<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                    FORM 10-Q
(Mark One)

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934


                 For the quarterly period ended June 18, 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 number 0-19649

                      Checkers Drive-In Restaurants, Inc.
            (Exact name of Registrant as specified in its charter)


          Delaware                                                  58-1654960
          (State or other jurisdiction of                     (I.R.S. employer
          incorporation or organization)                   identification no.)

          14255 49/th/ Street North, Building 1
          Suite 101
          Clearwater, FL                                                 33762
          (Address of principal executive offices)                  (Zip code)

      Registrant's telephone number, including area code: (727) 519-2000

     Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [_]

     The Registrant had 9,889,842 shares of Common Stock, par value $.001 per
share, outstanding as of June 18, 2001.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I        FINANCIAL INFORMATION                                                                                       PAGE
<S>                                                                                                                       <C>
Item 1        Financial Statements

                     Condensed Consolidated Balance Sheets
                         June 18, 2001 and January 1, 2001..................................................................  3

                     Condensed Consolidated Statements of Operations and Comprehensive Income
                         Quarters ended June 18, 2001 and June 19, 2000
                         And Two Quarters ended June 18, 2001 and June 19, 2000 ............................................  4

                     Condensed Consolidated Statements of Cash Flows
                         Two Quarters ended June 18, 2001 and June 19, 2000  ...............................................  5


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

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

Item 3        Quantitative and Qualitative Disclosures About Market Risk.................................................... 12


PART II       OTHER INFORMATION

Item 1        Legal proceedings............................................................................................. 12

Item 2        Changes in Securities and Use of Proceeds..................................................................... 14

Item 3        Defaults Upon Senior Securities............................................................................... 14

Item 4        Submission of Matters to a Vote of Security Holders .......................................................... 14

Item 5        Other Information............................................................................................. 14

Item 6        Exhibits and Reports on Form 8-K.............................................................................. 14
</TABLE>

                                       2
<PAGE>

                      CHECKERS DRIVE-IN RESTAURANTS, INC.
                               AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)
                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                          June 18,         January 1,
                                                                                            2001              2001
                                                                                       -------------    -------------
<S>                                                                                   <C>               <C>
Current Assets:
Cash and cash equivalents                                                             $      568        $      923
Restricted cash                                                                            1,749             1,847
Accounts, notes and leases receivable, net                                                 4,307             4,666
Inventory                                                                                  1,116               996
Prepaid expenses and other current assets                                                  1,424             2,189
Property and equipment held for sale                                                       8,720             8,774
                                                                                      ----------        ----------
    Total current assets                                                                  17,884            19,395

Property and equipment, net                                                               43,924            42,522
Notes receivable, net - less current portion                                               6,350             4,610
Lease receivable, net- less current portion                                                7,379             8,957
Intangible assets, net                                                                    47,053            48,341
Other assets, net                                                                          2,039             2,173
                                                                                      ----------        ----------
                                                                                      $  124,629        $  125,998
                                                                                      ==========        ==========
Current Liabilities:
Current maturities of long-term debt and obligations under capital leases             $    5,307        $    9,362
Accounts payable                                                                           4,410             7,374
Reserves for restaurant relocations and abandoned sites                                    1,582             1,722
Accrued wages and benefits                                                                 2,356             1,523
Accrued liabilities                                                                        8,325             8,404
                                                                                      ----------        ----------
    Total current liabilities                                                             21,980            28,385

Long-term debt, less current maturities                                                   27,209            24,909
Obligations under capital leases, less current maturities                                  7,277             6,267
Long-term reserves for restaurant relocations and adandoned sites                          2,777             3,596
Minority interests in joint ventures                                                         518               532
Deferred revenue                                                                           7,933             7,738
Other long-term liabilities                                                                3,875             3,637
                                                                                      ----------        ----------
    Total liabilities                                                                     71,569            75,064

Stockholders' Equity:
Preferred stock, $.001 par value, authorized 2,000,000 shares, none issued at
     June 18, 2001 and January 1, 2001                                                         -                 -
Common stock, $.001 par value, authorized 175,000,000 shares, issued 9,938,084
   at June 18, 2001 and 9,653,623 at January 1, 2001                                          10                10
Additional paid-in capital                                                               139,157           138,650
Accumulated deficit                                                                      (85,607)          (87,226)
                                                                                      ----------        ----------
                                                                                          53,560            51,434
Less:  Treasury stock, 48,242 at June 18, 2001
               and January 1, 2001, at cost                                                 (400)             (400)
          Note receivable - officer                                                         (100)             (100)
                                                                                      ----------        ----------
    Total stockholders' equity                                                            53,060            50,934
                                                                                      ----------        ----------
                                                                                      $  124,629        $  125,998
                                                                                      ==========        ==========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                      CHECKERS DRIVE-IN RESTAURANTS, INC.
                               AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                           AND COMPREHENSIVE INCOME
                (Dollars in thousands except per share amounts)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  Quarter Ended            Two Quarters Ended
                                                                             ------------------------- ---------------------------
                                                                              June 18,     June 19,      June 18,      June 19,
                                                                                2001         2000          2001          2000
                                                                             ------------------------- ---------------------------
<S>                                                                          <C>                       <C>
REVENUES:
Restaurant sales                                                                $ 33,208     $ 43,246     $ 64,891      $  92,757
Franchise revenues and other income                                                4,029        3,860        7,641          6,535
                                                                             ------------------------- ---------------------------
   Total revenues                                                               $ 37,237     $ 47,106     $ 72,532      $  99,292
                                                                             ------------------------- ---------------------------
COSTS AND EXPENSES:
Restaurant food and paper costs                                                   11,427       13,594       21,646         29,099
Restaurant labor costs                                                            10,791       14,179       21,214         30,589
Restaurant occupancy expenses                                                      2,443        2,923        4,971          6,804
Restaurant depreciation and amortization                                             970        1,061        1,940          2,028
Other restaurant operating expenses                                                4,193        4,719        8,217         10,086
General and administrative expenses                                                2,916        3,432        5,770          7,211
Advertising                                                                        1,933        2,929        3,780          6,666
Bad debt expense                                                                     162          180          341            360
Other depreciation and amortization                                                1,055        1,209        1,979          2,416
Gain on sale of assets                                                              (179)         (43)        (543)           (43)
                                                                             ------------------------- ---------------------------
  Total costs & expenses                                                          35,711       44,183       69,315         95,216
                                                                             ------------------------- ---------------------------
  Operating income                                                                 1,526        2,923        3,217          4,076
OTHER INCOME (EXPENSE):
Interest income                                                                      456          138          905            392
Interest expense                                                                  (1,149)      (1,642)      (2,395)        (3,548)
                                                                             ------------------------- ---------------------------
  Income before minority interests, income tax expense and
    extraordinary item                                                               833        1,419        1,727            920
Minority interests in operations of joint ventures                                   (22)          (3)         (36)           -
                                                                             ------------------------- ---------------------------
  Income before income tax expense and extraordinary item                            811        1,416        1,691            920
Income tax expense                                                                    35           37           72             74
                                                                             ------------------------- ---------------------------
  Net income from continuing operations before extraordinary item                    776        1,379        1,619            846
Extraordinary item-gain on early extinguishment of debt, net of
    income taxes                                                                     -            152          -              261
                                                                             ------------------------- ---------------------------
  Net income                                                                     $   776     $  1,531     $  1,619      $   1,107
                                                                             ========================= ===========================
  Comprehensive income                                                           $   776     $  1,531     $  1,619      $   1,107
                                                                             ========================= ===========================
Basic earnings per share:
    Earnings before extraordinary item                                           $  0.08     $   0.14     $   0.17      $    0.09
    Extraordinary item
                                                                                     -           0.02          -             0.03
                                                                             ------------------------- ---------------------------
    Net earnings                                                                 $  0.08     $   0.16      $  0.17      $    0.12
                                                                             ========================= ===========================
Diluted earnings per share:
    Earnings before extraordinary item                                           $  0.07     $   0.14      $  0.14      $    0.09
    Extraordinary item
                                                                                     -           0.02          -             0.03
                                                                             ------------------------- ---------------------------
    Net earnings                                                                 $  0.07     $   0.16      $  0.14      $    0.12
                                                                             ========================= ===========================
Weighted average number of common shares outstanding:
    Basic                                                                          9,869        9,388        9,807          9,388
    Diluted                                                                       11,908        9,582       11,645          9,485
</TABLE>

See accompanying notes to condensed consolidated financial statements

                                       4
<PAGE>

                      CHECKERS DRIVE-IN RESTAURANTS, INC.
                               AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Dollars in thousands)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                                   Two Quarters Ended
                                                                                             -------------------------------
                                                                                               June 18,           June 19,
                                                                                                 2001               2000
                                                                                             ------------      -------------
<S>                                                                                          <C>               <C>
Cash flows from operating activities:
  Net income                                                                                 $     1,619       $     1,107
  Adjustments to reconcile net earnings to net cash
      provided by operating activies:
    Depreciation and amortization                                                                  3,919             4,444
    Gain on bond repurchases                                                                           -              (261)
    Amortization of bond costs and discounts                                                           -               144
    Provisions for bad debt                                                                          341               360
    Gain on sale of assets                                                                          (543)              (43)
    Minority interest in operations of joint ventures                                                 36                 -
  Change in assets and liabilities:
    Decrease (increase) in receivables                                                               723            (2,283)
    Decrease (increase) in inventory                                                                 (76)              281
    Decrease (increase) in prepaid expenses and other current assets                                 711              (539)
    Decrease in other assets                                                                           -                63
    Increase (decrease) in accounts payable                                                       (2,964)            1,037
    Increase (decrease) in accrued liabilities                                                       125            (5,396)
                                                                                             ------------      ------------
        Net cash provided by (used in) operating activities                                        3,891            (1,086)
                                                                                             ------------      ------------
Cash flows from investing activities:
  Capital expenditures                                                                            (1,570)             (939)
  Acquistion of restaurants, net of cash acquired                                                   (312)                -
  Decrease in investments                                                                              -             2,149
  Proceeds from sale of property & equipment                                                         152            13,709
                                                                                             ------------      ------------
        Net cash provided by (used in) investing activities                                       (1,730)           14,919
                                                                                             ------------      ------------
Cash flows from financing activities:
  Principal payments on long-term debt and capital lease obligations                              (3,578)           (7,945)
  Decrease in restricted cash                                                                         98             1,187
  Repayments of senior notes                                                                           -           (45,601)
  Net proceeds from issuance of common stock                                                         507                 -
  Proceeds from issuance of long-term debt                                                           580            34,885
  Deferred loan costs incurred                                                                       (73)                -
  Distributions to minority interests                                                                (50)              (24)
                                                                                             ------------      ------------
         Net cash used in financing activities                                                    (2,516)          (17,498)
                                                                                             ------------      ------------
         Net decrease in cash                                                                       (355)           (3,665)
Cash at beginning of period                                                                          923             4,371
                                                                                             ------------      ------------
Cash at end of period                                                                        $       568       $       706
                                                                                             ============      ============
Supplemental disclosures of cash flow information
    Interest paid                                                                            $     2,394       $     4,055
                                                                                             ============      ============
    Issuance of capital lease obligation for equipment                                       $     2,253       $         -
                                                                                             ============      ============
    Note receivable accepted for market sale                                                 $     2,100       $         -
                                                                                             ============      ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>

                      CHECKERS DRIVE-IN RESTAURANTS, INC.
                               AND SUBSIDIARIES
                        NOTES TO CONDENSED CONSOLIDATED
                             FINANCIAL STATEMENTS
                                  (UNAUDITED)

Note 1:   Summary of Significant Accounting Policies

(a)       Basis of Presentation - The accompanying unaudited condensed
consolidated statements include the accounts of Checkers Drive-In Restaurants,
Inc., its wholly-owned subsidiaries, and its joint ventures, collectively
referred to as "the Company". The consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and notes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments necessary to present
fairly the information set forth therein have been included.

          The accounts of our joint ventures have been included with those of
the Company in these condensed consolidated financial statements. Intercompany
balances and transactions have been eliminated in consolidation and minority
interests have been established for the outside partners' interests. The Company
reports on a fiscal year which will end on the Monday closest to December 31st.
Each quarter consists of three 4-week periods, with the exception of the fourth
quarter which consists of four 4-week periods.

          The operating results for the two quarters ended June 18, 2001, are
not necessarily an indication of the results that may be expected for the fiscal
year ending December 31, 2001. Except as disclosed herein, there has been no
material change in the information disclosed in the notes to the consolidated
financial statements included in the Company's Annual Report on Form 10-K for
the year ended January 1, 2001. Therefore, it is suggested that the accompanying
consolidated financial statements be read in conjunction with the Company's
January 1, 2001 consolidated financial statements.

(b)       Purpose and Organization - Our principal business is the operation and
franchising of Checkers(R) and Rally's Hamburgers(R) (Rally's) restaurants. At
June 18, 2001, there were 426 Rally's restaurants operating in 18 different
states and there were 421 Checkers restaurants operating in 22 different states,
the District of Columbia, Puerto Rico and the West Bank in the Middle East. Of
the 847 total restaurants, 207 are owned by us and 640 are owned by franchisees.
Three of the Company-owned restaurants are owned by joint venture partnerships
in which we have a 50% to 75% ownership interest.

          Our restaurants offer high quality food, serving primarily the drive-
thru and take-out segments of the quick-service restaurant industry. Checkers
commenced operations in April 1986 and began offering franchises in January
1987. Rally's opened its first restaurant in January 1985 and began offering
franchises in November 1986.

(c)       Use of Estimates - The preparation of the financial statements in
conformity with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those estimates.

(d)       Reclassifications - Certain amounts in the 2000 financial statements
have been reclassified to conform to the 2001 presentation.

Note 2:   Liquidity and Capital Resources

          We have a working capital deficit of $4.1 million at June 18, 2001 as
compared to a $9.0 million deficit at January 1, 2001. The decrease in the
deficit is primarily due to the repayment of the Textron note payable (Loan B).
We repaid $2 million from operating cash flows and issued a note payable to
Heller Financial, Inc. for $3.8 million over a 30 month term at an interest rate
of 14%.

          Although there can be no assurance, we believe that our existing cash
at June 18, 2001, together with cash provided from operations will be sufficient
to meet our working capital and capital expenditure requirements for the next 12
months.

Note 3:   Lease Receivables

          We have capital lease receivables for restaurants previously sold
which are subject to capital lease and mortgage obligations. The amount of
capital lease receivables as of June 18, 2001 was approximately $8.0 million. We
have

                                       6
<PAGE>

deferred gains of $6.2 million from these sales as of June 18, 2001, since we
continue to be responsible for the payment of these obligations to the original
lessors and mortgagors. The gain is being recognized over the life of the
related capital leases. The deferred gains are included in the balance sheet
under the captions accrued liabilities-current and deferred revenue for $0.7
million and $5.5 million, respectively.

          The Company, as original lessee, has subleased the land associated
with the sale of Company-owned restaurants under operating leases. The revenue
from these subleases is offset against rent expense, as we continue to be
responsible for the rent payments to the original lessors.

Note 4:   Revolving Line of Credit

          The Company has exercised it option to extend the revolving
loan facility, under Loan B, available beginning June 30, 2001 with Textron
Financial Corporation that permits the Company to borrow up to 50% of collateral
pledged. The credit facility is available through June 15, 2002 with an interest
rate equal to LIBOR plus 4.5% (8.56% at June 18, 2001). Total collateral pledged
as of June 18, 2001 was approximately $5.2 million, consisting primarily of
property and equipment.

Note 5:   Long-Term debt and Obligations under Capital Leases

<TABLE>
<CAPTION>
                                                                                              June 18,        January 1,
                                                                                                2001             2001
                                                                                           --------------- --------------
<S>                                                                                        <C>             <C>
Note payable (Loan A) to Textron Financial Corporation payable in 120 monthly
   installments, including interest at LIBOR plus 3.7% (7.76% at June 18, 2001)
   secured by property and equipment.                                                      $  11,345        $   11,662

Revolving credit note payable (Loan B) to Textron Financial Corporation payable
   on June 15, 2001. Installment payments of interest only were due monthly at
   30%, secured by real estate, property and equipment, and subordinate to Loan
   A. The balance has been fully satisfied.                                                        -             5,873

Mortgages payable to FFCA Acquisition Corporation secured by thirty- two
   Company-owned restaurants, payable in 240 aggregate monthly of $133,295,
   including interest at 9.5%. Although we continue to be obligated,
   approximately $3.5 million of these mortgage obligations pass directly
   through to franchisees as a result of Company-owned restaurant sales.                      13,648            13,795

Note payable to Heller Financial secured by the equipment at Company-owned
   restaurants, payable in 30 monthly installments of $153,712, including
   interest at 14%.                                                                            3,872                 -

Obligations under capital leases, maturing at various dates through January 1,
   2018, secured by property and equipment, bearing interest ranging from 7% to
   16.4%. The leases are payable in monthly principal and interest installments
   ranging from $674 to $11,320. Although we continue to be obligated,
   approximately $4.5 million of these capital lease obligations pass directly
   through to franchisees as a result of Company-owned restaurant sales.                       9,004             7,694

Notes payable to former Rally's franchise owners for acquisition of markets,
   secured by the related assets acquired, with maturities through May 1, 2004,
   bearing interest at 7.5% and 7.75%. The notes are payable in monthly
   principal and interest installments of $8,416 and $15,420, respectively.                      662               769

Other notes payable maturing at various dates through November 20, 2005, secured
   by property and equipment, bearing interest ranging from 7.7% to 9.75%. The
   notes are payable in monthly principal and interest installments ranging from
   $1,531 to $18,095.                                                                          1,262               745
                                                                                           --------------- --------------
Total long-term debt and obligations under capital leases                                     39,793            40,538

Less current installments                                                                      5,307             9,362
                                                                                           --------------- --------------
Long-term debt, less current maturities                                                    $  34,486       $    31,176
                                                                                           =============== ==============
</TABLE>

Note 6:   Accounting Charges and Loss Provisions

                                       7
<PAGE>

         At the end of fiscal 2000, we had reserves of $5.3 million relating to
restaurant relocations and abandoned sites. These reserves represent
management's estimate of future lease obligations and are reviewed and adjusted
periodically, as more information becomes available related to our ability to
sublease or assign the lease and other negotiations with the landlord. During
the first half of 2001, the Company made lease and other payments of $764,000,
relating to restaurant relocations and abandoned sites.

Note 7:  Subsequent Event

         On July 2, 2001, we repossessed and began operating eighteen Rally's
restaurants in California and three Rally's restaurants in Arizona. These
restaurants were previously operated by CKE Restaurants, Inc.

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

Introduction

         Checkers Drive-In Restaurants, Inc. ("Checkers"), a Delaware
corporation, its wholly-owned subsidiaries, and its joint ventures
(collectively, the "Company") is one of the largest chains of double drive-thru
restaurants in the United States. Our Company is a combination of two separate
quick-service restaurant chains, Checkers(R) and Rally's Hamburgers(R)
(Rally's), which were merged in August 1999. Although Checkers was the surviving
entity for purposes of corporate law, Rally's was considered the surviving
entity for accounting purposes since the shareholders of Rally's owned a
majority of our outstanding stock immediately following the merger. At June 18,
2001, there were 426 Rally's restaurants operating in 18 different states and
421 Checkers restaurants operating in 22 different states, the District of
Columbia, Puerto Rico and the West Bank in the Middle East. Of the 847 total
restaurants, 207 are owned by us and 640 are owned by franchisees. Three of our
restaurants are owned by joint venture partnerships in which we have a 50%-75%
ownership interest. Our restaurants offer high quality food, serving primarily
the drive-thru and take-out segments of the quick-service restaurant industry.
Checkers commenced operations in April 1986 and began offering franchises in
January 1987. Rally's opened its first restaurant in January 1985 and began
offering franchises in November 1986.

         We receive revenues from restaurant sales, franchise fees and
royalties. Restaurant food and paper costs, labor costs, occupancy expense,
other operating expenses, depreciation and amortization, and advertising and
promotion expenses relate directly to Company-owned restaurants. Other expenses,
such as depreciation and amortization, and general and administrative expenses,
relate to Company-owned restaurant operations and the Company's franchise sales
and support functions. Our revenues and expenses are affected by the number and
timing of additional restaurant openings, closings, market sales and the sales
volumes of both existing and new restaurants.

                                       8
<PAGE>

                             RESULTS OF OPERATIONS
                             ---------------------

     The table below sets forth the percentage relationship to total revenues,
unless otherwise indicated, of certain items included in the Company's condensed
consolidated statements of income and operating data for the periods indicated:

<TABLE>
<CAPTION>
                                                                             Quarter Ended           Two Quarters Ended
                                                                     -------------------------     ---------------------
                                                                       June 18,      June 19,      June 18,     June 19,
                                                                         2001          2000          2001         2000
                                                                     ----------     ----------     --------     --------
<S>                                                                  <C>            <C>            <C>          <C>
REVENUES:
Restaurant sales                                                           89.2%          91.8%        89.5%        93.4%
Franchise revenues and other income                                        10.8%           8.2%        10.5%         6.6%
                                                                     ----------     ----------     --------     --------
   Total revenues                                                         100.0%         100.0%       100.0%       100.0%

COSTS AND EXPENSES:
Restaurant food and paper costs (1)                                        34.4%          31.4%        33.4%        31.4%
Restaurant labor costs (1)                                                 32.5%          32.8%        32.7%        33.0%
Restaurant occupancy expenses (1)                                           7.4%           6.8%         7.7%         7.3%
Restaurant depreciation and amortization (1)                                2.9%           2.5%         3.0%         2.2%
Other restaurant operating expenses (1)                                    12.6%          10.9%        12.7%        10.9%
General and administrative expenses                                         7.8%           7.3%         8.0%         7.3%
Advertising (1)                                                             5.8%           6.8%         5.8%         7.2%
Bad debt expense                                                            0.4%           0.4%         0.5%         0.4%
Other depreciation and amortization                                         2.8%           2.6%         2.7%         2.4%
Gain on sale of assets                                                     (0.5%)         (0.1%)       (0.8%)        0.0%
                                                                     ----------     ----------     --------     --------
   Total costs & expenses                                                  95.9%          93.8%        95.6%        95.9%
                                                                     ----------     ----------     --------     --------
   Operating income                                                         4.1%           6.2%         4.4%         4.1%

OTHER INCOME (EXPENSE):
Interest income                                                             1.2%           0.3%         1.2%         0.4%
Interest expense                                                           (3.1%)         (3.5%)       (3.3%)       (3.6%)
                                                                     ----------     ----------     --------     --------
Income before minority interests, income tax expense, and
   extraordinary item                                                       2.2%           3.0%         2.3%         0.9%
Minority interests in operations of joint ventures                         (0.0%)         (0.0%)       (0.0%)       (0.0%)
                                                                     ----------     ----------     --------     --------
Income before income tax expense and extraordinary item                     2.2%           3.0%         2.3%         0.9%
Income tax expense                                                          0.1%           0.1%         0.1%         0.1%
                                                                     ----------     ----------     --------     --------
Net income from continuing operations before extraordinary item             2.1%           2.9%         2.2%         0.8%
Gain on early extinguishment of debt, net of income taxes                   0.0%           0.3%         0.0%         0.3%
                                                                     ----------     ----------     --------     --------
Net income                                                                  2.1%           3.2%         2.2%         1.1%
                                                                     ==========     ==========     ========     ========
Number of Company-operated restaurants:
        Restaurants open at the beginning of period                         207            367          195          367
        Opened, closed or transferred, net during the period                  -            (80)          12          (80)
                                                                     ----------     ----------     --------     --------
        Total company-owned restaurants, end of period                      207            287          207          287
                                                                     ==========     ==========     ========     ========
Number of franchised restaurants:
        Restaurants open at the beginning of period                         638            537          659          540
        Opened, closed or transferred, net during the period                  2             64          (19)          61
                                                                     ----------     ----------     --------     --------
        Total franchised restaurant, end of period                          640            601          640          601
                                                                     ----------     ----------     --------     --------

        Total all restaurants opened at end of period:                      847            888          847          888
                                                                     ==========     ==========     ========     ========
</TABLE>

(1)  As a percentage of restaurant sales

                                       9
<PAGE>

Comparison of Historical Results - Quarter Ended June 18, 2001 and Quarter Ended
June 19, 2000

          Revenues. Total revenues were $37.2 million for the quarter ended June
          --------
18, 2001, compared to $47.1 million for the quarter ended June 19, 2000.
Company-owned restaurant sales decreased by $10.0 million for the quarter ended
June 18, 2001, to $33.2 million, as compared to $43.2 million for the quarter
ended June 19, 2000 due primarily to the decrease in Company-owned restaurants
by approximately 120, due to market sales in 2000, as compared to the quarter
ended June 19, 2000. Sales at comparable restaurants, which include only the
units that were in operation for the full quarters being compared, increased
13.6% for the quarter ended June 18, 2001 as compared with the quarter ended
June 19, 2000.

          Costs and expenses. Restaurant food and paper costs totalled $11.4
          ------------------
million or 34.4% of restaurant sales for the quarter ended June 18, 2001,
compared to $13.6 million or 31.4% of restaurant sales for the quarter ended
June 19, 2000. The increase in these costs as a percentage of restaurant sales
was due to increased beef prices accompanied with promotional sales during the
quarter.

          Restaurant labor costs, which includes restaurant employees' salaries,
wages, benefits and related taxes, totalled $10.8 million or 32.5% of restaurant
sales for the quarter ended June 18, 2001, compared to $14.2 million or 32.8% of
restaurant sales for the quarter ended June 19, 2000. Restaurant labor costs
remained consistent as a percentage of restaurant sales.

          Restaurant occupancy expense, which includes rent, property taxes,
licenses and insurance, totalled $2.4 million or 7.4% of restaurant sales for
the quarter ended June 18, 2001 compared to $2.9 million or 6.8% of restaurant
sales for the quarter ended June 19, 2000. The increase in restaurant occupancy
expense as a percentage of restaurant sales is primarily due to increasing
insurance costs.

          Restaurant depreciation and amortization remained consistent for the
quarter ended June 18, 2001 as compared to the quarter ended June 19, 2000.

          Other restaurant expense includes all other restaurant level operating
expenses, and specifically includes utilities, maintenance and other costs.
These expenses totalled $4.2 million, or 12.6% of restaurant sales for the
quarter ended June 18, 2001 compared to $4.7 million, or 10.9% of restaurant
sales for the quarter ended June 19, 2000. The increase was primarily related to
increases in repairs and maintenance as we continue to refurbish the
restaurants. In addition, utility costs also increased during the quarter ended
June 18, 2001.

          General and administrative expenses were $2.9 million, or 7.8% of
total revenues for the quarter ended June 18, 2001 compared to $3.4 million, or
7.3% of total revenues for the quarter ended June 19, 2000. The decrease in
costs is due primarily to a decrease in corporate payroll by approximately $0.4
million. The increase as a percentage of total revenues is due to the decrease
in total revenues, resulting from the sale of restaurants in fiscal 2000.

          Advertising expense decreased to $1.9 million, or 5.8% of restaurant
sales for the quarter ended June 18, 2001 from $2.9 million, or 6.8% of
restaurant sales for the quarter ended June 18, 2001. The decrease in dollars
spent was due to the decrease of approximately 120 Company-owned restaurants as
compared to the quarter ended June 19, 2000. The decrease as a percentage of
sales was due to the increase in comparable store sales of 13.6%.

          Bad debt expense for the quarter ended June 18, 2001 remained
consistent with the quarter ended June 19, 2000.

          Other depreciation and amortization decreased by $154,000 to $1.06
million. The decrease was due primarily to decreased amortization resulting from
the early repayment of debt at the end of fiscal 2000. Deferred financing costs
were written down as a result of the early repayment, decreasing amortization
expense.

          Interest expense. Interest expense decreased to $1.1 million, or 3.1%
          ----------------
of total revenues for the quarter ended June 18, 2001 from $1.6 million, or 3.5%
of total revenues for the quarter ended June 19, 2000. This decrease was
primarily due to the repayment of $40 million of debt near and after the end of
the quarter ended June 19, 2000.

          Income tax expense. The Company's income tax expense for both periods
          ------------------
remained consistent and represents estimated state income taxes. No federal
income tax expense has been recorded due to the availability of net operating
losses from prior years operations.

                                       10
<PAGE>

Comparison of Historical Results - Two Quarters Ended June 18, 2001 and Two
Quarters Ended June 19, 2000

          Revenues. Total revenues were $72.5 million for the two quarters ended
          --------
June 18, 2001, compared to $99.3 million for the two quarters ended June 19,
2000. Company-owned restaurant sales decreased by $27.9 million for the two
quarters ended June 18, 2001, to $64.9 million, as compared to $92.8 million for
the two quarters ended June 19, 2000, due primarily to a decrease in Company-
owned restaurants by approximately 160, due to market sales in 2000, as compared
to the two quarter ended June 19, 2000. Sales at comparable restaurants, which
include only the units that were in operation for the full two quarters being
compared, increased 13.0% for the two quarters ended June 18, 2001 as compared
with the two quarters ended June 19, 2000. Franchise revenues and fees increased
by $1.1 million, primarily as a result of the Company-owned restaurant sales,
resulting in an increase in royalties.

          Costs and expenses. Restaurant food and paper costs totalled $21.6
          ------------------
million or 33.4% of restaurant sales for the two quarters ended June 18, 2001,
compared to $29.1 million or 31.4% of restaurant sales for the two quarters
ended June 19, 2000. The increase in these costs as a percentage of restaurant
sales was due to increased beef prices accompanied with promotional sales during
the two quarters.

          Restaurant labor costs, which includes restaurant employees' salaries,
wages, benefits and related taxes, totalled $21.2 million or 32.7% of restaurant
sales for the two quarters ended June 18, 2001, compared to $30.6 million or
33.0% of restaurant sales for the two quarters ended June 19, 2000. Restaurant
labor costs remained consistent as a percentage of restaurant sales.

          Restaurant occupancy expense, which includes rent, property taxes,
licenses and insurance, totalled $5.0 million or 7.7% of restaurant sales for
the two quarters ended June 18, 2001 compared to $6.8 million or 7.3% of
restaurant sales for the two quarters ended June 19, 2000. The increase in
restaurant occupancy expense as a percentage of restaurant sales is primarily
due to increasing insurance costs.

          Restaurant depreciation and amortization remained consistent for the
two quarters ended June 18, 2001 as compared to the two quarters ended June 19,
2000.

          Other restaurant expense includes all other restaurant level operating
expenses, and specifically includes utilities, maintenance and other costs.
These expenses totalled $8.2 million, or 12.7% of restaurant sales for the two
quarters ended June 18, 2001 compared to $10.1 million, or 10.9% of restaurant
sales for the two quarters ended June 19, 2000. The increase was primarily
related to increases in repairs and maintenance as we continue to refurbish the
restaurants. In addition, utilities costs also increased during the two quarters
ended June 18, 2001.

          General and administrative expenses were $5.8 million, or 8.0% of
total revenues for the two quarters ended June 18, 2001 compared to $7.2
million, or 7.3% of total revenues for the two quarters ended June 19, 2000. The
decrease in costs is due primarily to a decrease in corporate payroll by
approximately $1.3 million. The increase as a percentage of total revenues is
due to the decrease in total revenues, resulting from the sale of restaurants in
fiscal 2000.

          Advertising expense decreased to $3.8 million, or 5.8% of restaurant
sales for the two quarters ended June 18, 2001 from $6.7 million, or 7.2% of
restaurant sales for the two quarters ended June 19, 2000. The decrease in
dollars spent was due to a decrease in Company-owned restaurants by
approximately 160 as compared to the two quarter ended June 19, 2000. The
decrease as a percentage of sales was due to the increase in comparable store
sales of 13.0% over the two quarters.

          Other depreciation and amortization decreased by $437,000 to $2.0
million. The decrease was due primarily to decreased amortization resulting from
the early repayment of debt at the end of fiscal 2000. Deferred financing costs
were written down as a result of the early repayment, decreasing amortization
expense.

          Interest expense. Interest expense decreased to $2.4 million, or 3.3%
          ----------------
of total revenues for the two quarters ended June 18, 2001 from $3.5 million, or
3.6% of total revenues for the two quarters ended June 19, 2000. This decrease
was primarily due to the repayment of $40 million of debt near and after the end
of the quarter ended June 19, 2000.

          Income tax expense. The Company's income tax expense remained
          ------------------
consistent and represents estimated state income taxes. No federal income tax
expense has been recorded due to the availability of net operating losses from
prior years operations.

                                       11
<PAGE>

Liquidity and Capital Resources

          At June 18, 2001, we had a working capital deficit of $4.1 million as
compared to a $9.0 million deficit at January 1, 2001. The decrease in the
deficit is primarily due to the repayment of the Textron note payable (Loan B).
We repaid $2 million from operating cash flows and issued a note payable to
Heller Financial, Inc. for $3.8 million payable over 30 months at an interest
rate of 14%. The Company, and the restaurant industry in general, operates with
a working capital deficit because all of our restaurant sales are for cash,
while we receive credit from our trade suppliers. In addition, we maintain
relatively low levels of accounts receivable and inventory.

          Cash and cash equivalents decreased approximately $355,000 to $568,000
from the fiscal year ended January 1, 2001. Cash flow from operating activities
was $3.9 million compared to an outflow of $1.1 million during the same period
last year. The increase of $5.0 million is largely attributable to current
profits and a net decrease in the balances of accounts payable and accrued
liabilities due to the timing of payments in the prior year.

          Cash flow used for investing activities was $1.7 million related
primarily to capital expenditures. The capital expenditures related to point-of-
purchase menu boards and building refurbishments. Point-of-sale equipment was
acquired during the period under capital lease obligations of approximately $2.3
million. In addition, 17 restaurants were reacquired during the two quarters
ended June 18, 2001 by assuming $312,000 in liabilities.

          Cash used by financing activities was $2.5 million. We paid down $2
million of the Textron note payable (Loan B) prior to refinancing the remaining
$3.9 million in addition to monthly principal payments of approximately $1.6
million. We received $580,000 from the issuance of long-term debt and $507,000
from the issuance of common stock from the exercise of stock options and
warrants during the two quarters ended June 18, 2001.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest rate and foreign exchange rate fluctuations:
----------------------------------------------------

          Our exposure to financial market risks relates to the impact that
interest rate changes could have on our debt. An increase in short-term and
long-term interest rates would result in a reduction of pre-tax earnings.
Substantially all of our business is transacted in U.S. dollars. Accordingly,
foreign exchange rate fluctuations do not have a significant impact on the
Company and are not expected to in the foreseeable future.

Commodity Price Risk:
--------------------

          We purchase certain products which are affected by commodity prices
and are, therefore, subject to price volatility caused by weather, market
conditions and other factors which are not considered predictable or within our
control. Although many of the products purchased are subject to changes in
commodity prices, certain purchasing contracts or pricing arrangements contain
risk management techniques designed to minimize price volatility. Typically, we
use these types of purchasing techniques to control costs as an alternative to
directly managing financial instruments to hedge commodity prices. In many
cases, we believe it will be able to address commodity cost increases, which are
significant and appear to be long-term in nature by adjusting our menu pricing
or changing our product delivery strategy. However, increases in commodity
prices could result in lower restaurant-level operating margins.

PART II. OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          Jonathan Mittman et al. v. Rally's Hamburgers, Inc., et al. In January
          ----------------------------------------------------------
and February 1994, two putative class action lawsuits were filed, purportedly on
behalf of the stockholders of Rally's, in the United States District Court for
the Western District of Kentucky, Louisville division, against Rally's, Burt
Sugarman and Giant Group, Ltd. and certain of Rally's former officers and
directors and its auditors. The cases were subsequently consolidated under the
case name Jonathan Mittman et. al. vs. Rally's Hamburgers, Inc., et. al. The
complaints allege that the defendants violated the Securities Exchange Act of
1934, among other claims, by issuing inaccurate public statements about Rally's
in order to arbitrarily inflate the price of its common stock. The plaintiffs
seek unspecified damages. On April 15, 1994, Rally's filed a motion to dismiss
and a motion to strike. On April 5, 1995, the Court struck certain provisions of
the complaint but otherwise denied Rally's motion to dismiss. In addition, the
Court denied plaintiffs' motion for class certification; the plaintiffs renewed
this motion, and despite opposition by the defendants, the Court granted such
motion for class certification on April 16, 1996, certifying a class from July
20, 1992 to September 29, 1993. Motions for Summary Judgment were filed by the
parties in September 2000, and rulings by the Court are pending. The defendants
deny all wrongdoing and intend to defend themselves vigorously in this matter.
Management is unable to predict the outcome of this matter at the present time
or whether or not certain available insurance coverages will apply.

                                       12
<PAGE>

          Greenfelder et al. v. White, Jr., et al. On August 10, 1995, a state
          ---------------------------------------
court complaint was filed in the Circuit Court of the Sixth Judicial Circuit in
and for Pinellas County, Florida, Civil Division, entitled Gail P. Greenfelder
and Powers Burgers, Inc. v. James F. White, Jr., Checkers Drive-In Restaurants,
Inc., Herbert G. Brown, James E. Mattei, Jared D. Brown, Robert G. Brown and
George W. Cook. A companion complaint was also filed in the same Court on May
21, 1997, entitled Gail P. Greenfelder, Powers Burgers of Avon Park, Inc., and
Power Burgers of Sebring, Inc. v. James F. White, Jr., Checkers Drive-In
Restaurants, Inc., Herbert G. Brown, James E. Mattei, Jared D. Brown, Robert G.
Brown and George W. Cook. The original complaint alleged, generally, that
certain officers of Checkers intentionally inflicted severe emotional distress
upon Ms. Greenfelder, who is the sole stockholder, president and director of
Powers Burgers, Inc., a Checkers franchisee. The present versions of the amended
complaints in the two actions assert a number of claims for relief, including
claims for breach of contract, fraudulent inducement to contract, post-contract
fraud and breaches of implied duties of "good faith and fair dealings" in
connection with various franchise agreements and an area development agreement,
battery, defamation, negligent retention of employees, and violation of
Florida's Franchise Act. The parties reached a tentative settlement on January
11, 2001. In the event the settlement is not consummated, we intend to defend
vigorously.

          Checkers Drive-In Restaurants, Inc. v. Tampa Checkmate Food Services,
          --------------------------------------------------------------------
Inc., et al. On August 10, 1995, a state court counterclaim and third party
-----------
complaint was filed in the Circuit Court of the Thirteenth Judicial Circuit in
and for Hillsborough County, Florida, Civil Division, entitled Tampa Checkmate
Food Services, Inc., Checkmate Food Services, Inc. and Robert H. Gagne v.
Checkers Drive-In Restaurants, Inc., Herbert G. Brown, James E. Mattei, James F.
White, Jr., Jared D. Brown, Robert G. Brown and George W. Cook. In the original
action filed by the Company in July 1995, against Mr. Gagne and Tampa Checkmate
Food Services, Inc., (hereinafter "Tampa Checkmate") a company controlled by Mr.
Gagne, Checkers sought to collect on a promissory note and foreclose on a
mortgage securing the promissory note issued by Tampa Checkmate and Mr. Gagne
and obtain declaratory relief regarding the rights of the respective parties
under Tampa Checkmate's franchise agreement with Checkers. The counterclaim, as
amended, alleged violations of Florida's Franchise Act, Florida's Deceptive and
Unfair Trade Practices Act, and breaches of implied duties of "good faith and
fair dealings" in connection with a settlement agreement and franchise agreement
between various of the parties and sought a judgment for damages in an
unspecified amount, punitive damages, attorneys' fees and such other relief as
the court may deem appropriate.

          The case was tried before a jury in August of 1999. The court entered
a directed verdict and an involuntary dismissal as to all claims alleged against
Robert G. Brown, George W. Cook, and Jared Brown. The court also entered a
directed verdict and an involuntary dismissal as to certain other claims alleged
against Checkers and the remaining individual counterclaim defendants, James E.
Mattei, Herbert G. Brown and James F. White, Jr. The jury returned a verdict in
favor of Checkers, James E. Mattei, Herbert G. Brown and James F. White, Jr. as
to all counterclaims brought by Checkmate Food Services, Inc. and in favor of
Mr. Mattei as to all claims alleged by Tampa Checkmate and Mr. Gagne. In
response to certain jury interrogatories, however, the jury made the following
determination: (i) that Mr. Gagne was fraudulently induced to execute a certain
unconditional guaranty and that Checkers was therefore not entitled to enforce
its terms; (ii) that Checkers, H. Brown and Mr. White fraudulently induced Tampa
Checkmate to execute a certain franchise agreement whereby Tampa Checkmate was
damaged in the amount of $151,331; (iii) that Checkers, H. Brown and Mr. White
violated a provision of the Florida Franchise Act relating to that franchise
agreement whereby Tampa Checkmate and Mr. Gagne were each damaged in the amount
of $151,331; and (iv) that none of the defendants violated Florida's Deceptive
and Unfair Trade Practices Act relating to that franchise agreement.

          We believe that the responses to the jury interrogatories described
above are "advisory" because of certain pre-trial orders entered by the Court.
As a result, we believe that the responses contained in the jury interrogatories
are not binding on the trial court, and that it is incumbent on the trial court
to weigh the evidence and enter its own verdict. The trial court nonetheless
determined that the responses to the jury interrogatories described above are
binding upon it and entered a final judgment accordingly. We believe that the
entry of the judgment was erroneous and we have filed a notice of appeal to the
Court of Appeals for the Second District of Florida.

          On or about July 15, 1997, Tampa Checkmate filed a Chapter 11 petition
in the United States Bankruptcy Court for the Middle District of Florida, Tampa
Division, entitled In re: Tampa Checkmate Food Services, Inc. In July 1997,
Checkers filed an Adversary Complaint in the Tampa Checkmate bankruptcy
proceedings entitled Checkers Drive-In Restaurants, Inc. v. Tampa Checkmate Food
Services, Inc. The Adversary Complaint sought a preliminary and permanent
injunction enjoining Tampa Checkmate's continued use of Checkers' marks and
trade dress notwithstanding the termination of its franchise agreement on April
8, 1997. Tampa Checkmate filed a counterclaim to Checkers complaint that
essentially contained the same claims set forth in the amended counterclaim
filed in the state court action. The court granted Checkers' motion for
preliminary injunction on July 23, 1998, and Tampa Checkmate de-identified its
restaurant. On December 15, 1998, the Court granted Checkers motion to convert
Tampa Checkmate's bankruptcy proceedings from a Chapter 11 proceeding to a
Chapter 7 liquidation. The bankruptcy court has granted Checkers' motion to lift
the automatic stay imposed by 11 U.S.C. ss.362 to allow Checkers to proceed with
the disposition of the property which is the subject of its mortgage. The

                                       13
<PAGE>

counterclaim in the bankruptcy proceedings remains pending, but we believe the
merits of the counterclaim were already determined by state court proceedings
described above.

          Dorothy Hawkins v. Checkers Drive-In Restaurants, Inc. and KPMG Peat
          --------------------------------------------------------------------
Marwick. On March 4, 1999, a state court complaint was filed in the Circuit
-------
Court in and for Pinellas County, Florida, Civil Division. The complaint alleges
that Mrs. Hawkins was induced into purchasing a restaurant site and entering
into a franchise agreement with Checkers based on misrepresentations and
omissions made by Checkers. The complaint asserts claims for breach of contract,
breach of the implied covenant of good faith and fair dealing, violation of
Florida's Deceptive Trade Practices Act, fraudulent concealment, fraudulent
inducement, and negligent representation. The Company denies the material
allegations of the complaint and intends to defend this lawsuit vigorously.

          We are also involved in various other claims and legal actions arising
in the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on our
consolidated financial position, results of operations or liquidity.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

          None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.

ITEM 5.   OTHER INFORMATION

          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(a)       Exhibits:

          None.

(b)       Reports on 8-K:


          The following reports on Form 8-K were filed during the quarter
          covered by this report:

          None


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.



                                    Checkers Drive-In Restaurants, Inc.
                                    -----------------------------------
                                               (Registrant)


Date: July 30, 2001                    By: /s/ Daniel J. Dorsch
                                          ---------------------
                                       President and Chief Executive Officer

                                       14