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 twenty-six weeks ended June 27, 1998

( )  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 1-5084

                              TASTY BAKING COMPANY

             (Exact name of registrant as specified in its charter)

         Pennsylvania                                   23-1145880
  (State of Incorporation)                  (IRS Employer Identification Number)


           2801 Hunting Park Avenue, Philadelphia, Pennsylvania 19129
               (Address of Principal Executive Offices) (Zip Code)


                                 (215) 221-8500
              (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 ____

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

     Common Stock, par value $.50                           7,812,908
          (Title of Class)                        (No. of Shares Outstanding
                                                       at August 7, 1998)

                  INDEX OF EXHIBITS IS LOCATED ON PAGE 9 OF 10.

                                    1 of 10
<PAGE>
                      TASTY BAKING COMPANY AND SUBSIDIARIES


                                      INDEX


                                                                            Page


PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Condensed Balance Sheets
          June 27, 1998 and December 27, 1997............................... 3

          Consolidated Statements of Operations
          Thirteen weeks and Twenty-six weeks
          ended June 27, 1998 and June 28, 1997 ............................ 4

          Consolidated Condensed Statements of Cash Flows
          Twenty-six Weeks Ended June 27, 1998 and June 28, 1997............ 5

          Notes to Consolidated Condensed Financial Statements.............. 6

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations...............................7-8


PART II.  OTHER INFORMATION

Item 4.   Submission of Matters to a Vote of Security Holders .............. 9

Item 6.   Exhibits and Reports on Form 8-K.................................. 9

Signature ..................................................................10

                                    2 of 10
<PAGE>
 PART I. FINANCIAL INFORMATION
 Item 1. Financial Statements

                      TASTY BAKING COMPANY AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (unaudited)
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
                                                      June 27, 1998    December 27, 1997
----------------------------------------------------------------------------------------
<S>                                                    <C>              <C>         
Current assets:
      Cash                                             $    728,696     $    748,117
      Accounts and notes receivable, net of
        allowance for doubtful accounts                  21,333,133       18,661,411
      Inventories:
           Raw materials                                  2,078,567        1,940,423
           Work in progress                                 635,743          580,362
           Finished goods                                   561,354          775,417
                                                       -----------------------------
                                                          3,275,664        3,296,202
      Deferred income taxes, prepayments and other        3,261,935        2,241,587
                                                       -----------------------------
           Total current assets                          28,599,428       24,947,317
                                                       -----------------------------
Property, plant and equipment:                          154,323,606      149,709,346
      Less accumulated depreciation                     107,899,344      105,501,230
                                                       -----------------------------
                                                         46,424,262       44,208,116
                                                       -----------------------------
Long-term receivables                                    11,355,107       11,233,128
                                                       -----------------------------
Deferred income taxes                                    11,059,696       11,059,696
                                                       -----------------------------
Spare parts inventory and miscellaneous assets            3,290,061        2,871,121
                                                       -----------------------------
Total assets                                           $100,728,554     $ 94,319,378
                                                       =============================
Current liabilities:
      Current portion of long-term debt                $     29,354     $     29,354
      Current obligations under capital leases              434,918          543,962
      Notes payable, banks                                  950,000          900,000
      Accounts payable                                    5,226,566        4,345,944
      Accrued liabilities                                 7,243,115        8,644,300
                                                       -----------------------------
         Total current liabilities                       13,883,953       14,463,560
                                                       -----------------------------
Long-term debt, less current portion                     12,258,669        7,773,053
                                                       -----------------------------
Long-term obligations under capital leases,
      less current portion                                  420,628          587,156
                                                       -----------------------------
Accrued pensions and other liabilities                   12,826,307       11,771,540
                                                       -----------------------------
Postretirement benefits other than pensions              18,790,097       18,129,226
                                                       -----------------------------
Shareholders' equity:
      Common stock                                        4,558,243        4,558,243
      Capital in excess of par value of stock            29,414,797       29,337,938
      Retained earnings                                  25,570,586       24,788,276
                                                       -----------------------------
                                                         59,543,626       58,684,457
      Less:
      Treasury stock, at cost                            16,479,745       16,738,364
      Management Stock Purchase Plan
           receivables and deferrals                        514,981          351,250
                                                       -----------------------------
                                                         42,548,900       41,594,843
                                                       -----------------------------
Total liabilities and shareholders' equity             $100,728,554     $ 94,319,378
                                                       =============================
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                     3 of 10
<PAGE>
                      TASTY BAKING COMPANY AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
                                         For the Thirteen Weeks Ended         For the Twenty-six Weeks Ended
                                       June 27, 1998      June 28, 1997      June 27, 1998      June 28, 1997
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>                <C>                <C>                <C>          
Gross Sales                            $  56,933,408      $  57,652,342      $ 114,094,160      $ 113,285,582
Less discounts and allowances            (18,572,369)       (18,678,237)       (37,412,653)       (36,856,731)
                                       ----------------------------------------------------------------------
Net Sales                                 38,361,039         38,974,105         76,681,507         76,428,851
                                       ----------------------------------------------------------------------
Costs and expenses:
     Cost of sales                        24,307,090         23,610,742         48,132,069         46,782,850

     Depreciation                          1,589,016          1,860,066          3,340,394          3,555,493

     Selling, general and
        administrative                    11,167,403         10,327,675         21,638,420         20,559,255
     Interest expense                        178,308            158,045            319,551            285,635

     Other income, net                      (357,356)          (415,287)          (708,720)          (811,714)
                                       ----------------------------------------------------------------------
                                          36,884,461         35,541,241         72,721,714         70,371,519
                                       ----------------------------------------------------------------------
Income before provision for
     income taxes                          1,476,578          3,432,864          3,959,793          6,057,332

Provision for income taxes                   462,887          1,326,230          1,305,000          2,336,905
                                       ----------------------------------------------------------------------
Net income                             $   1,013,691      $   2,106,634      $   2,654,793      $   3,720,427
                                       ======================================================================

Average common shares outstanding:
          Basic                            7,806,554          7,761,182          7,799,103          7,752,276
          Diluted                          7,985,349          7,855,889          7,975,274          7,826,300
Per share of common stock:
     Net income:  Basic                $        0.13      $        0.27      $        0.34      $        0.48
                                       ======================================================================
                  Diluted              $        0.13      $        0.27      $        0.33      $        0.48
                                       ======================================================================
     Cash dividend                     $        0.12      $       0.112      $        0.24      $       0.224
                                       ======================================================================
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                     4 of 10
<PAGE>
                      TASTY BAKING COMPANY AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------
                                                       For the Twenty-six Weeks Ended
                                                       June 27, 1998    June 28, 1997
-------------------------------------------------------------------------------------
<S>                                                     <C>              <C>        
Cash flows from (used for) operating activities
     Net income                                         $ 2,654,793      $ 3,720,427
     Adjustments to reconcile net income to net
      cash provided by operating activities:
         Depreciation                                     3,340,394        3,555,493
         Amortization                                        88,673           63,707
         Other                                            1,709,908        1,620,436
     Changes in assets and liabilities
      affecting operations                               (4,192,095)      (2,552,172)
                                                        ----------------------------
     Net cash from operating activities                   3,601,673        6,407,891
                                                        ----------------------------
Cash flows from (used for) investing activities
     Purchase of property, plant and equipment           (6,002,255)      (5,788,833)
     Proceeds from owner/operators' loan repayments       1,732,127        1,838,209
     Loans to owner/operators                            (1,852,111)      (3,505,018)
     Other                                                   (8,566)          32,400
                                                        ----------------------------
     Net cash used for investing activities              (6,130,805)      (7,423,242)
                                                        ----------------------------
Cash flows from (used for) financing activities
     Additional long-term debt                            5,500,000        2,000,000
     Proceeds from sale of common stock                     122,150          181,181
     Dividends paid                                      (1,872,483)      (1,736,529)
     Payment of long-term debt                           (1,289,956)      (1,337,013)
     Net increase in short-term debt                         50,000        1,850,000
                                                        ----------------------------
     Net cash from financing activities                   2,509,711          957,639
                                                        ----------------------------
     Net decrease in cash                                   (19,421)         (57,712)
     Cash, beginning of year                                748,117          233,366
                                                        ----------------------------
     Cash, end of period                                $   728,696      $   175,654
                                                        ============================
     Supplemental Cash Flow Information:
     Cash paid during the period for:
         Interest                                       $   345,733      $   228,036
                                                        ============================
         Income taxes                                   $ 1,247,575      $ 3,470,240
                                                        ============================
</TABLE>

     See accompanying notes to consolidated condensed financial statements.

                                     5 of 10
<PAGE>
                      TASTY BAKING COMPANY AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.   Interim Financial Information
     -----------------------------
     In the  opinion of  management,  the  accompanying  unaudited  consolidated
     condensed financial statements contain all adjustments  (consisting of only
     normal  recurring  accruals)  necessary  to present  fairly  the  financial
     position of the company as of June 27, 1998 and  December  27, 1997 and the
     results of its operations for the thirteen and twenty-six  weeks ended June
     27,  1998 and June 28, 1997 and cash flows for the  twenty-six  weeks ended
     June 27, 1998 and June 28, 1997.  These  unaudited  consolidated  condensed
     financial  statements  should be read in conjunction  with the consolidated
     financial  statements  and footnotes  thereto in the company's  1997 Annual
     Report to  Shareholders.  In addition,  the results of  operations  for the
     twenty-six weeks ended June 27, 1998 are not necessarily  indicative of the
     results to be expected for the full year.

     Certain  expense  items are  charged to  operations  in the year  incurred.
     However,  for  interim  reporting  purposes  the  expenses  are  charged to
     operations on a pro-rata basis over the company's  accounting periods.  For
     the twenty-six  weeks ended June 27, 1998 and June 28, 1997, the difference
     between the actual expenses incurred and the expenses charged to operations
     was not significant.

2.   Net Income Per Common Share
     ---------------------------
     Net income per common share is  calculated  according  to the  Statement of
     Financial  Accounting  Standards  No.  128 -  "Earnings  Per  Share"  which
     requires  companies to present  basic and diluted  earnings per share.  Net
     income per common share - Basic is based on the weighted  average number of
     common shares  outstanding  during the year.  Net income per common share -
     Diluted  is based on the  weighted  average  number  of common  shares  and
     dilutive potential common shares outstanding during the year. The company's
     dilutive  potential  common  shares  outstanding  during  the  year  result
     entirely from dilutive stock options.

                                    6 of 10
<PAGE>
                      TASTY BAKING COMPANY AND SUBSIDIARIES

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

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

For the second  quarter of 1998,  the company  realized net income of $1,013,691
versus $2,106,634 for the second quarter of 1997. Net income per share decreased
to $.13 from $.27 per share for the comparable quarter of 1997.

For the twenty-six weeks ended June 27, 1998, the company realized net income of
$2,654,793  versus  $3,720,427 for the twenty-six weeks ended June 28, 1997. Net
income per share decreased to $.34 from $.48 per share for the comparable period
in 1997.

For the second quarter,  gross sales decreased 1.2% to $56,933,408,  compared to
$57,652,342 last year. Gross sales, less discounts and allowances  resulted in a
net sales decrease of 1.6% to $38,361,039  compared to $38,974,105 reported last
year.  However,  our unit sales remained stable. The decrease in gross sales was
the result of price  reductions  on  certain  product  lines and  changes in our
promotion  schedule.   As  part  of  the  company's  strategic  plan  to  expand
geographically,  we had  anticipated new sales volume in national sales and also
in products  produced in our Oxford plant. As a result, we decided to reduce our
promotion  schedule  from the usual  three  weeks per  quarter  to two.  We also
decided to take price  reductions on certain  product  lines to stabilize  their
sales.  While we were  successful in bringing  stability to these product lines,
the  change  in  promotion  schedule,  along  with the lack of  anticipated  new
national sales volume, resulted in lower gross sales. The difference between the
decreases of 1.2% in gross sales and 1.6% in net sales  resulted  primarily from
an increase in returns partially offset by lower promotion costs.

Cost of  sales,  as a  percentage  of gross  sales,  was 42.7% and 41.0% for the
second  quarters of 1998 and 1997,  respectively.  This  increase in the current
quarter  was due to the  effect of the  temporary  price  reductions  on certain
product lines as well as costs incurred in conjunction with product  development
costs at the Oxford facility.

Selling,  general and  administrative  expenses  for the second  quarter of 1998
increased by $839,728 or 8.1% over the comparable  period in 1997. This increase
resulted  primarily  from an increase in selling  expenses  associated  with the
expansion into new geographic regions.  Administrative costs also increased as a
result  of   payroll   taxes   generated   from  the  IRS   ruling   classifying
owner/operators   as  statutory   employees  and  costs   associated   with  the
installation of a new computer system.

Interest  expense  increased  for the second  quarter of 1998  versus the second
quarter of 1997 as a result of increased average borrowing levels.  The decrease
in other income, net for the second quarter of 1998 was the result of a decrease
in rental income.

The  effective  tax rate was 31.3% for the quarter ended June 27, 1998 and 38.6%
for the quarter ended June 28, 1997 which  compares to a federal  statutory rate
of 34%. The difference  between the effective rate and the statutory rate in the
second quarter of 1998 is the result of tax benefits arising from passive income
and state tax  credits.  The  principal  reason for the  difference  between the
effective  rate and the  statutory  rate in the  second  quarter of 1997 was the
effect of state income taxes.

                                    7 of 10
<PAGE>
Financial Condition
-------------------

The company has consistently  demonstrated the ability to generate positive cash
flow  from  operations.   Bank   borrowings,   under  various  lines  of  credit
arrangements, are used to supplement cash flow from operations during periods of
cyclical shortages.

For the twenty-six weeks ended June 27, 1998, net cash from operating activities
decreased by  $2,806,218 to $3,601,673  from  $6,407,891  for the same period in
1997. The decrease in net cash from operating  activities was principally due to
a decrease in net income and the payment  made to the IRS as  settlement  of the
dispute concerning the payroll taxes for the independent  owner/operators  which
was accrued in 1997.

Net cash used for investing  activities for the twenty-six  weeks ended June 27,
1998 decreased by $1,292,437 relative to the same period in 1997 principally due
to a  decrease  in the  funds  needed to  finance  the net  owner/operator  loan
activity.  This decrease was partially  offset by an increase in expenditures on
equipment to upgrade the computer system and production facilities.

Net cash from financing  activities for the twenty-six weeks ended June 27, 1998
increased  by  $1,552,072  relative to the same  twenty-six  weeks in 1997.  The
increase is primarily the result of a net increase in long-term  debt  partially
offset by a decrease in short-term debt relative to the prior year.

For  the  remainder  of  1998  the  company  anticipates  that  cash  flow  from
operations,  along with the continued  availability of bank lines of credit, the
revolving  credit  agreement  and  other  long-term   financing,   will  provide
sufficient cash to meet operating and financing requirements.

                                    8 of 10
<PAGE>
                      TASTY BAKING COMPANY AND SUBSIDIARIES

PART II.  OTHER INFORMATION

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

     (a)  The Company's  annual  meeting of  stockholders  was held on April 24,
          1998.

     (b)  The directors elected at the meeting were:

                                                For        Against      Withheld

           Philip J. Baur, Jr.               6,406,748       ---        375,836
           Judith M. von Seldeneck           6,411,195       ---        371,389

     Other  directors  whose terms of office  continued after the meeting are as
follows: Fred C. Aldridge,  Jr., G. Fred DiBona, Jr., John M. Pettine,  James L.
Everett, III, Nelson G. Harris, and Carl S. Watts.

     (c)  Other matters voted upon at the meeting and the results of those votes
          were as follows:

                                                 For         Against     Abstain

          Approval of the Amendments to the
          Tasty Baking Company Articles of
          Incorporation and By-Laws           3,923,199     1,537,364     55,969


                                                 For         Against     Abstain

          Approval of adoption of the 1997
          Long Term Incentive Stock Option
          Plan                                5,735,043       919,828    127,713


                                                 For         Against     Abstain

          Approval of Coopers & Lybrand
          L.L.P., as independent certified
          public accountants                  6,724,446        29,447     28,689


The foregoing  matters are described in detail in the Company's  proxy statement
dated March 26, 1998.


Item 6.   Exhibits and Reports on Form 8-K

     (a) Exhibits: Exhibit 27 - Financial Data Schedule

     (b) Reports on Form 8-K

     The  registrant  did not file a report on Form 8-K  during  the  twenty-six
weeks ended June 27, 1998.

                                  Exhibit Index

                      Exhibit 27 - Financial Data Schedule

                                    9 of 10
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                      TASTY BAKING COMPANY AND SUBSIDIARIES

                                    SIGNATURE

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.





                                                TASTY BAKING COMPANY
                                                    (Registrant)








   August 7, 1998                                  /S/ John M. Pettine
      (Date)                                         JOHN M. PETTINE
                                                   VICE PRESIDENT AND
                                                CHIEF FINANCIAL OFFICER
                                    (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)


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