<PAGE>

================================================================================

                      SECURITIES AND EXCHANGE COMMISSION

                             Washington D.C. 20549

                           _________________________

                                   FORM 10-Q

     (Mark one)

               X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
             -----
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended October 10, 1999

                                      OR

             ____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from ____ to ____

                       Commission File Number 001-10811


                              SMART & FINAL INC.
            (Exact name of registrant as specified in its charter)

            Delaware                                    No. 95-4079584
(State or other jurisdiction of               (IRS Employer Identification No.)
 incorporation or organization)

                      600 Citadel Drive
                 City of Commerce, California                  90040
            (Address of principal executive offices)        (zip code)

Registrant's telephone number, including area code:      (323) 869-7500

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

Yes   X   No____

The registrant had 29,136,995 shares of common stock outstanding as of November
19, 1999.

================================================================================
<PAGE>

                              SMART & FINAL INC.
                                     Index

                                    Part I
                             Financial Information

<TABLE>
<CAPTION>

                                                                         Page
<S>                                                                      <C>
Item 1.   Financial Statements
          Unaudited Consolidated Balance Sheets                            2
          Unaudited Consolidated Statements of Operations                  3
          Unaudited Consolidated Statements of Cash Flows                  4
          Notes to Unaudited Consolidated Financial Statements             5

Item 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations                                        9

Item 3.   Quantitative and Qualitative Disclosure About Market Risk       17


                                    Part II
                               Other Information

Item 1.   Legal Proceedings                                               18
Item 2.   Changes in Securities                                           18
Item 3.   Defaults upon Senior Securities                                 18
Item 4.   Submission of Matters to a Vote of Security Holders             18
Item 5.   Other Information                                               18
Item 6.   Exhibits and Reports on Form 8-K                                18
</TABLE>

                                       1
<PAGE>

                              SMART & FINAL INC.
                          CONSOLIDATED BALANCE SHEETS
                 (dollars in thousands, except share amounts)

<TABLE>
<CAPTION>
                                                          October 10,        January 3,
ASSETS                                                       1999              1999
------                                                   -------------     -------------
Current assets:                                           (Unaudited)
<S>                                                      <C>               <C>
     Cash & cash equivalents                                $  26,376         $  20,887
     Trade notes and accounts receivable, less
        allowance for doubtful accounts of
        $3,160 in 1999 and $3,660 in 1998                      60,121            70,155
     Inventories                                              148,459           157,678
     Prepaid expenses                                           9,685            22,341
     Deferred tax asset                                        11,511            11,511
                                                         -------------     -------------
           Total current assets                               256,152           282,572

Property, plant and equipment:
     Land                                                      35,742            36,387
     Buildings and improvements                                29,111            29,625
     Leasehold improvements                                    90,772            85,501
     Fixtures and equipment                                   169,810           162,148
                                                         -------------     -------------
                                                              325,435           313,661

     Less - Accumulated depreciation and amortization         119,345           108,588
                                                         -------------     -------------
           Net property, plant and equipment                  206,090           205,073

Assets under capital leases, net of accumulated
     amortization of  $7,070 in 1999 and $6,669 in 1998         3,615             4,016
Goodwill, net of accumulated amortization
     of  $3,274 in 1999 and $2,060 in 1998                     55,453            56,667
Deferred tax asset                                              3,730             3,730
Other assets                                                   28,226            30,206
                                                         -------------     -------------
              Total assets                                  $ 553,266         $ 582,264
                                                         =============     =============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
     Current maturities of long-term debt                   $   4,041         $ 139,680
     Accounts payable                                          77,886            97,568
     Payable to Parent                                              -             1,681
     Accrued salaries and wages                                16,914            13,951
     Other accrued liabilities                                 32,634            40,789
                                                         -------------     -------------
           Total current liabilities                          131,475           293,669

Long-term liabilities:
     Notes payable, net of current maturities                  12,869            15,839
     Notes payable to Parent                                   15,965            55,388
     Bank debt                                                112,500                 -
     Obligations under capital leases                           6,933             7,485
     Other long-term liabilities                                3,151             3,033
     Workers' compensation reserve, postretirement
        and postemployment benefits                            18,699            17,564
                                                         -------------     -------------
           Total long-term liabilities                        170,117            99,309

Stockholders' equity:
     Preferred stock, $1 par value (authorized-
     10,000,000 shares; no shares issued)                           -                 -
     Common stock, $0.01 par value (authorized-
     100,000,000 shares; 29,136,995 shares issued
     and outstanding in 1999 and 22,527,179 in 1998)              291               225
     Additional paid-in capital                               204,335           144,987
     Notes receivable for stock                                  (100)                -
     Cumulative translation loss                                 (835)             (835)
     Retained earnings                                         47,983            44,909
                                                         -------------     -------------
           Total stockholders' equity                         251,674           189,286
                                                         -------------     -------------
              Total liabilities and stockholders' equity    $ 553,266         $ 582,264
                                                         =============     =============
</TABLE>

  The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       2
<PAGE>

                              SMART & FINAL INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
               (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                               Sixteen Weeks Ended                   Forty Weeks Ended
                                                         -------------------------------      -------------------------------
                                                           October 10,      October 11,        October 10,       October 11,
                                                              1999             1998               1999              1998
                                                         --------------   --------------      --------------   --------------
                                                                  (Unaudited)                           (Unaudited)
<S>                                                      <C>              <C>                 <C>              <C>
Sales.................................................    $   555,890      $   546,434        $ 1,372,835        $ 1,261,289
Cost of sales, buying and occupancy...................        482,483          473,566          1,196,133          1,100,801
                                                         --------------   --------------      --------------   --------------
Gross margin..........................................         73,407           72,868            176,702            160,488
Operating and administrative expenses.................         65,931           59,619            157,913            142,495
                                                         --------------   --------------      --------------   --------------

   Income from operations.............................          7,476           13,249             18,789             17,993

Interest expense, net.................................          4,510            4,044             14,618              8,610
                                                         --------------   --------------      --------------   --------------

Income before income taxes, extraordinary item and
   cumulative effect of accounting change.............          2,966            9,205              4,171              9,383
Income taxes..........................................          1,089            3,573              1,563              3,546
                                                         --------------   --------------      --------------   --------------
   Income from consolidated subsidiaries..............          1,877            5,632              2,608              5,837

Equity earnings in unconsolidated subsidiary..........            343                3                626                190
                                                         --------------   --------------      --------------   --------------
   Income before extraordinary item
     and cumulative effect of accounting change.......          2,220            5,635              3,234              6,027

Extraordinary loss on extinguishment of debt,
 net of tax effect of $147............................              -                -                166                  -
Cumulative effect of accounting change (start-up
   costs, net of tax effect of $758)..................              -                -                  -              1,090
                                                         --------------   --------------      --------------   --------------
   Net income.........................................    $     2,220      $     5,635        $     3,068        $     4,937
                                                         ==============   ==============      ==============   ==============

Earnings per common share:
   Earnings per common share before extraordinary
    item and cumulative effect of accounting change...    $      0.08      $      0.25        $      0.13        $      0.27
   Extraordinary loss on extinguishment of debt per
    common share......................................              -                -              (0.01)                 -
   Cumulative effect of accounting change per
    common share......................................              -                -                  -              (0.05)
                                                         --------------   --------------      --------------   --------------
   Earnings per common share..........................    $      0.08      $      0.25        $      0.12        $      0.22
                                                         ==============   ==============      ==============   ==============

Weighted average common shares........................     29,136,995       22,513,649         25,426,416         22,458,109
                                                         ==============   ==============      ==============   ==============

Earnings per common share, assuming dilution:
   Earnings per common share, assuming dilution,
     before extraordinary item and cumulative effect
     of accounting change.............................    $      0.08      $      0.25        $      0.13        $      0.27
   Extraordinary loss on extinguishment of debt per
    common share......................................              -                -              (0.01)                 -
   Cumulative effect of accounting change per
    common share......................................              -                -                  -              (0.05)
                                                         --------------   --------------      --------------   --------------
   Earnings per common share, assuming dilution.......    $      0.08      $      0.25        $      0.12        $      0.22
                                                         ==============   ==============      ==============   ==============

Weighted average common shares and common share
   equivalents........................................     29,204,499       22,594,482         25,475,529         22,616,263
                                                         ==============   ==============      ==============   ==============

Dividend per common share.............................    $         -      $      0.05        $         -        $      0.15
                                                         ==============   ==============      ==============   ==============
</TABLE>

 The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       3
<PAGE>

                              SMART & FINAL INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                               Forty Weeks Ended
                                                                           --------------------------
                                                                             October 10,   October 11,
                                                                                1999          1998
                                                                           --------------------------
Cash Flows From Operating Activities:                                              (Unaudited)
<S>                                                                        <C>             <C>
      Net income ........................................................  $   3,068        $  4,937
      Adjustments to reconcile net income to net
        cash provided by operating activities:
        Gain on disposal of fixed assets.................................       (999)         (3,021)
        Depreciation and amortization....................................     23,868          22,409
        Amortization of deferred financing costs.........................      1,579               -
        Extraordinary loss on extinguishment of debt.....................        166               -
        Cumulative effect of accounting change, net of taxes.............          -           1,090
        Equity earnings in unconsolidated subsidiary.....................       (626)           (190)
        Decrease (increase), net of business acquisition, in:
           Trade notes and accounts receivable...........................     10,034            (890)
           Inventories...................................................      9,219           6,189
           Prepaid expenses and other....................................      8,234           1,618
        Increase (decrease), net of business acquisition, in:
           Accounts payable..............................................    (18,979)          3,381
           Accrued liabilities...........................................      2,963           2,667
           Other liabilities.............................................     (4,278)            333
                                                                           --------------------------

        Net cash provided by operating activities........................     34,249          38,523
                                                                           --------------------------

Cash Flows From Investing Activities:
      Acquisition of property, plant and equipment ......................    (20,389)        (26,033)
      Proceeds from disposal of property, plant and equipment............      2,920           3,580
      Acquisition of business............................................          -         (44,401)
      Other..............................................................     (1,985)         (1,845)
                                                                           --------------------------

        Net cash used in investing activities............................    (19,454)        (68,699)
                                                                           --------------------------

Cash Flows From Financing Activities:
      Proceeds from issuance of common stock, net of costs...............     20,163           1,737
      Borrowings on bank line of credit..................................     10,000          65,000
      Payments on bank line of credit....................................    (31,000)        (37,000)
      Payments on notes payable..........................................     (5,661)         (2,918)
      Change in payable to Parent and affiliates.........................     (1,681)          7,746
      Quarterly dividend paid............................................     (1,127)         (3,364)
                                                                           --------------------------

        Net cash (used in) provided by financing activities..............     (9,306)         31,201
                                                                           --------------------------

Increase in cash and cash equivalents....................................      5,489           1,025

Cash and cash equivalents at beginning of  year..........................     20,887          22,891
                                                                           --------------------------

Cash and cash equivalents at end of period...............................  $  26,376        $ 23,916
                                                                           ==========================

Noncash Investing and Financing Activities:
      Note to affiliates extinguished for common stock issued ...........     39,423               -
      Note issued in connection with acquisition of business ............          -          17,500
                                                                           --------------------------

        Total noncash transactions.......................................  $  39,423        $ 17,500
                                                                           ==========================
</TABLE>

 The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       4
<PAGE>

                              SMART & FINAL INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  Basis of Presentation

     Smart & Final Inc. (the "Company") is a Delaware corporation and is a 57.3
percent owned subsidiary of Casino USA, Inc. (the "Parent").

     The consolidated balance sheet as of October 10, 1999, the consolidated
statements of operations and cash flows for the sixteen and forty weeks ended
October 10, 1999 and October 11, 1998 are unaudited. In the opinion of
management, all adjustments necessary for a fair presentation of these financial
statements have been included. Such adjustments consisted only of normal
recurring items. Interim results are not necessarily indicative of results for a
full year.

     These consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Form 10-K for the year ended January 3, 1999.

(2)  Fiscal years

     The Company's fiscal year ends on the Sunday closest to December 31. Each
fiscal year consists of twelve-week periods in the first, second and fourth
quarters and a sixteen-week period in the third quarter.

(3)  Interest expense

     Interest expense was incurred primarily on borrowings under the Company's
revolving credit facilities and loans from its Parent. The Company paid $17.2
million and $7.7 million in interest in the forty weeks ended October 10, 1999
and October 11, 1998, respectively.

(4)  Income taxes

     The Company and Casino USA, Inc. are parties to a tax sharing arrangement
covering income tax obligations in the state of California. Under this
arrangement, the Company received tax sharing benefits of $1,119,000 and
$1,509,000 in the forty weeks ended October 10, 1999 and October 11, 1998,
respectively, from the Parent for state income taxes overpaid, due to taxable
losses in the first three quarters of 1999 and 1998. The Company did not pay any
federal income taxes in the forty weeks ended October 10, 1999 and October 11,
1998, due to taxable losses in the first three quarters of each year.

(5)  Earnings per common share

     Earnings per common share is based on the weighted average number of common
shares outstanding. Earnings per common share, assuming dilution includes the
weighted average number of common stock equivalents outstanding related to
employee stock options and a stock purchase agreement.

                                       5
<PAGE>

                              SMART & FINAL INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)

(6)  Dividend

     The declaration and payment of dividends is subject to the discretion of
the Company's Board of Directors, and there can be no assurance whether or when
dividends will be paid in the future. The Company's debt facilities also contain
restrictions on the amount of cash dividends declared or paid. In February 1999,
the Company indefinitely suspended payments of dividends on its common stock.

(7)  Stockholders' Equity

     During the second quarter of 1999, the Company issued 6,486,406 shares of
common stock at a price of $9.25 per share. The offering increased stockholders'
equity approximately $57.9 million after expenses of the offering.

     In connection with the stock offering, the Parent acquired 4,271,935 shares
and increased its ownership interest in the Company to 57.3 percent.
Consideration for shares subscribed by the Parent was the exchange of $39.4
million of its $55.4 million loan to the Company.

     Pursuant to an agreement dated March 7, 1989, the Company's former Chairman
was obligated to purchase 100,000 common shares. The agreement, as amended at
December 29, 1996, included a fixed purchase price of $8.90 per share. On April
22, 1999, the Company's former Chairman fulfilled his obligation by purchasing
the 100,000 common shares.

(8)  Segment Reporting

     The Company has two reportable segments: Stores and Foodservice. The stores
segment provides food and related items in bulk sizes and quantities through
non-membership grocery warehouse stores. The foodservice distribution segment
provides delivery of food, restaurant equipment and supplies to mainly
restaurant customers and Smart & Final stores. Corporate expense is comprised
primarily of the Company's corporate expenses incidental to the activities of
the reportable segments and rental income from Smart & Final Stores. The
Company's reportable segments are strategic business units that offer different
products and services. They are managed separately because each segment requires
different technology and marketing strategies.

     The Company does not allocate interest, income taxes or nonrecurring gains
and losses to the reportable segments. These costs are included in Corporate
Expense below. The Company evaluates performance based on profit or loss from
operations before income taxes not including nonrecurring gains and losses.

                                       6
<PAGE>

                              SMART & FINAL INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)

     The revenues, profit or loss and other information of each segment are as
follows, amounts in thousands:

For the sixteen weeks ended October 10, 1999:

<TABLE>
<CAPTION>
                                                               Corporate
                                        Stores   Foodservice    Expense     Total
                                       --------  ------------  ----------  --------
<S>                                    <C>       <C>           <C>         <C>
Revenues from external
  customers                            $436,002     $119,888     $     -   $555,890
Intercompany real estate
  charge (income)                         4,213            -      (4,213)         -
Interest income                               -            -         344        344
Interest expense                              -            -       4,854      4,854
Pre-tax income (loss) before
  extraordinary item and cumulative
  effect of accounting change            10,946       (3,736)     (4,244)     2,966
</TABLE>

For the sixteen weeks ended October 11, 1998:

<TABLE>
<CAPTION>
                                                               Corporate
                                        Stores   Foodservice    Expense     Total
                                       --------  ------------  ----------  --------
<S>                                    <C>       <C>           <C>         <C>
Revenues from external
  customers                            $410,815     $135,619     $     -   $546,434
Intercompany real estate
  charge (income)                         4,240            -      (4,240)         -
Interest income                               -            -         152        152
Interest expense                              -            -       4,196      4,196
Pre-tax income (loss) before
  extraordinary item and cumulative
  effect of accounting change            14,074       (2,526)     (2,343)     9,205
</TABLE>

                                       7
<PAGE>

                              SMART & FINAL INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (continued)


For the forty weeks ended October 10, 1999:

<TABLE>
<CAPTION>
                                                                 Corporate
                                         Stores    Foodservice    Expense      Total
                                       ----------  ------------  ----------  ----------
<S>                                    <C>         <C>           <C>         <C>
Revenues from external
  customers                            $1,053,891     $318,944    $      -   $1,372,835
Intercompany real estate
  charge (income)                          10,555            -     (10,555)           -
Interest income                                 -            -         745          745
Interest expense                                -            -      15,363       15,363
Pre-tax income (loss) before
  extraordinary item and cumulative
  effect of accounting change              23,409       (5,007)    (14,231)       4,171
</TABLE>

For the forty weeks ended October 11, 1998:

<TABLE>
<CAPTION>
                                                               Corporate
                                        Stores   Foodservice    Expense      Total
                                       --------  ------------  ----------  ----------
<S>                                    <C>       <C>           <C>         <C>
Revenues from external
  customers                            $907,250     $354,039    $      -   $1,261,289
Intercompany real estate
  charge (income)                        10,575            -     (10,575)           -
Interest income                               -            -         322          322
Interest expense                              -            -       8,932        8,932
Pre-tax income (loss) before
  extraordinary item and cumulative
  effect of accounting change            20,266       (4,464)     (6,419)       9,383
</TABLE>

(9)  Legal Actions

     The Company has been named as defendant in various legal actions arising in
the normal conduct of its business. In the opinion of management, after
consultation with counsel, none of these actions are expected to result in
significant liability to the Company.

                                       8
<PAGE>

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

     Management's discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements and notes thereto and the
Company's Form 10-K for the year ended January 3, 1999.

Summary

     Smart & Final Inc. (the "Company") reported net income of $2.2 million, or
$0.08 per diluted share, for the sixteen weeks ended October 10, 1999, compared
to net income of $5.6 million, or $0.25 per diluted share, in the sixteen weeks
ended October 11, 1998.

     For the forty weeks ended October 10, 1999, the Company reported net income
of $3.1 million, or $0.12 per diluted share, compared to net income of $4.9
million, or $0.22 per diluted share, in the forty weeks ended October 11, 1998.
The 1999 results include an extraordinary loss on extinguishment of debt, net of
tax, of $0.2 million, or $0.01 per diluted share. The 1998 period included a
cumulative effect of accounting change, net of tax, charge of $1.1 million, or
$0.05 per diluted share, related to adoption of the American Institute of
Certified Public Accountants ("AICPA") Statement of Position 98-5 which required
write-off of start-up costs.

     Operating earnings increased from $18.0 million in the first three quarters
of the prior year to $18.8 million in the same period of the current year. This
improvement was attributed to increased sales and improved gross margin rates
which were offset by increased operating and administrative expenses. The
increase in expense was due to a decline in year to year real estate gains, and
in the current year quarter, payment of consulting fees and charges related to
further restructuring of the Florida foodservice operations.

     The substantial increase in interest expense for the first three quarters
of 1999 was the primary cause of the decrease in pretax income. Interest
expense, net increased for the first three quarters of 1999 due to higher debt
levels during the first two quarters and rate increases. The offering of common
stock to the Company's stockholders completed in the second quarter 1999
improved the Company's financial position and significantly reduced interest
expense for the third quarter.

                                       9
<PAGE>

Results of Operations

     The following table shows, for the periods indicated, certain condensed
consolidated income statement data, expressed as a percentage of sales.

<TABLE>
<CAPTION>
                                                     Sixteen Weeks Ended          Forty Weeks Ended
                                                  --------------------------  --------------------------
                                                  October 10,   October 11,    October 10,   October 11,
                                                      1999          1998           1999         1998
                                                  ------------  ------------  ------------   -----------
<S>                                               <C>           <C>           <C>            <C>
Sales:
   Store                                                  78.4%         75.2%         76.8%         71.9%
   Foodservice distribution sales                         21.6          24.8          23.2          28.1
                                                  ------------  ------------  ------------   -----------
   Sales, consolidated total                             100.0         100.0         100.0         100.0
Cost of sales, buying and occupancy                       86.8          86.7          87.1          87.3
                                                  ------------  ------------  ------------   -----------
Gross margin                                              13.2          13.3          12.9          12.7
Operating and administrative expenses                     11.9          10.9          11.5          11.3
                                                  ------------  ------------  ------------   -----------
  income from operations                                   1.3           2.4           1.4           1.4
Interest expense, net                                      0.8           0.7           1.1           0.7
                                                  ------------  ------------  ------------   -----------
Income before income taxes, extraordinary item
  and cumulative effect of accounting change               0.5           1.7           0.3           0.7
Income taxes                                               0.2           0.7           0.1           0.3
                                                  ------------  ------------  ------------   -----------

   Income from consolidated subsidiary                     0.3           1.0           0.2           0.5
Equity earnings in unconsolidated subsidiary               0.1            --            --            --
                                                  ------------  ------------  ------------   -----------

   Income before extraordinary item and
     cumulative effect of accounting change                0.4           1.0           0.2           0.5
Extraordinary loss on extinguishment
  of debt, net of tax effect                                --            --            --            --
Cumulative effect of accounting change
  (start-up costs), net of tax effect                       --            --            --           0.1
                                                  ------------  ------------  ------------   -----------

Net income (loss)                                          0.4%          1.0%          0.2%          0.4%
                                                  ============  ============  ============   ===========
</TABLE>

 .    Totals do not aggregate due to rounding.

     The following table sets forth pre-tax profit or loss, in millions, for
each of the Company's various reportable segments:

<TABLE>
<CAPTION>
                                                Sixteen Weeks Ended          Forty Weeks Ended
                                             --------------------------  --------------------------
                                             October 10,   October 11,   October 10,   October 11,
                                                 1999          1998          1999          1998
                                             ------------  ------------  ------------  ------------
<S>                                          <C>           <C>           <C>           <C>
Stores                                             $10.9         $14.1         $23.4         $20.3
Foodservice                                         (3.7)         (2.6)         (5.0)         (4.5)
                                             ------------  ------------  ------------  ------------
   Segment totals                                    7.2          11.5          18.4          15.8
Interest and other corporate expenses                4.2           2.3          14.2           6.4
                                             ------------  ------------  ------------  ------------
Consolidated pre-tax income (loss)
   before extraordinary item and
   cumulative effect of accounting change          $ 3.0         $ 9.2         $ 4.2         $ 9.4
                                             ============  ============  ============  ============
</TABLE>

                                       10
<PAGE>

Background

     The Company has continued its expansion program with primary emphasis
during 1999 on assimilating the 39 Pacific Northwest stores acquired in 1998.

<TABLE>
<CAPTION>
                                                                    Three
                                     Quarter Ended             Quarters Ended         Year Ended
                              ---------------------------  -------------------------  -----------
                               October 10,   October 11,   October 10,  October 11,   January 3,
                                  1999           1998         1999          1998         1999
                              -------------  ------------  -----------  ------------  -----------
<S>                           <C>            <C>           <C>          <C>           <C>
USA:
Beginning store count                   212          208           209          167          167
Stores opened:
  New stores                             --            1             3            3            5
  Relocations                            --           --            --            3            3
  Acquired                               --           --            --           39           39
Stores relocated or closed               --           (2)           --           (5)          (5)
                              -------------  ------------  -----------  ------------  -----------
Ending store count                      212          207           212          207          209
                              -------------  ------------  -----------  ------------  -----------

MEXICO:
  Store count beginning                   6            6             6            5            5
  New stores opened                      --           --            --            1            1
                              -------------  ------------  -----------  ------------  -----------
  Store count ending                      6            6             6            6            6
                              -------------  ------------  -----------  ------------  -----------

Grand Total                             218          213           218          213          215
                              =============  ============  ===========  ============  ===========
</TABLE>

     Mexico operations are not consolidated and are reported on the equity
basis.

     Although new stores are important to the Company's continued growth and
profitability, each new store opening initially penalizes earnings because
stores are not immediately profitable. To date new stores opened in existing
market areas generally have achieved break even on a pre-tax basis after
allocation of all operating expenses within the first six to eighteen months.
Stores opened in new market areas, which mature more slowly, generally have
achieved break even in approximately three years. Because of the complex
customer mix, break-even of the Florida stores is expected to take an even
longer period.

     Each of the Company's fiscal years consists of twelve-week periods in the
first, second and fourth quarters of the fiscal year and a sixteen-week period
in the third quarter.

Comparison of Sixteen Weeks Ended October 10, 1999 with Sixteen Weeks Ended
October 11, 1998.

     Sales. Third quarter 1999 sales were $555.9 million, up 1.7% over the
comparable 1998 period.

     Store sales, including the United Grocers Cash & Carry ("Cash & Carry")
store operations, increased 6.1%, from $410.8 million in third quarter 1998 to
$436.0 million in third

                                       11
<PAGE>

quarter 1999. Excluding Cash & Carry, store sales increased 7.5% in the third
quarter of 1999 versus the third quarter of 1998. Comparable store sales for the
third quarter of 1999 increased 4.3% over the prior year period. Average
comparable transaction size also increased, by 3.0%, to $37.62 in the third
quarter of 1999. Store sales reflect the two new stores, including relocations,
opened during the fourth quarter 1998 and the three new stores opened in the
first three quarters of 1999.

     Foodservice distribution sales decreased 11.6% from $135.6 million in the
third quarter of 1998 to $119.9 million in the current year third quarter. This
decrease in part reflects the decision made in the latter part of 1998 to focus
foodservice growth on improved credit quality and profitability of foodservice
distribution business versus aggressive sales growth.

     Gross Margin. Gross margin improved 0.7% from $72.9 million in the third
quarter of 1998 to $73.4 million in the current year quarter. As a percentage of
sales, gross margin decreased from 13.3% in the prior year quarter to 13.2% in
third quarter 1999. The slight decrease in gross margin percentage was due to
lower vendor rebate income and, to a lesser extent, start-up inefficiencies in
the new Commerce warehouse. These decreases more than offset improvements as a
result of higher foodservice margins achieved by focusing on improved credit
quality and margins and a higher proportion of sales from stores which generate
higher gross margins and higher expenses than foodservice distribution sales.

     Operating and Administrative Expenses. Operating and administrative
expenses for the third quarter of 1999 were $65.9 million, up $6.3 million, or
10.6%, over the third quarter of 1998. These expenses, as a percentage of sales,
increased from 10.9% in the third quarter of 1998 to 11.9% in the third quarter
of 1999. Expenses, as a percentage of sales, increased due to a number of
factors: increased operating expenses from foodservice operations as a result of
a higher provision for bad debt reserves and costs related to a significant
downsizing of the Florida foodservice operations, a significant real estate gain
recognized in third quarter 1998 and payment of consulting fees in the current
year quarter. These increases in operating and administrative expenses more than
offset the improvements as a result of an intensive corporate-wide expense
reduction program.

     Interest expense, net. Interest expense, net increased from $4.0 million in
the third quarter of 1998 to $4.5 million in the third quarter of 1999. Interest
expense, net increased due to higher weighted average interest rates as a result
of the Company's debt restructuring in late 1998. This increase was partially
offset by lower weighted average borrowings for the third quarter of 1999 over
the comparable 1998 quarter. Borrowings at the end of third quarter 1998 were
paid down significantly with proceeds from the offering of common stock
completed at the end of second quarter this year.

                                       12
<PAGE>

Comparison of Forty Weeks Ended October 10, 1999 with Forty Weeks Ended October
11, 1998.

     Sales. For the first three quarters of 1999, sales were $1,372.8 million,
up 8.8% over the comparable 1998 period. Sales reflect the May 1998 acquisition
of Cash & Carry stores operations.

     Store sales, including Cash & Carry, increased 16.2%, from $907.3 million
to $1,053.9 million in the first three quarters of 1999. Excluding Cash & Carry,
store sales increased 7.6% in the first three quarters of 1999 versus the same
period of 1998. Comparable store sales increased 4.3% in the first three
quarters of 1999. Average comparable transaction size also increased 3.4% to
$35.21 in the first three quarters of 1999.

     Foodservice distribution sales decreased 9.9% to $318.9 million for the
first three quarters of 1999. This decrease is in part the result of focusing
foodservice growth on improved credit quality and profitability of foodservice
distribution business versus aggressive sales growth.

     Gross Margin. Gross margin improved 10.1% from $160.5 million in the first
three quarters of 1998 to $176.7 million in the 1999 forty-week period. As a
percentage of sales, gross margin increased from 12.7% of sales for the first
three quarters of 1998 to 12.9% in the comparable 1999 period. The increase in
gross margin percentage was due to a number of factors: higher foodservice
margins achieved by a focus on improved credit quality and profitability, a
lower overall mix of foodservice sales which carry lower margins than store
sales and increased store margins due to purchasing economy and store assortment
mix. The overall margin was reduced by the inclusion of Cash & Carry, acquired
in May 1998, which operates at lower gross margin and expense levels than Smart
& Final stores, lower rebate income from stores, start-up inefficiencies in the
new Commerce warehouse and increased occupancy costs associated with new
facilities and technology.

     Operating and Administrative Expenses. Operating and administrative
expenses for the first three quarters of 1999 were $157.9 million, or 11.5% of
sales, compared with $142.5 million, or 11.3% of sales, in the first three
quarters of 1998. Higher expenses as a percentage of sales were due to higher
foodservice expenses as a result of a higher provision for bad debt reserves,
costs related to a significant downsizing of the Florida foodservice operations
and increased sales commission expenses associated with higher foodservice
distribution gross margins. The substantially higher gain in real estate
recognized in the same period of 1998 also attributed to the increased expenses
compared to the prior year. These increases more than offset the improvements
due to inclusion of Cash & Carry operations, which operate at lower gross margin
and expense levels than Smart & Final stores and an intensive corporate-wide
expense reduction program.

     Interest Expense, net. Interest expense, net increased from $8.6 million,
or 0.7% of sales, in the first three quarters of 1998 to $14.6 million, or 1.1%
of sales, in the comparable 1999

                                       13
<PAGE>

period. This increase was a result of higher weighted average borrowings as well
as higher weighted average interest rates as a result of the Company's debt
restructuring in late 1998.

Financial Condition

     Cash and cash equivalents were $20.9 million on January 3, 1999, and $26.4
million at October 10, 1999. Cash provided by operating activities, for the
forty weeks ended October 10, 1999, was $34.2 million. The common stock offering
and other stock purchase agreements generated net proceeds of $59.8 million.
Proceeds of the equity offering were used to reduce the note payable to the
Company's majority shareholder by $39.4 million and the revolving debt by $19.0
million. Other changes in debt were additional borrowings of $10 million and
payments of $19.3 million. Investments in fixed asset and other additions were
$19.5 million and $1.1 million of dividends were paid.

     During the forty weeks ended October 10, 1999, trade notes and accounts
receivable decreased $10.0 million and inventories declined by $9.2 million as a
result of a program to reduce cash investments in working capital. Other changes
in operating assets and liabilities generally reflect the timing of receipts and
disbursements. Accounts payable decreased $19.0 million and prepaid expenses
decreased $8.2 million while other liabilities decreased $4.3 million and other
accrued liabilities increased $3.0 million in the first three quarters of 1999.

     Stockholders' equity increased from $189.3 million to $251.7 million at
October 10, 1999. This increase includes the effect of the $57.9 million, net of
fees, common stock offering completed during second quarter 1999, as well as a
$1.4 million increase due to the issuance of stock resulting from the exercise
of stock options and other stock purchase agreements and the $3.1 million income
for the first three quarters of 1999.

Liquidity and Capital Resources

     Historically, the Company's primary source of liquidity has been cash flow
from operations. Cash provided by operating activities decreased to $34.2
million in the first three quarters of 1999 from $38.5 million in the comparable
1998 period. At October 10, 1999, the Company had cash of $26.4 million,
compared to $20.9 million at January 3, 1999. The Company had $144.6 million of
debt, excluding capital leases, and stockholders' equity of $251.7 million at
October 10, 1999.

     During second quarter, 1999, the Company completed its fixed-price rights
offering pursuant to a registration statement on Form S-3 filed in April 1999.
The offering increased stockholders' equity by $57.9 million after expenses of
the offering. The Company's majority shareholder increased its ownership by
4,271,935 shares and paid for its subscribed shares by exchanging $39.4 million
of its $55.4 million loan to the Company. The Company used the $19.0 million
proceeds from other stockholders to pay down its revolving loan.

     As of the end of third quarter, 1999, the Company was in compliance with
financial covenants contained in its loan agreements, as amended during the
latter part of June 1999.

                                       14
<PAGE>

     The Company expects to be able to fund future acquisitions and other cash
requirements by a combination of available cash, cash from operations, lease
financings and other borrowings and proceeds from the issuance of equity
securities. It believes that its sources of funds are adequate to provide for
working capital, other capital expenditures, and debt service requirements for
the foreseeable future.

Year 2000

     The Company relies on a diverse assortment of computer hardware and
software, the integrated operation of which is essential to the successful
implementation of the Company's operations. In 1996, the Company began a
comprehensive review of its information technology systems and other systems and
equipment and has developed a Year 2000 implementation program. The
implementation program has been reviewed by the Company's Board of Directors.
Full compliance and testing is scheduled to be completed by the end of November
1999.

     The entire implementation program is divided into three broad systems, the
corporate systems, the store systems and the foodservice systems and the program
has two phases, the impact analysis phase and the modification or replacement
phase.

     The impact analysis phase for the corporate systems, which includes the
identification of date sensitive computer codes within the systems, has been
completed. The modification or replacement phase for the corporate systems is
complete. The Company continues to monitor all vendors for last-minute Year 2000
issues.

       The impact analysis phase for the store systems has been completed and
the modification or replacement phase is to be completed by the end of November
1999. The impact analysis phase for the foodservice systems also has been
completed, and the modification or replacement phase is scheduled to be
completed by the end of November 1999.

     Except for the cost of replacement systems, the Company expenses, as
incurred, the cost of the Year 2000 program. The Company is funding the costs
associated with the Year 2000 program through operating cash flows. The Company
estimates the total incremental cost of the Year 2000 program will not exceed
$2.7 million. As of October 10, 1999, the Company had incurred approximately
$2.1 million in costs with respect to the Year 2000 program.

     As part of the Year 2000 project, the Company has identified relationships
with third parties, including vendors, suppliers, and service providers, which
the Company believes are critical to its business operations. The Company is in
the process of communicating with these third parties through questionnaires,
letters and interviews in an effort to determine the extent to which they are
addressing their Year 2000 issues. The Company will continue to communicate
with, assess and monitor the progress of these third parties in resolving Year
2000 issues.

     The Company anticipates minimal disruptions in its operations as a result
of system failures related to Year 2000 issues. If the Company or a key third
party experiences a systems failure due to the century change, the Company
believes the most significant adverse impact

                                       15
<PAGE>

would be its inability to communicate with suppliers concerning timely delivery
of inventory. Other possible consequences include, but are not limited to, loss
of communications with stores, loss of electric power, and an inability to
process customer transactions or otherwise engage in similar normal business
activities. The Company cannot assure that there will not be an adverse impact
on the Company if third parties do not appropriately address their Year 2000
issues in a timely manner.

     Although the Company does not believe the actual impact of these failures
will be material, the Company is currently developing a contingency plan for
possible Year 2000 issues including the delivery of inventory and processing of
customer transactions. The Company will continue to develop these plans based on
its internal testing results, tests with third parties and its assessment of
other outside risks. The Company will continually refine its contingency plan
throughout 1999, as additional information becomes available.

                                       16
<PAGE>

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Interest Rate Risk

     The Company is exposed to market risks relating to fluctuations in interest
rates. The Company's objective of financial risk management is to minimize the
negative impact of interest rate fluctuations on the Company's earnings and cash
flows. Interest rate risk is managed through the use of interest rate collar
contracts to hedge principal amounts of up to $100 million. The agreements limit
LIBOR fluctuations to interest rate ranges from 4.7% to 8.0% and extend to
September 2004. These contracts are entered into with major financial
institutions thereby minimizing risk of credit loss.

Credit Risk

     The Company is exposed to credit risk on accounts receivable. The Company
provides credit to customers in the ordinary course of business and performs
ongoing credit evaluations. Concentrations of credit risk with respect to trade
receivables are limited due to the number of customers comprising the Company's
customer base. The Company currently believes its allowance for doubtful
accounts is sufficient to cover customer credit risks.


Forward-Looking Statements

     From time to time Smart & Final may publish forward-looking statements
about anticipated results. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order to comply with
the terms of the safe harbor, the Company notes that such forward-looking
statements are based upon internal estimates which are subject to change because
they reflect preliminary information and management assumptions, and that a
variety of factors could cause the Company's actual results and experience to
differ materially from the anticipated results or other expectations expressed
in the Company's forward-looking statements. The factors which could cause
actual results or outcomes to differ from such expectation include the extent of
the company's success in (i) changing market conditions (ii) unforeseen costs
and expenses (iii) ability to attract new customers and retain existing
customers (iv) gain or losses from sales along with the uncertainties (v)
increases in interest rates of the Company's cost of borrowing and other
factors, including unusually adverse weather conditions, described from time to
time in the company's SEC filing and reports. This report includes "forward-
looking statements" including, without limitation, statements as to the
Company's liquidity and availability of capital resources.

                                       17
<PAGE>

                          PART II - OTHER INFORMATION

Item 1.  Legal proceedings

         Not applicable.

Item 2.  Changes in Securities

         Not applicable.

Item 3.  Defaults upon Senior Securities

         Not applicable

Item 4.  Submission of Matters to a Vote of Security Holders

         Not applicable

Item 5.  Other information

         Not applicable

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits:

              Exhibit Number       Description of Exhibit
              --------------       ----------------------

              27                   Financial Data Schedule


         (b)  Reports on Form 8-K
              None

                                       18
<PAGE>

                                  SIGNATURES

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


                                   SMART & FINAL INC.

                                   By:


Date:  November 22, 1999                    /s/ MARTIN A. LYNCH
                                   -------------------------------------
                                                Martin A. Lynch
                                          Executive Vice President,
                                         Chief Financial Officer, and
                                   Principal Accounting Officer of the Company

                                       19
<PAGE>

                              SMART & FINAL INC.
                                 EXHIBIT INDEX

Exhibit Number           Description of Exhibit
--------------           ----------------------

27                       Financial Data Schedule

                                       20