for the periods  indicated.  All
information  is derived from the historical financial  statements
of the Company included elsewhere in this Annual Report.

Fiscal Year Ended                         1997     1996    1995

Net Sales                                100.0%   100.0%  100.0%
                                                                
Operating Costs and Expenses:                                       
    Cost of merchandise                   28.3%    28.2%   26.8%
    Payroll and related costs             36.3%    38.0%   35.8%
    Other operating costs                 22.5%    20.9%   20.6%
    Selling, general and administrative    7.1%     6.6%    6.9%
    Depreciation                           4.0%     3.8%    3.5%
    Interest expense (income), net         0.1%     0.0%   (0.1)%
    Loss on impairment of assets                    5.2%             
    Restructure costs                               3.1%          
                                                                  
Total Operating Costs and Expenses        98.3%   105.8%   93.5%
                                                                 
Income (Loss) before Income Taxes          1.7%    (5.8)%   6.5%
                                                                 
Provision for (Benefit from) Income        0.6%    (2.1)%   2.6%
  Taxes                                                           

Net Income (Loss)                          1.1%    (3.7)%   3.9%
                                                    

1997 Compared to 1996

     Net sales decreased $18.0 million, or 6.7%. This decrease in
sales  was  primarily attributable to two fewer  cafeteria  units
compared  to  the  prior year and a 2.7% decrease  in  same-store
sales.  The same-store sales decrease was partially mitigated  by
an  increase in check average due to a price increase implemented
in October 1996.
     Cost of merchandise decreased $4.8 million, or 6.3% and  was
relatively   stable  as  a  percentage  of  sales.  The   Company
maintained  a  flat  cost  of  sales despite  heavy  to  moderate
inflationary  food cost pressures during the year,  primarily  in
the  first  and  second  quarters of  fiscal  1997.  The  Company
experienced  some food price increases as the result  of  product
offering changes during the latter part of fiscal 1997.
     Payroll and related costs decreased $11.0 million, or 10.8%,
and  as  a percentage of sales, decreased 1.7 percentage  points.
This  decrease  was  the  result of a  reduction  in  store-level
management  labor and a decrease in average wage rates associated
with  the  increased use of part-time labor. The labor  reduction
was  offset by the federal minimum wage increase in October 1996.
Fringe  benefit  costs decreased from the prior  year  due  to  a
decrease  in  the  Company's self-insurance  costs  for  workers'
compensation  and  medical insurance  programs  as  a  result  of
improvements in claims experience.
      Other  operating costs decreased slightly  from  the  prior
year.  Rent and leasing expense, the largest components  of  this
category, remained relatively unchanged as a percentage of  sales
from  the  prior year. The increase as a percentage of sales  was
primarily  due  to  an increase in accruals associated  with  the
expected  settlement costs of closed units, as well as  increases
in repairs and utilities costs.
     Selling,   general  and  administrative  expenses  increased
slightly  over  the prior year as a percentage of sales.  General
and  administrative costs increased as a percentage of sales over
the  prior year due to increased management labor associated with
additional  supervisory operations positions added to reduce  the
number  of  restaurants  supervised  by  each  regional  manager.
General and administrative costs were also negatively impacted by
a  $0.3 million accrual of severance costs for two executives who
resigned  during  the fourth quarter of fiscal 1997.  Advertising
costs  remained relatively flat as a percentage of sales compared
to the prior fiscal year.
     Depreciation increased slightly as a percentage of sales due
to  equipment  upgrades and remodeling programs conducted  during
the fiscal year.
      Net  interest expense increased over the prior year due  to
increased  borrowing levels maintained during  fiscal  1997  over
fiscal 1996.
      The  effective income tax rate (benefit) increased to 37.2%
in 1997 from (36.5%) in 1996.


1996 Compared to 1995

      Net  sales decreased $26.9 million, or 9.1%. This  decrease
was  principally the result of 26 store closings  and  same-store
customer count declines. Partially offsetting these decreases was
the  addition of seven new stores and higher average tray  prices
over the prior year.
      Cost  of  merchandise  decreased  $3.5  million,  or  4.5%,
principally  due  to  the  reduction in stores  and  lower  sales
volume. However, early in fiscal year 1996, the menu was modified
to  offer  additional higher-end products, resulting in a  higher
cost per meal.
      Payroll and related costs decreased $3.8 million, or  3.6%.
The  primary  factors  in this decrease  were  the  reduction  in
stores,  the implementation of a self-serve beverage  counter,  a
kitchen labor reduction program and the use of an enhanced  labor
scheduling  tool.  Management  and  hourly  wage  rate  increases
partially offset this decrease.
      Other operating costs decreased $4.4 million, or 7.3%.  The
principal contributors to this decrease were reduction in stores,
offset partially by the settlement of a four-year-old claim.
     Selling, general and administrative expenses decreased  $2.8
million,  or 13.6%. The majority of this decrease was  associated
with  the  reduction in advertising promotions conducted  by  the
Company during the year.
     Depreciation  decreased  $0.2  million,  or  1.9%,  and  was
related  to  the reduction in stores, offset by the  addition  of
$14.7 million in capital expenditures.
     Net  interest income decreased $0.4 million as a  result  of
the  reduction in available funds to invest stemming  from  lower
sales volume.
     In  the  third  quarter of fiscal 1996, the Company  adopted
Statement  of Financial Accounting Standards No. 121  (FAS  121),
"Accounting for the Impairment of Long-Lived Assets and for Long-
lived  Assets to be Disposed Of". In the third quarter of  fiscal
1996,  the  Company recorded a $13.8 million charge for  loss  on
impairment  of  assets, $1.5 million of  which  was  due  to  the
adoption  of  FAS  121. Of this charge, $8.7 million  related  to
assets  to  be  disposed  of, largely due  to  15  quick  service
restaurants and seven traditional cafeterias that were closed  in
fiscal  1996, and the remaining $5.1 million related to a  write-
down  of  impaired  assets that will continue to  be  carried  in
operations.  See  Note 10 of the Financial  Statements  for  more
information on this charge.
        The  Company  also  recorded an $8.3 million  restructure
charge  in  the  third quarter of fiscal 1996.  This  restructure
charge  was  largely composed of $6.1 million  for  costs  to  be
incurred  to  settle lease obligations for the 15  quick  service
restaurants and seven cafeterias that were closed. The  remaining
$2.2  million  of the charge related to various asset  write-offs
and  professional fees associated with the Distribution. See Note
11  of  the  Financial  Statements for more information  on  this
charge.
       The  effective  income  tax rate  (benefit)  decreased  to
(36.5%) in 1996 from 40.5% in 1995. This decrease was due to  the
nondeductibility of a portion of the professional fees associated
with  the  restructuring, which resulted in a lower  tax  benefit
from the pre-tax loss.


LIQUIDITY AND CAPITAL RESOURCES

Cash Flow

      During 1997, cash generated from operations of $8.3 million
combined  with cash available from lines of credit  was  used  to
fund  $14.1 million of net capital expenditures and $3.3  million
of  dividends.  There were $7.5 million in short-term  borrowings
under  the  Company's  line of credit as  of  May  31,  1997,  an
increase  of $7.5 million over the prior year. See the Statements
of Cash Flows on page 21 for more information.

Capital Expenditures

      Property  and equipment expenditures for fiscal  1997  were
$14.1 million, 4.6% lower than the prior year. During 1997, three
cafeteria-style restaurants (two small cafeterias  and  one  mall
food  court)  were  opened and four traditional  cafeterias  were
closed.   The  Company  spent  approximately  $4.5   million   on
technology  upgrade  programs during  the  fiscal  year.  Capital
expenditures  for fiscal 1998 are expected to be  $14.8  million.
Expected  openings  for  fiscal  year  1998  include  six   small
cafeterias.  The Company anticipates that capital expansion  will
be  funded  primarily by operations supplemented  by  incremental
borrowings  from its line of credit when necessary. See  "Special
Note Regarding Forward-Looking Information".

Borrowings and Credit Facilities

      The  Company had a committed line of credit totaling  $10.0
million at May 31, 1997, which had a balance outstanding of  $7.5
million  as  of the fiscal year end. There was also an additional
$5.0 million uncommitted portion of this same facility which  was
unused  during  the fiscal year. Subsequent to fiscal  1997,  the
Company  replaced  this  line  of credit  with  a  $30.0  million
committed  line  of credit with another bank. This  new  line  of
credit  is considered adequate by the Company to provide for  its
financing  needs over the next three fiscal years.  See  "Special
Note Regarding Forward-Looking Information".

Dividends

     Cash dividends paid to stockholders during 1997 equaled $3.3
million ($0.36 per share).

Deferred Tax Assets

      The  recognition  of  deferred tax assets  depends  on  the
anticipated  existence of taxable income  in  future  periods  in
amounts  sufficient to realize the assets. Statement of Financial
Accounting  Standards No. 109 (FAS 109), "Accounting  for  Income
Taxes",  specifies that deferred tax assets are to be reduced  if
it  is  believed more likely than not that some  or  all  of  the
deferred  tax  assets  will not be realized. Management  believes
that future taxable income should be sufficient to realize all of
the  Company's  deferred  tax  assets  based  on  the  historical
earnings of the Company; therefore, a valuation allowance has not
been  established.  See  "Special Note Regarding  Forward-Looking
Information".


KNOWN EVENTS, UNCERTAINTIES AND TRENDS

New Accounting Standards

      In  February 1997, the Financial Accounting Standards Board
issued  Statement of Financial Accounting Standards No. 128  (FAS
128),  "Earnings Per Share", which is required to be adopted  for
financial  statements issued after December  15,  1997.  At  that
time, the Company will be required to change the method currently
used  to  compute  earnings per share and to  restate  all  prior
periods.   Under  the  new  requirements  for  calculating  basic
earnings per share, the dilutive effect of stock options will  be
excluded. The change is not expected to have a material impact on
the Company's primary or fully diluted earnings per share.

Impact of Inflation

       In  the  past,  the  Company  has  been  able  to  recover
inflationary cost increases through increased menu prices.  There
have been, and there may be in the future, delays in implementing
such  menu  price increases, and competitive pressures may  limit
the  Company's  ability to recover such cost increases  in  their
entirety.  At present, the minimum wage is scheduled to  increase
again  on  September  1,  1997 which may  negatively  impact  the
Company's  payroll costs in the short-term, but which  Management
feels   can   be  negated  in  the  long-term  through  increased
efficiencies  in  its operations. Historically,  the  effects  of
inflation  on  the Company's net income have not been  materially
adverse.

Management's Outlook

      The  Company  intends to grow primarily through  same-store
customer and sales increases, as well as to achieve profitability
growth  through  cost  management. To help accomplish  this,  the
Company  will  make  its  restaurants  more  convenient  for  the
customer  by  locating  to freestanding sites  when  appropriate.
Incremental  new  restaurant growth will be managed  to  a  level
which  can  be funded from operating cash flows, supplemented  by
borrowings when appropriate. Management's focus in the short term
will  be on improving operating margins at the restaurant  level,
as  well  as  leveraging overhead and general and  administrative
expenses.   Management  consistently  evaluates  its  advertising
expenditures and anticipates marketing its restaurants at a  rate
consistent  with  prior years based on the effectiveness  of  its
efforts.    See    "Special   Note   Regarding    Forward-Looking
Information".

Special Note Regarding Forward-Looking Information

      The  foregoing  section  contains various  "forward-looking
statements" which represent the Company's expectations or beliefs
concerning  future  events, including the  following:  statements
regarding  unit  growth, future capital expenditures  and  future
borrowings.  The  Company cautions that  a  number  of  important
factors  could,  individually or in the aggregate,  cause  actual
results  to differ materially from those included in the forward-
looking  statements including, without limitation, the following:
consumer   spending  trends  and  habits;  mall-traffic   trends;
increased   competition   in  the  restaurant   market;   weather
conditions   in  the  regions  in  which  the  Company   operates
restaurants;  consumers' acceptance of the Company's  development
concepts;  and laws and regulations affecting labor and  employee
benefit costs.





MORRISON FRESH COOKING, INC.
SUMMARY OF OPERATIONS
(In thousands except per-share data)

                                          For the Fiscal Year Ended
                            May 31,     June 1,   June 3,    June 4,   June 5,
                             1997        1996      1995       1994       1993
<TABLE>
<S>                        <C>        <C>        <C>        <C>        <C>
Net Sales                $ 249,637  $ 267,638  $ 294,587  $ 292,493  $ 291,032
                                                                               
Income Before Loss on                                                        
  Impairment of Assets,                                                      
  Restructure Costs, Income                                                  
  Taxes and Cumulative Effect                                                  
  of Accounting Changes  $   4,349  $   6,491  $  19,108  $  16,724  $  13,110
                                                                               
Loss on Impairment of Assets           13,789                              
Restructure Costs                       8,290                               
Income (Loss) Before Income Taxes                                          
 and Cumulative Effect of                                                  
 Accounting Changes          4,349    (15,588)    19,108     16,724     13,110
                                                                          
Provision for (Benefit from)                                                 
   Income Taxes              1,617     (5,694)     7,734      6,646      4,898
                                                                              
Income (Loss) Before Cumulative                                               
 Effect of Accounting                                                           
 Changes                     2,732     (9,894)    11,374     10,078      8,212
                                                                        
Cumulative Effect of Accounting                                            
Changes, net:                                                            
    Postretirement Benefits                                             (1,921)
    Income Taxes                                                         1,409
                                                                        
Net Income (Loss)        $   2,732  $  (9,894) $  11,374  $  10,078  $   7,700
                                                                            
Earnings (Loss) Per Common and                                              
 Common Equivalent Share $    0.30  $   (1.10) $    1.27  $    1.08  $    0.81
Weighted Average Common and                                                  
 Common Equivalent Shares    9,100      8,954      8,981      9,342      9,520
                                                                          
                                                                     
All fiscal years are composed of 52 weeks.                         
                                                                             
                                                                 
Other Financial Data:                                                      
 Total Assets            $  84,028  $  83,539  $  90,122  $  77,461  $  82,077
 Short Term Borrowings   $   7,461  $       0  $       0  $       0  $       0
 Long-Term Capital Leases$     662  $     775  $     848  $     931  $   1,008
 Stockholders' Equity    $  39,944  $  39,844  $  47,465  $  29,303  $  32,623
 Current Ratio               0.4:1      0.5:1      0.4:1      0.4:1      0.5:1
 Cash Dividends Per                                                       
   Common Share          $    0.36  $    0.09  $    0.00  $    0.00  $    0.00
</TABLE>



MORRISON FRESH COOKING, INC.
STATEMENTS OF OPERATIONS
(In thousands except per-share data)

                                                 For the Fiscal Year Ended
                                                May 31,    June 1,    June 3,
                                                 1997       1996       1995
<TABLE>
<S>                                            <C>        <C>        <C>
Net Sales                                    $ 249,637  $ 267,638  $ 294,587
                                                                                
Operating Costs and Expenses:                                                   
     Cost of merchandise                        70,684     75,458     78,987
     Payroll and related costs                  90,712    101,718    105,472
     Other operating costs                      56,163     56,184     60,618
     Selling, general and administrative        17,639     17,658     20,426
     Depreciation                                9,950     10,078     10,277
     Interest  expense  (income), net              140         51       (301)
     Loss on impairment of assets                          13,789           
     Restructure costs                                      8,290          
                                                                                
                                               245,288    283,226    275,479
                                                                               
Income (Loss) Before Income Taxes                4,349    (15,588)    19,108
                                                                           
Provision for (Benefit from) Income Taxes        1,617     (5,694)     7,734
                                                                            
Net Income (Loss)                            $   2,732  $  (9,894) $  11,374
                                                                           
                                                                           
Earnings (Loss) Per Common and                                               
   Common Equivalent Share                   $    0.30  $   (1.10) $    1.27 
                                                                           
Weighted Average Common and Common                                         
   Equivalent Shares                             9,100      8,954      8,981
                                                                         
</TABLE>

The accompanying notes are an integral part of the financial statements.



MORRISON FRESH COOKING, INC.
BALANCE SHEETS
(In thousands)

                                                  For the Fiscal Year Ended
                                                      May 31,      June 1,    
                                                       1997          1996
<TABLE>
<S>                                                  <C>           <C>
ASSETS                                                                 
CURRENT ASSETS:                                                
  Cash and short-term investments                 $    2,939    $    1,561
  Receivables:                                                               
     Trade                                               321           412
     Other                                             1,226         1,495
  Inventories:                                                           
     Merchandise                                       1,488         1,335
     China, silver and supplies                          924         1,081
  Prepaid expenses                                     1,545         1,791
  Deferred income tax benefits - current               5,027         5,605
       Total Current Assets                           13,470        13,280
                                                                          
PROPERTY AND EQUIPMENT - at cost:                                           
  Land                                                 6,666         6,436
  Buildings                                           19,882        18,762
  Improvements                                        58,017        57,186
  Restaurant equipment                                56,265        53,143
  Other equipment                                     14,277        13,232
  Construction in progress                             6,627         6,183
                                                     161,734       154,942
  Less accumulated depreciation and amortization    (100,834)      (95,828)
                                                      60,900        59,114
Deferred income tax benefits                           2,615         3,325
Other assets                                           7,043         7,820
                                                                           
  TOTAL ASSETS                                    $   84,028    $   83,539
                                                                            
LIABILITIES AND STOCKHOLDERS' EQUITY                                        
CURRENT LIABILITIES:                                                        
  Accounts payable                                $    8,212    $    9,579
  Accrued liabilities:                                                   
     Taxes, excluding income taxes                     2,621         2,983
     Payroll and related costs                         4,889         4,082
     Insurance                                         4,257         5,829
     Rent and other                                    2,910         4,484
   Short term borrowings                               7,461
   Current portion of capital lease obligations          103            77
       Total Current Liabilities                      30,453        27,034
                                                                            
  Capital lease obligations                              662           775
  Employee benefit obligations                         8,285         8,620
  Other deferred liabilities                           4,684         7,266
                                                                         
STOCKHOLDERS' EQUITY:                                                      
   Common stock, $0.01 par value (100,000 shares                             
     authorized; 9,214 shares issued - 1997,                                
     9,049 shares issued - 1996)                          90            90
  Capital in excess of par value                      41,428        40,279
   Accumulated deficit                                   593)          (70)
  Treasury stock                                        (266)         (455)
  Unearned ESOP shares                                  (715)             
         Total Stockholders' Equity                   39,944        39,844
                                                                           
                                                                           
  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $   84,028    $   83,539 

</TABLE>

The accompanying notes are an integral part of the financial statements.



MORRISON FRESH COOKING, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands except per-share data)

                                                                         Total
                    Capital in                             Unearned      Stock-
       Common Stock Excess of Accumulated Treasury Stock*     ESOP      holders'
      Shares Amount Par Value   Deficit    Shares Amount  Shares Amount  Equity
<TABLE>
<S>    <C>      <C>    <C>        <C>         <C>  <C>    <C>     <C>   <C>
Balance, June 4, 1994  29,303                                           29,303
Net Income             11,374                                           11,374
Net transfers from MRI  6,788                                            6,788
                                                                     
Balance, June 3, 1995  47,465                                           47,465
Net Income (Loss) as of                                                 
 March 2, 1996        (10,615)                                         (10,615)
Post-distribution Net Income      721                                      721
Net transfers from MRI  1,747                                            1,747
Shares issued pursuant to the                                                
  Distribution                                                           
       8,839    88        367                 48  (455)                      0
Shares issued under stock bonus and                                       
  stock option plans                                                      
         210     2      1,315                                            1,317
Cash Dividends of                                                        
  $.09 per common share          (791)                                    (791)
                                                                          
Balance, June 1, 1996                                                      
       9,049    90     40,279     (70)        48  (455)                 39,844
Net Income                      2,732                                    2,732
ESOP funding              734                             151    (734)       0
Shares allocated under                                                      
  ESOP     4                1                              (4)     19       20
Deferred Compensation Plan                    (4)  189                     189
Shares issued under                                                      
  stock bonus and stock option                                              
  plans   14              414                                              414
Cash Dividends of                                                             
  $.36 per common share        (3,255)                                  (3,255)
                                                                          
Balance, May 31, 1997                                                      
       9,067  $ 90   $ 41,428  $ (593)        44 $(266)   147   $(715) $39,944

</TABLE>

The accompanying notes are an integral part of the financial
statements.

*  Treasury shares are held exclusively in an irrevocable rabbi
trust for the Morrison Fresh Cooking, Inc. Deferred
Compensation Plan.



MORRISON FRESH COOKING, INC.
STATEMENTS OF CASH FLOWS
(In thousands)

                                               For the Fiscal Year Ended
                                           May 31,      June 1,      June 3,
                                            1997         1996         1995
<TABLE>
<S>                                        <C>          <C>          <C>    
Operating Activities:                             
   Net Income (Loss)                     $  2,732     $ (9,894)   $  11,374
   Adjustments to reconcile net income (loss) to                            
   net cash provided by operating activities:                               
     Depreciation                           9,950       10,078       10,277
     Deferred income taxes                  1,617       (5,694)       1,624
    (Gain)/Loss on disposition and write-down                               
       of  assets                          (1,122)      13,789          605
     Changes in operating assets and liabilities:                             
       (Increase)/decrease in receivables     360         (354)        (450)
       (Increase)/decrease in inventories       4          819         (456)
       (Increase)/decrease in prepaid and                                    
         other assets                       1,023        1,456         (311)
        Increase/(decrease) in accounts payable,                              
         accrued and other liabilities     (6,264)       1,117       (5,764)
                                                                             
Net  Cash Provided by Operating Activities  8,300       11,317       16,899
                                                                           
Investing Activities:                                                      
   Purchases of property and equipment    (14,068)     (14,742)     (19,422)
   Proceeds from disposal of assets         2,404        1,160          154
   Other, net                                                        (4,110)
                                                                            
Net Cash Used by Investing Activities     (11,664)     (13,582)     (23,378)
                                                                          
Financing Activities:                                                     
   Principal payments on capital leases       (87)         (79)         (75)
   Short-term borrowings                    7,461                          
   Proceeds from issuance of stock            414        1,317             
   Dividends paid                          (3,255)        (791)             
   ESOP shares released                        20                          
   Decrease in treasury stock held by Deferred                                 
     Compensation Plan                        189                          
   Net transfers from Morrison Restaurants                                 
     Inc.                                                1,747        6,788    
                                                                            
Net Cash Provided by Financing Activities   4,742        2,194        6,713
                                                                            
Increase/(decrease) in cash and short-term                                     
 Investment                                 1,378          (71)         234
Cash and short-term investments at the beginning                             
 of the year                                1,561        1,632        1,398
Cash and short-term investments at the end of                            
 the  year                               $  2,939     $  1,561    $   1,632
                                                                           
Supplemental Disclosure of Cash Flow Information                            
  Cash Paid for:                                                          
   Interest (net of amount capitalized)  $    153     $     45    $      82
   Income taxes, net                     $      0     $      0    $   8,901

</TABLE>

The accompanying notes are an integral part of the financial statements.



MORRISON FRESH COOKING, INC.
NOTES TO FINANCIAL STATEMENTS

May 31, 1997

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

      The  operations of Morrison Fresh Cooking, Inc., a  Georgia
corporation   (the   Company),  consist  of  154   family   style
restaurants in the southeastern and mid-Atlantic regions  of  the
United  States,  with  the largest number  in  Florida,  Georgia,
Virginia,  Alabama  and  Mississippi. The  Company's  restaurants
provide  cafeteria-style service and are located in shopping  and
business   developments  as  well  as  residential   areas.   The
restaurants  are  generally open for lunch  and  dinner  service,
seven days a week. All restaurants are Company-owned.

Basis of Presentation
     
     On   March   9,  1996,  Morrison  Restaurants   Inc.   (MRI)
distributed to its shareholders all of the issued and outstanding
shares  of  common stock of the Company, which  held  the  family
dining  assets  and  business  of MRI.  For  financial  reporting
purposes, the Distribution is assumed to have become effective on
March 3, 1996, the first day of the fourth quarter of fiscal year
1996.  The  accompanying  comparative financial  statements  were
prepared  as  if MRI's family dining business had operated  as  a
stand-alone  entity  for all periods presented.  Such  statements
include  the assets, liabilities, revenues and expenses that  are
directly  related to the Company's operations. For periods  prior
to  the  Distribution, they also include an allocation of certain
assets,  liabilities and general corporate expenses of MRI,  such
as  executive payroll, legal, data processing and interest, which
are  related  to  the  Company. Amounts were  allocated  using  a
specific  identification method where appropriate and  on  a  pro
rata  basis otherwise. Management believes the allocation methods
used are reasonable.
     Certain  1996 balances have been reclassified between  other
deferred   liabilities  and  deferred  tax  assets   to   reflect
refinements  in  the allocation of liabilities  at  the  time  of
Distribution.

Use of Estimates in Financial Statements

      Judgement  and  estimation are exercised by  Management  in
certain areas of the preparation of financial statements. Some of
the more significant areas include reserves for self insurance of
workers' compensation, general liability and medical benefits, as
well   as  the  estimates  of  impairment  losses,  restructuring
expenses  and  the reates have  been  based  on  reasonable
assumptions  and  that  provisions and  reserves  based  on  such
estimates  are adequate. Actual results could differ  from  those
estimates.

Fiscal Year

     The  Company's fiscal year ends on the first Saturday  after
May  30.  The fiscal years ended May 31, 1997, June 1,  1996  and
June 3, 1995, were composed of 52 weeks.

Fair Value of Financial Instruments

     The Company's financial instruments at May 31, 1997 and June
1, 1996 consisted of cash and short-term investments, receivables
and  short-term  borrowings. The fair value  of  these  financial
instruments  approximated the carrying amounts  reported  in  the
balance  sheets.  The  Company  considers  short-term  marketable
securities with a maturity of three months or less when purchased
to be short-term investments.

Advertising

     The  Company  expenses the costs of all advertising  in  the
period incurred.

Inventories

     Inventories  consist of food supplies and china and  silver,
and  are  stated at the lower of cost (first in,  first  out)  or
market.

Property and Equipment and Depreciation

     Depreciation  for financial reporting purposes  is  computed
using the straight-line method over the estimated useful lives of
the  assets or, for capital lease property, over the term of  the
lease, if shorter. Annual rates of depreciation range from 3%  to
5%  for  buildings  and from 8% to 34% for restaurant  and  other
equipment.
     As  discussed  in  Note  10, during fiscal  year  1996,  the
Company  adopted Statement of Financial Accounting Standards  No.
121  (FAS  121),  "Accounting for the  Impairment  of  Long-Lived
Assets  and  for Long-Lived Assets to Be Disposed  Of".  FAS  121
requires   that   long-lived  assets  and  certain   identifiable
intangibles  to  be held and used by an entity  be  reviewed  for
impairment  whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable. Long-
lived  assets and certain identifiable intangibles to be disposed
of  are  generally to be reported at the lower of carrying amount
or  fair  value,  less  cost to sell.  In  association  with  the
Company's  adoption of FAS 121 in fiscal year 1996, a  charge  of
$13.8 million was recorded for the impairment of assets. Prior to
fiscal  year  1996, the Company recognized asset impairment  upon
the decision to close a unit.

Income Taxes

     Deferred  income taxes are determined utilizing a  liability
approach.  This  method gives consideration  to  the  future  tax
consequences   associated  with  differences  between   financial
accounting  and tax bases of assets and liabilities. For  periods
prior   to   the   Distribution  reflected  in  the  accompanying
statements  of  operations,  the  income  tax  expense  reflected
includes the Company's allocated share of MRI's tax expense.  The
allocated income tax expense approximates the tax expense of  the
Company on a stand-alone basis.

Pre-Opening Expenses

     Salaries,  personnel training costs and  other  expenses  of
opening new facilities are charged to expense as incurred.

Earnings Per Share

     Earnings per share are based on the weighted average  number
of  shares outstanding during the year and are adjusted  for  the
assumed  exercise  of  options, after the assumed  repurchase  of
shares with the related proceeds and after the adjustment for any
stock splits and stock dividends through May 31, 1997.
     For fiscal year 1996, shares issued in the Distribution were
assumed to have been issued for the entire year. For prior years,
the  number  of shares used in computing earnings per  share  was
based  on  the  average number of MRI common  shares  outstanding
during  the  applicable  fiscal year, adjusted  for  the  1-for-4
distribution ratio.

Stockholders' Equity

     The  Company's  Certificate of Incorporation  provides  that
authorized  capital stock will consist of 100,000,000  shares  of
common  stock at $0.01 par value and 250,000 shares of  preferred
stock  at  $0.01 par value. As a result of the Distribution,  one
share of Company common stock was issued for every four shares of
MRI  common stock outstanding. No shares of preferred  stock  are
issued or outstanding.

Stock-Based Employee Compensation Plans

     The  Company  has  elected to follow  Accounting  Principles
Board  Opinion No. 25 (APB 25), "Accounting for Stock  Issued  to
Employees"  and  related Interpretations, in accounting  for  its
employee stock options and adopted the disclosure-only provisions
of Statement of Financial Accounting Standards No. 123 (FAS 123),
"Accounting  for  Stock-Based Compensation". The  Company  grants
stock  options for a fixed number of shares to employees with  an
exercise  price equal to the market value of the  shares  at  the
date of grant, and accordingly recognizes no compensation expense
for the stock option grants.

Insurance Programs

      The Company is generally self-insured for costs related  to
workers'   compensation,  health  and  welfare  claims,  business
interruption  resulting  from certain events,  and  comprehensive
general, product and vehicle liability. Losses are accrued  using
actuarial   assumptions  followed  in  the  insurance   industry,
adjusted  for  company-specific  history  and  expectations.  The
Company uses commercial insurance as a risk reduction strategy to
minimize catastrophic losses.


2.  Short-Term Borrowings

      At May 31, 1997, the Company had $7.5 million in borrowings
under  a  $15 million line of credit. The interest rate  on  this
line of credit at May 31, 1997 was 8.5%. There were no borrowings
under this line of credit at June 1, 1996.
     In  June 1997, the Company replaced this line of credit with
a   three-year $30 million credit facility with another financial
institution.  This  credit facility consists  of  a  $25  million
revolving line of credit which allows the Company to borrow under
various interest rate options and a $5 million credit line toward
letters  of  credit  issued with respect to the  Company's  self-
insurance  programs.  Commitment fees  of  0.35%  per  annum  are
payable  on the unused portion of the $25 million revolving  line
of  credit.  This credit facility contains certain  restrictions,
including,  but not limited to, incurring additional indebtedness
and  certain  funded  debt, net worth and fixed  charge  coverage
requirements.


3. LEASES

      Various  operations of the Company are conducted in  leased
premises.  Initial lease terms expire at various dates  over  the
next  20 years and may provide for escalation of rent during  the
lease   term.  Most  of  these  leases  provide  for   additional
contingent  rents based upon sales volume and contain options  to
renew (at adjusted rentals for some leases).
     Assets  recorded  under  capital  leases  are  included   in
Property and Equipment in the accompanying balance sheets.
     
     At  May  31,  1997, the future minimum lease payments  under
capital  leases and operating leases for the next five years  and
in the aggregate are as follows:

                                             (In thousands)
                                         Capital        Operating
                                          Leases          Leases

1998                                        265         $ 10,730
1999                                        140            9,517
2000                                        140            8,522
2001                                        140            7,156
2002                                        140            6,204
Subsequent years                            188           16,816
                                                                
Total minimum lease payments              1,013         $ 58,945

Less amount representing interest          (248)
                                                 
Present value of minimum lease payments           
 under capital leases (including current          
 maturities of $103)                     $  765

Rental  expense  pursuant to operating leases  is  summarized  as
follows:

                                             (In  thousands)
                                        May 31,    June 1,    June 3,
                                         1997       1996       1995

Minimum rent                          $ 11,706   $ 11,896   $ 12,173
Contingent rent                          3,745      5,133      3,913
                                                                     
                                      $ 15,451   $ 17,029   $ 16,086

      On  May 30, 1997, the Company entered into a sale-leaseback
transaction  resulting in a gain of $1.6 million to  be  deferred
over  the ten-year life of the lease. The Company classifies  the
lease  as an operating lease. Terms of the lease require  minimum
lease  payments plus a percentage of gross sales. The Company  is
responsible  for  real estate taxes and flood  insurance  on  the
property.
     At  May  31,  1997, the future minimum rent payments  to  be
received  on  subleases  for  the next  five  years  and  in  the
aggregate are as follows:

                                               (In thousands)
                                                     Sub
                                                    Leases

1998                                              $   237
1999                                                  304
2000                                                  238
2001                                                  232
2002                                                  232
Subsequent years                                      183
                                                           
Total minimum lease payments                      $ 1,426


4. INCOME TAXES

The components of income tax expense (benefit) are as follows:

                                         (In thousands)
                                May 31,    June 1,        June 3,
                                 1997       1996           1995
                                                               
Current:                                                        
  Federal                      $     0  $       0      $   5,047
  State                              0          0          1,063
                                     0          0          6,110
Deferred:                                                          
  Federal                        1,396     (4,689)         1,445
  State                            221     (1,005)           179
                                 1,617     (5,694)         1,624
                                                                         
                               $ 1,617  $  (5,694)     $   7,734

Deferred  tax  assets  and  liabilities  are  comprised  of   the
following:

                                       (In thousands)
                                May 31,            June 1,
                                 1997               1996
                                                         
Deferred Tax Assets                                    
  Employee benefits            $ 3,438            $ 4,102
  Insurance reserves             2,234              3,052
  Restaurant closing reserve       444              2,155
  Net operating loss             4,196              2,234
  Deferred income                  583                  0
  Other                            967              2,075
    Total deferred tax assets   11,862             13,618

Deferred Tax Liabilities
  Depreciation                   1,039              1,423
  Retirement plans                 801                827
  Prepaid deductions                84                226
  Restructuring                      0                765
  Intangibles and other          2,296              1,447
Total deferred tax liabilities   4,220              4,688

Net deferred tax asset         $ 7,642            $ 8,930

     FAS 109 specifies that deferred tax assets are to be reduced
by  a valuation allowance if it is more likely than not that some
portion  of  the  deferred  tax  assets  will  not  be  realized.
Management  believes  that  future  taxable  income   should   be
sufficient  to realize all of the Company's deferred  tax  assets
based  on  historical  earnings  of  the  Company;  therefore,  a
valuation allowance has not been established.
      A  reconciliation  from the statutory  federal  income  tax
expense (benefit) to the reported income tax expense (benefit) is
as follows:
                                         (In thousands)
                                  May 31,    June 1,    June 3,
                                   1997       1996       1995

Statutory Federal income tax
 (benefit)                       $ 1,479   $ (5,456)   $ 6,688
State income taxes, net of
 federal income tax benefit          146       (653)       807
Tax credits                          (33)       (20)      (346)
Other, net                            25        435        585

                                 $ 1,617   $ (5,694)   $ 7,734

      The effective income tax (benefit) rate was 37.2%, (36.5%),
and 40.5% in 1997, 1996, and 1995, respectively.
      For  federal  income tax purposes, the Company  has  a  net
operating  loss  carryforward of $1.9 million  which  expires  in
fiscal  2011. This loss was generated by the income  tax  returns
filed  by  the Company for the short tax year beginning March  3,
1996 and ending June 1, 1996. The net operating loss carryforward
generated by fiscal 1997 operations is estimated at $8.5  million
and will expire in fiscal 2012.
      In  connection  with the Distribution, the Company  entered
into  a tax allocation agreement with Morrison Health Care, Inc.,
which  was  also spun-off to the shareholders of  MRI,  and  Ruby
Tuesday, Inc., successor to MRI. This agreement provides that the
Company  pay  its share of Ruby Tuesday, Inc.'s (as successor  to
MRI)  consolidated  tax  liability for the  tax  years  that  the
Company  was  included in MRI's consolidated federal  income  tax
return.   The   agreement  also  provides  for   sharing,   where
appropriate,  of  state, local and foreign taxes attributable  to
periods prior to the Distribution date.


5.   EMPLOYEE BENEFIT PLANS

     The Company maintains the following employee benefit plans.
     
      Salary  Deferral Plan - Under the Morrison  Fresh  Cooking,
Inc.  Salary  Deferral Plan each eligible employee may  elect  to
make  pre-tax  contributions to a trust fund in  amounts  ranging
from 2% to 10% of their annual earnings. Employees contributing a
pre-tax  contribution of at least 2% may elect to make  after-tax
contributions  not  in  excess of 10%  of  annual  earnings.  The
Company contribution to the Plan is based on the employee's  pre-
tax  contribution  and  years of service. After  three  years  of
service  (including service with MRI prior to the  Distribution),
the   Company   contributes  20%  of   the   employee's   pre-tax
contribution,  30% after ten years of service and  40%  after  20
years  of  service.  The  Company's contributions  and  allocated
contributions  to the trust fund approximated $284,000,  $308,000
and $303,000 for 1997, 1996 and 1995, respectively.
      On  February 28, 1997, the Company began sponsorship of  an
employee stock ownership feature (ESOP) covering participants  in
the  Salary Deferral Plan. Under this feature, the Company issued
150,907  shares of its common stock with a fair market  value  of
$4.88 per share to the Salary Deferral Plan in exchange for a ten-
year  note  of $736,000 executed by the Plan's trustee. Repayment
of the loan is being funded by matching employer contributions to
the  Plan.  Shares  purchased with  the  loan  are  allocated  to
participants'  accounts over time as loan  repayments  are  made.
There were 3,890 shares allocated to the Plan in 1997. The market
value of unallocated shares was $735,000 at May 31, 1997.
      The  Company  adopted the provisions of AICPA Statement  of
Position No. 93-6 (SOP) which requires that compensation  expense
be measured based on the fair value of the shares over the period
the  shares  are  earned. Compensation expense was  approximately
$20,000 in 1997. Dividends paid on unallocated shares held by the
ESOP  are used to make additional principal and interest payments
and  are  not  charged  to  retained  earnings.  Shares  not  yet
committed  to be released are not considered outstanding  in  the
calculation of earnings per share.

      Deferred  Compensation  Plan - The  Company  maintains  the
Morrison  Fresh  Cooking,  Inc. Deferred  Compensation  Plan  for
certain  selected  employees. The provisions  of  this  Plan  are
similar  to  those  of  the Salary Deferral Plan.  The  Company's
contributions under the Plan approximated $62,000, $119,000,  and
$102,000  for 1997, 1996, and 1995, respectively. Company  assets
earmarked  to  pay  benefits  under  the  Plan  are  held  by  an
irrevocable  rabbi trust. Assets of the irrevocable  rabbi  trust
are  accounted for as if they are assets of the Company  and  all
earnings  and  expenses are recorded in the  Company's  financial
statements. The net of the rabbi trust's earnings and  losses  is
recorded  as  additional  liability to the  participants  and  is
considered to be interest expense to the Company. Assets  in  the
irrevocable  rabbi  trust  approximated  $3,148,000  and  include
$266,000  of  Company  common stock which  is  accounted  for  as
treasury stock at May 31, 1997.

      Retirement  Plan  -  The Company is  a  co-sponsor  of  the
Morrison  Restaurants  Inc.  Retirement  Plan  along  with   Ruby
Tuesday,  Inc. and Morrison Health Care, Inc. The MRI  Retirement
Plan  was  frozen  on  December 31,  1987.  Participants  receive
benefits based upon salary and length of service. No contribution
was  made  by  the  Company in 1997. Pension  expense  or  income
related to the Plan was insignificant in 1997, 1996 and 1995. The
Plan's  assets  include  common stock, fixed  income  securities,
short-term  investments and cash. The Company  will  continue  to
share in future expenses of the Plan, and will make contributions
to the Plan as necessary, on behalf of its employees.

      Executive  Supplemental Pension Plan - Under  the  Morrison
Fresh   Cooking,  Inc.  Executive  Supplemental   Pension   Plan,
employees  with an average compensation of at least $120,000  for
the  immediately  preceding  two  calendar  years  and  who  have
completed  five years (including service with MRI  prior  to  the
Distribution)  in a qualifying position become eligible  to  earn
supplemental  retirement income based upon salary and  length  of
service  (including service with MRI prior to  the  Distribution)
reduced   by  social  security  benefits  and  amounts  otherwise
receivable under the Retirement Plan.

      Management  Retirement  Plan -  Under  the  Morrison  Fresh
Cooking, Inc. Management Retirement Plan, individuals who have 15
years  of  credited service (including service with MRI prior  to
the  Distribution) and whose average annual compensation  equaled
or  exceeds  $40,000,  become participants. Participants  receive
benefits  based  upon  salary and length  of  service  (including
service  with  MRI prior to the Distribution) reduced  by  social
security benefits and benefits payable under the Retirement  Plan
and Executive Supplemental Pension Plan.
      To  provide a source for the payment of benefits under  the
Executive Supplemental Pension Plan and the Management Retirement
Plan, the Company owns whole-life insurance contracts on some  of
the  participants. The cash value of these policies net of policy
loans  was  $678,000 at May 31, 1997. The Company has established
an  irrevocable  rabbi  trust  to hold  the  policies  and  death
benefits  as  they  are  received.  Expenses  recorded  for   the
Executive Supplemental Pension Plan and the Management Retirement
Plan  were  $534,000, $512,000 and $508,000 for  1997,  1996  and
1995, respectively.
     The following table details the allocation of the components
of  pension  expense,  as  well as  a  comparison  of  assets  to
obligations  and  amounts recognized in the  Company's  financial
statements  for  the  Management Retirement Plan,  the  Executive
Supplemental Pension Plan, and the Retirement Plan.

                                   (In thousands)
                        Assets Exceed       Accumulated Benefits Exceed Assets-
                    Accumulated Benefits-   Executive Supplemental Pension Plan 
                        Retirement Plan        and Management Retirement Plan 
                  May 31,    June 1,     June 3,      May 31, June 1,   June 3,
                   1997       1996        1995         1997    1996       1995
<TABLE>
<S>                <C>        <C>        <C>           <C>      <C>      <C>
            Components of pension expense (income):                         
Service cost    $           $          $             $    69  $    56  $    66
Interest cost        647        660         820          295      312      250
Actual return on                                                            
  plan assets     (1,307)    (1,556)       (263)                            
Amortization and                                                             
  deferral           623        983        (622)         170      144      111
Other                                                                       81
                $    (37)   $    87    $    (65)     $   534  $   512  $   508
                                                                             
Plan assets at fair                                                          
  value         $  9,161    $ 8,903    $ 10,066      $     0  $     0  $     0
Actuarial present value of                                                   
  projected benefit obligations:                                             
Accumulated benefit obligations:                                             
  Vested           8,527      8,764       9,846        3,148    2,040    3,108
  Nonvested                                                0        0        7
Provision for future salary                                                   
  increases                                              837      852      799
Total projected benefit                                                      
  obligations      8,527      8,764       9,846        3,985    2,892    3,914
                                                                            
Excess (deficit) of plan assets over                                          
  projected benefit                                                          
  obligations        634        139         220       (3,985)  (2,892)  (3,914)
Unrecognized net loss                                                       
  (gain)             871      1,200       1,960         (101)      81     (239)
Unrecognized prior                                                           
  service cost                                           381      450      602
Unrecognized net transition                                                 
  obligation         641        769       1,077          981      710      899
Additional minimum                                                           
  liability                                             (923)    (445)    (524)
Prepaid (accrued)                                                           
  pension cost  $  2,146    $ 2,108    $  3,257      $(3,647) $(2,096) $(3,176)

</TABLE>

      The  weighted-average discount rate for all three plans  is
8.25%, 7.75% and 8.5% for 1997, 1996, and 1995, respectively. The
rate  of  increase  in  compensation  levels  for  the  Executive
Supplemental Pension Plan and Management Retirement  Plan  is  4%
for 1997, 1996 and 1995. The expected long-term rate of return on
Plan assets for the Retirement Plan is 10% for all three years.


6.   POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

      The  Company provides certain health care benefits and life
insurance benefits to eligible retirees. Effective June 7,  1992,
the  Company  amended the plan to fix the Company's  current  and
future  contribution levels to the Benefit Plan at the  rates  in
place at that time. Increases in health care benefits above  such
rates   are  borne  by  the  participants.  Measurement  of   the
accumulated  postretirement benefit obligation was  based  on  an
assumed  8.25%  discount rate for fiscal 1997, 7.75%  for  fiscal
1996  and  8.5% for fiscal 1995. Benefits are funded  as  medical
claims  and life insurance premiums are incurred. Retirees become
eligible for retirement benefits if they have met certain service
and  minimum age requirements at date of retirement. The  Company
accrues  expenses related to postretirement health care and  life
insurance   benefits  during  the  years  an  employee   provides
services.
      The  actuarial  present value of accumulated postretirement
benefit  obligations and the amounts recognized in the  Company's
balance sheets are as follows:

                                                (In thousands)
                                               May 31,   June 1,
                                                1997      1996

Retirees                                      $ 1,867   $ 2,035
Fully eligible active plan participants           458       444
Other active plan participants                    260       261
                                                               
Accumulated postretirement benefit obligation   2,585     2,740
Unrecognized net loss                            (660)     (848)
Unrecognized prior service cost                   251       284
                                                                   
Accrued postretirement benefit cost           $ 2,176   $ 2,176
     
     The postretirement benefit cost is as follows:
     
                                             (In thousands)
                                        May 31,  June 1,  June 3,
                                         1997     1996     1995

Service cost                             $   8    $   9    $  22
Interest cost                              203      223      307
Amortization of unrecognized net loss       60       40       95
Postretirement benefit cost              $ 271    $ 272    $ 424


7.  EMPLOYEE STOCK INCENTIVE PLANS

     The  Company's  1996  Stock Incentive Plan  provides  for  a
committee appointed by the Board and authorizes the committee the
discretion to grant a variety of equity-based awards to  eligible
persons.  The plan has 595,000 shares of common stock  authorized
for  issuance. Options granted have a five-year term  and  become
fully  vested and exercisable either two or three years from  the
grant  date.  The  1996 Non-Executive Stock  Incentive  Plan  has
1,985,000  shares authorized for the issuance of  stock  to  non-
executive management personnel. Criteria for granting options and
vesting  schedules  are  identical to those  of  the  1996  Stock
Incentive Plan.
     The  Stock  Incentive  and Deferred  Compensation  Plan  for
Directors  has  85,000  shares authorized  for  issue.  The  Plan
requires  that  directors use 60% of their retainer  to  purchase
shares  of  Company stock if they have not attained  a  specified
level  of  ownership. Participants receive 15% of  the  purchased
amount as bonus shares and a non-qualified stock option equal  to
three  times  the  total shares received. All options  are  fully
vested  and exercisable after six months and have a term of  five
years from the grant date.
      Under  the  terms  of the Distribution,  employees  of  the
Company  who were holders of MRI stock options received adjusted,
substitute  options  which,  in  the  aggregate,  preserved   the
economic  value  as well as the material terms,  such  as  option
period, vesting provisions and payment terms, the optionee had in
the  original MRI options prior to the Distribution.  Vested  and
non-vested  MRI  options  were adjusted by  granting  new  option
rights  to  acquire Ruby Tuesday, Inc. and Morrison Health  Care,
Inc. stock in addition to Company stock.
     The  Company  applies APB 25 and related interpretations  in
accounting  for  its employee stock options. In contrast  to  the
intrinsic  value  based method employed by APB 25,  Statement  of
Financial Accounting Standards No. 123 (FAS 123) "Accounting  for
Stock-Based  Compensation," utilizes a fair value  based  method.
FAS 123 requires the use of option valuation models developed for
estimating  the  fair  value of traded options  which  are  fully
transferable  and have no vesting restrictions. Option  valuation
models  also  utilize  highly  subjective  assumptions  such   as
expected  stock price volatility. Changes in the assumptions  can
materially  impact the fair value estimate and,  in  Management's
opinion, do not necessarily provide a reliable single measure  of
the  fair  value of its employee stock options. Adoption  of  the
cost  recognition  requirements of FAS 123 is optional;  however,
the required pro forma disclosures as if the Standard was adopted
in 1996 are presented on the following page.
     All stock options are awarded at the prevailing market value
on the date of grant; therefore, under the intrinsic value method
employed  by  APB 25, no compensation expense is recognized.  For
purposes of FAS 123 disclosure, the estimated fair value  of  the
options is expensed over the vesting period of the options.  Fair
value  was estimated at the date of grant using the Black-Scholes
option   pricing  model  with  the  following  weighted   average
assumptions  for  1997  and  1996,  respectively:  (i)  risk-free
interest  rates of 6.24% and 5.64%, (ii) dividend yield  of  7.3%
and 4.6%, (iii) stock price volatility factor of .27 and .23, and
(iv)  expected option life of 4.3 years. Options replacing  those
originally  granted prior to the Distribution were valued  as  of
the original date of grant. If the Company had adopted FAS 123 in
accounting  for  stock options granted in fiscal years  1997  and
1996, its net income and earnings per share would approximate the
pro forma amounts below (in thousands except for per share data):
     
                                   1997                      1996
                          As Reported   Pro Forma   As Reported   ProForma
                                                                           
Net Income (Loss).........   $ 2,732     $ 2,567     $ (9,894)     $ (9,951)
                                                                         
Earnings per Share........   $  0.30     $  0.28     $  (1.10)     $  (1.11)

     The effects of applying FAS 123 in this pro forma disclosure
may  not be indicative of future results. FAS 123 does not  apply
to  awards  made  prior to 1996 and additional awards  in  future
years are anticipated.
     
     The following table summarizes the activity in options under
all plans as of May 31, 1997 and June 1, 1996 (in thousands):

                                             1997                1996
                                                Wtd. Avg.            Wtd.Avg.
                                                Exercise             Exercise
                                       Shares   Price      Shares    Price
                                                                           
Outstanding at beginning of year       1,875   $ 6.69          0       
Replacement options granted                0               1,114     5.78
Granted                                   44     5.15        846     7.75
Exercised                               (111)    3.26        (65)    4.29
Forfeited                               (330)    7.73        (20)    9.18
                                                                            
Balance at end of year                 1,478     6.68       1,875    6.69

Exercisable  at  end  of  year           796     5.92         778    5.46
                                                                         
Shares available for future grant      1,187                  751             
                                                                             
Weighted average fair value of options                                     
  granted during the year                       $0.74               $1.27

      Information regarding stock options outstanding at the  end
of  the current fiscal year are summarized in the following table
(in thousands):

                  Options Outstanding                     Options Exercisable 
                                Weighted
                                Average       Weighted                Weighted
 Range of          Options      Remaining     Average    Options      Average
 Exercise          Outstanding  Contractual   Exercise   Exercisable  Exercise
 Prices            at 5/31/97   Life in Yrs.  Price      at 5/31/97   Price
$3.34 to $5.41         566        2.3         $4.86         538        $4.87
$5.41 to $7.38         146        4.4         $6.07          60        $5.79
$7.75 to $7.75         523        3.9         $7.75           3        $7.75
$8.10 to $11.75        243        1.8         $8.96         195        $8.85

$3.34 to $11.75      1,478        2.9         $6.68         796        $5.92

    The  Company's Stock Incentive and Deferred Compensation Plan
for directors also provides for a restricted stock award of 5,000
shares to newly elected directors. Unvested shares are restricted
as   to  disposition  and  are  subject  to  forfeiture  if   the
participant ceases to be a member of the Board of Directors.  The
participant is entitled to full dividends and voting rights  with
respect  to  the entire award. Shares vest incrementally  over  a
three  year period, but become fully vested on account of  death,
disability,  or retirement. Upon issuance, unearned  compensation
is  recorded  and then expensed ratably over the vesting  period.
One   such  award  was  made  during  fiscal  1996.  The  Company
recognized  compensation expense of $13,000 in  fiscal  1997  and
$3,000 in fiscal 1996 related to the restricted shares.
   In June 1997, the Compensation Committee approved a resolution
to  replace  282,000 outstanding options granted to non-executive
employees immediately after the Distribution at a price of  $7.75
per  share  with new options priced at $4.75 per share which  was
the  market value of the Company's stock on the date of re-grant.
The  Company believes that the new options provide employees with
a greater incentive to increase their ownership in the Company.


8. Preferred Stock

      Under  its  Certificate of Incorporation,  the  Company  is
authorized to issue preferred stock with a par value of $0.01  in
an  amount not to exceed 250,000 shares which may be divided into
and  issued in designated series, with dividend rates, rights  of
conversion,  redemption, liquidation prices and  other  terms  or
conditions as determined by the Board of Directors. No  preferred
shares  have  been  issued  as of May  31,  1997.  The  Board  of
Directors has designated 50,000 of such shares as Series A Junior
Participating  Preferred Stock and has issued rights  to  acquire
such  shares,  upon  certain events, with an  exercise  price  of
$50.00  per one one-thousandth of a share, subject to adjustment.
The rights expire on March 1, 2006, and may be redeemed prior  to
ten  days  after the acquisition of 20% or more of the  Company's
common stock.


9. COMMITMENTS AND CONTINGENCIES

      At  May  31, 1997, the Company was contingently liable  for
approximately $4.9 million in letters of credit and $4.1  million
for  an  indemnity agreement bond, issued primarily in connection
with its workers' compensation and casualty insurance programs.
      The Company is presently, and from time to time, subject to
pending claims and lawsuits arising in the ordinary course of its
business.  In the opinion of Management, the ultimate  resolution
of  these  pending  legal proceedings will not  have  a  material
adverse effect on the Company's operations or financial position.


10.  Loss on Impairment of Assets

      In  conjunction with the adoption of FAS 121 in  the  third
quarter  of  fiscal  1996, the Company recorded  a  loss  on  the
impairment  of assets of $13.8 million. This charge was  composed
of  the  following: a $6.8 million asset write-off  of  15  quick
service  restaurants and seven traditional cafeterias which  were
approved for closure within one year by the Board of Directors; a
$5.1  million  asset  write-down of  impaired  units  which  will
continue to be operated, $1.5 million of which was due solely  to
the  adoption of FAS 121; and a $1.9 million asset write-down  of
previously closed locations.
     The $6.8 million charge was composed of the expected loss on
the  disposal of long-lived assets of units selected for closure,
net  of  an assumed salvage value of $0.8 million. As of May  31,
1997,  the  Company  had  closed all  seven  of  the  traditional
cafeterias  and  14 of the quick service restaurants  which  were
selected  for closure, at a net loss on disposal of $6.6 million.
The  remaining quick service restaurant is expected to be  closed
in  fiscal  1999  when the Company exercises its right  to  early
termination  under the terms of the lease. Management anticipates
that  the  remaining  allowance will be adequate  to  record  the
ultimate loss expected on the disposal of the unit's assets.
      All  operating  units  not  recommended  for  closure  were
reviewed for impairment. Such review consisted of an analysis  of
each  unit's cash flows and profit trends over the past year.  If
such  review  indicated  impairment,  Management  estimated   the
undiscounted future net cash flows to be generated by these units
and determined that certain of them would be unlikely to generate
net  cash  flows  in  excess of carrying value.  Management  then
estimated the fair value of those units using discounted net cash
flow  as  a measure of fair value, which resulted in a write-down
in  fiscal 1996 of $5.1 million, $1.5 million of which was due to
the  effect of the discounting of cash flows as prescribed by FAS
121.
     In addition to those units selected for closure and impaired
operating units, the Company recorded a charge of $1.9 million in
fiscal 1996 for the write-down of long-lived assets of previously
closed  units. This charge was based on Management's estimate  of
the eventual loss that would be incurred on the ultimate disposal
of these properties. As of May 31, 1997, the Company had disposed
of  two  of  these properties at a net loss on disposal  of  $0.9
million.  Management anticipates that the allowance  provided  is
adequate  for the remaining properties. The Company continues  to
systematically  analyze its units for signs  of  impairment,  and
will record a loss on impairment when impairment is indicated. No
impairment  was  recorded in fiscal 1997  based  on  Management's
analysis.


11.  Restructure Costs

      In  fiscal 1996, the Company recorded restructure costs  of
$8.3  million relating to the settlement of lease obligations  of
units  selected  for  closure  and  costs  associated  with   the
Distribution.  In  addition  to the write-off  of  the  22  units
selected  for  closure by the Board of Directors as described  in
Note  10,  the Company accrued charges of $6.1 million in  fiscal
1996  for settlement of the related lease obligations. As of  May
31,  1997, the Company had negotiated lease settlements on 15  of
its  closed  units at a net cost of $2.3 million,  subleased  two
properties, and paid $3.3 million in rent and related payments on
closed  properties. In addition to the lease obligations  of  its
closed  units,  the Company recorded charges of $0.3  million  in
fiscal  1996 for severance payments of personnel employed at  the
closed  units. Management anticipates that the remaining  accrual
of $0.8 million is adequate to settle the remaining five leases.
      The  Company recorded $2.0 million in 1996 in other charges
incurred as a result of the Distribution. These charges consisted
of  $1.8 million in estimated professional and other fees such as
stock  exchange  listing fees, and $0.2 million of  miscellaneous
other  asset  write-offs. As of May 31,  1997,  the  Company  had
incurred  $1.7 million in professional fees associated  with  the
Distribution,  and had written off $0.3 million of  miscellaneous
assets.  The  Company  does not anticipate any  additional  costs
related to the Distribution.


12.  PRO FORMA FINANCIAL INFORMATION (unaudited)

The  following Unaudited Pro Forma Statements of Operations  were
prepared   to  illustrate  certain  estimated  effects   of   the
Distribution  and related transactions. These statements  include
adjustments  for  the effects of additional payroll  and  related
costs;   other   operating   expenses;   selling,   general   and
administrative  expenses;  and  depreciation  which  might   have
occurred  had  the Distribution been effected  as  of  the  dates
indicated,  as well as the estimated tax benefit associated  with
these adjustments. The Pro Forma Statements of Operations for the
years  ended June 1, 1996 and June 3, 1995, are prepared assuming
the  distribution  had occurred as of June 1, 1996  and  June  3,
1995,   respectively.   Such  pro  forma  information   may   not
necessarily be indicative of the results that would actually have
occurred had the transactions occurred on the dates indicated  or
of  the  results that may occur in the future. The Unaudited  Pro
Forma Statements of Operations should be read in conjunction with
the historical financial statements, including the notes thereto,
and  other  financial  data  of the  Company  included  elsewhere
herein.

MORRISON FRESH COOKING, INC.
PRO FORMA - STATEMENTS OF OPERATIONS (unaudited)
(In thousands except per-share data

                                                For the Fiscal Year Ended
                                                  June 1,        June 3,
                                                   1996           1995
<TABLE>
<S>                                              <C>            <C>
Net Sales                                      $ 267,638      $ 294,587
                                                                         
Operating Costs and Expenses:                                             
  Cost of merchandise                             75,458         78,987
  Payroll and related costs                      101,967        105,947
  Other operating costs                           56,364         60,960
  Selling, general and administrative             18,416         20,642
  Depreciation and                                10,091         10,299
                                                                       
                                                 262,296        276,835
Operating Income Before Loss on Impairment of Assets                      
  and Restructure Costs                            5,342         17,752
                                                                             
  Loss on impairment of assets                    13,789                  
  Restructure costs                                8,290               
                                                                           
Operating Income (Loss)                          (16,737)        17,752    
                                                                            
  Interest expense (income), net                      51           (301)      
                                                                             
Income (Loss) Before Income Taxes                (16,788)        18,053     
                                                                        
Provision for (Benefit from) Income Taxes         (6,165)         7,307      
                                                                        
Net Income (Loss)                              $ (10,623)     $  10,746
                                                                         
Earnings (Loss) Per Common and                                           
  Common Equivalent Share                      $   (1.19)     $    1.20         
                                                                          
Weighted Average Common and                                             
  Common Equivalent Shares                         8,954          8,981

</TABLE>


13. SUPPLEMENTAL QUARTERLY FINANCIAL DATA (unaudited)

     Quarterly financial results for the years ended May 31, 1997
and  June 1, 1996 are summarized below. All quarters are composed
of 13 weeks.

In thousands (excpet per-share data)

                              FIRST    SECOND      THIRD      FOURTH
                             QUARTER   QUARTER    QUARTER   QUARTER(1)   TOTAL
For The Year Ended May 31, 1997:                                            
<TABLE>
<S>                           <C>       <C>        <C>        <C>      <C>                                     
Net Sales                   $ 63,246  $ 62,889   $ 61,921   $ 61,581  $249,637
Gross Profit*               $  8,372  $  7,844   $  7,554   $  8,308  $ 32,078
Income Before Income Taxes  $  1,262  $  1,103   $  1,109   $    875  $  4,349
Provision for Income Taxes       467       413        408        329     1,617
Net Income                  $    795  $    690   $    701   $    546  $  2,732
                                                                          
Earnings Per Common and                                                  
  Common Equivalent Share   $   0.09  $   0.08   $   0.08   $   0.06  $   0.30
                                                                               
                              FIRST    SECOND      THIRD      FOURTH
                             QUARTER   QUARTER    QUARTER     QUARTER    TOTAL
For The Year Ended June 1, 1996:                                       
                                                                         
Net Sales                   $ 70,129  $ 67,889   $ 65,260   $ 64,360  $267,638
Gross Profit*               $  9,726  $  8,503   $  8,774   $ 7,275   $ 34,278
Income (Loss) Before Income                                           
  Taxes                     $  2,881  $  1,387   $(21,057)  $ 1,201   $(15,588)
Provision for (Benefit from)                                               
  Income Taxes                 1,216       545     (7,935)      480     (5,694)
Net Income (Loss)           $  1,665  $    842   $(13,122)  $   721   $ (9,894)

Earnings (Loss) Per Common and
  Common Equivalent Share   $   0.19  $   0.10   $  (1.49)  $  0.08   $  (1.10)
</TABLE>

(1)  Fourth quarter 1997 results include $0.3 million expense for
severance  costs  ($0.02  per share, net  of  taxes),  offset  by
favorable  adjustments  of  $0.6 million  for  medical  insurance
expense  ($0.04  per share, net of taxes) and  $0.7  million  for
workers'  compensation  and general liability  insurance  expense
($0.05   per  share,  net  of  taxes)  due  to  favorable  claims
experience during 1997.

*  The  Company  defines gross profit as revenues  less  cost  of
merchandise,  payroll  and  related costs,  and  other  operating
costs.

Due  to  weighted average share calculations, quarterly  earnings
per share amounts may not sum to the fiscal year amount.


Morrison  Fresh Cooking, Inc. common stock is publicly traded  on
the  New  York  Stock Exchange under the ticker symbol  MFC.  The
following  table sets forth the reported high and low prices  for
the  fiscal  year ended May 31, 1997, and the fiscal  year  ended
June  1,  1996, commencing with the first trading date  following
the Distribution.


      For the 52 weeks ended May 31, 1997
                              Per Share
                              Cash
Quarter     High      Low     Dividend
First     $ 7.38    $ 4.25    $ 0.09
Second    $ 5.88    $ 4.63    $ 0.09
Third     $ 5.38    $ 4.50    $ 0.09
Fourth    $ 5.38    $ 4.50    $ 0.09


For the 12 weeks ended June 1, 1996
                              Per Share
                              Cash
Quarter     High      Low     Dividend
Fourth    $ 9.00    $ 5.50    $ 0.09


In  June  1997  the  Company's  Board  of  Directors  declared  a
quarterly  dividend of $0.09 per share payable July 31,  1997  to
5,884 shareholders of record on July 11, 1997.



                REPORT OF INDEPENDENT AUDITORS

Stockholders and Board of Directors
Morrison Fresh Cooking, Inc.

      We have audited the accompanying balance sheets of Morrison
Fresh Cooking, Inc. as of May 31, 1997 and June 1, 1996, and  the
related  statements of operations, stockholders' equity and  cash
flows for each of the three fiscal years in the period ended  May
31,  1997.  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 financial position
of Morrison Fresh Cooking, Inc. at May 31, 1997 and June 1, 1996,
and the results of its operations and its cash flows for each  of
the  three  fiscal  years in the period ended May  31,  1997,  in
conformity with generally accepted accounting principles.
      As  discussed  in Note 10 to the financial  statements,  in
fiscal year 1996, Morrison Fresh Cooking, Inc. changed its method
of accounting relative to impairment of long-lived assets.



                                   /s/ Ernst &Young LLP
                                  


Atlanta, Georgia
June 20, 1997