<PAGE>
 
                                                                       CONFORMED
                                 UNITED STATES
                       SECURITY 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     September 30, 1996    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                0-19548
                       --------------------------------------------------------

                               KOO KOO ROO, INC.
-------------------------------------------------------------------------------
            (Exact Name of Registrant as Specified in its Charter)

               Delaware                                 22-3132583
--------------------------------------  ---------------------------------------
     (State or Other Jurisdiction of                 (I.R.S. Employer
      Incorporation or Organization)                Identification No.)

 11075 Santa Monica Boulevard, Suite 225, Los Angeles, CA             90025
-------------------------------------------------------------------------------
     (Address of Principal Executive Offices)                       (Zip Code)

                                 (310) 479-2080
-------------------------------------------------------------------------------
             (Registrant's Telephone Number, Including Area Code)

                                 Not Applicable
-------------------------------------------------------------------------------
             (Former Name, Former Address and Former Fiscal Year, 
                         if Changed Since Last Report)

     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 
                                 ---       ---

     As of November 8, 1996, the registrant had outstanding 15,326,469 shares of
common stock, $.01 par value per share (excluding 72,512 shares held in the
Treasury), and 1,130,000 shares of 5% Convertible Preferred Stock, liquidation
preference $25.00 per share.

                                 Page 1 of 14
<PAGE>
 
                      KOO KOO ROO, INC. AND SUBSIDIARIES

                                   FORM 10-Q
                                     INDEX

<TABLE>
<CAPTION>
                                                                   PAGE NO.
 
<S>                                                                <C> 
PART I.  FINANCIAL INFORMATION

Condensed Consolidated Statements of Operations for the Three 
and Nine Months Ended September 30, 1995 and 
September 30, 1996                                                     3
 
Condensed Consolidated Balance Sheets as of
December 31, 1995 and September 30, 1996                               4
 
Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1995
and September 30, 1996                                                 5
 
Notes to Condensed Consolidated Financial Statements                  6-7
 
Management's Discussion and Analysis
of Financial Condition and Results of Operations                      8-12
 
 
PART II.  OTHER INFORMATION
 
Exhibits and Reports on Form 8-K                                       13
 
Signatures                                                             14

</TABLE>

                                 Page 2 of 14
<PAGE>
 
                      KOO KOO ROO, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 
                                                        Nine               Nine              Three              Three
                                                    Months Ended       Months Ended       Months Ended       Months Ended 
                                                    September 30,      September 30,      September 30,      September 30, 
                                                        1995               1996               1995               1996
                                                    -------------      -------------      -------------      -------------
<S>                                                 <C>                <C>                <C>                <C> 

Revenues:

Sales                                               $ 13,787,441       $ 26,225,851       $  5,625,873       $ 10,206,588
Interest and other                                       357,594          1,294,508            216,672            460,919
                                                    ------------       ------------       ------------       ------------
  Total revenues                                      14,145,035         27,520,359          5,842,545         10,667,507

Cost of sales                                          9,498,660         18,166,475          3,739,384          7,110,712
                                                    ------------       ------------       ------------       ------------
  Gross profit                                         4,646,375          9,353,884          2,103,161          3,556,795

Operating expenses                                     8,822,227         15,431,064          3,223,358          6,224,710
                                                    ------------       ------------       ------------       ------------
  Loss before minority interest                       (4,175,852)        (6,077,180)        (1,120,197)        (2,667,915)

Minority interest in loss                                 24,912            254,363            (64,223)           143,107
                                                    ------------       ------------       ------------       ------------
  Net loss                                            (4,150,940)        (5,822,817)        (1,184,420)        (2,524,808) 

Preferred dividends                                          ---           (780,182)               ---           (355,982)
                                                    ------------       ------------       ------------       ------------
Net loss applicable to common stockholders          $ (4,150,940)      $ (6,602,999)      $ (1,184,420)      $ (2,880,790)
                                                    ============       ============       ============       ============

Net loss per common share:                          $      (0.36)      $      (0.45)      $      (0.09)      $      (0.19)
                                                    ============       ============       ============       ============

Weighted average number of common and
common equivalent shares                              11,384,245         14,688,227         13,760,525         14,921,561
                                                    ============       ============       ============       ============

</TABLE> 

                                 Page 3 of 14
<PAGE>
 
                      KOO KOO ROO, INC. AND SUBSIDIARIES 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (UNAUDITED)

<TABLE> 
<CAPTION> 

                                                                  December 31,            September 30, 
                                                                      1995*                   1996
                                                                  -------------           ------------- 
<S>                                                               <C>                     <C>
                  ASSETS
Current Assets:
  Cash and cash equivalents                                       $   3,501,815           $  11,379,663
  Marketable securities                                               3,663,111               9,184,848
  Inventories                                                           186,742                 454,094
  Prepaid expense and other                                             680,703               1,405,368
                                                                  -------------           ------------- 

      Total current assets                                            8,032,371              22,423,973  

Property and equipment                                               14,270,703              26,920,385
Lease acquisition costs                                               1,511,328               1,962,508  
Pre-opening costs                                                       840,891               1,128,003
Investment in international joint ventures                                   --                 240,791
Intangibles and other assets                                          1,899,367               2,615,853
                                                                  -------------           ------------- 
                                                                  $  26,554,660           $  55,291,513
                                                                  =============           =============

    LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable                                                $   1,660,899           $   3,007,528
  Accrued payroll                                                       491,169                 628,742
  Accrued store closing costs                                           546,463                 525,942
  Notes and loans payable, short-term                                    13,823                 282,898
  Other accrued liabilities                                           1,402,413               2,549,580 
                                                                  -------------           ------------- 
      Total current liabilities                                       4,114,767               6,994,690
                                                                  -------------           ------------- 
Notes and loans payable, long-term                                      178,646               1,557,053
                                                                  -------------           ------------- 
Minority interest                                                       718,109                 398,231
                                                                  -------------           ------------- 
Stockholders' Equity
 Preferred stock, $.01 par value, 5,000,000
  shares authorized; 0 and 1,138,514 shares of
  5% Convertible Preferred Stock issued and outstanding
  (liquidation preference $28,463,000)                                       --                  11,385
 Common stock, $.01 par value, 50,000,000
  shares authorized; 14,329,851 and 15,173,582
  shares issued and outstanding                                         143,299                 151,735 
 Additional paid-in capital                                          40,467,687              71,730,992
 Accumulated deficit                                                (18,274,719)            (24,877,688)
 Treasury stock, 84,352 and 72,512 shares at cost                        (2,242)                 (2,123)
 Common stock issued for unearned compensation                         (790,887)               (672,762)
                                                                  -------------           ------------- 
      Total stockholders' equity                                     21,543,138              46,341,539 
                                                                  -------------           ------------- 
                                                                  $  26,554,660           $  55,291,513
                                                                  =============           =============

</TABLE> 

* Derived from audited financial statements


                                 Page 4 of 14
<PAGE>
 
                      KOO KOO ROO, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
<TABLE> 
<CAPTION> 

                                                                      Nine                    Nine
                                                                  Months Ended            Months Ended
                                                                  September 30,           September 30, 
                                                                      1995                    1996
                                                                  -------------           ------------- 
<S>                                                               <C>                     <C>
Cash Flows From Operating Activities
 Net loss                                                         $  (4,150,940)          $  (5,822,817)
 Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation and amortization                                       1,463,465           $   2,862,333 
  Deferred franchise revenue                                            (80,000)                     --  
  Minority interest in net loss                                          24,912                (254,363) 
  Assets written off or abandoned                                       217,959                 314,011
  Common stock issued for expenses and other                            128,226                 132,499
  Changes in operating assets and liabilites:
   Inventories                                                          (50,478)               (267,352) 
   Prepaid expenses and other assets                                   (384,155)               (311,787)
   Accounts payable                                                     788,803                 640,921
   Accrued expenses and other liabilities                               312,422                 939,775
                                                                  -------------           -------------  
      Net cash used in operating activities                          (1,729,786)             (1,766,780)
                                                                  -------------           ------------- 
Cash Flows From Investing Activities:
 Sale of marketable securities                                       (6,158,040)             (5,521,735)
 Acquisition of property and equipment                               (5,759,680)            (13,697,701)
 Lease acquisition and other assets                                     (52,177)             (1,337,537)
 Investment in international joint ventures                                  --                (240,791)
 Pre-opening costs                                                     (980,238)             (1,195,694)
                                                                  -------------           ------------- 
      Net cash used in investing activities                         (12,950,135)            (21,993,458)
                                                                  -------------           ------------- 
Cash Flows From Financing Activities
 Net loan proceeds                                                       (6,328)              1,600,000
 Minority capital contributions (distributions)                         151,034                 (65,515)
 Notes and loans to employees and others                                     --                (638,770)
 Net loan repayments                                                         --                 (24,056)
 Proceeds from private placements, net                               17,661,625              30,435,484
 Distributions to stockholders                                          (50,332)                (49,200)
 Exercise of common stock options and warrants                        2,180,958                 380,143
                                                                  -------------           ------------- 
      Net cash provided by financing activities                      19,936,957              31,638,086
                                                                  -------------           ------------- 
Net Increase in Cash and Cash Equivalents                             5,257,036               7,877,848
Cash and Cash Equivalents, beginning of period                          544,185               3,501,815
                                                                  -------------           ------------- 
Cash and Cash Equivalents, end of period                          $   5,801,221           $  11,379,663
                                                                  =============           =============

</TABLE> 

                                 Page 5 of 14
<PAGE>
 
                      KOO KOO ROO, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

1.   The consolidated financial statements include the accounts of the Company,
     its majority-owned subsidiaries and two limited partnerships in which the
     Company has a controlling interest.  All significant inter-company
     transactions and balances have been eliminated.

2.   In March 1996, the Company acquired 90% of the outstanding stock of Color
     Me Mine, Inc. ("Color Me Mine") a chain of paint-your-own ceramics studios.
     The consideration consisted solely of 377,000 shares of restricted,
     unregistered shares of the Company's Common Stock.  Shares aggregating
     $900,000 in value are subject to registration at the end of one year, and
     100,000 shares are subject to a lock-up to be released at the end of three
     years.  The founders of Color Me Mine have five-year employment contracts.
     The acquisition has been accounted for utilizing the pooling of interest
     accounting method and, accordingly, prior period financial statements have
     been restated to include Color Me Mine.
 
     A wholly-owned subsidiary  of Color Me Mine is in the business of
     entering into agreements to establish Color Me Mine franchises.  During the
     quarter ended June 30, 1996 Color Me Mine completed the sale of three area
     development territories. Revenue from these sales amounting to $255,000 has
     been recognized in the accompanying Condensed Consolidated Statement of
     Operations in accordance with Statement of Financial Accounting Standards
     No. 45.

3.   The accompanying unaudited consolidated financial statements were prepared
     on the accrual basis of accounting.  In the opinion of management, all
     adjustments (consisting only of normal, recurring accruals) which are
     necessary for a fair presentation of the financial results for the periods
     presented have been made.  The interim period results of operations are not
     necessarily indicative of the results of operation for the full year.

4.   In the quarter ended June 30, 1996 the Company entered into definitive
     agreements with a group of investors in Toronto, Canada to form a Canadian
     Limited Partnership, Koo Koo Roo Canada Holdings, which plans to develop
     the Koo Koo Roo California Kitchen restaurant and Arrosto Coffee Company
     concepts in Canada.  The partnership is 40% owned by Koo Koo Roo, Inc. with
     the remaining 60% owned by the group of investors based in Toronto.  The
     first location is expected to open during the second quarter of 1997.

                                 Page 6 of 14
<PAGE>
 
5.   On October 9, 1996 the Company made an offer to holders of 1,197,863
     warrants to purchase Common Stock, issued pursuant to June 1995 private
     placement transactions, to tender any or all of such warrants at a price of
     $2.00 per warrant in cash.  All of the warrants were issued pursuant to
     private placement transactions exempt from the registration requirements of
     the Securities Act.  On November 8, 1996, the Company completed the tender
     offer and repurchased 802,256 tendered warrants at $2.00 per warrant
     ($1,604,512 in the aggregate).

6.   During the quarter ended September 30, 1996, the Company entered into a
     $1.6 million in store level debt financing representing two loans, each
     secured by leasehold mortgages and first priority security interests in all
     of the furniture, fixtures and equipment at each of the Company's two joint
     venture locations in Florida.  The loans are also guaranteed by the Company
     and its joint venture partner.  The interest rate on these loans is equal
     to one percent over the base rate established by Citibank, N.A. from time
     to time and the principal maturing in seven years.

                                 Page 7 of 14
<PAGE>
 
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                      CONDITION AND RESULTS OF OPERATIONS

HIGHLIGHTS FOR THE QUARTER ENDED SEPTEMBER 30, 1996

     In accordance with the Company's business plan to rapidly replicate the Koo
Koo Roo California Kitchen concept, nationally and internationally, three new
Koo Koo Roo restaurants were opened during the quarter.  Two of these locations
are in new markets:  Denver, Colorado and Menlo Park which is in the San
Francisco Bay Area.  A third location in Irvine, California was also opened
during the three months ended September 30, 1996. As of November 13, 1996, the
Company operates 28 restaurants (including two opened in October of 1996 and one
in November 1996).

     Also during  the quarter ended September 30, 1996, two Color Me Mine
company-owned ceramics studios were opened in Studio City and Venice, California
and one franchise location was opened in Costa Mesa, California.  As of November
13, 1996, ten Color Me Mine stores were open and operating, including seven
ceramics studios owned and operated by the Company and three franchised ceramics
studios owned and operated by third parties.  Two of these locations (one owned
by the Company and one  franchised) were opened in October of 1996.

RESULTS OF OPERATIONS

     The Company incurred operating losses during the three and nine months
ended September 30, 1996 in large part due to the establishment of corporate
infrastructure designed to support future growth.  The Company's corporate
overhead contemplates a greater number of stores than are currently open and
will support a greater rate of new store development than is presently
occurring.

QUARTER TO QUARTER COMPARISON

     The net loss for the quarter ended September 30, 1996 was $2,524,808
($2,880,790 after dividends on preferred stock) compared to $1,184,420 for the
quarter ended September 30, 1995.

     Total revenues for the three month period ended September 30, 1996 were
$10,667,507 compared to $5,842,545 for the three month period ended September
30, 1995, an increase of 83%.

                                 Page 8 of 14
<PAGE>
 
     Sales for the current quarter were produced by 13 Koo Koo Roo restaurants
which were operating during the current quarter and a portion of the same period
of the prior year and 12 additional restaurants opened subsequent to September
30, 1995.  Three new restaurants were opened during the current quarter,
including restaurants in Irvine and Menlo Park, California and Denver, Colorado.
Sales for the quarter ended September 30, 1996 include revenues of $412,000
produced by six Color Me Mine ceramics studios owned and operated by the
Company, two of which were open during the same period of the prior year.

     Average weekly sales for the 12 Koo Koo Roo restaurants open the full 13
weeks of the third quarter of both the current and prior year  increased 10.2%
for the quarter.  Four Arrosto locations open in both periods generated $191,269
in revenues for the current period and $187,025 during the same period of the
prior year, an increase of 2.3%.  Management believes that these improvements
are due to a number of factors, including new customers generated by greater
awareness of the Company's operations, high frequency visits of a growing group
of  customers, upgraded restaurant management through recruitment of more
experienced managerial personnel, improved training programs and the addition of
new products late in 1995 including hand-tossed, gourmet salads offered at
restaurants retrofitted with The Vegetable Stand.  As of September 30, 1996, all
but two of the Koo Koo Roo locations had been retrofitted with The Vegetable
Stand.

     Interest and other revenues include $397,000 in interest income for the
current quarter compared with $187,000 for the same period last year and $10,000
in Color Me Mine franchise and royalty revenue. Higher interest income resulted
from the investment of the remaining net proceeds of the private placements
which occurred in the first quarter of 1996.

     Cost of sales were $7,110,712 in the current quarter compared to $3,739,384
in the same period of the prior year.  These costs increased to 69.7% of sales
compared to 66.5% in the same period of the prior year due to higher costs
associated with new store openings in new markets (including New York, Colorado
and Northern California).  As a result, gross profit for the quarter ended
September 30, 1996, as a percentage of revenues, decreased to 33.0% compared
with 36.0% in the same period of the prior year.

     Operating expenses amounted to $6,224,710 million for the current quarter
compared to $3,223,358 million for the prior year quarter. Operating expenses as
a percentage of revenues increased to 58.4% from 55.2% in the same period of the
prior year.  This increase in aggregate expenditures was primarily due to the
Company's expansion of the Koo Koo Roo and Arrosto concepts and partially to
establishing the infrastructure needed to rapidly develop the Color Me Mine
concept. Management presently expects the growth of corporate overhead to
continue, but at a slower rate and to decline as a percentage of revenues in the
future.  The results for the quarter ended September 30, 1996 also include
approximately $400,000 in advertising costs relating to 

                                 Page 9 of 14
<PAGE>
 
a television commercial which aired during September and October of 1996 and
$211,000 in costs relating to the development of the franchise sales and support
program for Color Me Mine. In addition, during the third quarter of 1996, the
Company incurred $125,000 in employee severance costs.

     The Company distributed a quarterly dividend to the holders of its 5%
Convertible Preferred Stock amounting to $355,982, which was paid in October
1996 through the issuance of 50,836 shares of the Company's Common Stock.  The
Company had no preferred stock outstanding during the prior year.

NINE MONTH COMPARISON

     The net loss for the nine month period ended September 30, 1996 was
$5,822,817 ($6,602,999 after dividends on preferred stock) compared to a net
loss of $4,150,940 for the nine month period ended September 30, 1995.

     Revenues for the nine month period ended September 30, 1996 were
$27,520,359 compared to $14,145,035 for the nine month period ended September
30,1995, an increase of 95%.

     Interest and other revenues include $860,000 in interest income for the
nine month period ended September 30, 1996 compared with $286,000 for the same
period last year. Higher interest income resulted from the investment of the
remaining net proceeds of the private placements which occurred in the first
quarter of 1996. The nine month  period also includes $282,000 in Color Me Mine
franchise revenue.

     Cost of sales were $18,166,475 for the nine month period ended September
30, 1996 compared to $9,498,660 for the same period of the prior year.  These
costs increased to 69.3% of sales  compared to 68.9% in the same period last
year due to higher costs associated with new store openings in new markets
(including New York, Colorado and Northern California).

     Gross profit for the nine month period ended September 30, 1996 as a
percentage of revenues, increased to 34.0% compared with 32.8% for the same
period of the prior year.  These results also include the Color Me Mine
franchise revenues discussed above and higher interest income.

     Operating expenses amounted to $15.4 million for the nine month period
ended September 30, 1996 compared to $8.8 for the same period of the prior year.
The increase was primarily due to the Company's expansion of the Koo Koo Roo and
Arrosto concepts and partially to establishing the infrastructure needed to
rapidly develop the Color Me Mine concept.  In addition to $400,000 in
advertising costs discussed above, the current nine month includes costs to
develop the Color Me Mine franchise and sales and support program which will
initiate franchise revenues in October of 1996. Approximately $314,000 in site
abandonment expenses are included in the current nine month period 

                                 Page 10 of 14
<PAGE>
 
compared to $267,000 for the prior year. Operating expenses as a percentage of
revenues decreased to 56.1% from 62.4% in the same period of the prior year due
to increased sales and higher per store volumes. Management presently expects
the growth of corporate overhead to continue, but at a slower rate and to
decline as a percentage of revenues in the future. Personnel and corporate
expense increased due to infrastructure added in preparation for the Company's
planned growth.

     Through September 30, 1996 dividends distributed to the holders of the
Company's 5% Convertible Preferred Stock amounted to $780,182.  Approximately
$49,000 was paid in cash and the remainder through the issuance of  92,237
shares of the Company's Common Stock.  The Company had no preferred stock
outstanding during the prior year.

LIQUIDITY AND CAPITAL RESOURCES

     LIQUIDITY.  Total cash, cash equivalents, and marketable securities at
September 30, 1996 amounted to $20.5 million. The Company has been expending
cash resources to fund operations and to build income producing assets in the
form of new and remodeled Koo Koo Roo California Kitchen and Color Me Mine
stores.  The Company completed the construction of three restaurants and two
ceramics studios during the quarter.  Purchases of property, equipment and
computer hardware and software together with costs for acquiring certain
locations for the nine months ended September 30, 1996 amounted to $15.0 million
compared with $5.8 million during the same quarter last year.

     Corporate expenses for the development of the Koo Koo Roo California
Kitchen and Color Me Mine concepts, real estate development, and the
infrastructure necessary to manage store growth have resulted, to date, in
overall net operating losses.  The Company's strategy is to build sufficient new
stores to generate positive overall operating cash flow as quickly as possible.
This strategy requires acquisition and development of successful new sites, and
while management has been successful in opening new Koo Koo Roo California
Kitchen restaurants and Color Me Mine ceramics studios in the past, there can be
no assurance that this success will continue in the future.

     CAPITAL RESOURCES.  During the first quarter of 1996, the Company received
$33.2 million before expenses of $2.7 million from two private placements
relating to the issuance of 450,000 shares of Common Stock for $7.245 per share
(subject to adjustment) and 1,200,000 shares of a newly-designated class of 5%
Convertible Preferred Stock for $25.00 per share, as well as related warrants
issued to its placement agents.  The number of shares of Common Stock issuable
in connection with such transactions is subject to adjustment and will depend
upon factors which cannot be predicted by the Company at this time including,
primarily, the future market price of the Common Stock.  During the quarter
ended September 30, 1996, 61,486 shares of 5% Convertible Preferred Stock were
converted into 241,830 shares of the Company's Common Stock.

     As of September 30, 1996, the Company has approximately $1.7 million of
long term notes and loans payable consisting of $135,000 assumed with the
acquisition of Color Me Mine and $1.6 million in store level debt financing.
The store level 

                                 Page 11 of 14
<PAGE>
 
financing represents two loans totaling $1.6 million secured by leasehold
mortgages and first priority security interests in all of the furniture,
fixtures and equipment at each of the Company's two joint venture locations in
Florida. The loans are also guaranteed by the Company and its joint venture
partner. The interest rate on the loans is equal to one percent over the base
rate established by Citibank, N.A. from time to time and the principal maturing
in seven years.

     In the second quarter of 1996 the Company formed a Canadian Limited
Partnership, Koo Koo Roo Canada Holdings, which plans to develop the Koo Koo Roo
California Kitchen restaurant and Arrosto Coffee Company concepts in Canada.
The partnership is 40% owned by Koo Koo Roo, Inc. with the remaining 60% owned
by the group of investors based in Toronto. As of September 30, 1996 the
Company's investment in its Canadian joint venture was approximately $241,000.
The first Canadian Koo Koo Roo California Kitchen is expected to open in the
spring of 1997.

     In response to the Company's tender offer to its June 1995 private
placement warrant holders, 802,256 warrants have been tendered back to the
Company in connection with its October 9, 1996 tender offer at $2.00 per
warrant.  The Company plans to fund the $1.6 million payable to the warrant
holders with current cash balances during the month of November.

     The timing of future capital requirements will be affected by the number of
restaurants and ceramics studios opened, operational results, real-estate
development and potential other corporate opportunities, including joint
ventures in the United States and internationally, and potential acquisitions
with the objective of converting locations to the Koo Koo Roo  California
Kitchen concept, the Color Me Mine concept or dual branding.  To achieve
management's planned goal for calendar 1997, the Company will need to raise
additional funds.  As the Company's capital requirements increase, the Company
may seek additional funds from public or private offerings of debt or equity, or
may seek bank financing facilities.  There can be no assurance, however, that
the Company will be able to raise such capital on acceptable terms when needed.

     The forward-looking statements and comments contained in this Report
concerning, among other things, the prospects for the Company to grow rapidly
and attain profitable operations, are necessarily subject to risks and
uncertainties some of which are significant in scope and nature.  Actual results
will be dependent upon many factors the outcome of which cannot be predicted as
of the date of this Report.  In addition to the matters discussed herein,
factors that should be considered are included under the caption "Business
Risks" in the Company's most recent Form 10-K and "Risk Factors" in its most
recent Form S-1, each of which has been filed with the Securities and Exchange
Commission.

                                 Page 12 of 14
<PAGE>
 
                           PART II. OTHER INFORMATION
                           --------------------------
                                        

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------
 
 
          (a)  EXHIBITS - Exhibit No. 27, Financial Data Schedule

          (b)  FORM 8-K - There  were no reports on Form 8-K filed for the three
               months ended September 30, 1996.
 


 

 
                                 Page 13 of 14
<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.

                                    KOO KOO ROO, INC.
                                    -----------------



Date:   November 14, 1996            /s/ KENNETH BERG
      --------------------          ------------------------------------------
                                    KENNETH BERG, CHAIRMAN OF THE BOARD



Date:   November 14, 1996            /s/ ROBERT KAUTZ
      --------------------          ------------------------------------------
                                    ROBERT KAUTZ, CHIEF FINANCIAL OFFICER

                                 Page 14 of 14