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



                                    FORM 10-Q



|X|  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended July 1, 2001, 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 No. 1-13727



                           FFP MARKETING COMPANY, INC.
             (Exact name of registrant as specified in its charter)




               Texas                                     75-2735779
   (State or other jurisdiction of                    (I.R.S. employer
    incorporation or organization)                  identification number)


                2801 Glenda Avenue; Fort Worth, Texas 76117-4391
           (Address of principal executive office, including zip code)

                                  817/838-4700
              (Registrant's telephone number, including area code)


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


                             Common Shares 3,818,747
              (Number of shares outstanding as of August 15, 2001)


<PAGE>
                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                     (In thousands, except number of shares)
                                   (Unaudited)

                                                        July 1,     December 31,
                                                          2001          2000
                                                        -------     -----------
               ASSETS

Current assets -
  Cash and cash equivalents                             $11,938        $14,572
  Investments in stocks and bonds                         3,602          3,084
  Trade receivables                                      29,819         28,671
  Notes receivable, current portion                       1,728          1,391
  Receivables from affiliates, current portion              716            770
  Inventories                                            22,235         24,502
  Deferred income taxes                                   1,046          1,181
  Prepaid expenses and other current assets               1,445            676
                                                       --------       --------
     Total current assets                                72,529         74,847

Property and equipment, net                              36,540         38,074
Notes receivable, excluding current portion               4,366          3,620
Other assets, net                                         9,914          8,320
                                                       --------       --------
     Total assets                                      $123,349       $124,861
                                                       ========       ========

      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities -
  Current installments of long-term debt                 $1,526         $1,642
  Current installments of capital lease obligations         437            437
  Accounts payable                                       22,243         21,190
  Money orders payable                                   18,377         18,237
  Advances from affiliates                                1,846          1,407
  Accrued expenses and other current liabilities         11,803         14,182
                                                       --------       --------
     Total current liabilities                           56,232         57,095

Long-term debt, excluding current installments           37,482         37,557
Capital lease obligations, excluding current
   installments                                           3,863          4,042
Deferred income taxes                                     3,120          3,367
Other liabilities                                         1,936          2,081
                                                       --------       --------
     Total liabilities                                  102,633        104,142
Commitments and contingencies                                -              -
Stockholders' equity -
  Common stock ($0.01 par value; 9,000,000
     common shares authorized; 3,818,747
     common shares issued and outstanding)               22,235         22,235
  Accumulated deficit                                      (812)          (547)
  Accumulated other comprehensive loss                     (707)          (969)
                                                       --------       --------
     Total stockholders' equity                          20,716         20,719
                                                       --------       --------
     Total liabilities and stockholders' equity        $123,349       $124,861
                                                       ========       ========


     See accompanying Notes to Condensed Consolidated Financial Statements.


<PAGE>

                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (In thousands, except per share data)
                                   (Unaudited)

                                        Three Months Ended    Six Months Ended
                                        ------------------  -------------------
                                         July 1,  June 25,   July 1,   June 25,
                                           2001    2000       2001       2000
                                        --------  --------  --------   --------
                                                    (In thousands)

Revenues -
  Motor fuel                            $153,410  $146,401   $284,179  $269,833
  Merchandise                             26,292    29,266     50,321    57,946
  Miscellaneous                            3,609     2,133      7,104     5,642
                                        --------  --------   --------  --------
     Total revenues                      183,311   177,800    341,604   333,421

Costs and expenses -
  Cost of motor fuel                     143,697   137,401    269,285   254,909
  Cost of merchandise                     18,264    20,287     35,551    40,483
  Direct store expenses                   11,316    12,516     23,217    25,393
  General and administrative expenses      4,136     4,041      8,488     7,801
  Depreciation and amortization            1,896     1,736      3,730     3,460
                                        --------  --------   --------  --------
    Total costs and expenses             179,309   175,981    340,271   332,046

Operating income                           4,002     1,819      1,333     1,375

  Interest income                            317       367        588       717
  Interest expense                         1,189     1,139      2,323     2,309
                                        --------  --------   --------  --------
Income (loss) before income taxes          3,130     1,047       (402)     (217)

Income tax expense (benefit) -
  Current                                    110         0        110         0
  Deferred                                   954       315       (247)      (65)
                                        --------  --------   --------  --------
    Total income tax expense (benefit)     1,064       315       (137)      (65)
                                        --------  --------   --------  --------
Net income (loss)                         $2,066      $732      $(265)    $(152)
                                        ========  ========   ========  ========



Net income (loss) per share -
  Basic                                    $0.54     $0.19     $(0.07)   $(0.04)
  Diluted                                  $0.54     $0.18     $(0.07)   $(0.04)



Weighted average number of
  common shares outstanding -
  Basic                                    3,819     3,819      3,819     3,819
  Diluted                                  3,822     3,985      3,819     3,819



     See accompanying Notes to Condensed Consolidated Financial Statements.


<PAGE>
                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)

                                                             Six Months Ended
                                                          ---------------------
                                                            July 1,     June 25,
                                                             2001         2000
                                                          -------       -------
Cash Flows from Operating Activities -
   Net loss                                                $ (265)        $(152)
   Adjustments to reconcile net loss to cash
   used by operating activities -
       Depreciation and amortization                        3,730         3,460
       Provision for doubtful accounts                        307            22
       Deferred income tax benefit                           (247)          (65)
       Net gain on sale of properties                      (1,039)       (1,251)
       Increase in stocks and bonds                          (733)         (879)
       Net change in operating assets and liabilities      (3,349)       (4,408)
                                                          -------       -------
    Net cash used by operating activities                  (1,596)       (3,273)
                                                          -------       -------


Cash Flows from Investing Activities -
    Repayments of advances to affiliate                        54           136
    Additions of property and equipment, net               (1,638)       (2,832)
    Increase (decrease) in notes receivable                   477           (10)
                                                          -------       -------
    Net cash used by investing activities                  (1,107)       (2,706)
                                                          -------       -------

Cash Flows from Financing Activities -
    Advances from affiliate                                   439         1,368
    Net borrowings (payments) on debt and capital leases     (370)         (856)
                                                          -------       -------
    Net cash provided by financing activities                  69           512
                                                          -------       -------

Net decrease in cash and cash equivalents                  (2,634)       (5,467)

Cash and cash equivalents at beginning of period           14,572        20,868
                                                          -------       -------

Cash and cash equivalents at end of period                $11,938       $15,401
                                                          =======       =======



Supplemental Disclosure of Cash Flow Information:
------------------------------------------------

Cash paid for interest                                     $2,323        $2,309
                                                          =======       =======







     See accompanying Notes to Condensed Consolidated Financial Statements.

<PAGE>


                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JULY 1, 2001
                                   (Unaudited)

1.  Basis of Presentation

     The  condensed   consolidated  financial  statements  include  the  assets,
liabilities,  and results of operations of FFP Marketing Company,  Inc., and its
wholly owned subsidiaries, FFP Operating Partners, L.P., Direct Fuels, L.P., FFP
Financial Services,  L.P., Practical Tank Management,  Inc., FFP Transportation,
L.L.C.,  FFP Money Order  Company,  Inc.,  FFP  Operating  LLC, and Direct Fuels
Management  Company,  Inc. These companies are  collectively  referred to as the
"Company."

     The  condensed  consolidated  balance  sheet  as of July 1,  2001,  and the
condensed  consolidated  statements of operations and the condensed consolidated
statements of cash flows for the periods presented have not been audited. In the
opinion of management,  all  adjustments,  consisting  only of normal  recurring
adjustments,  necessary to fairly present the Company's financial position as of
July 1, 2001,  and the  results  of  operations  and cash flows for the  periods
presented  have  been  made.  Interim  operating  results  are  not  necessarily
indicative of results for the entire year.

     The  notes to the  audited  consolidated  financial  statements,  which are
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000, include accounting policies and additional information pertinent to an
understanding of these interim  financial  statements.  That information has not
changed  other than as a result of normal  transactions  in the six months ended
July 1, 2001, and as discussed below.


2.  Income (Loss) per Share

     Basic net  income  (loss)  per share is net  income  (loss)  divided by the
weighted average number of common shares  outstanding for the year.  Diluted net
income per share is net income divided by the weighted  average number of common
shares  outstanding  for the  year  plus  potentially  dilutive  common  shares.
Outstanding  options to acquire  253,667 and 303,667 common shares were excluded
from the diluted  computation for the  three-month  and six-month  periods ended
July 1, 2001,  respectively,  and  outstanding  options to acquire 0 and 228,667
common shares were excluded from the diluted computation for the three-month and
six-month  periods ended June 25, 2000,  respectively,  because the effect would
have been anti-dilutive.  The following table reconciles the denominators of the
basic and diluted net income (loss) per share  calculations  for the three-month
and six-month periods ended July 1, 2001, and June 25, 2000:


                                       Three Months Ended    Six Months Ended
                                        ------------------  -------------------
                                         July 1,  June 25,   July 1,   June 25,
                                           2001    2000       2001       2000
                                        -------- ---------  -------- ----------
                                                    (In thousands)


Weighted average number
   of common shares outstanding           3,819     3,819     3,819      3,819
Effect of dilutive options                    3       166         0          0
                                          -----     -----     -----      -----
Weighted average number
   of common shares outstanding,
   assuming dilution                      3,822     3,985     3,819      3,819
                                          =====     =====     =====      =====

<PAGE>

3.  Operating Segments

     The Company and its subsidiaries  are principally  engaged in two operating
segments:  (i) the retail and  wholesales of motor fuel,  merchandise  and other
products and services at  convenience  stores,  truck stops,  and other gasoline
outlets  ("Retail  and  Wholesale"),  and (ii)  the  operation  of a motor  fuel
terminal  and  processing  facility  ("Terminal  Operations").  The  Company has
identified  such  segments  based  on  management  responsibilities.   No  major
distinctions  exist  regarding  geographical  areas  served  by the  Company  or
customer types.  The following table sets forth certain  information  about each
segment's financial  information for the three month and six month periods ended
July 1, 2001 and June 25, 2000:



                                 Retail and  Terminal
                                  Wholesale Operations Eliminations Consolidated
                                  --------- ----------- ----------- ------------
                                                 (In thousands)

Six Months Ended July 1, 2001
-----------------------------
Revenues from external sources      $283,586    $58,018        $0     $341,604
Revenues from other segment                0     18,515   (18,515)           0
Depreciation and amortization          3,407        323         0        3,730
Income (loss) before income taxes     (2,019)     1,617         0         (402)

Six Months Ended June 25, 2000
------------------------------
Revenues from external sources      $293,704    $39,717         0     $333,421
Revenues from other segment                0     15,780   (15,780)           0
Depreciation and amortization          3,163        297         0        3,460
(Loss) before income taxes              (171)       (46)        0         (217)

Second Quarter 2001
-------------------
Revenues from external sources      $152,618    $30,693         0     $183,311
Revenues from other segment                0     10,536   (10,536)           0
Depreciation and amortization          1,733        163         0        1,896
Income before income taxes               905      2,225         0        3,130

Second Quarter 2000
-------------------
Revenues from external sources      $153,260    $24,540         0     $177,800
Revenues from other segment                0      8,239    (8,239)           0
Depreciation and amortization          1,586        150         0        1,736
Income (loss) before income taxes      1,283       (236)        0        1,047


4.  Comprehensive Net Loss

     The components of comprehensive net income (loss) for the three and six
months periods ended July 1, 2001 and June 25, 2000, are set forth below:

                                       Three Months Ended     Six Months Ended
                                       -------------------  -------------------
                                        July 1,   June 25,   July 1,   June 25,
                                          2001     2000       2001       2000
                                       --------  ---------  -------- ----------
                                                   (In thousands)

Net income (loss)                       $2,066     $732       $(265)     $(152)
Unrealized net gains
  (losses) on available-
  for-sale securities,
  net of tax                               (31)       0         262          0
                                        ------    -----      ------      ------
Comprehensive net income (loss)         $2,035     $732       $ (3)      $(152)
                                        ======    =====      ======      ======

5.   Notes Payable and Long-Term Debt

     In June 1998 the Company closed 44 loans in the original  principal  amount
of $9,420,000 and secured by the Company's assets at 44 of 94 convenience stores
acquired in December 1997.  The loans bear interest at 8.66% per annum,  require
the Company to maintain a minimum fixed charge  coverage ratio of 1.25 to 1, and
will be fully  amortized at various  maturity dates ranging from October 2007 to
July  2013  by  making   principal  and  interest   payments  in  equal  monthly
installments  over their  respective  terms.  At July 1, 2001,  and December 31,
2000,  $8,111,000 and $8,359,000,  respectively,  remained  outstanding on these
loans.

     In February 1999 the Company  acquired 23 convenience  stores and two truck
stops.  Eleven of the 25 stores are third party  leasehold  locations  where the
Company purchased the existing leasehold interest, equipment, and inventory. The
Company financed its purchase of those properties with fully-amortizing mortgage
loans in the aggregate  original  principal amount of $1,012,000,  with maturity
dates ranging from 86 to 180 months,  interest payable at a fixed rate of 9.275%
per annum,  a minimum  fixed charge  coverage  ratio of 1.25 to 1, and aggregate
monthly  payments of  principal  and interest of $13,000.  At July 1, 2001,  and
December 31, 2000, $875,000 and $908,000, respectively,  remained outstanding on
these loans.

     The land and building at the remaining 14 of those 25 stores were purchased
on the same date by FFP Partners  and  immediately  leased to the Company  under
real estate leases with a 15-year term. The real estate leases with FFP Partners
require  a total  monthly  rent  payment  of  $99,000  with a rate of  return of
approximately 14%. Under generally  accepted  accounting  principles,  each real
estate lease is treated as two leases:  a land lease and a building lease.  Each
land lease is classified as an operating  lease,  with monthly  payments for all
such land leases  aggregating  $28,000.  Each building  lease is classified as a
capital lease,  with monthly  payments for all such building leases  aggregating
$71,000.  The amount of rent  allocated to the capital lease  obligation for the
buildings in the original  amount of  $3,932,000  results in an implicit rate of
approximately  20%.  As a  condition  to  the  Company's  acquisition  of  store
operations at those 14 fee locations,  the Company was required to guarantee the
acquisition  indebtedness in the original  amount of $9,550,000  incurred by FFP
Partners in its purchase of those stores,  including land,  building,  equipment
and inventory.  At July 1, 2001, and December 31, 2000, the outstanding  amounts
on  loans  of  FFP  Partners  guaranteed  by the  Company  were  $8,824,000  and
$9,000,000,  respectively. The Company's scheduled real estate lease payments to
FFP Partners  equal or exceed the debt service costs of FFP Partners  during the
term of the leases.

     In June 1999 the Company refinanced its previous long-term revolving credit
facility  and term loan with the proceeds of fixed rate  financing  from a third
party lender in the original  principal  amount of  $23,800,000.  This long-term
debt is payable in 180 equal, monthly installments with interest at a fixed rate
of 9.9% per  annum,  a minimum  fixed  charge  coverage  ratio of 1.25 to 1, and
aggregate  monthly payments of principal and interest of $256,000.  This loan is
secured by a lien against the Company's leasehold improvements,  equipment,  and
inventory at 49 specific  convenience stores,  truck stops and gas-only outlets.
At  July  1,  2001,  and  December  31,  2000,   $22,366,000  and   $22,773,000,
respectively, remained outstanding on these loans.

     In December 1999 the Company  obtained a revolving  credit  facility with a
third party  lender  providing  for  borrowings  up to  $10,000,000.  The amount
available  at any time  under  the loan is equal to a  borrowing  base of 80% of
certain trade  receivables  plus 60% of the Company's  inventory at its terminal
facility;  provided,  however,  that  any draw  which  would  cause  outstanding
borrowings  under the  facility to exceed  $5,000,000  is limited to 140% of net
value of marketable  securities in the Company's  trading account at a brokerage
firm. At the end of the second quarter of 2001, the Company's borrowing base was
limited  under  the  agreement  to  $9,800,000.  The  net  value  of  marketable
securities at that brokerage firm was $3,049,000 and $2,711,000 at July 1, 2001,
and  December  31, 2000,  respectively.  The  revolving  credit  facility  bears
interest at the lender's prime rate plus one percentage point,  payable monthly,
and matures in December 2002. At July 1, 2001, and December 31, 2000, $7,484,000
and  $6,858,000,  respectively,  were  outstanding  under the revolving  line of
credit.  The loan is subject to a Loan Agreement and a Security  Agreement dated
in December  1999 between the lender,  the Company and two  subsidiaries  of the
Company.  The agreement  contains  restrictive  covenants  including a financial
covenant requiring the Company to maintain a minimum fixed charge coverage ratio
of 1.25 to 1. Loans  under the  agreement  are  secured by all of the  Company's
trade accounts  receivable and its inventories at the terminal.  The Company was
in compliance with its loan covenants at the end of the second quarter.

<PAGE>
                  FFP MARKETING COMPANY, INC. AND SUBSIDIARIES

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

General
-------

     FFP Marketing Company,  Inc. was formed as a Texas corporation  immediately
prior to the December 1997 restructuring of FFP Partners, L.P. ("FFP Partners").
In that  restructuring,  all of the assets and  businesses  of FFP Partners were
transferred to the Company,  except that FFP Partners retained the improved real
property  previously used in its retail operations.  Unless the context requires
otherwise, references herein to the "Company" for periods or activities prior to
the December 1997  restructuring  include the activities of FFP Partners and its
then subsidiaries, which are now subsidiaries of FFP Marketing Company, Inc.

     In the December  1997  restructuring  of FFP  Partners,  the holders of its
limited partnership  interests received one share of common stock of the Company
for each  limited  partnership  unit  that  they  owned on  December  28,  1997,
resulting in each such person owning the same  economic  interest in the Company
as they had held in FFP Partners.

     The Company conducts its operations through the following subsidiaries:


  Entity and Type of Entity      Date Formed          Principal Activity
-----------------------------   --------------   ------------------------------

FFP Operating Partners, L.P.    December 1986    Operation of convenience stores
Delaware limited partnership                     and other retail outlets

Direct Fuels, L.P.              December 1988    Operation of fuel terminal and
Texas limited partnership                        wholesale fuel sales

FFP Financial Services, L.P.    September 1990   Sale of money orders
Delaware limited partnership

Practical Tank Management, Inc. September 1993   Underground storage tank
Texas corporation                                monitoring

FFP Transportation, L.L.C.      September 1994   Ownership of tank trailers and
Texas limited liability company                  transportation of motor fuel

FFP Money Order Company, Inc.   December 1996    Sale of money orders through
Nevada corporation                               agents


     The Company and its subsidiaries  are principally  engaged in two operating
segments: (i) the retail sales of motor fuel, merchandise and other products and
services (at 169  Company-operated  convenience  stores, 12 truck stops, and 243
gas-only stores, or a total of 424 retail locations),  and the wholesale sale of
motor fuel,  and (ii) the  operation  of a motor fuel  terminal  and  processing
facility. (See Note 3 of Notes to Condensed Consolidated Financial Statements.)


Results of Operations
---------------------


     Fuel Sales and Margins
     ----------------------

                           Second Quarter                   Year-to-Date
                   -----------------------------  -----------------------------
                                        Change                         Change
                                   ------------                   -------------
                    2001     2000    Amount   %     2001    2000    Amount    %
                  -------  -------  ------  ---   -------  ------  -------  ---
                     (In thousands, except average prices and per gallon data)

Motor fuel sales $153,410 $146,401  $7,009   5%  $284,179 $269,833 $14,346   5%

Fuel margin        $9,713   $9,001    $712   8%   $14,894  $14,925    $(31) (0%)

Gallons sold
     Retail        59,380   62,550  (3,170) (5%)  115,923  122,183  (6,260) (5%)
     Wholesale     26,228   26,881    (653) (2%)   47,731   49,587  (1,856) (4%)
     Terminal      25,604   23,181   2,423  10%    52,291   37,961  14,330  38%
                  -------  -------  ------  ---   -------  -------  ------  ---
     Total        111,212  112,612  (1,400) (1%)  215,945  209,731   6,214   3%

Average per
  gallon sales
  price             $1.38   $1.30    $0.08   6%     $1.32    $1.29   $0.03   2%

Margin per
 gallon (cents)       8.7     8.0      0.7   1%       6.9      7.1    (0.2) (3%)


     The Company  sold more motor fuel,  in dollars,  in the second  quarter and
first half of 2001 than in the  corresponding  periods of the prior year.  Motor
fuels sales  increased by $7,009,000  (5%) in the second  quarter of 2001 and by
$14,346,000  (5%) in the  first  half of  2001,  compared  to the  corresponding
periods of 2000.  Motor fuel sales increased  principally  because of additional
sales at the terminal.  Terminal sales improved by $6,139,000 and $18,273,000 in
the  second  quarter  and  first  half  of  2001,   respectively,   compared  to
corresponding  periods of 2000,  and  offset a decline  in retail and  wholesale
motor fuel sales in the comparative periods.

     In gallons,  motor fuels sales  decreased by 1,400,000  gallons (1%) in the
second quarter of 2001, but increased by 6,214,000 gallons (3%) in the first six
months of 2001,  compared in each instance to sales in corresponding  periods of
2000.  These  increases  resulted from additional  sales at the terminal,  which
increased by 2,423,000  gallons (10%) and 14,330,000  gallons (38%) in the three
and  six-month  periods,  respectively,  and  offset a decline  in  retail  and
wholesale sales, compared to the corresponding periods of 2000.

     The Company's  overall  gross profit on motor fuel sales was  $9,713,000 in
the second  quarter  of 2001,  a $712,000  (8%)  increase  over motor fuel gross
profit  in the  corresponding  quarter  in 2000.  Second  quarter  fuel  margins
increased  principally as a result of favorable market  conditions for wholesale
and terminal  operations,  which are not expected to remain at that level in the
future.  For the first half of 2001,  the Company earned an overall gross profit
on motor fuel sales of $14,894,000,  a slight decline of $31,000 (0%) from motor
fuel gross profit in the  corresponding  period of last year.  Fuel margins over
the  first  half  of  2001  decreased  principally  as  a  result  of  increased
competition in retail  operations  but were largely  offset by additional  gross
profit on terminal sales.

     Merchandise Sales and Margins
     -----------------------------

                           Second Quarter                   Year-to-Date
                   -----------------------------  -----------------------------
                                        Change                         Change
                                   ------------                   -------------
                    2001     2000    Amount   %     2001    2000    Amount    %
                  ------- ------- -------- -----  ------- ------- -------- ----
                          (In thousands, except average weekly sales data)

Mdse sales        $26,292 $29,267 $(2,975) (10%)  $50,321 $57,946 $(7,625) (13%)

Mdse margin         8,028   8,979    (951) (11%)   14,769  17,463  (2,694) (15%)

Mdse margin %,
  convenience
  stores and
  truck stops       30.5%   30.7%   (0.2%)  (1%)    29.3%   30.1%   (0.8%)  (3%)

Average weekly
  mdse sales
  per store -
  Convenience
      stores      $12,379 $11,488    $891    8%   $11,414 $11,081     333    3%
  Truck stops      16,702  17,053    (351)  (2%)   16,081  16,251    (170)  (1%)


     Merchandise  sales  decreased by $2,975,000  in the second  quarter of 2001
(10%),  compared to the second  quarter of 2000, and decreased by $7,625,000 for
the first half of 2001 (13%),  compared to the same period of the prior year.  A
principal factor for the changes was that the Company operated an average of 16%
fewer  convenience  stores in the second quarter of 2001 than in same quarter of
2000 and 16% fewer  convenience  stores  in the  first  half of 2001 than in the
first half of 2000.  Likewise,  the Company operated only 169 convenience stores
at the end of the second quarter of 2001 compared to operating 202 at the end of
the second  quarter of 2000.  Implementing  the Company's  previously  announced
strategy of converting  Company-operated  stores to gas-only  outlets caused the
decline in the number of convenience stores.

     Merchandise  gross  profit,  or margin,  decreased  by  $951,000  (11%) and
$2,694,000 (15%) for the three and six month periods of 2001, respectively, when
compared  to the  corresponding  periods of the prior  year.  Total  merchandise
margins  declined for these  comparative  periods  because the Company  operated
fewer convenience stores in 2001 than in 2000, as described above.

     Other Income and Expenses
     -------------------------

     Miscellaneous  revenues  include  lottery ticket sales income,  money order
sales income,  commissions  received on alcohol  beverage  sales,  check cashing
fees, state excise tax handling fees, gains on asset sales,  unrealized gains or
losses  on  investments  in  trading  securities  (but  not   available-for-sale
securities), exchange and motor fuel trading gains and losses, and various other
types of income.  Miscellaneous  revenues were  $3,609,000 and $7,104,000 in the
second quarter and first half of 2001, respectively,  constituting  improvements
in both  comparative  periods  (69% and 26%,  respectively)  over  miscellaneous
revenues of $2,133,000 and $5,642,000 in the corresponding periods of 2000.

     The improvement in miscellaneous revenues in the second quarter in 2001 was
achieved in spite of the  Company  operating  34 fewer  convenience  stores,  on
average,  in the second  quarter of 2001 than in the second  quarter in 2000.  A
material  factor for the  improvement  in both  comparable  periods  was that no
unrealized  losses  from  trading  securities  were  included in earnings in the
second quarter or first half of 2001, compared to unrealized losses from trading
securities  of  $1,894,000  and  $1,321,000  included  in earnings in the second
quarter  and first six months of 2000.  Also,  exchange  and motor fuel  trading
gains of $328,000 and $302,000 were incurred in the second quarter and first six
months of 2001,  compared to exchange and motor fuel trading  losses of $171,000
and   $1,012,000  in  the  second  quarter  and  in  the  first  half  of  2000,
respectively.  The overall improvement in miscellaneous  revenues was offset, in
part,  by  lesser  gains  being  recorded  in 2001 from the  sale/conversion  of
Company-operated  convenience stores to gas-only stores. These sales/conversions
continued in  considerable  numbers (13 sales and 19 sales in the second quarter
and the first half of 2001, respectively), but lesser total gains were recorded.
Specifically,  gains from the  sale/conversion of  Company-operated  convenience
stores to gas-only  outlets were $763,000 and  $1,231,000 in the second  quarter
and  first  half of 2001,  respectively,  compared  to gains of  $1,240,000  and
$1,450,000 in the second quarter and first six months of 2000, respectively.

     Direct store expenses  decreased by $1,200,000  (10%) in the second quarter
of 2001,  compared to the second quarter of 2000.  Direct store expenses for the
six-month  period  decreased  by  $2,176,000  (9%).  These  decreases  primarily
resulted from operating fewer convenience stores in 2001 than in 2000.

     General and administrative  expenses increased by $95,000 (2%) and $687,000
(9%) in the  three and six  month  periods  ended  July 1,  2001,  respectively,
compared to the corresponding  periods of 2000. These increases resulted largely
from increased activity in fuel  transportation and terminal operations and as a
result of bad debt and legal expenses of $178,000 incurred in the second quarter
of 2001 in connection with litigation to collect wholesale fuel receivables.

     Depreciation  and  amortization  increased  by $160,000  (9%) in the second
quarter  of  2001,  compared  to the  corresponding  quarter  of  2000.  For the
six-month  period  in  2001,  compared  to the  corresponding  period  in  2000,
depreciation and amortization increased by $270,000 (8%). This increase resulted
from depreciation of property and equipment additions made during 2001 and 2000.

     Interest  income  declined by $50,000  (14%) and by  $129,000  (18%) in the
second quarter and first half of 2001,  respectively,  compared to corresponding
periods in 2000.  These  decreases  were due to a decline in  interest  rates on
Company investments.

     Interest  expense  increased by $50,000 (4%) and by $14,000 (1%) during the
second  quarter  and  first  half  of  2001,  respectively,   when  compared  to
corresponding  periods of 2000. These increases resulted from higher debt levels
in the first half of 2001 than in 2000.  In future  years,  these loan  payments
will slowly  convert to a higher  percentage  of principal  payments and a lower
percentage of interest payments.


Liquidity and Capital Resources
-------------------------------

     The  majority  of the  Company's  working  capital is  provided  from three
sources: (i) liquid, short-term investments,  (ii) cash flows generated from its
operating  activities,  and (iii)  borrowings under its revolving line of credit
facility. The Company believes that these investments, operating activities, and
short-term working capital facilities, will provide sufficient liquidity to fund
current commitments for operating and capital expenditure  programs,  as well as
to  service  debt  requirements.  Actual  capital  expenditure  funding  will be
dependent on the level of cash flow generated from operating  activities and the
funds available from financings.

     From time to time, the Company utilizes a revolving line of credit facility
that provides for borrowings of up to $10,000,000,  with the amount available at
any time  limited  to a  borrowing  base  equal to 80% of  certain  of its trade
receivables plus 60% of its inventory at the terminal;  provided,  however, that
any amounts  which  would cause  outstanding  borrowings  under the  facility to
exceed  $5,000,000  are  limited  to 140% of the net  value of debt  and  equity
securities in the Company's  trading  account at a brokerage firm. At the end of
the second  quarter  of 2001,  the  borrowing  base was  limited  under the loan
agreement to $9,800,000, and the Company's borrowings were $7,484,000 under such
revolving  credit  facility  at  that  time.  The  net  value  of the  Company's
securities at that brokerage firm was approximately $3,049,000 on that date.

     The Company is currently pursuing, and has recently obtained a non-binding,
written  proposal for, a new revolving  credit  facility with another  lender to
provide for borrowings of up to  $20,000,000,  with the amount  available at any
time  limited to a borrowing  base equal to a percentage  of its eligible  trade
receivables  plus a percentage  of its  inventory at the  terminal.  The Company
currently  anticipates  closing this new facility in the fourth  quarter of 2001
and terminating its current  revolving credit facility,  which could require the
payment of prepayment penalties.  The loan being sought would be payable monthly
on amounts  borrowed  and mature in three  years.  Such loan would be subject to
loan and  security  agreements,  not yet  negotiated,  between  the  lender  and
operating  subsidiaries of the Company, and be guaranteed by the Company and its
other  subsidiaries.  The Company  anticipates  that the agreement  will contain
numerous, but typical, restrictive covenants,  including financial covenants not
yet  negotiated,  and be  secured by the  Company's  trade  receivables  and its
inventory at the terminal.

     Subject to  obtaining  satisfactory  deal  terms,  the  Company  intends to
continue  to  sell  its  inside   convenience   store   operations   at  certain
Company-operated  convenience stores to independent  operators while retaining a
motor  fuel  concession  at  those   locations.   It  has  identified   numerous
Company-operated  convenience  stores  that  it  would  consider  converting  to
gas-only stores in such a manner. The Company may or may not purchase additional
convenience  stores in 2001 and beyond as the  convenience  store  industry goes
through  as  period  of  greater   competition  and   consolidation.   Any  such
dispositions or  acquisitions  will impact the Company's  financial  results and
liquidity.  In the second  quarter and first half of 2001, the Company closed on
the  sale/conversion of 13 and 19 stores,  respectively.  The sale/conversion of
several other stores was under contract at the end of each period.

     The Company is party to commodity  futures  contracts and forward contracts
to buy and sell fuel,  both of which are used  principally  to satisfy  balances
owed on exchange  agreements.  Both of these types of contracts involve the risk
of dealing with others and their  ability to meet the terms of the contracts and
the risk associated with unmatched positions and market  fluctuations.  The open
positions  under these  contracts  were  insignificant  at the end of the second
quarter of 2001.

     Over the last few years,  the  Company's  money order sales have  increased
significantly.  For example, money order payables at the end of fiscal year 1996
were  $7,809,000,  compared to money order payables of $18,377,000 at the end of
the second quarter of 2001. Money order payables  represent those sales of money
orders  for which the payee of the money  order has not yet  requested  payment.
Although the Company  collects money order receipts on a daily basis on sales of
money  orders made by its own stores,  the Company  relies on  receiving  timely
payment from its third party money order sales agents.

     The Company had positive  working  capital of $16,297,000 at the end of the
second  quarter of 2001.  In past years,  the Company has  operated its business
with minimal or even negative working capital,  principally  because most of its
sales  are  cash  sales  and  it  has  received   payment  terms  from  vendors.
Consequently,   management  believes  that  its  current  liquidity,  internally
generated  funds,  use of trade credit,  and available line of credit will allow
its operations to be conducted in a customary manner.

Forward-Looking Statements
--------------------------

     Certain  of the  statements  made  in  this  report  are  "forward-looking"
statements that involve inherent risks and uncertainties. As defined by the U.S.
Private Securities Litigation Reform Act of 1995,  "forward-looking"  statements
include information about the Company that is based on the beliefs of management
and the assumptions made by, and information currently available to, management.
In making  such  forward-looking  statements,  the  Company is relying  upon the
"statutory  safe harbors"  contained in the  applicable  statutes and the rules,
regulations and releases of the Securities and Exchange  Commission.  Statements
that should generally be considered forward-looking include, but are not limited
to, those that contain the words  "estimate,"  "anticipate,"  "in the opinion of
management,"  "expects," "believes," and similar phrases. Among the factors that
could cause actual results to differ materially from the statements made are the
following:  general  business  conditions  in the  local  markets  served by the
Company's  convenience  stores,  truck stops, and other retail outlets,  and its
wholesale fuel markets;  the weather in the local markets served by the Company;
competitive  factors  such as changes  in the  locations,  merchandise  offered,
pricing, and other aspects of competitors' operations; increases in cost of fuel
and merchandise sold or reductions in the gross profit realized from such sales;
available  product for processing and processing  efficiencies  at the Company's
fuel terminal;  expense pressures relating to operating costs,  including labor,
repair and maintenance, and supplies; unexpected outcome of litigation;  adverse
liquidity  situations;   unanticipated  general  and  administrative   expenses,
including  employee,  taxes,  insurance,  expansion  and  financing  costs;  and
unexpected liabilities.

     Should one or more of these risks or uncertainties  materialize,  or should
any underlying assumptions prove incorrect,  actual results or outcomes may vary
materially from those  described  herein as  anticipated,  believed,  estimated,
expected, or intended.


           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

     The Company is subject to market risks related to variable  interest  rates
and commodity  prices.  The interest rate calculated under the Company's line of
credit  facility  is based on the prime  rate of  interest,  which is subject to
change and exposes the Company to the  possibility of increasing  interest rates
on borrowing under the facility.  Approximately  11% of the Company's  long-term
obligations  at the end of the second  quarter of 2001 was  subject to  variable
interest  rates.  The  remainder of the Company's  long-term  debt is fixed rate
financing and not subject to interest rate risk.

     The Company is also  subject to market  risks  related to  increasing  fuel
prices  and  sometimes  attempts  to reduce  that risk by  purchasing  commodity
futures and forward  contracts.  Such attempts to reduce commodity risk are also
subject to risk  because  the  commodities  under the  financial  contracts  are
normally  not of the same grade or location of fuel as that owned by the Company
in its business.  Open positions under these futures and forward  contracts were
not significant at July 1, 2001.


               SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Company held its 2001 annual shareholder  meeting in Fort Worth, Texas,
on May 30, 2001. At that meeting Victor  Puente,  Sr. and Robert W. Ratliff were
elected to the Board of Director and John H. Harvison,  E. Michael Gregory,  and
Garland  R.  McDonald  were  re-elected  to the Board of  Directors.  The voting
results by persons present at the meeting or by proxy were as follows:


                                              Nominees
                      ------------------------------------------------------
                           Victor            Robert W.             John H.
                         Puente, Sr.          Ratliff             Harvison
                       ---------------    --------------     ---------------
                       Votes         %    Votes        %     Votes         %
                       -----     -----    -----    -----     -----     -----
                                   (in thousands, except percentages)

For                    3,537       93%    3,537      93%     3,537       93%
Withheld                 113        3%      113       3%       113        3%
Abstain                    0        0%        0       0%         0        0%
Non-votes                168        4%      168       4%       168        4%
                       -----     -----    -----    -----     -----     -----
Totals                 3,818      100%    3,818     100%     3,818      100%
                       =====     =====    =====    =====     =====     =====


                                              Nominees
                            -----------------------------------------
                              E. Michael                  Garland R.
                                Gregory                    McDonald
                            ---------------            --------------
                            Votes         %            Votes        %
                            -----     -----            -----    -----
                                (in thousands, except percentages)

For                         3,537       93%            3,537       93%
Withheld                      113        3%              113        3%
Abstain                         0        0%                0        0%
Non-votes                     168        4%              168        4%
                            -----     -----            -----     -----
Totals                      3,818      100%            3,818      100%
                            =====     =====            =====     =====


     The other  directors,  whose terms of office as a director  continued after
the meeting on May 30, 2001, were J.D. St. Clair, Michael Triantafellou,  Robert
J. Byrnes,  Joseph F. Leonardo,  and John D. Harvison. At a meeting of the Board
of  Directors  immediately  following  the  shareholder  meeting,  the  Board of
Directors  elected  Victor  Puente,  Sr.  and  Robert  W.  Ratliff  to its Audit
Committee.

                                OTHER INFORMATION

     On or about June 18, 2001,  Garland R. McDonald and E. Michael Gregory were
elected to the Board of Trustees of FFP Real Estate Trust,  the general  partner
of FFP Partners, L.P., and resigned from the Board of Directors of the Company.


                        EXHIBITS AND REPORTS ON FORM 8-K


Exhibits

     None.


Reports on Form 8-K

     None.


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


                                   FFP MARKETING COMPANY, INC.
                                   Registrant

Date:  August 15, 2001             By:    /s/ John H. Harvison
                                   -----------------------------
                                   John H. Harvison
                                   Chairman and Chief Executive Officer

Date:  August 15, 2001             By:    /s/ Craig T. Scott
                                   -----------------------------
                                   Craig T. Scott
                                   Vice President - Finance and
                                   Chief Financial Officer