<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 June 18, 2000


                                       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 29,203,114 shares of common stock outstanding as of July
27, 2000.
================================================================================
<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 Income                    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    9
           and Results of Operations

Item  3.   Quantitative and Qualitative Disclosure About Market Risk     16
</TABLE>

                                    Part II
                               Other Information
<TABLE>



<S>                                                                 <C>
Item  1.   Legal Proceedings                                             17

Item  2.   Changes in Securities                                         17

Item  3.   Defaults upon Senior Securities                               17

Item  4.   Submission of Matters to a Vote of Security Holders           17

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>

                                                                                June 18,         January 2,
ASSETS                                                                            2000             2000
------                                                                       ------------      -----------
Current assets:                                                               (Unaudited)
<S>                                                                         <C>                <C>
     Cash & cash equivalents                                                 $  39,569          $  42,936
     Trade notes and accounts receivable, less
         allowance for doubtful accounts of
         $2,924 in 2000 and $4,687 in 1999                                      62,486             63,494

     Inventories                                                               150,929            154,550
     Prepaid expenses                                                            7,424              7,835
     Deferred tax asset                                                         10,834             10,834
                                                                             ---------          ---------
             Total current assets                                              271,242            279,649
Property, plant and equipment:
     Land                                                                       35,742             35,742
     Buildings and improvements                                                 29,116             29,116
     Leasehold improvements                                                     97,655             95,337
     Fixtures and equipment                                                    172,016            166,234
                                                                             ---------          ---------
                                                                               334,529            326,429
     Less - Accumulated depreciation and amortization                          134,386            122,499
                                                                             ---------          ---------
             Net property, plant and equipment                                 200,143            203,930

Assets under capital leases, net of accumulated
     amortization of  $7,302 in 2000 and $7,233 in 1999                          7,754              8,343
Goodwill, net of accumulated amortization
     of  $4,374 in 2000 and $3,640 in 1999                                      54,353             55,087
Deferred tax asset                                                               4,734              4,734
Other assets                                                                    29,815             30,856
                                                                             ---------          ---------
                 Total assets                                                $ 568,041          $ 582,599
                                                                             =========          =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
     Current maturities of long-term debt                                      $ 4,102            $ 3,928
     Accounts payable                                                           86,001             92,513
     Accrued salaries and wages                                                 21,519             18,360
     Other accrued liabilities                                                  37,945             34,150
                                                                             ---------          ---------
             Total current liabilities                                         149,567            148,951
Long-term liabilities:
     Notes payable, net of current maturities                                   10,403             12,865
     Notes payable to Parent                                                    15,965             15,965
     Bank debt                                                                 100,000            117,500
     Obligations under capital leases                                           10,363             11,140
     Other long-term liabilities                                                 4,354              3,946
     Workers' compensation reserve, postretirement
         and postemployment benefits                                            19,602             18,785
                                                                             ---------          ---------
             Total long-term liabilities                                       160,687            180,201

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; 29,203,114 shares issued
     and outstanding in 2000 and 29,136,995 in 1999)                               292                291
     Additional paid-in capital                                                204,738            204,450
     Notes receivable for stock                                                   (100)              (100)
     Accumulated other comprehensive loss                                         (616)              (835)
     Retained earnings                                                          53,473             49,641
                                                                             ---------          ---------
             Total stockholders' equity                                        257,787            253,447
                                                                             ---------          ---------
                 Total liabilities and stockholders' equity                  $ 568,041          $ 582,599
                                                                             =========          =========
</TABLE>


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

                                       2

<PAGE>
                              SMART & FINAL INC.
                       CONSOLIDATED STATEMENTS OF INCOME
               (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>


                                                                         Twelve Weeks Ended             Twenty-Four Weeks Ended
                                                                     ---------------------------      --------------------------
                                                                      June 18,          June 20,      June 18,           June 20,
                                                                        2000              1999          2000               1999
                                                                     -----------      ----------      --------        ----------
                                                                          (Unaudited)                      (Unaudited)

<S>                                                                <C>              <C>            <C>               <C>
 Sales                                                              $  442,998      $   418,608     $  842,359        $  816,945
 Cost of sales, buying and occupancy                                   382,842          365,391        727,980           713,650
                                                                    ----------       ----------     ----------        ----------

 Gross margin                                                           60,156           53,217        114,379           103,295
 Operating and administrative expenses                                  52,205           45,880        102,218            91,982
                                                                    ----------       ----------     ----------        ----------
     Income from operations                                              7,951            7,337         12,161            11,313

 Interest expense, net                                                   3,237            5,027          6,482            10,108
                                                                    ----------       ----------     ----------        ----------

 Income before income tax provision and extraordinary item               4,714            2,310          5,679             1,205
 Income tax provision                                                    1,616              893          1,989               474
                                                                    ----------       ----------     ----------        ----------
     Income from consolidated subsidiaries                               3,098            1,417          3,690               731

 Equity earnings in unconsolidated subsidiary                               94               71            138               283
                                                                    ----------       ----------     ----------        ----------
     Income before extraordinary item                                    3,192            1,488          3,828             1,014
 Extraordinary loss on extinguishment of debt,
     net of  tax effect of $147                                              -              166              -               166
                                                                    ----------       ----------     ----------        ----------
     Net income                                                     $    3,192       $    1,322     $    3,828        $      848
                                                                    ==========       ==========     ==========        ==========

 Earnings  per common share:
     Earnings per common share before extraordinary item            $     0.11       $     0.06     $     0.13        $     0.04
     Extraordinary loss on extinguishment of                                 -            (0.01)             -             (0.01)
       debt per common share                                        ----------       ----------     ----------        ----------
 *   Earnings  per common share                                     $     0.11       $     0.06     $     0.13        $     0.04
                                                                    ==========       ==========     ==========        ==========

 Weighted average common shares                                     29,192,368       23,378,215     29,177,777        22,952,697
                                                                    ==========       ==========     ==========        ==========

 Earnings per common share, assuming dilution:
     Earnings per common share, assuming dilution,
        before extraordinary item                                   $     0.11       $     0.06     $     0.13        $     0.04
     Extraordinary loss on extinguishment of                                 -            (0.01)             -             (0.01)
       debt per common share                                        ----------       ----------     ----------        ----------
 *   Earnings per common share, assuming dilution                   $     0.11       $     0.06     $     0.13        $     0.04
                                                                    ==========       ==========     ==========        ==========
 Weighted average common shares
 and common share equivalents                                       29,264,238       23,451,919     29,220,452        22,989,549
                                                                    ==========       ==========     ==========        ==========
</TABLE>

     * Earnings per share totals do not aggregate due to rounding.



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

                                       3
<PAGE>
                               SMART & FINAL INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)

<TABLE>
<CAPTION>

                                                                  Twenty-Four Weeks Ended
                                                             ------------------------------
                                                                  June 18,     June 20,
                                                                   2000         1999
                                                             ------------    --------------
Cash Flows From Operating Activities:                                 (Unaudited)
<S>                                                              <C>         <C>
       Net income                                                $  3,828    $    848
       Adjustments to reconcile net income to net
         cash provided by operating activities:
         Gain on disposal of fixed assets                             (61)       (524)
         Depreciation and amortization                             15,474      13,966
         Amortization of deferred financing costs                     873       1,023
         Extraordinary loss on extinguishment of debt                  --         166
         Equity earnings in unconsolidated subsidiary                (138)       (283)
         Decrease (increase) in:
            Trade notes and accounts receivable                     1,008      10,240
            Inventories                                             3,621       6,796
            Prepaid expenses and other                                411       4,364
         Increase (decrease) in:
            Accounts payable                                       (6,115)     (9,313)
            Accrued liabilities                                     3,159       1,453
            Other liabilities                                       5,907      (5,495)
                                                             ------------    --------
         Net cash provided by operating activities                 27,967      23,241
                                                             ------------    --------
Cash Flows From Investing Activities:
       Acquisition of property, plant and equipment                (9,479)    (14,372)
       Proceeds from disposal of property, plant and equipment         77         692
       Other                                                       (1,286)        105
                                                             ------------    --------
         Net cash used in investing activities                    (10,688)    (13,575)
                                                             ------------    --------
Cash Flows From Financing Activities:
       Proceeds from issuance of common stock, net of costs            --      20,502
       Payments on bank line of credit                            (17,500)    (19,000)
       Borrowings on bank line of credit                               --      10,000
       Payments on notes payable                                   (3,146)     (4,851)
       Change in payable to Parent and affiliates                      --      (1,681)
       Quarterly dividend paid                                         --      (1,127)
                                                             ------------    --------

         Net cash (used in) provided by financing activities      (20,646)      3,843
                                                             ------------    --------
Increase (decrease) in cash and cash equivalents                   (3,367)     13,509

Cash and cash equivalents at beginning of  period                  42,936      20,887
                                                             ------------    --------
Cash and cash equivalents at end of period                       $ 39,569    $ 34,396
                                                             ============    ========
Noncash Investing and Financing Activities:
       Note to affiliates extinguished for common                $     --    $ 39,423
            stock issued                                     ============    ========
         Total noncash transactions                              $     --    $ 39,423
                                                             ============    ========
</TABLE>


  The accompanying notes are an integral part of these 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 57.1
percent owned subsidiary of Casino USA, Inc. (the "Parent").  Casino Guichard-
Perrachon, S.A. ("Casino France"), a publicly traded French joint stock limited
liability company, is the principal shareholder of the Parent.  Collectively,
Casino France and its subsidiaries currently own approximately 60.2 percent of
the Company's common stock.

     The consolidated balance sheet as of June 18, 2000, the consolidated
statements of income and cash flows for the twelve and twenty-four weeks ended
June 18, 2000 and June 20, 1999 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 2, 2000.

2.   Recent Accounting Pronouncements

     In June 1998, Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which established accounting and reporting
standards for derivative instruments and for hedging activities.  SFAS No. 133
was amended by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of SFAS No. 133," which deferred the
implementation of SFAS No. 133 until fiscal years beginning after June 15, 2000.
Currently, the Company has limited use of derivative financial instruments and
believes that adoption of SFAS No. 133 will not have a material impact on its
results of operations or financial position.

3.   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.

4.   Comprehensive income

     Beginning in January 2000, in accordance with generally accepted accounting
principles, the functional currency for the Company's Mexico operations has been
the Mexican Peso.  As such, foreign currency translation gains and losses are
included in other comprehensive income (loss) and reflected in Accumulated other
comprehensive loss under Stockholders' equity. During fiscal years 1997, 1998
and 1999, in accordance with generally accepted accounting

                                       5
<PAGE>


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


principles, the functional currency had been the U.S. dollar and as such,
foreign currency translation gains and losses were included in results of
operations for those fiscal years.

     Comprehensive income was computed as follows, amounts in thousands:
<TABLE>
<CAPTION>

                                              Twelve Weeks Ended    Twenty-Four Weeks Ended
                                              -------------------   -----------------------
                                               June 18,   June 20,    June 18,     June 20,
                                                2000       1999         2000         1999
                                               ------     ------       ------        -----
<S>                                           <C>        <C>          <C>          <C>
Net income                                      $3,192     $1,322       $3,828      $ 848
Other comprehensive income:
Foreign currency translation adjustments           146          -       $  219      $   -
                                                ------     ------       ------      -----
Total comprehensive income                      $3,338     $1,322       $4,047      $ 848
                                                ======     ======       ======      =====
</TABLE>

5.  Interest expense

      Interest expense was incurred primarily on borrowings under the Company's
revolving credit facilities and loans from its Parent. The Company paid $4.7
million and $10.1 million in interest expense in the twenty-four weeks ended
June 18, 2000 and June 20, 1999, respectively.

6.  Income taxes

      The Company and the Parent are parties to a tax sharing arrangement
covering income tax obligations in the state of California. Under this
arrangement, based upon pre-tax income or loss, the Company has made tax sharing
payments of $235,000 to the Parent in the twenty-four weeks ended June 18, 2000
and received tax sharing benefits of $1,277,000 in the twenty-four weeks ended
June 20, 1999 from the Parent. The Company paid $40,000 and $20,000 of income
taxes for states other than California in the twenty-four weeks ended June 18,
2000 and June 20, 1999, respectively. The Company paid $1,185,000 of federal
income taxes in the twenty-four weeks ended June 18, 2000. The Company did not
pay any federal income taxes in the twenty-four weeks ended June 20, 1999 due to
taxable losses in the first half of 1999.

7.  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.

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

                                       6
<PAGE>


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


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.

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

     For the twelve weeks ended June 18, 2000:

<TABLE>
<CAPTION>

                                                        Corporate
                               Stores    Foodservice     Expense      Total
                              --------   ------------   ----------   --------
<S>                           <C>        <C>            <C>          <C>
Revenues from external
  customers                   $348,069       $94,929      $     -    $442,998
Intercompany real estate
  charge (income)                3,180             -       (3,180)          -
Interest income                      -             -          301         301
Interest expense                     -             -        3,538       3,538
Pre-tax income (loss)            8,210          (907)      (2,589)      4,714

</TABLE>
     For the twelve weeks ended June 20, 1999:
<TABLE>
<CAPTION>

                                                        Corporate
                               Stores    Foodservice     Expense      Total
                              --------   ------------   ----------   --------
<S>                           <C>        <C>            <C>          <C>
Revenues from external
  customers                   $323,423       $95,185      $     -    $418,608
Intercompany real estate
  charge (income)                3,148             -       (3,148)          -
Interest income                      -             -          202         202
Interest expense                     -             -        5,229       5,229
Pre-tax income (loss) before
  extraordinary item             8,990        (1,741)      (4,939)      2,310
</TABLE>

                                       7
<PAGE>



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



     For the twenty-four weeks ended June 18, 2000:

<TABLE>
<CAPTION>

                                                        Corporate
                               Stores    Foodservice     Expense      Total
                              --------   ------------   ----------   --------
<S>                           <C>        <C>            <C>          <C>
Revenues from external
  customers                   $651,539      $190,820      $     -    $842,359
Intercompany real estate
  charge (income)                6,347             -       (6,347)          -
Interest income                      -             -          694         694
Interest expense                     -             -        7,176       7,176
Pre-tax income (loss)           14,018          (699)      (7,640)      5,679

</TABLE>
     For the twenty-four weeks ended June 20, 1999:
<TABLE>
<CAPTION>

                                                        Corporate
                               Stores    Foodservice     Expense      Total
                              --------   ------------   ----------   --------
<S>                           <C>        <C>            <C>          <C>
Revenues from external
  customers                   $617,889      $199,056      $     -    $816,945
Intercompany real estate
  charge (income)                6,342             -       (6,342)          -
Interest income                      -             -          401         401
Interest expense                     -             -       10,509      10,509
Pre-tax income (loss) before
  extraordinary item            12,463        (1,271)      (9,987)      1,205

</TABLE>

     Costs for servicing stores was revised in 2000. If we had used the new
allocation method, Foodservice pre-tax income would have been approximately
$300,000 and $700,000 lower for the twelve weeks and twenty-four weeks ended
June 20, 1999, respectively and Stores pre-tax income would have been
approximately $300,000 and $700,000 higher for the twelve weeks and twenty-four
weeks ended June 20, 1999, respectively.

9.   Legal Actions

     The Company has been named as a 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 2, 2000.

Summary

     Smart & Final Inc. (the "Company") reported net income of  $3.2 million, or
$0.11 per diluted share, for the twelve weeks ended June 18, 2000, compared to
net income of $1.3 million, or $0.06 per diluted share, in the twelve-week
period ended June 20, 1999.  The 1999 results include an extraordinary loss on
extinguishment of debt, net of tax, of $0.2 million, or $0.01 per diluted share.

     For the twenty-four weeks ended June 18, 2000, the Company reported net
income of $3.8 million, or $0.13 per diluted share, compared to net income of
$0.8 million, or $0.04 per diluted share, in the twenty-four weeks ended June
20, 1999. The 1999 results include an extraordinary loss on extinguishment of
debt, net of tax, of $0.2 million, or $0.01 per diluted share.

     Operating earnings increased from $11.3 million in the first half of the
prior year to $12.2 million in the same period of the current year. Improvement
attributed to increased sales and improved gross margin rates was partially
offset by increased operating and administrative expenses.

     Interest expense, net decreased $3.6 million in the first half of 2000
primarily as a result of debt reduction from the proceeds of a $60 million
common stock offering completed in June 1999.

                                       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.  Totals
may not aggregate due to rounding.
<TABLE>
<CAPTION>


                                             Twelve Weeks Ended       Twenty-Four Weeks Ended
                                            ---------------------    -------------------------
                                              June 18,    June 20,      June 18,      June 20,
                                                2000        1999          2000          1999
                                               -----       -----         -----         -----
<S>                                            <C>         <C>         <C>           <C>
Sales:
 Store                                          78.6%       77.3%         77.3%         75.6%
 Foodservice distribution sales                 21.4        22.7          22.7          24.4
                                               -----       -----         -----         -----
 Sales, consolidated total                     100.0       100.0         100.0         100.0
Cost of sales, buying and occupancy             86.4        87.3          86.4          87.4
                                               -----       -----         -----         -----
Gross margin                                    13.6        12.7          13.6          12.6
Operating and administrative expenses           11.8        11.0          12.1          11.3
                                               -----       -----         -----         -----
  Income from operations                         1.8         1.8           1.4           1.4
Interest expense, net                            0.7         1.2           0.8           1.2
                                               -----       -----         -----         -----
Income before income tax provision
and extraordinary item                           1.1         0.6           0.7           0.1
Income tax provision                             0.4         0.2           0.2           0.1
                                               -----       -----         -----         -----
 Income from consolidated subsidiaries           0.7         0.3           0.4           0.1
Equity earnings in unconsolidated
subsidiary                                         -           -             -             -
                                               -----       -----         -----         -----
 Income before extraordinary item                0.7         0.4           0.5           0.1
Extraordinary loss on extinguishment
of debt, net of tax                                -           -             -             -
                                               -----       -----         -----         -----

Net income                                       0.7%        0.3%          0.5%          0.1%
                                               =====       =====         =====         =====

</TABLE>

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

<TABLE>
<CAPTION>

                                            Twelve Weeks Ended       Twenty-Four Weeks Ended
                                           ---------------------    -------------------------
                                             June 18,    June 20,      June 18,      June 20,
                                               2000        1999          2000          1999
                                              -----       -----         -----         -----
<S>                                          <C>         <C>         <C>           <C>
Stores                                        $ 8.2       $ 9.0         $14.0         $12.5
Foodservice                                    (0.9)       (1.8)         (0.7)         (1.3)
                                              -----       -----         -----         -----
  Segment totals                                7.3         7.2          13.3          11.2
Interest and other corporate expenses           2.6         4.9           7.6          10.0
                                              -----       -----         -----         -----
Consolidated pre-tax income before
 extraordinary item                           $ 4.7       $ 2.3         $ 5.7         $ 1.2
                                              =====       =====         =====         =====
</TABLE>

     Costs for servicing stores was revised in 2000.  If we had used the new
allocation method, Foodservice pre-tax income would have been approximately $0.3
million and $0.7 million lower for the twelve weeks and twenty-four weeks ended
June 20, 1999, respectively and Stores pre-tax income would have been
approximately $0.3 million and $0.7 million higher for the twelve weeks and
twenty-four weeks ended June 20, 1999, respectively.

                                       10
<PAGE>

Background

     The Company plans to continue its store expansion program in fiscal 2000.
In fiscal 1999, the Company's primary emphasis was on assimilating the 39 stores
in the Pacific Northwest acquired in 1998:

<TABLE>
<CAPTION>
                                                         Twenty-Four
                                Twelve Weeks Ended       Weeks Ended         Year Ended
                                -------------------      -----------         ---------
                                June 18,   June 20,    June 18,  June 20,     January 2,
                                 2000        1999       2000       1999         2000
                                --------   --------   ---------  --------    -----------

<S>                             <C>        <C>        <C>         <C>           <C>
USA:
Beginning store count            212        210        212          209          209
Stores opened:
 New stores                        1          2          1            3            3
 Relocations                       -          -          1            -            -
Stores relocated or closed         -          -         (1)           -            -
                                ----       ----       ----         ----          ---
Ending store count               213        212        213          212          212
                                ----       ----       ----         ----          ---

MEXICO:
Beginning store count              6          6          6            6            6
New stores opened                  -          -          -            -            -
                                ----       ----       ----         ----          ---
Ending store count                 6          6          6            6            6
                                ----       ----       ----         ----          ---

Grand Total                      219        218        219          218          218
                                ====       ====       ====         ====          ===

</TABLE>

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

     Management continually assesses each store's profitability on a pre-tax
profit basis after allocation of administrative expenses.  Stores not meeting
strategic management objectives for profitability, market penetration, and/or
other measures are evaluated for closure or relocation.  Generally, stores
opened in mature markets are expected to achieve profitability within 18 months
of operations.  However, there can be no assurance that the Company will be able
to open new stores in a timely manner; hire, train and integrate employees;
continue locating and obtaining favorable store sites; or adapt distribution,
management information and other operating systems sufficiently to grow in a
successful and profitable manner.

     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 Twelve Weeks Ended June 18, 2000 with Twelve Weeks Ended
June 20, 1999.

     Sales.  Second quarter 2000 sales were $443.0 million, up 5.8% over the
comparable 1999 period.

                                       11
<PAGE>

     Store sales increased 7.6%, from $323.4 million in second quarter 1999 to
$348.1 million in second quarter 2000.  Comparable store sales for the second
quarter of 2000 increased 7.2% over the prior year period.  Average comparable
transaction size also increased by 2.8%, to $38.22 in the second quarter of
2000.  Store sales reflect the three new stores opened in 1999 and two new and
relocated stores opened in the first half of 2000.

     Foodservice distribution sales decreased 0.3% from $95.2 million in the
second quarter of 1999 to $94.9 million in the current year second quarter, but
the trend in sales continued to improve, with sales increasing in the third
month of the quarter.

     Gross Margin.  Gross margin improved 13.0% from $53.2 million in the second
quarter of 1999 to $60.2 million in the current year quarter.  As a percentage
of sales, gross margin improved from 12.7% in the prior year quarter to 13.6% in
second quarter 2000.  The primary factors in the improvement of gross margin
rates were lower purchase costs due to the new national procurement program and
expanded corporate brands, better store assortment mix and reduced distribution
costs due to the improved efficiency at the new Commerce distribution center and
cost reductions at Florida foodservice.

     Operating and Administrative Expenses.  Operating and administrative
expenses for the second quarter of 2000 were $52.2 million, up $6.3 million, or
13.8%, over the second quarter of 1999.  These expenses, as a percentage of
sales, increased from 11.0% in the second quarter of 1999 to 11.8% in the second
quarter of 2000.  Expenses increased due to a $1.9 million increase in marketing
expense, $1.0 million of retroactive medical insurance and other benefit charges
and $0.9 million of provisions for performance-based incentive compensation
recorded in the quarter.  No similar retroactive medical insurance and other
benefit charges or provisions for performance-based incentive compensation were
recorded in the same quarter of 1999.  Excluding these items, expenses increased
5.6% or, as a percentage of sales, stayed essentially unchanged for the second
quarters of 2000 and 1999.

     Interest expense, net.  Interest expense, net decreased from $5.0 million
in the second quarter of 1999 to $3.2 million in the second quarter of 2000
primarily as a result of debt reduction from the net proceeds of a $60 million
common stock offering completed in June 1999.


Comparison of Twenty-Four Weeks Ended June 18, 2000 with Twenty-Four Weeks Ended
June 20, 1999.

     Sales.  Sales in the first half of 2000 were $842.4 million, up 3.1% from
the comparable 1999 period.

     Store sales increased 5.4%, from $617.9 million to $651.5 million in the
first half of 2000.  Comparable store sales increased 4.8% in the first half of
2000 over the prior year period.  Average comparable transaction size also
increased 2.2% to $37.55 in the first half of 2000.  Sales early in 2000 were
soft due to customer Y2K stockpiling late in 1999 and heavy rainfall also
impacted sales in the first quarter of the year.

                                       12
<PAGE>

     Foodservice distribution sales decreased 4.1% to $190.8 million for the
first half of 2000, but the trend in sales continued to improve throughout the
first half of the year, with sales increasing in the last month of the first
half.

     Gross Margin.  Gross margin improved 10.7% from $103.3 million in the first
half of 1999 to $114.4 million in the 2000 twenty-four week period.  As a
percentage of sales, gross margin increased from 12.6% of sales for the first
half of 1999 to 13.6% in the comparable 2000 period.  The primary factors in the
improvement of gross margin rates were lower purchase costs due to the new
national procurement program and expanded corporate brands, better store
assortment mix and reduced distribution costs due to the improved efficiency at
the new Commerce distribution center and cost reductions at Florida foodservice.
Other than savings from the new national procurement program, improvement of
foodservice margin rates was also attributable to a continuing focus on improved
credit quality and profitability.

     Operating and Administrative Expenses.  Operating and administrative
expenses for the first half of 2000 were $102.2 million, or 12.1% of sales,
compared with $92.0 million, or 11.3% of sales, in the first half of 1999.
Expenses increased due to $2.2 million of consulting fees incurred related to
improving procurement programs, $1.9 million of provision for performance-based
incentive compensation and $1.0 million of retroactive medical insurance and
other benefit charges recorded in the first half of 2000.  No similar consulting
fees, provisions for performance-based incentive compensation or retroactive
medical insurance and other benefit charges were recorded in the first half of
1999.  In addition, marketing expense increased $1.6 million compared to the
first half of 1999.  Excluding these items, expenses increased 3.8% or, as a
percentage of sales, stayed essentially unchanged at 11.3%.

     Interest Expense, net.  Interest expense, net decreased from $10.1 million,
or 1.2% of sales, in the first half of 1999 to $6.5 million, or 0.8% of sales,
in the comparable 2000 period.  This decrease was primarily a result of debt
reduction from the net proceeds of a $60 million common stock offering completed
in June 1999.


Financial Condition

     Cash and cash equivalents were $42.9 million on January 2, 2000 and $39.6
million at June 18, 2000.  Operating activities provided cash of $28.0 million
for the twenty-four weeks ended June 18, 2000.  For the first half of 2000,
payments on bank and other debt were $20.6 million and investments in fixed
asset and other additions were $10.7 million.

     During the twenty-four weeks ended June 18, 2000, inventories declined by
$3.6 million.  The related accounts payable decreased $6.1 million.  Trade notes
and accounts receivable decreased $1.0 million.  Other changes in operating
assets and liabilities generally reflect the timing of receipts and
disbursements.

     Stockholders' equity increased $4.4 million to $257.8 million at June 18,
2000. This increase includes $3.8 million of income for the first half of 2000,
$0.4 million from the issuance of stock and other stock agreements and a $0.2
million translation adjustment.

                                       13
<PAGE>

Liquidity and Capital Resources

     Historically, the Company's primary source of liquidity has been cash flow
from operations.  Cash provided by operating activities was $28.0 million in the
first half of 2000.  At June 18, 2000, the Company had cash of $39.6 million,
compared to $42.9 million at January 2, 2000.  The Company had $129.0 million of
debt, excluding capital leases, and stockholders' equity of $257.8 million at
June 18, 2000.

     The Company had $219.0 million committed under its Senior Secured Credit
Facilities at June 18, 2000 and January 2, 2000.  At June 18, 2000, the
Company's borrowings under these facilities totaled $182.9 million compared with
$200.4 million at January 2, 2000.  At June 18, 2000, the Company had available
$36.1 million of unused credit under these facilities.

     As of the end of second quarter, 2000, the Company was in compliance with
all financial covenants contained in its loan agreements.

     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

     Full compliance of the Company's Year 2000 program was completed before the
end of 1999.  Except for the cost of replacement systems, the Company expensed,
as incurred, the cost of the Year 2000 program.  The Year 2000 program was
funded through operating cash flows.  The Company incurred approximately $2.6
million in costs with respect to the Year 2000 program.

     Subsequent to the end of 1999, the Company believes that its operations are
fully functioning and have not experienced any significant issues related to the
Year 2000.  While the Company is encouraged by the results of its Year 2000
compliance efforts, monitoring for any potential problems will continue
throughout 2000.

     Since the beginning of 2000, the Company has not received any reports from
third parties indicating any material Year 2000 incidents.  The Company will
continue to communicate with and assess and monitor any potential Year 2000
issues of these third parties throughout 2000.  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 any continued exposure exists, the
Company has a contingency plan for possible Year 2000 issues and will continue
to update these plans based on assessments of any subsequent Year 2000 issues as
additional information becomes available.

                                       14
<PAGE>

     The Company experienced sales increases in the final weeks of fiscal 1999,
which it believes were due to customers' stockpiling in preparation for possible
year end interruptions in product availability.  Consequently, the Company
experienced minor sales decreases in the first few weeks of fiscal 2000.

                                       15
<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 four interest rate
collar agreements to hedge principal amounts of up to an aggregate of $100
million.  These agreements limit LIBOR fluctuations to interest rate ranges from
4.7% to 8.0% and expire during various periods between October 2002 to September
2004.  These agreements 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.

                                       16
<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

               The annual Meeting of Stockholders of the Company was held on May
         17, 2000. At the meeting, stockholders (1) elected three directors of
         the Company and (2) ratified the selection of Arthur Andersen LLP,
         independent public accountants, as auditors for the Company for the
         year ending December 31, 2000.

               The three directors elected at the meeting were Christian P.
         Couvreux, James S. Gold, and Antoine Guichard. The directors whose term
         of office as a director continued after the meeting are Pierre B.
         Bouchut, Timm F. Crull, David J. McLaughlin, Joel-Andre Ornstein,
         Thomas G. Plaskett, Ross E. Roeder and Etienne Snollaerts.

               The votes cast for, against, or withheld, as well as the number
         of abstention and broker non-votes for each nominee for office as a
         director were as follows:
<TABLE>
<CAPTION>

                                                VOTES
                                  -------------------------------                  Broker
                                     For       Against   Withheld   Abstentions   Non-Votes
                                  ----------   -------   --------   -----------   ---------
<S>                               <C>          <C>       <C>        <C>           <C>

       Christian P. Couvreux      26,933,029      -      822,826        -             -
       James S. Gold              27,527,423      -      228,432        -             -
       Antoine Guichard           26,925,431      -      830,424        -             -

</TABLE>

               The votes cast for, against, or withheld, as well as the number
         of abstentions and broker non-votes for ratification of Arthur Andersen
         LLP, as auditors for the Company for the year ending December 31, 2000
         were as follows:

<TABLE>
<CAPTION>

                                               VOTES
                               ---------------------------------                     Broker
                                 For       Against      Withheld     Abstentions    Non-Votes
                               --------  ----------    ----------  -------------    ---------
<S>                            <C>        <C>          <C>          <C>           <C>

        Ratification of       27,747,757      5,235       -                2,863         -
        Arthur Andersen LLP
        as auditors for the
        Company for the year
        ending December 31, 2000

</TABLE>

                                       17
<PAGE>

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits:

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

              10.126              Seventh Amendment to the Smart & Final
                                  Supplemental Deferred Compensation Plan dated
                                  as of May 16, 2000*

              27                  Financial Data Schedule
              ________

               *    Management contracts and compensatory plans, contracts and
                       arrangements of the Company.

         (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:  July 27, 2000                     /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
--------------        ----------------------

10.126                Seventh Amendment to the Smart & Final Supplemental
                      Deferred Compensation Plan dated as of May 16, 2000*

27                    Financial Data Schedule

________

*    Management contracts and compensatory plans, contracts and arrangements of
     the Company.

                                       20