SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549

                                 FORM 10-QSB
(Mark One)
[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
      OF THE SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended December 25, 2000

                                     OR

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

      For the transition period from ____________ to _________________

                         Commission File No. 1-13818

                         Spencer's Restaurants, Inc.
               ----------------------------------------------
               (Name of small business issuer in its charter)

            Delaware                                  06-1369616
-------------------------------                 ----------------------
(State or other jurisdiction of                    (I.R.S. Employer
 incorporation or organization)                 Identification Number)

                              106 Federal Road
                              Danbury, CT 06810
             ---------------------------------------------------
             (Address of principal executive offices) (Zip Code)

      Registrant's telephone number, including area code: (203) 798-1390

     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  [ ]

      65,442,911 Common Shares, par value $.001 per share were outstanding
as of December 25, 2000

                                 FORM 10-QSB

                         Spencer's Restaurants, Inc.

                              December 25, 2000

                                    INDEX

Part I - Financial Information

          Condensed Consolidated Balance Sheets as of December 25, 2000
          (unaudited) and June 26, 2000 (audited)                            3

          Unaudited Condensed Consolidated Statements of Operations for
          the thirteen and twenty six weeks ended December 25, 2000 and
          December 27, 1999                                                  4

          Unaudited Condensed Consolidated Statement of Cash Flows for
          the twenty-six weeks ended December 25, 2000 and
          December 27, 1999                                                  5

          Unaudited Consolidated Statement of Stockholders Equity for
          the twenty-six weeks ended December 25, 2000                       6

          Notes to Unaudited Condensed Consolidated Financial Statements     7

          Management's Discussion and Analysis                               9

          Liquidity                                                         12

          Safe Harbor Statement                                             14

Part II - Other Information

Item 1:   Legal Proceedings                                                 15

Item 2:   Changes in Securities and use of Proceeds                         15

Item 3:   Defaults Upon Senior Securities                                   15

Item 4:   Submission of Matters Stockholders' vote                          15

Item 5:   Other Information                                                 15

Item 6:   Exhibits and Reports on Form 8-K                                  15

Signatures                                                                  16


                SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
                    Condensed Consolidated Balance Sheets
      As of December 25, 2000 (unaudited ) and June 26, 2000 (audited)

<TABLE>
<CAPTION>


                                                            December 25         June 26
                                                                2000              2000
                                                             Unaudited          Audited

<S>                                                          <C>             <C>
ASSETS
  Cash                                                      $    630,141     $    374,507
  Accounts Receivable                                             33,612           24,500
  Inventory                                                       41,280           47,862
  Prepaid expenses                                                64,387            2,159
                                                            -----------------------------
  Total current assets                                           769,420          449,028

  Land, building, and equipment, net                           2,064,674        2,021,456
  Intangible assets, net                                          10,232           13,744
  Other assets                                                    15,108           18,776
                                                            -----------------------------
TOTAL ASSETS                                                $  2,859,434     $  2,503,004
                                                            =============================

LIABILITIES
  Notes Payable, current portion                            $    216,678     $    258,344
  Accounts Payable                                               408,523          486,714
  Accrued Expenses                                               307,507          322,673
  Dividends Payable                                              306,808          347,904
  Others Payables                                                 69,652           77,555
                                                            -----------------------------
TOTAL CURRENT LIABILITIES                                      1,309,168        1,493,190
  Notes Payables                                                 800,000                0
                                                            -----------------------------
TOTAL LIABILITIES                                              2,109,168        1,493,190

  Par Value - Series B Conv. $0.10; 5,000,000 shares
   authorized; 300,112 shares issued and outstanding
   at 12/25/00; 315,076 shares issued and outstanding
   at 6/26/2000                                                   30,011           31,507
  Par Value - Common Stock $0.001; 400,000,000 shares
   authorized; 65,442,911 shares issued and outstanding
   at 12/25/00; 51,002,981 shares issued and outstanding
   at 6/26/2000                                                   65,443           51,003
  Additional Paid In Capital-Series B Preferred Stock          5,960,150        6,535,088
  Additional Paid In Capital-Common Stock                     15,038,577       14,476,583
  Accrued Dividends                                             (306,808)        (347,904)
  Common Stock Subscribed                                         80,000
  Retained Earnings                                          (20,117,107)     (19,736,463)
                                                            -----------------------------

TOTAL STOCKHOLDERS EQUITY                                        750,266        1,009,814
                                                            -----------------------------

TOTAL LIABILITIES & STOCKHOLDERS EQUITY                     $  2,859,434     $  2,503,004
                                                            =============================
</TABLE>


See accompanying notes to the unaudited condensed consolidated financial
statements


                SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
          Unaudited Condensed Consolidated Statements of Operations
      Thirteen weeks ended December 25, 2000 and December 27, 1999 and
       Twenty-six weeks ended December 25, 2000 and December 27, 1999

<TABLE>
<CAPTION>

                                                       13 Weeks Ending                 26 Weeks Ending
                                                Dec 25, 2000    Dec 27, 1999    Dec 25, 2000    Dec 27, 1999
                                                         (unaudited)                     (unaudited)

<S>                                             <C>             <C>             <C>             <C>
Restaurant Sales                                $   857,967     $   558,114     $ 1,906,494     $   881,811
Less: Promotional Sales                              13,570          16,453          31,408          23,904
                                                -----------------------------------------------------------
Net Restaurant Sales                                844,397         541,661       1,875,086         857,907

Costs & Expenses
Food & Beverage Cost                                300,023         234,220         676,799         313,910
Salaries, Wages & Employee Benefits                 318,311         393,307         702,981         562,064
Operating Expenses                                  147,709         187,497         330,979         330,313
Occupancy                                            26,649          27,745          52,291          55,530
Depreciation And Amortization on Restaurants         24,831           7,840          49,267          17,571
                                                -----------------------------------------------------------
Total Restaurant Cost And Expense                   817,523         850,609       1,812,317       1,279,388
                                                -----------------------------------------------------------

Income (Loss) From Restaurant Operations             26,874        (308,948)         62,769        (421,481)

General And Administrative                          236,954         153,756         473,777         243,933
Loss On Restaurant Closure                                0               0               0          42,800
Total G&A Expense                                   236,954         153,756         473,777         286,733
                                                -----------------------------------------------------------
Total Loss From Operations                         (210,080)       (462,704)       (411,008)       (708,214)

Other Income
Other Expense (Income) Net                           (1,797)                         (4,465)
Interest Expense (Income) Net                        18,331               0          20,414               0
                                                -----------------------------------------------------------
Total Other Expense (Income)                         16,534               0          15,949               0
                                                -----------------------------------------------------------

Net Loss Before Extraordinary Item                 (226,614)       (462,704)       (426,957)       (708,214)

Extraordinary Item
Gain On Extinguishment Of Debt                        8,333               0          46,315               0
                                                -----------------------------------------------------------

Net Loss Available To Shareholders                 (218,281)       (462,704)       (380,642)       (708,214)

Dividends On Preferred Shares                       154,246         171,659         306,808         343,318
                                                -----------------------------------------------------------

Net Loss Available To Common Shareholders       $  (372,527)    $  (634,363)    $  (687,450)    $(1,051,532)
                                                ===========================================================

Net Loss Per Share:
  Before Extraordinary Item                     $     (0.01)    $     (0.02)    $     (0.01)    $     (0.04)
  Extraordinary Item                                      -               -               -               -
                                                -----------------------------------------------------------
Net Loss Basic And Diluted                      $     (0.01)    $     (0.02)    $     (0.01)    $     (0.04)
                                                ===========================================================

Weighted Average Number Of Common
 Shares Outstanding                              61,252,323      29,979,013      58,584,452      29,979,013
                                                ===========================================================
</TABLE>

See accompanying notes to the unaudited condensed consolidated financial
statements


                SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
          Unaudited Condensed Consolidated Statements of Cash Flows
       Twenty-six weeks ended December 25, 2000 and December 27, 1999

<TABLE>
<CAPTION>

                                                                   UNAUDITED            UNAUDITED
                                                               December 25, 2000    December 27, 1999
                                                               --------------------------------------

<S>                                                                <C>                 <C>
CASH FLOW FROM OPERATING ACTIVITY
  Adjustments to reconcile net loss to net cash used
   in operating activities:
    Net Income (Loss)                                              $(380,642)          $  (708,214)
    Depreciation and Amortization                                     68,988                17,571
    Gain on Extinguishment of Debt                                   (46,315)
    Loss on conversion of asset                                            0                42,800
  Stock issued for services performed                                      0                72,909
  Changes in assets and liabilities:
    Decrease (Increase) In Inventory                                   6,582                 2,390
    Decrease (Increase) In Accts. Rec.                                (9,112)                5,773
    Decrease (Increase) In Prepaid and Other Current Assets          (51,828)               (6,997)
    Decrease (Increase) In Other Assets                                3,668
    Increase (Decrease) In Accounts Payable                          (41,608)              (85,962)
    Increase (Decrease) In Accrued Expenses                           (5,436)
    Increase (Decrease) In Other Payables                             (7,903)              (23,838)
                                                                   -------------------------------
    NET CASH USED IN OPERATING ACTIVITIES                           (463,605)             (683,568)

CASH FLOW FROM INVESTING ACTIVITY
  Capital expenditures                                              (108,694)             (671,282)
                                                                   -------------------------------
    NET CASH USED IN INVESTING ACTIVITIES                           (108,694)             (671,282)

CASH FLOW FROM FINANCINIG ACTIVITY
  Increase (Decrease) In Long Term Debt                              800,000
  Principal repayments of Borrowings                                 (41,666)                    0
  Proceeds from Common Stock Subscription                             69,600
  Proceeds from issuance of Preferred Stock                                0                50,000
                                                                   -------------------------------
  NET CASH PROVIDED BY FINANCING ACTIVITIES                          827,934                50,000

  Increase (Decrease) In Cash                                        255,634            (1,304,850)

Cash Beginning                                                       374,507             2,337,675
                                                                   -------------------------------

Cash Ending                                                          630,141             1,032,825
                                                                   -------------------------------

Cash paid during period for interest                                  25,876                     -
</TABLE>


See accompanying notes to the unaudited condensed consolidated financial
statements


                SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
           Unaudited Consolidated Statement of Stockholders Equity
                  Twenty-six weeks ended December 25, 2000

<TABLE>
<CAPTION>

                                                                                Additional                              Additional
                                                                                  Paid-in                                 Paid-in
                                             Preferred  Preferred   Common        Capital-                                Capital-
                        Common     Common     Stock      Stock       Stock      Preferred     Accrued     Accumulated     Common
December 25, 2000       Shares     Stock     Series B   Series B   Subscribed      Stock      Dividends      Deficit       Stock
----------------------------------------------------------------------------------------------------------------------------------

<S>                   <C>          <C>       <C>        <C>         <C>         <C>          <C>         <C>            <C>
BALANCE, JUNE 26,
 2000 (audited)       51,002,981   $51,003   315,076    $31,507     $     -     $6,535,088   $(347,904)  $(19,736,463)  $14,476,583

Common Stock
 Subscribed 12/18/00                                                 80,000
Conversion of Series
 B preferred stock
 to common stock      14,439,930    14,440   (28,880)    (2,888)                  (573,546)                                 561,994
Issuance of series
 B preferred stock
 as dividend                                  13,916      1,392                     (1,392)    347,900
Accrued dividends -
 Series B                                                                                     (306,804)
Net loss for the
 Twenty-six weeks
 ended December 25,
 2000                                                                                                        (380,643)
                      -------------------------------------------------------------------------------------------------------------
BALANCE, December 25,
 2000 (unaudited)     65,442,911   $65,443   300,112    $30,011     $80,000     $5,960,150   $(306,808)  $(20,117,106)  $15,038,577
                      =============================================================================================================
</TABLE>


                SPENCER'S RESTAURANTS, INC. AND SUBSIDIARIES
       NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.    Consolidated Financial Statements.

      The accompanying unaudited condensed consolidated financial
statements were prepared in accordance with generally accepted accounting
principles and include all adjustments which, in the opinion of management,
are necessary to present fairly the consolidated financial position of the
Company as of December 25, 2000, the consolidated results of operations for
the thirteen and twenty-six weeks ended on December 25, 2000 and December
27, 1999, consolidated statement of cash flows for the twenty-six weeks
ended on December 25, 2000 and December 27, 1999 and the consolidated
statement of stockholders equity for the twenty-six weeks ended on December 25,
2000. In the opinion of management, all necessary adjustments that were made
are of a normal recurring nature. The balance sheet at June 26, 2000 was
derived from audited financial statements.

      Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the year-end June 26, 2000. The
results of operations for the period ended December 25, 2000 are not
necessarily indicative of the operating results, which may be achieved for
the full year.

2.    Basis of Presentation

      Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these financial
statements in conformity with generally accepted accounting principles. All
material intercompany balances and intercompany transactions have been
eliminated. Actual results could differ from those estimates.

      The accompanying unaudited condensed consolidated financial
statements have been prepared on a going concern basis, which contemplates
the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business.  However, due to the matters
discussed below, the Company's continuation as a going concern cannot be
reasonably assured.

3.    Description of Business

      Spencer's Restaurants, Inc. (formerly known as The Rattlesnake
Holding Company, Inc.), a Delaware corporation (unless the context
otherwise indicates, with its subsidiaries, the "Company"), was formed and
commenced operations in 1993, and effected an initial public offering of
its stock in 1995 to develop, build and operate a chain of casual dining
southwestern restaurants under the name Rattlesnake(r) Southwestern Grill. At
one time, the Company operated a total of 8 restaurants in the New York
metropolitan area. Management was unable to operate the restaurants
profitably, failed to control general and administrative expenses and did
not develop a workable growth strategy. As a consequence, the Company
experienced substantial losses and incurred a significant amount of debt.
In 1997, the Board of Directors elected certain of its members as officers
to take control of operations and replace the existing management pursuant
to its cost reduction plan. The Company then disposed of development
projects and non-performing restaurants, negotiated severance agreements
with the former management, and sharply reduced general and administrative
expenses.

      In fiscal 1999, 106 Federal Road Restaurant Corp., our wholly-owned
subsidiary, purchased the Danbury, Connecticut facility previously closed.
The restaurant has been remodeled and reconfigured to serve as the first
location for our new 200 seat Spencer's Steak and Shrimp restaurant
concept.

      In fiscal 2000, we opened the new Spencer's Steak and Shrimp
restaurant. Through December 25, 2000 its operations have been
satisfactory.

      We continue to operate a self-sustaining Rattlesnake(r) Southwestern
Grill in South Norwalk, Connecticut.

4.    Management Plans

      The accompanying consolidated financial statements have been prepared
on a going concern basis which contemplates the realization of assets and
the satisfaction of liabilities and commitments in the normal course of
business. However, due to the matters discussed below, its continuation as
a going concern can not be reasonably assured.

      The Company has incurred aggregate losses since inception of
$20,117,107, inclusive of a net loss for the twenty-six weeks ended
December 25, 2000 of $380,462 and at December 25, 2000 had a working
capital deficit of $539,748. Additionally, $195,840 of Series B convertible
subordinated notes payable matured on July 7, 2000, $18,749 of Series C
subordinated notes payable matured on August 6, 1997, and a $2,089 Series A
subordinated note payable matured on August 6, 1996, are in default as of
December 25, 2000.

      The Company anticipates that it will require additional working
capital to fund operations. The Company believes that it will have
sufficient capital to meet these obligations and implement an expansion
strategy through a second stock offering. In addition, in October 2000, the
Company obtained financing on its real estate holdings at 106 Danbury Road
(Management Discussion and Analysis). However there can be no assurance
that the Company will have sufficient capital to support operations and
implement its business plan.

5.    Prepaid Assets

      The Company's prepaid assets as of December 25, 2000 are as follows;

<TABLE>

            <S>                        <C>
            Prepaid insurance          $ 6,410
            Deferred offering costs     52,652
            Other                        5,325
                                       -------
            Total                      $64,387
</TABLE>

6.    Debt

      On October 19, 2000 the Company closed on an $800,000 sale, leaseback
and purchase option (the "Transaction") for its 106 Federal Road property
(the "Property") owned by 106 Federal Road, Inc., a wholly owned subsidiary
of the Company. The Transaction consisted of a sale of the Property to
Mercury Capital Corporation, which in turn leased back the Property to 106
Federal Road, Inc. The Company has the right to purchase back the Property
for $800,000 at a date no earlier than May 1, 2001 and no later than
November 9, 2002. For accounting purposes the Transaction was recorded as a
financing of the property. The note calls for payments of interest only at
14.5% totaling $9,667 per month.

7.    Stockholder's Equity

Preferred Stock
---------------

      For the thirteen weeks ended December 25, 2000, 16,680 shares of
Series B preferred stock were converted to 8,339,985 shares of common
stock. For the twenty-six weeks ended December 25, 2000, 28,880 shares of
Series B preferred stock were converted to 14,439,930 shares of common
stock.

      In September 2000, the Company issued 13,916 shares of Series B
preferred stock as payment of dividends declared for the $347,904 of
accrued dividends as of June 26, 2000. Total dividends accrued as of
December 25, 2000 are $306,808.

Common Stock
------------

      For the thirteen weeks ended December 25, 2000, the Company was able
to raise $69,600, net of $10,400 offering costs, in a private placement. At
quarter end the shares had not been issued pending a possible repricing of
the purchase.

8.    Reclassification

      Reclassification of certain expense captions have been made to the
statement of operations for fiscal quarter and twenty-six weeks ending
December 27, 1999 to conform to the December 25, 2000 presentation. In
addition $187,497 was reclassified from general and administrative to
operating expense for the thirteen weeks ending December 27, 1999 and
$330,313 for the twenty-six weeks ending December 27, 1999

      The impact of the reclassification did not result in changes to the
balance sheet and consolidated statement of cash flows for the twenty-six
weeks ending December 27, 1999.

9.    Litigation

      The Company is defending an action brought by Jack Cioffi Trust, the
landlord of a former Rattlesnake restaurant in Lynbrook New York leased by
a subsidiary of the Company. The action against the Company is based on an
alleged guaranty of the lease payments due from the subsidiary of the
Company. The Company is of the position that the landlord waived the
guarantee at the time of the surrender of the premises in September 1997.
The action seeks the sum of approximately $190,000. On October 2, 2000 the
Company received notification from its attorneys regarding the Cioffi Trust
case indicating the case is Certified, ready for trial. On November 2, 2000
plaintiff filed the Note of Issue and Certificate of Readiness. As of
December 25, 2000 a trial date has not been set. The company intends to
vigorously defend this action.

10.   Subsequent Events

      Effective January 1, 2001 Mr. Stephan Stein resigned as Director and
Secretary of the Company.

      Effective January 1, 2001 Mr. John S. Reuther, Jr. was elected as
Director and Secretary to complete Mr. Stein's unexpired term.

      Consulting contracts with Messrs. Stephan Stein and Shelly Frank were
terminated effective January 1, 2001 and February 9, 2001 respectively.

      January 29, 2001 the Company also announced that it has agreed to
purchase the assets and take assignment of the lease on an existing
restaurant location in Glastonbury, CT. There is no assurance that this
acquisition will be consummated.


MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.

      The following discussion of the results of operations and financial
condition should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto issued in its 10-KSB
report for the fiscal period June 26, 2000.

      This analysis by management contains some forward-looking statements.
When we use the words" "anticipate," "believe," "estimate," "expect," and
similar expressions that relate to the Company and its management, they are
intended to identify such forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Our actual results
performance and achievements could differ materially from the results
expressed or implied by these forward-looking statements.

      In connection with its February 1999 Offering the Company was
required to file a registration statement with the Securities and Exchange
Commission. The Company filed a registration statement on August 16, 1999
and July 2000, filed a first amendment to the registration statement.

      On October 19, 2000 the Company closed on an $800,000 sale, leaseback
and purchase option (the "Transaction") for its 106 Federal Road property
(the "Property") owned by 106 Federal Road, Inc., a wholly owned subsidiary
of the Company. The Transaction consisted of a sale of the Property to
Mercury Capital Corporation, which in turn leased back the Property to 106
Federal Road, Inc. The Company has the right to purchase back the Property
for $800,000 at a date no earlier than May 1, 2001 and no later than
November 9, 2002. For accounting purposes the Transaction was recorded as a
financing of the property. The note calls for payments of interest only at
14.5% totaling $9,667 per month.

      The Company presently operates a Rattlesnake Southwestern Grill in
South Norwalk, Connecticut and the Spencer's Restaurant in Danbury, CT.
The Company has closed all other restaurants previously owned as of June
30, 1999.

Operating results for the thirteen weeks ended December 25, 2000 as
compared with the thirteen weeks ended December 27, 1999 are as follows:

      Gross restaurant sales increased $299,853 or 53.7% to $857,967 for
the thirteen weeks ended December 25, 2000 from $558,114 for the thirteen
weeks ended December 27, 1999. Net restaurant sales increased $302,736 or
55.9% to $844,397 for the thirteen weeks ended December 25, 2000 from
$541,661 for the thirteen weeks ended December 27, 1999. Same store sales
for the quarter increased 17.5%. These increases in restaurant sales are
primarily due to the new Spencer's Danbury restaurant, which opened in
November of 1999.

      Promotional sales decreased $2,883 or 17.5% to $13,570 for the
thirteen weeks ended December 25, 2000 from $16,453 for the thirteen weeks
ended December 27, 1999. The decrease is attributable to the commencement
of operations of the new Spencer's restaurant that opened November 3, 1999.
Promotional sales as a percentage of net sales decreased 1.4% to 1.6% from
3.0% in the respective periods

      Cost of food and beverage sales increased $65,803 or 28.1% to
$300,023 for the thirteen weeks ended December 25, 2000 from $234,220 for
the thirteen weeks ended December 27, 1999. Cost of food and beverage as a
percentage of net sales decreased 7.7% to 35.5% from 43.2% in the
respective periods. The percentage decrease is attributable to economies
recognized through greater sales volumes.

      Restaurant salaries and fringe benefits, which consist of direct
salaries of restaurant managers, hourly employee wages related fringe
benefits and bonuses, decreased $74,996 or 19.1% to $318,311 for the
thirteen weeks ended December 25, 2000 from $393,307 for the thirteen weeks
ended December 27, 1999. Restaurant salaries and fringe benefits as a
percentage of net sales decreased 34.9% to 37.7% from 72.6% in the
respective periods. The decrease, as a percentage, is primarily
attributable to the prior year reporting of corporate salaries in this line
item and greater sales in the thirteen weeks ended December 25, 2000.

      Operating expense decreased $39,788 or 21.2% to $147,709 for the
thirteen weeks ended December 25, 2000 from $187,497 for the thirteen weeks
ended December 27, 1999. Operating expense as a percentage of net sales
decreased 17.1% to 17.5% from 34.6% in the respective periods, due to the
addition of the Danbury location and cost reduction measures.

      Occupancy and other related expenses, which include rent and common
area maintenance, decreased $1,096 or 4.0% to $26,649 for the thirteen
weeks ended December 25, 2000 from $27,745 for the thirteen weeks ended
December 27, 1999. Occupancy as a percentage of net sales decreased 2.0% to
3.2% from 5.2% in the respective periods. The percentage decrease is due to
the additional restaurant sales and the fact that the Company did not incur
rent at its Danbury location, as the location is owned by the Company.

      Depreciation and amortization expense increased $16,991 or 216.7% to
$24,831 for the thirteen weeks ended December 25, 2000 from $7,840 for the
thirteen weeks ended December 27, 1999. The increase is attributable to
assets at the new restaurant in Danbury.

      General and administrative expenses which includes, among other
things, legal accounting and professional fees, corporate and training
salaries increased $83,198 or 54.1% to $236,954 for the thirteen weeks
ended December 25, 2000 from $153,756 for the thirteen weeks ended December
27, 1999. The increase is attributable to costs associated with the various
legal matters. General and administrative expense as a percentage of net
sales decreased .3% to 28.1% from 28.4% in the respective periods. The
percentage reduction from prior year is the result of added sales from the
new restaurant.

      Other expense (income) net increased $1,797 or 100% to $1,797 for the
thirteen weeks ended December 25, 2000 from $0 for the thirteen weeks ended
December 27, 1999. Other expense (income) as a percent of net restaurant
sales increased .2% to .2% from 0% in the prior period.

      Interest expense (income) net, increased $18,331 or 100% to $18,331
for the thirteen weeks ended December 25, 2000 compared to $0 for the
thirteen weeks ended December 27, 1999. Interest expense is for Series B
notes payable due July 2000 that carry interest of 9% per annum and
financing of the 106 Federal Road property, less interest earned on
available cash balances.

      Gain on extinguishment of debt increased $8,333 or 100% to $8,333 for
the thirteen weeks ended December 25, 2000 from $0 for the thirteen weeks
ended December 27, 1999. Gain on extinguishment of debt as a percent of net
restaurant sales increased 1.0% to 1.0% from 0.0% in the respective
periods. This is attributable to the write off of certain payables.

      Net Loss available to Shareholders decreased $261,835 or 41.3% to
$372,528 for the thirteen weeks ended December 25, 2000 compared to
$645,363 for the thirteen weeks ended December 27, 1999. Net Loss available
to Shareholders as a percent of net restaurant sales decreased 73.0% to
44.1% from 117.1% in the respective periods.

Operating results for the twenty-six weeks ended December 25, 2000 as
compared with the twenty-six weeks ended December 27, 1999 are as follows:

      Gross restaurant sales increased $1,024,684 or 116.2% to $1,906,495
for the twenty-six weeks ended December 25, 2000 from $881,811 for the
twenty-six weeks ended December 27, 1999. Net restaurant sales increased
$1,017,180 or 118.6% to $1,875,087 for the twenty-six weeks ended December
25, 2000 from $857,907 the twenty-six weeks ended December 27, 1999. These
increases in restaurant sales are primarily due to the new Spencer's
restaurant, which opened in November of 1999.

      Promotional sales increased $7,504 or 31.4% to $31,408 for the
twenty-six weeks ended December 25, 2000 from $23,904 for the twenty-six
weeks ended December 27, 1999. The increase is attributable to the
commencement of operations of the new Spencer's restaurant that opened
November 3, 1999. Promotional sales as a percentage of net sales decreased
1.1% to 1.7% from 2.7% in the respective periods

      Cost of food and beverage sales increased $362,889 or 115.6% to
$676,799 for the twenty-six weeks ended December 25, 2000 from $313,910 for
the twenty-six weeks ended December 27, 1999. Cost of food and beverage as
a percentage of net sales decreased 0.5% to 36.1% from 36.6% in the
respective periods.

      Restaurant salaries and fringe benefits, which consist of direct
salaries of restaurant managers, hourly employee wages related fringe
benefits and bonuses, increased $140,917 or 25.1% to $702,981 for the
twenty six weeks ended December 25, 2000 from $562,064 for the twenty six
weeks ended December 27, 1999. Restaurant salaries and fringe benefits as a
percentage of net sales decreased 28.0% to 37.5% from 65.5% in the
respective periods. The decrease, as a percentage, is primarily
attributable the prior year reporting of corporate salaries in this line
item and greater sales in the twenty-six weeks ended December 25, 2000.

      Operating expense increased $666 or .2% to $330,979 for the twenty-
six weeks ended December 25, 2000 from $330,313 for the twenty-six weeks
ended December 27, 1999. Operating expense as a percentage of net sales
decreased 20.9% to 17.7% from 38.5% in the respective periods, due to the
addition of the Danbury location.

      Occupancy and other related expenses, which include rent and common
area maintenance, decreased $3,239 or 5.8% to $52,291 for the twenty-six
weeks ended December 25, 2000 from $55,530 for the twenty-six weeks ended
December 27, 1999. Occupancy as a percentage of net sales decreased 3.7% to
2.8% from 6.5% in the respective periods. The percentage decrease is due to
the additional restaurant sales and the fact that the Company did not incur
rent at its Danbury location, as the location is owned by the Company.

      Depreciation and amortization expense increased $31,696 or 180.4% to
$49,437 for the twenty-six weeks ended December 25, 2000 from $17,571 for
the twenty-six weeks ended December 27, 1999. The increase is attributable
to assets at the new restaurant in Danbury.

      General and administrative expenses which includes, among other
things, legal accounting and professional fees, corporate depreciation and
amortization, corporate and training salaries increased $229,844 or 94.2%
to $473,777 for the twenty six weeks ended December 25, 2000 from $243,933
for the twenty six weeks ended December 27, 1999. The increase is
attributable to administrative costs associated with the new restaurant,
loan fee amortization as well as costs associated with the various legal
matters. General and administrative expense as a percentage of net sales
decreased 3.2% to 25.3% from 28.5% in the respective periods. The
percentage reduction from prior year is the result of added sales from the
new restaurant.

      Loss on restaurant closure decreased $42,800 or 100% to $0 for the
twenty-six weeks ended December 25, 2000 from $42,800 for the twenty-six
weeks ended December 27, 1999. Loss on restaurant closure as a percent of
net restaurant sales decreased 5.0% to 0% from 5.0% in the respective
periods. This is attributable to the 1999 closing of the Flemington
location.

      Other expense (income) net increased $4,465 or 100% to $4,465 for the
twenty-six weeks ended December 25, 2000 from $0 for the twenty-six weeks
ended December 27, 1999. Other expense (income) as a percent of net
restaurant sales increased .3% to .3% from 0% in the prior period.

      Interest expense (income) net, increased $20,414 or 100% to $20,414
for the twenty six weeks ended December 25, 2000 compared to $0 for the
twenty six weeks ended December 27, 1999. Interest expense as a percentage
of net sales increased 1.1% to 1.1% from 0% in the respective periods.
Interest expense is for Series B notes payable, due July 2000 that carry
interest of 9% per annum and financing of the 106 Federal Road property,
less interest earned on available cash balances.

      Gain on extinguishment of debt increased $46,315 or 100% to $46,315
for the twenty-six weeks ended December 25, 2000 from $0 for the twenty-six
weeks ended December 27, 1999. Gain on extinguishment of debt as a percent
of net restaurant sales increased 2.5% to 2.5% from 0.0% in the respective
periods. This is attributable to the write off of certain payables from
closed location.

      Net Loss available to Shareholders decreased $364,081 or 34.6% to
$687,451 for the twenty-six weeks ended December 25, 2000 compared to
$1,051,532 for the twenty-six weeks ended December 27, 1999. Net Loss
available to Shareholders decreased as a percent of net restaurant sales
decreased 85.9% to 36.7% from 122.6% in the respective periods.

ACCOUNTING STANDARDS TO BE ADOPTED

      In April 1998, Statement of Position 98-5 ("SOP 98-5"), "Reporting
the Cost of Start-up Activities," was issued. SOP 98-5 requires that costs
incurred during start-up activities, including pre-opening costs, be
expensed as incurred. The Company adopted SOP 98-5 in the first quarter of
fiscal 2000 and did not result in any cumulative effect of a change in
accounting principle.

      In June 1998, Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("Statement
133"), was issued and amended by Statement 138 in June, 2000 which is
effective for fiscal years beginning after June 15, 2000. Statement 133
standardizes the accounting for derivative instruments and requires that
all derivative instruments be carried at fair value. The Company adopted
Statement 133 in the first quarter of fiscal 2001 and did not result in any
cumulative effect of a change in accounting principle.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

      The Company is not subject to interest rate risk, as substantially all
borrowings are fixed rate obligations. However, the Company has exposure to
commodity risk, including the dependence on the rapid availability of food,
principally steak and shrimp, and fluctuations in price of these commodities.
Although the Company believes that its relationships with suppliers are
satisfactory and that alternative sources are available, the loss of certain
suppliers, or substantial price increases, could have a material adverse
effect on the Company.

YEAR 2000 MODIFICATIONS:

      The Year 2000 Issue was the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date-sensitive software may have
recognized a date using "00" as the year 1900 rather than the year 2000,
resulting in possible system failure or miscalculations causing disruptions
of operations, including, among other things, a temporary inability to
process certain transactions, send invoices, or engage in similar normal
business activities.

      The Company did not experience any year 2000 issues.

LIQUIDITY

      The Company has a long history of losses, which has depleted its
capital resources. Without additional funds, the Company will have to
abandon its long-term plans for the Spencer's concept development and the
opening of additional restaurants, and drastically reduce its corporate
overhead. The Company estimates, that with financing, the Company will be
able to affect some expansion and to operate through fiscal 2001. There can
be no assurance that the Company will have adequate resources after such
time unless it conducts profitable operations and/or obtains additional
financing of which there can be no assurance. The Company continues to
explore equity investments but there is no assurance the Company will be
successful. In October 2000 the Company obtained a sale-leaseback
financing. See Management Discussion and Analysis, above.

      The Company has incurred aggregate losses since inception of
$20,117,107, inclusive of a net loss for the twenty-six weeks ended
December 25, 2000 of $380,462 and at December 25, 2000 had a working
capital deficit of $539,748. Additionally, $195,840 of Series B convertible
subordinated notes payable matured on July 7, 2000, $18,749 of Series C
subordinated notes payable matured on August 6, 1997, and a $2,089 Series A
subordinated note payable matured on August 6, 1996, are in default as of
December 25, 2000.

      On July 2, 1999 the Company sold an additional 2,000 shares of its
Series B Preferred Stock for a value of $50,000 as part of its Offering.

      The preferred shares will be convertible, at the option of the holder
at any time after November 1999, at a conversion price initially equal to
$0.05 per share of common stock. The conversion rate will be reduced by 10%
per month for each month the Company fails to comply with its obligations
to file, and in good faith process, a registration statement.

      Dividends on the Series B Preferred for the first and second quarters
were accrued at 8% per annum totaling $306,804.

      Dividends were paid in September 2000 in the form 13,916 additional
shares of Series B Preferred Stock.

      Cash flows used in operating activities for the six months ended
December 25, 2000 were ($463,605) as opposed to ($683,568) for the same
period in the previous year.

      Cash flows used in investing activities were ($108,694) for the
twenty-six weeks ended December 25, 2000 whereas in 1999, for the twenty-
six weeks, ($671,282) accounted for the cash flows used in investing
activities. This difference can be attributed to the preparations of the
new restaurant, Spencer's. The Company does not have further commitments
for capital expenditures beyond the completion of the Danbury location
except those normally associated with day-to-day operations. However, the
Company does plan to expand the Spencer's concept and should that occur,
further capital expenditures would be required.

      Cash flows from financing activities were $827,934 for the twenty-six
weeks ended December 25, 2000, whereas for the twenty-six weeks ended
December 27, 1999 cash flows from financing activities were $50,000 due to
the sale of Series B Preferred Stock in July 1999. This reflects funds
received for the sale-leaseback and an equity subscription.

      Given the above, cash during the twenty-six weeks ended December 25,
2000 increased by $255,634 as compared to a decrease of $1,304,850 during
the thirteen weeks ended December 27 1999. The decrease during 1999 is
attributable to the opening of the Danbury location in fiscal 2000.

      At December 25, 2000, the following obligations are past due and in
default; (i) $195,840 of Series B convertible subordinated notes payable
matured on July 7, 2000; and (ii) $18,750 of Series C subordinated notes
payable, matured in August 1997 and a $2,089 subordinated note payable
matured in August 1996 (the Company has been unable to locate either
noteholder). The Company is currently seeking to restructure the Series B
Preferred notes and/or to exchange the same for equity, although there can
be no assurance of the same.

      At June 26, 2000 the Company reported, in its 10-KSB, a net operating
loss carry forward ("NOL") of $18,290,000, however, due to a greater than
50% change in ownership the Company's recomputed NOL as of December 27,
1999 is $8,917,137. At December 27, 1999 the Company had available an NOL
for Federal and State income tax purposes of approximately $8,917,137,
which are available to offset future taxable income, if any, before 2019.
According to Internal Revenue Code section 382, as amended, a change in
more than 50% in the beneficial ownership of the Company within a three
year period (an "Ownership Change") places a limit on the Company's ability
to utilize its existing NOL carry forwards to offset taxable income in
current and future periods. The maximum annual amount of taxable income
that can be offset by the NOL is $445,857. If there is no taxable income
this amount can be carried over each year for twenty years.

SAFE HARBOR STATEMENT

      Certain statements in this Form 10-QSB, including information set
forth under "Management's  Discussion and Analysis of Financial Condition
and Results of Operations" constitute  "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Act"). The Company desires to avail itself of certain "safe harbor"
provisions of the Act and is therefore including this special note to
enable the Company to do so. Forward-looking statements included in this
Form 10-QSB or hereafter included in other publicly available documents
filed with the Securities and Exchange Commission, reports to the Company's
stockholders and other publicly available statements issued or released by
the Company involve known and unknown risks, uncertainties, and other
factors which could cause the Company's actual results, performance
(financial or operating) or achievements to differ from the future results,
performance (financial or operating) or achievements expressed or implied
by such forward looking statements. Such future results are based upon
management's best estimates based upon current conditions and the most
recent results of operations. These risks include, but are not limited to,
risks associated with potential acquisitions, successful implementation of
the Company's cost containment plan and new operating strategy, immediate
need for additional capital, competition, and other risks detailed in the
Company's Securities and Exchange Commission filings, including its Annual
Report on Form 10-KSB for the fiscal year 1999, each of which could
adversely affect the Company's business and the accuracy of the forward
looking statements contained herein.


PART II - OTHER INFORMATION

Item 1 - Legal Proceedings

Lynbrook, New York

      The Company is defending an action brought by Jack Cioffi Trust, the
landlord of a former Rattlesnake restaurant in Lynbrook New York leased by
a subsidiary of the Company. The action against the Company is based on an
alleged guaranty of the lease payments due from the subsidiary of the
Company. The Company is of the position that the landlord waived the
guarantee at the time of the surrender of the premises in September 1997.
The action seeks the sum of approximately $190,000. On October 2, 2000 the
Company received notification from its attorneys regarding the Cioffi Trust
case indicating the case is Certified, ready for trial. On November 2, 2000
plaintiff filed the Note of Issue and Certificate of Readiness. As of
December 25, 2000 a trial date has not been set. The company intends to
vigorously defend this action.

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 Stockholders during the quarter
         ending December 25, 2000:

      None.

Item 5 - Other Information.

      The Company securities are traded on the NASDAQ Bulletin Board. Due
to the nature of such markets and the "penny stock' rules to which the
common stock trades (Rule 15g-9 promulgated under the SEC Act) there may
not be a liquid trading market in the common stock.

Item 6 - Exhibits and Reports on Forms 8-K.

      On august 22, 2000 the Company filed Form 8-K reflecting a change in
Certifying Accountants.


                                 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.

                                       Spencer's Restaurants, Inc.
                                              (Registrant)


February 8, 2001                       By: /s/ Kenneth Berry
                                           --------------------------
                                           Kenneth Berry
                                           President / CEO


February 8, 2001                       By: /s/ John S. Reuther, Jr.
                                           --------------------------
                                           John S. Reuther, Jr.
                                           CFO