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

                                   FORM 10-Q

[X]   Quarterly report pursuant to Section 13 or 15(d) of the Securities and
      Exchange Act of 1934 For the quarterly period ended September 30, 2000
                                                          ------------------

                                       or

[ ]   Transition report pursuant to Section 13 or 15(d) of the Securities and
      Exchange Act of 1934 For the transition period from ________ to _______

                          Commission File No. 0-11271
                                              -------

                             WALL STREET DELI, INC.
             (Exact name of registrant as specified in its Charter)

       DELAWARE                                     63-0514240
       (State of Incorporation)                     (IRS Employer I.D. No.)

                       One Independence Plaza, Suite 100
                           Birmingham, Alabama 35209
                    (Address of principal executive offices)

                                 (205) 870-0020
                        (Registrant's telephone number)

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

         Indicate by check mark whether the registrant has (1) filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                              Yes   [X]         No   [ ]

         Indicate the number of shares outstanding of the registrant's class of
common stock, as of the latest practicable date.


<TABLE>
<CAPTION>
                 Class                                                 Outstanding at November 9, 2000
----------------------------------------------                         -------------------------------
<S>                                                                    <C>
         Common Stock, $.05 Par Value                                             2,908,477
</TABLE>


<PAGE>   2


                                     INDEX


<TABLE>
<CAPTION>
                                                                                             Page No.
                                                                                             --------

<S>      <C>                                                                                 <C>
PART I:  FINANCIAL INFORMATION

         ITEM 1:  Financial Statements..........................................................1

                  Consolidated Balance Sheets...................................................2

                  Consolidated Statements of Operations.........................................4

                  Consolidated Statements of Stockholders' Equity...............................5

                  Consolidated Statements of Cash Flows.........................................6

                  Notes to Consolidated Financial Statements....................................8

         ITEM 2:  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations..........................................10


PART II: OTHER INFORMATION

         ITEM 6:  Exhibits and Reports on Form 8-K ............................................13

         SIGNATURES............................................................................14
</TABLE>


<PAGE>   3


                         PART I: FINANCIAL INFORMATION


<TABLE>
<S>      <C>
ITEM I:  FINANCIAL STATEMENTS

         The financial statements listed below are included on the following pages of this Report on Form 10-Q:

                  Consolidated Balance Sheets at September 30, 2000 (unaudited) and July 1, 2000.

                  Consolidated Statements of Operations (unaudited) for the thirteen week periods ended
                  September 30, 2000 and October 2, 1999.

                  Consolidated Statements of Stockholders' Equity (unaudited) for the thirteen week periods ended
                  September 30, 2000 and October 2, 1999.

                  Consolidated Statements of Cash Flows (unaudited) for the thirteen week periods ended
                  September 30, 2000 and October 2, 1999.

         Notes to Consolidated Financial Statements  (unaudited).
</TABLE>


                                       1
<PAGE>   4


                             WALL STREET DELI, INC.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                       September 30,         July 1, 2000
                                                                    2000 (unaudited)
=============================================================       ================         =============
<S>                                                                 <C>                      <C>
Assets
Current
     Cash and cash equivalents                                      $    646,369             $    761,380
     Accounts and notes receivable, net (Notes 3 & 6)                  1,368,475                1,341,829
     Inventories                                                         531,221                  549,009
     Deferred tax assets                                                 296,000                  296,000
     Prepaid rent                                                         79,969                   53,580
     Other                                                               110,066                  153,328
                                                                    ------------             ------------
Total current assets                                                   3,032,100                3,155,126
                                                                    ------------             ------------
Equipment and improvements
     Equipment and fixtures                                           15,797,025               15,774,120
     Leasehold improvements                                           12,463,575               12,462,075
                                                                    ------------             ------------
                                                                      28,260,600               28,236,195
Less accumulated depreciation and amortization                       (21,345,477)             (20,918,060)
                                                                    ------------             ------------
Net equipment and improvements                                         6,915,123                7,318,135
                                                                    ------------             ------------
Other
     Long-term portion of notes receivable (Notes 3 & 6)                 834,732                  891,769
     Deferred tax assets                                               2,580,000                2,580,000
                                                                    ------------             ------------
Total other assets                                                     3,414,732                3,471,769
                                                                    ------------             ------------
                                                                    $ 13,361,955             $ 13,945,030
                                                                    ============             ============
</TABLE>


See accompanying notes to consolidated financial statements (unaudited).


                                       2

<PAGE>   5


                             WALL STREET DELI, INC.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                       September 30,         July 1, 2000
                                                                                2000
                                                                         (unaudited)
=============================================================       ================         =============
<S>                                                                 <C>                      <C>
Liabilities and Stockholders' Equity
Current Liabilities
     Bank overdrafts                                                $  1,397,803             $  1,075,620
     Notes payable                                                     1,078,065                1,427,392
     Accounts payable                                                  1,491,483                1,405,267
     Accruals:
          Taxes other than income                                        562,897                  672,405
          Compensation                                                   428,586                  463,639
          Rent                                                           387,193                  487,019
          Workers' compensation                                         (127,015)                  29,962
          Other insurance                                                225,000                  225,000
          Miscellaneous                                                   56,483                  120,876
                                                                    ------------             ------------
Total current liabilities                                              5,500,495                5,907,180
                                                                    ------------             ------------
Commitments and contingencies
Stockholders' equity
     Common stock, $.05 par - shares authorized
          20,000,000; issued 3,426,802                                   171,341                  171,341
     Additional paid-in capital                                       10,805,322               10,805,322
     Retained earnings                                                  (868,112)                (691,722)
                                                                    ------------             ------------
                                                                      10,108,551               10,284,941
Treasury stock, at cost, 518,325 shares                               (2,247,091)              (2,247,091)
                                                                    ------------             ------------
Total stockholders' equity                                             7,861,460                8,037,850
                                                                    ------------             ------------
                                                                    $ 13,361,955             $ 13,945,030
                                                                    ============             ============
</TABLE>


   See accompanying notes to consolidated financial statements (unaudited).


                                       3
<PAGE>   6


                             WALL STREET DELI, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      For the thirteen week periods ended
                                                                    ======================================
                                                                       September 30,            October 2,
                                                                                2000                  1999
=============================================================       ================         =============
<S>                                                                 <C>                      <C>
Revenues
     Net sales                                                      $ 11,239,666             $ 12,838,407
     Franchise revenues                                                   68,311                   52,372
                                                                    ------------             ------------
Total revenues                                                        11,307,977               12,890,779
                                                                    ------------             ------------
Costs of restaurant operations
     Food and paper costs                                              3,730,826                4,528,676
     Labor                                                             2,734,187                2,978,412
     Store expenses                                                    3,220,516                3,528,459
     Restaurant depreciation                                             543,039                  631,040
     Franchise expenses                                                  161,363                   39,607
                                                                    ------------             ------------
Total cost of restaurant operations                                   10,389,931               11,706,194
                                                                    ------------             ------------
Restaurant operating income                                              918,046                1,184,585
                                                                    ------------             ------------
Administrative expenses
     Division level                                                      329,064                  433,798
     Catering sales                                                      123,468                  155,300
     Corporate                                                           598,713                  755,670
                                                                    ------------             ------------
Total general and administrative                                       1,051,245                1,344,768
                                                                    ------------             ------------
Other income (expense)
     Interest (expense)                                                  (43,686)                 (16,088)
     Gain (loss) from sale of assets                                         495                  (24,957)
                                                                    ------------             ------------
Total other income (expense)                                             (43,191)                 (41,045)
                                                                    ------------             ------------
Income (loss) before taxes                                              (176,390)                (201,228)
Taxes on income (Note 7)                                                      --                       --
                                                                    ------------             ------------
Net income (loss)                                                   $   (176,390)            $   (201,228)
                                                                    ------------             ------------
Basic and diluted income (loss) per share                           $      (0.06)            $      (0.07)
                                                                    ------------             ------------
Weighted average number of common shares
     outstanding (Note 5)                                              2,908,477                2,896,477
                                                                    ============             ============
</TABLE>


See accompanying notes to consolidated financial statements (unaudited).


                                       4

<PAGE>   7
                             WALL STREET DELI, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                              Common Stock                                                           Treasury Stock
                                --------------------------                                             ----------------------------
                                   Number                         Additional                             Number
                                       of                            Paid-in           Retained              of
                                   Shares          Amount            Capital           Earnings          Shares             Amount
                                ---------------------------------------------------------------------------------------------------
<S>                             <C>              <C>             <C>                <C>                 <C>            <C>
Balance, July 3, 1999           3,414,802        $170,740        $10,787,369        $ 1,189,940         518,325        $(2,247,091)
Net loss for the quarter               --              --                 --           (201,228)             --                 --
Treasury stock acquired                --              --                 --                 --              --                 --
                                ---------------------------------------------------------------------------------------------------

Balance, October 2, 1999        3,414,802        $170,740        $10,787,369        $   988,712         518,325        $(2,247,091)
                                ===================================================================================================

Balance, July 1, 2000           3,426,802        $171,341         10,805,322        $  (691,722)        518,325        $(2,247,091)
Net loss for the quarter               --              --                 --           (176,390)             --                 --
Treasury stock acquired                --              --                 --                 --              --                 --
                                ---------------------------------------------------------------------------------------------------

Balance, September 30, 2000     3,426,802        $171,341         10,805,322        $  (868,112)        518,325        $(2,247,091)
                                ===================================================================================================
</TABLE>


   See accompanying notes to consolidated financial statements (unaudited).


                                       5
<PAGE>   8


                             WALL STREET DELI, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      For the thirteen week periods ended
                                                                    ======================================
                                                                       September 30,            October 2,
                                                                                2000                  1999
=============================================================       ================         =============
<S>                                                                 <C>                      <C>
Operating activities
     Net loss                                                       $   (176,390)            $   (201,228)
     Adjustments to reconcile net loss
          to net cash provided by operating activities:
               Depreciation and amortization                             577,379                  656,634
               Loss (gain) on sale of property and equipment                (495)                  24,957
               Provision for loss on accounts and notes receivable            --                   42,000
               Changes in operating assets and liabilities:
                        Receivables - net (Note 3)                       (96,646)                (149,175)
                        Inventories                                       17,788                    4,300
                        Refundable income taxes                               --                   (2,212)
                        Prepaid expenses and other                        16,873                   (4,909)
                        Accounts payable and bank overdraft              408,399                 (353,334)
                        Accruals                                        (465,757)                 (49,095)
                                                                    ------------             ------------
Cash provided by operating activities                                    281,151                  (32,062)
                                                                    ------------             ------------
Investing activities
     Payments for purchase of equipment and
          improvements                                                  (173,872)                (105,611)
     Proceeds from sale of equipment and improvements                         --                    1,591
     Net decrease of notes receivable                                     57,037                   40,089
     Decrease in officer loans for split-dollar
          life insurance policies                                         70,000                       --
                                                                    ------------             ------------
Cash provided (used) by investing activities                             (46,835)                 (63,931)
                                                                    ============             ============
</TABLE>


   See accompanying notes to consolidated financial statements (unaudited).


                                       6
<PAGE>   9


                             WALL STREET DELI, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)


<TABLE>
<CAPTION>
                                                                      For the thirteen week periods ended
                                                                    ======================================
                                                                           September            October 2,
                                                                                 30,                  1999
                                                                                2000
=============================================================       ================         =============
<S>                                                                 <C>                      <C>
Financing activities
     Net borrowings (payments) under line of credit                     (349,327)                   5,613
                                                                    ------------             ------------
Cash provided (used) by financing activities                            (349,327)                   5,613
                                                                    ------------             ------------
Net increase (decrease) in cash for the period (Note 9)                 (115,011)                 (90,380)
     Cash and cash equivalents, beginning of period                      761,380                1,305,652
                                                                    ------------             ------------
     Cash and cash equivalents, end of period                       $    646,369             $  1,215,272
                                                                    ------------             ------------
Supplemental disclosures of cash flow information
     Cash paid during the period for:
          Interest                                                  $     43,686             $     20,199
          Income taxes                                              $         --             $         --
</TABLE>


   See accompanying notes to consolidated financial statements (unaudited).



                                       7

<PAGE>   10


                             WALL STREET DELI, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)


1.       In the opinion of management of the Company, the accompanying
         unaudited consolidated financial statements contain all adjustments
         (consisting of only normal recurring accruals) necessary to present
         fairly the financial position as of September 30, 2000, and the
         results of operations, changes in stockholders' equity and cash flows
         for the thirteen week periods ended September 30, 2000 and October 2,
         1999.

         The preparation of financial statements in conformity with generally
         accepted accounting principles 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. Estimates also affect the reported
         amounts of revenues and expenses during the reporting period. Actual
         results could differ from those estimates.

2.       The results of operations for the thirteen week periods ended
         September 30, 2000 and October 2, 1999 are not necessarily indicative
         of the results to be expected for the full year. Certain amounts
         during the first quarter of fiscal 2000 have been reclassified to
         conform to the current year presentation.

3.       Accounts and notes receivable consists of:


<TABLE>
<CAPTION>
                                                                   September 30,                  July 1,
                                                                            2000                     2000
                                                                   =============             ============
<S>                                                                <C>                       <C>
Accounts receivable                                                 $    603,794             $    559,097
Notes receivable                                                         459,650                  498,566
Assets of business transferred under contractual
     arrangement                                                         632,000                  656,000
Officer's loans for split-dollar life
     insurance policies                                                  758,804                  828,804
                                                                    ------------             ------------
                                                                       2,454,248                2,542,467
Less allowance for doubtful accounts                                    (251,041)                (308,869)
                                                                    ------------             ------------
                                                                       2,203,207                2,233,598
Less non-current portion of notes receivable                            (834,732)                (891,769)
                                                                    ------------             ------------
                                                                    $  1,368,475             $  1,341,829
                                                                    ============             ============
</TABLE>

4.       Inventories are valued at the lower of cost (first-in, first-out) or
         market.

5.       Earnings per share ("EPS") have been computed in accordance with the
         provisions of SFAS 128. Basic EPS excludes dilution and is computed by
         dividing income available to common stockholders by the weighted
         average number of shares outstanding during the respective periods.
         Diluted EPS reflects the potential dilution that could occur if
         securities or other contracts to issue common stock are exercised or
         converted into common stock or result in the issuance of common stock
         that then shares in the earnings of the Company. The effect of shares
         issuable under the Company's stock option plan are excluded for the
         thirteen week periods ended September 30, 2000 and October 2, 1999 as
         the effect would be anti-dilutive. The assumed exercise of the common
         stock options is not included in the computation of common stock
         equivalents for the thirteen week periods ended September 30, 2000 and
         October 2, 1999, because the


                                       8
<PAGE>   11


         significant majority of common options outstanding were at prices
         which exceed the common stock market price.

         Earnings per share has been calculated using the following:


<TABLE>
<CAPTION>
                                                                                       For the Thirteen
                                                                                     Week Periods Ended
                                                                     ----------------------------------
                                                                     September 30,           October 2,
                                                                              2000                 1999
                                                                     -------------       --------------
<S>                                                                  <C>                 <C>
 Weighted average number of common
         shares used for basic EPS                                       2,908,477          2,896,477
 Effect of dilutive stock options                                               --                 --
Weighted average number of common shares and
     dilutive potential common stock used in
     diluted EPS                                                         2,908,477          2,896,477
</TABLE>

6.       Effective December 31, 1998, the Company transferred leasehold
         improvements and equipment and subleased five stores in the Los
         Angeles, California area to California Fresh Deli, Inc. ("CFD"). CFD
         entered into a franchise agreement with the Company to operate the
         five stores and a management agreement to manage for the Company a
         sixth store also in the Los Angeles area for the remainder of the
         current lease term.

         The Company received approximately $40,500 in cash and a $800,000
         non-interest bearing note, payable in monthly installments at $12,000
         from June 1999 through November 2000, and at the greater of $13,333 or
         eight percent of monthly revenues thereafter until the note is repaid.
         The realization of the note is dependent on future operations of the
         five stores and has been reported as "Assets of business transferred
         under contractual arrangement" net of a valuation allowance of
         $129,378. Franchise fees payable by CFD under the franchise agreement
         have been deferred until the note has been paid in full.

7.       The effective tax rates for the thirteen weeks ended September 30,
         2000 and October 2, 1999 were -0- percent. Estimated amounts of tax
         benefits not considered more likely than not to be realized result in
         decreases from the effective tax rate of 40 percent for the thirteen
         week periods ended September 30, 2000 and October 2, 1999,
         respectively.

8.       In March 2000, the Financial Accounting Standards Board issued FASB
         Interpretation No. 44, "Accounting for Certain Transactions involving
         Stock Compensation, an Interpretation of APB Opinion No. 25." The
         Company was required to adopt the Interpretation on July 1, 2000. The
         Interpretation requires that stock options that have been modified to
         reduce the exercise price be accounted for as variable. The Company
         cancelled certain stock options and reissued them at a lower price on
         December 15, 1999 and in accordance with generally accepted accounting
         principles accounted for the repriced stock options as fixed. As a
         result of adopting the Interpretation on July 1, 2000 the Company was
         required to apply variable accounting to these options at year-end and
         for each period going forward until they are exercised, forfeited or
         expire unexercised. There was no impact during the current quarter.

9.       Effective as of November 1, 2000, the expiration date of the Credit
         Agreement has been extended to April 30, 2001. The line of credit is
         collateralized by inventory and certain receivables. Management expects
         that the expiration date will be extended from April 30, 2001 to
         October 31, 2001. However, should negotiations with the lender not
         proceed as expected, management believes there are a number of viable
         refinancing alternatives, though there can be assurance that such
         alternatives would be on terms as favorable as the present
         arrangements.

10.      In June 1998, the Financial Accounting Standards Board Issued SFAS No.
         133, "Accounting for Derivative Instruments and Hedging Activities
         ("SFAS 133"). SFAS 133 requires companies to recognize all derivatives
         contracts as either assets or liabilities in the balance sheet and to


                                       9
<PAGE>   12


         measure them at fair value. If certain conditions are met, a
         derivative may be specifically designated as a hedge, the objective of
         which is to match the timing of gain or loss recognition on the
         hedging derivative with the recognition of (i) the changes in the fair
         value of the hedged asset or liability that are attributable to the
         hedged risk or (ii) the earnings effect of the hedged forecasted
         transaction. For a derivative not designated as a hedging instrument,
         the gain or loss is recognized in income in the period of change.

11.      SFAS 133, as amended by SFAS 137, is effective for financial statements
         for fiscal years beginning after June 15, 2000. Historically, the
         Company has not entered into derivatives contracts either to hedge
         existing risk or for speculative purposes. Accordingly, the Company's
         adoption of the new standard on July 2, 2000 did not affect its
         financial statements.

                                   ---------


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

         The following is management's discussion and analysis of certain
significant factors that have affected the Company's financial condition and
earnings during the periods included in the accompanying consolidated balance
sheets and statements of operations.

         Forward Looking Statements. The statements in this Form 10-Q that are
not historical fact are forward looking statements. Such statements appear in a
number of places in this report and include statements regarding the intent,
belief or expectations of the Company and its management with respect to, among
other things, the Company's operating performance, anticipated growth
strategies, trends in the food service industry and other trends that may
affect the Company's financial condition or results of operations. Such
statements are subject to numerous risks and uncertainties which could cause
actual results to differ materially from those anticipated or projected,
including, among others, recent changes in management, the availability of
financing, new franchising programs and other new products and programs,
competition for customers, labor force and store sites, the effects of changes
in the economy such as inflation and unemployment rates, and weather conditions
and seasonal effects.

         Readers are cautioned not to place undue reliance on these forward
looking statements which speak only as of the date hereof and reflect only
management's belief and expectations based upon presently available
information.

         Readers are also urged to carefully review and consider the various
disclosures made by the Company which attempt to advise interested parties of
the factors which affect the Company's business, including the disclosures made
in other periodic reports on Forms 10-K, 10-Q and 8-K filed with the Securities
and Exchange Commission.

RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, the
percentages of revenues represented by certain items in the Company's
consolidated statements of operations.


<TABLE>
<CAPTION>
                                       Thirteen week periods ended
                                    ==================================
                                    September 30,           October 2,
                                        2000                   1999
                                    =============           ==========
<S>                                 <C>                     <C>
Net sales                              99.4%                   99.6%
Franchise revenues                      0.6                     0.4
                                      -----                   -----
Total revenues                        100.0                   100.0
</TABLE>



                                       10
<PAGE>   13


<TABLE>
<S>                                   <C>        <C>
Total cost of restaurant operations    91.9       90.8
                                      -----      -----
Restaurant operating income             8.1        9.2
General and administrative expenses     9.3       10.4
                                      -----      -----
     Operating income (loss)           (1.2)      (1.2)
Other income (expense)                 (0.4)      (0.3)
                                      -----      -----
     Income (loss) before taxes        (1.6)      (1.5)
                                      -----      -----
Taxes                                    --         --
                                      -----      -----
Net income (loss)                      (1.6)%     (1.5)%
                                      =====      =====
</TABLE>

NET SALES

         Net sales for company-owned restaurants for the thirteen weeks ended
September 30, 2000 declined 12.5% to $11,239,666 from $12,838,407 recorded
during the comparable prior year period. Comparable sales per restaurant
declined by 9.2% from the same period last year, reflecting the effects of
operational issues in certain markets, lower catering sales, as well as
continuing competitive pressures. In addition, the number of company-owned
restaurants declined from 101 at the end of the first quarter of fiscal 2000 to
95 at the end of the first quarter of fiscal 2001. At the end of fiscal 2000
there were 97 restaurants. During the current quarter one restaurant was closed
and a second restaurant was contracted for sale. Management expects to sell or
franchise additional restaurants during the balance of the fiscal year; present
expectations are that approximately three more restaurants will be sold, and
three to five more will be franchised, by the end of the current fiscal year.

TOTAL COST OF RESTAURANT OPERATIONS

         The components of cost of restaurant operations for the thirteen week
periods ended September 30, 2000 and October 2, 1999, respectively, are shown
in the following table:


<TABLE>
<CAPTION>
                                                               For the thirteen week periods ended
                                 =================================================================
                                           September 30, 2000                      October 2, 1999
                                 ============================         ============================
                                      Amount         % of Net              Amount         % of Net
                                                        Sales                                Sales
                                 ============================         ============================
<S>                              <C>                 <C>              <C>                 <C>
Food and Paper                   $ 3,730,826             33.2%        $ 4,528,676             35.3%
Labor                              2,734,187             24.3           2,978,412             23.2
Store Expenses                     3,220,516             28.7           3,528,459             27.5
Restaurant Depreciation              543,039              4.8             631,040              4.9
                                 -----------         --------         -----------         --------
                                 $10,228,568             91.0%        $11,666,587             90.9%
                                 ===========         ========         ===========         ========
</TABLE>

         Cost of restaurant operations declined 12.3% to $10,228,568 from
$11,666,587 incurred during the comparable prior year quarter. Cost of food and
paper as a percent of net sales declined from 35.3% to 33.2% due to improved
buying practices. Labor as a percent of net sales


                                       11
<PAGE>   14


increased to 24.3% from 23.2% during the prior year quarter primarily due to
the relatively fixed nature of these expenses. Store expenses, which include
mostly fixed expenses such as rent, taxes and insurance, declined by 8.7% but
increased as a percent of sales to 28.7% compared to 27.5% during the
comparable period. Depreciation and amortization declined 13.9% to $543,037
from $631,040 primarily due to impairment adjustments recorded in fiscal 2000
and the fact that six fewer restaurants were in operation at the end of the
first quarter of fiscal 2001 compared to the same time in fiscal 2000. All of
these factors resulted in an increase in the cost of restaurant operations as a
percent of net sales to 91.0% for the first quarter of fiscal 2000 compared to
90.9% for the comparable prior year period.

GENERAL AND ADMINISTRATIVE

         General and administrative expenses consist of overhead expenses
associated with each of the Company's operating divisions, expenses associated
with catering operations and corporate administration. Each of these expense
categories declined compared to the prior year due to fewer restaurants and
lower sales, as well as certain cost savings actions and certain nonrecurring
income of $84,881. Total general and administrative expenses declined $293,523
or 21.8% compared to the comparable prior year period.

FRANCHISE OPERATIONS

         A brief summary of franchise operations for the first quarter of
fiscal 2000 compared to the comparable prior year period follows:


<TABLE>
<CAPTION>
                                       September 30,           October 2,
Description                                     2000                 1999
==================================     =============           ==========
<S>                                    <C>                     <C>
Royalty income                          $  58,311                 $52,372
Initial franchise fees                     10,000                      --
                                        ---------                 -------
Total franchise revenues                   68,311                  52,372
Franchise expenses                        161,363                  39,607
                                        ---------                 -------
Franchise income (loss)                 $ (93,052)                $12,765
                                        =========                 =======
</TABLE>

         During the first quarter of fiscal 2001 there were 18 franchised
restaurants in operation compared to 17 at the end of the first quarter of
fiscal 2000. Royalty income increased 11.3% to $58,311, compared to $52,372
recorded in the comparable prior year quarter.

         Franchise expenses increased to $161,363 in the first quarter of fiscal
2001 compared to $39,607 in the first quarter of fiscal 2000. This is
primarily due to relocation expenses of $39,450 for the new Vice President
of Business Development for his move from Phoenix to Birmingham, consulting fees
of $33,106 for concept research, and increased travel of $15,615 to review
certain markets that are under consideration for sale or franchising.

TAXES ON INCOME

         The effective tax rate for each of the thirteen weeks ended September
30, 2000 and October 2, 1999 was -0- percent.

GAIN (LOSS) FROM SALE OF ASSETS

         During the quarter, one restaurant and certain other fixed assets were
sold resulting in a net gain of $495 for the quarter compared to a loss of
$24,157 for the first quarter of fiscal 2000.

INTEREST (EXPENSE)


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<PAGE>   15


         Interest expense was $43,686 compared to $16,088 incurred during the
comparable prior year quarter primarily due to significantly higher average
daily balances on the line of credit and a higher interest rate. At the end of
the first quarter of fiscal 2001 there was a $1,078,605 balance on the line
compared to $1,427,392 at year-end and to $398,004 at the end of the first
quarter of fiscal 1999. See Note 9 for additional details.

IMPACT OF INFLATION

         In most cases, management has been able to pass on the impact of wage
and food inflation through modest price increases, but there is no assurance
that it will be able to do so in the future.

LIQUIDITY AND CAPITAL RESOURCES

         Historically, the Company has generated most of its cash from
operations, and to a lesser extent from bank borrowings on the Company's
short-term line of credit. Cash flow from operations, equity financings and
bank borrowings have historically funded expansion. The Company currently does
not have long-term debt. In the future the Company anticipates that it may rely
on long-term debt or lease financing to fund the purchase of point-of-sale
management information systems, remodeling or Company expansion.

         At the end of the first quarter liquidity was improved compared to
year-end results but decreased compared to the comparative prior year quarter.
The current ratio was .55 to 1.00 compared to .53 to 1.00 at the end of fiscal
2000 and .68 to 1.00 at the end of the first quarter of fiscal 1999.

         The Company's principal capital requirements are for the remodeling of
Company stores and to a lesser degree, for new restaurants. Capital
expenditures for these purposes were $173,872 compared to $105,611 expended
during the comparable prior year quarter.

         The Company has historically met its capital need from short-term bank
borrowings and internally generated funds. Cash provided by operations for the
first quarter of fiscal 2001 was $281,151 compared to $32,062 used by
operations for the comparable prior year quarter.

                                   ---------

                           PART II: OTHER INFORMATION

ITEM 6:           EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  Exhibit 27 - Financial Data Schedule, submitted to the
                               Securities and Exchange Commission in electronic
                               format

         (b)      Reports on Form 8-K:

                  There were no reports on Form 8-K filed during the quarter
                  ended September 30, 2000.


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                                   SIGNATURES

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

DATE:                          WALL STREET DELI, INC.




November 13, 2000                       /s/ Jeffrey V. Kaufman
                                        ---------------------------------------
                                        JEFFREY V. KAUFMAN
                                        President and Chief Executive Officer


November 13, 2000                       /s/ Thomas J. Sandeman
                                        ---------------------------------------
                                        THOMAS J. SANDEMAN
                                        Chief Financial Officer




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