UNITED STATES 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 SECURITIESEXCHANGE ACT OF 1934
|----- | ---------------------------------------------------------------------------------------
|      |                                                                                        
|      | For quarterly period ended June 30, 2001                                               



OR

|/   / | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIESEXCHANGE ACT OF 1934
|----- | ----------------------------------------------------------------------------------------
|      |                                                                                         

| | For the transition period from ______________________ to ______________________.
| | --------------------------------------------------------------------------------





Commission file number 0-25886

GARDEN FRESH RESTAURANT CORP.

(Exact name of registrant as specified in its charter)

|Delaware                                      |  | 33-0028786         
|--------------------------------------------- |  | -------------------
|(State or other jurisdiction of incorporation |  | (I.R.S. Employee   
|or organization                               |  | Identification No.)

17180 Bernardo Center Drive, San Diego, CA 92128 (Address of principal executive offices)(Zip Code)

Registrants telephone number, including area code:(858) 675-1600

______________________________________________________________________________________________________

(Former name, former address and former fiscal year,

if changed since last report)

Indicate by a 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.

YesXNo __

The number of shares of Common Stock, $.01 par value, outstanding as of August 1, 2001 was 5,675,626. There are no other classes of common stock.



GARDEN FRESH RESTAURANT CORP.

FORM 10-Q

INDEX

|         |                       |                                                              |  | PAGE
|-------- | --------------------- | ------------------------------------------------------------ |  | ----
|         |                       |                                                              |  |     
|PART I:  | FINANCIAL INFORMATION |                                                              | 
|         |                       |                                                              |  |     
|         | Item 1:               | Unaudited Financial Statements                               |  |     
|         |                       |                                                              |  |     
|         |                       | Balance Sheets at September 30, 2000 and                     |  |     
|         |                       | June 30, 2001                                                |  | 3   
|         |                       |                                                              |  |     
|         |                       | Statements of Operations for the three and nine months ended |  |     
|         |                       | June 30, 2000 and June 30, 2001                              |  | 4   
|         |                       |                                                              |  |     
|         |                       | Statements of Cash Flows for the nine months ended           |  |     
|         |                       | June 30, 2000 and June 30, 2001                              |  | 5   
|         |                       |                                                              |  |     
|         |                       | Notes to Unaudited Financial Statements                      |  | 6   
|         |                       |                                                              |  |     
|         | Item 2:               | Managements Discussion and Analysis of Financial            |  |     
|         |                       | Condition and Results of Operations                          |  | 7   
|         |                       |                                                              |  |     
|         | Item 3:               | Quantitative and Qualitative Disclosures About Market Risk   |  | 17  
|         |                       |                                                              |  |     
|         |                       |                                                              |  |     
|PART II: | OTHER INFORMATION     |                                                              | 
|         |                       |                                                              |  |     
|         | Item 1:               | Legal Proceedings                                            |  | 18  
|         | Item 2:               | Changes in Securities                                        |  | 18  
|         | Item 3:               | Defaults Upon Senior Securities                              |  | 18  
|         | Item 4:               | Submission of Matters to a Vote of Security Holders          |  | 18  
|         | Item 5:               | Other Information                                            |  | 18  
|         | Item 6:               | Exhibits and Reports on Form 8-K                             |  | 18  
|         |                       |                                                             

2





|GARDEN FRESH RESTAURANT CORP.                                       
|--------------------------------------------------------------------
|BALANCE SHEETS                                                      
|(Dollars in thousands)                                              
|                                                                    
|                                                                    
|                                                                    
|Assets                                                              
|                                                                    
|Current assets:                                                     
|Cash and cash equivalents                                           
|Inventories                                                         
|Other current assets                                                
|                                                                    
|                                                                    
|Total current assets                                                
|                                                                    
|Property and equipment, net                                         
|Intangible and other assets                                         
|                                                                    
|                                                                    
|Total assets                                                        
|                                                                    
|                                                                    
|                                                                    
|Liabilities and Shareholders' Equity:                               
|                                                                    
|Current liabilities:                                                
|Accounts payable                                                    
|Revolving line of credit                                            
|Current portion of long-term debt                                   
|Current deferred income taxes                                       
|Accrued liabilities                                                 
|                                                                    
|                                                                    
|Total current liabilities                                           
|                                                                    
|Deferred income taxes                                               
|Long-term debt, net of current portion                              
|Other liabilities                                                   
|                                                                    
|Shareholders' equity:                                               
|Preferred stock, $.001 par value; 0 and 120,000 shares authorized at
|at September 30, 2000 and June 30, 2001, respectively; 0 issued and 
|outstanding at September 30, 2000 and June 30, 2001, respectively   
|Common stock, $.01 par value; 12,000,000 shares authorized at       
|September 30, 2000 and June 30, 2001, respectively; 5,655,645 and   
|5,675,626 issued and outstanding at September 30, 2000 and          
|June 30, 2001, respectively                                         
|Paid-in capital                                                     
|Retained earnings                                                   
|                                                                    
|                                                                    
|Total shareholders' equity                                          
|                                                                    
|                                                                    
|Total liabilities and shareholders' equity                          
|                                                                    

See notes to unaudited financial statements.

3

|GARDEN FRESH RESTAURANT CORP.                                |          |                    |          |   |                   |   |      |         |   |   |         |  
|------------------------------------------------------------ | -------- | ------------------ | -------- | - | ----------------- | - | ---- | ------- | - | - | ------- | -
|STATEMENTS OF OPERATIONS                                     |          |                    |          |   |                   |   |      |         |   |   |         |  
|(In thousands, except per share amounts)                     |          |                    |          |   |                   |   |      |         |   |   |         |  
|(Unaudited)                                                  |          | Three Months Ended |          |   | Nine months ended |  
|                                                             |          |                    |          |  
|                                                             | June 30, |                    | June 30, |  
|                                                             | 2000     |                    | 2001     |   | 2000              |   | 2001 |        
|                                                             |          |                    |          |   |                   |   |      |        
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|NET SALES                                                    | $        | 42,657             |          | $ | 52,103            |   | $    | 119,142 |   | $ | 146,784 |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Costs and expenses:                                          |          |                    |          |   |                   |   |      |         |   |   |         |  
|Costs of sales                                               |          | 10,838             |          |   | 12,907            |   |      | 30,104  |   |   | 36,348  |  
|Restaurant operating expenses:                               |          |                    |          |   |                   |   |      |         |   |   |         |  
|Labor                                                        |          | 13,123             |          |   | 16,676            |   |      | 37,489  |   |   | 47,675  |  
|Occupancy and other expenses                                 |          | 8,634              |          |   | 12,332            |   |      | 25,146  |   |   | 34,635  |  
|General and administrative expenses                          |          | 2,562              |          |   | 3,213             |   |      | 7,579   |   |   | 9,755   |  
|Restaurant opening costs                                     |          | 1,040              |          |   | 305               |   |      | 2,086   |   |   | 1,432   |  
|Depreciation and amortization expenses                       |          | 2,502              |          |   | 3,241             |   |      | 6,949   |   |   | 9,170   |  
|                                                             |          |                    |          |   |                   |   |      |        
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Total costs and expenses                                     |          | 38,699             |          |   | 48,674            |   |      | 109,353 |   |   | 139,015 |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Operating income                                             |          | 3,958              |          |   | 3,429             |   |      | 9,789   |   |   | 7,769   |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Other income (expense):                                      |          |                    |          |   |                   |   |      |         |   |   |         |  
|Interest income                                              |          | 37                 |          |   | 37                |   |      | 104     |   |   | 147     |  
|Interest expense                                             |          | (928               | )        |   | (1,299            | ) |      | (2,460  | ) |   | (3,643  | )
|Other income (expense), net                                  |          | 29                 |          |   | (103              | ) |      | 80      |   |   | 1,066   |  
|                                                             |          |                    |          |   |                   |   |      |        
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Income before income taxes and cumulative effect of          |          |                    |          |   |                   |   |      |         |   |   |         |  
|accounting change                                            |          | 3,096              |          |   | 2,064             |   |      | 7,513   |   |   | 5,339   |  
|Provision for income taxes                                   |          | (1,202             | )        |   | (805              | ) |      | (2,951  | ) |   | (2,101  | )
|                                                             |          |                    |          |   |                   |   |      |        
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Income before cumulative effect of accounting change         |          | 1,894              |          |   | 1,259             |   |      | 4,562   |   |   | 3,238   |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Cumulative effect of change in accounting for startup costs, |          |                    |          |   |                   |   |      |         |   |   |         |  
|net of income tax benefit of $800                            |          | -                  |          |   | -                 |   |      | (1,233  | ) |   | -       |  
|                                                             |          |                    |          |   |                   |   |      |        
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Net income                                                   | $        | 1,894              |          | $ | 1,259             |   | $    | 3,329   |   | $ | 3,238   |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Basic net income per share:                                  |          |                    |          |   |                   |   |      |         |   |   |         |  
|Income before cumulative effect of accounting change         | $        | 0.34               |          | $ | 0.22              |   | $    | 0.81    |   | $ | 0.57    |  
|Cumulative effect of change in accounting for startup costs  |          | -                  |          |   | -                 |   |      | (0.22   | ) |   | -       |  
|                                                             |          |                    |          |   |                   |   |      |        
|Net income                                                   | $        | 0.34               |          | $ | 0.22              |   | $    | 0.59    |   | $ | 0.57    |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Shares used in computing basic net income per share          |          | 5,653              |          |   | 5,676             |   |      | 5,644   |   |   | 5,668   |  
|                                                             |          |                    |          |   |                   |   |      |        
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Diluted net income per share:                                |          |                    |          |   |                   |   |      |         |   |   |         |  
|Income before cumulative effect of accounting change         | $        | 0.33               |          | $ | 0.22              |   | $    | 0.78    |   | $ | 0.57    |  
|Cumulative effect of change in accounting for startup costs  |          | -                  |          |   | -                 |   |      | (0.21   | ) |   | -       |  
|                                                             |          |                    |          |   |                   |   |      |        
|Net income                                                   | $        | 0.33               |          | $ | 0.22              |   | $    | 0.57    |   | $ | 0.57    |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|                                                             |          |                    |          |   |                   |   |      |         |   |   |         |  
|Shares used in computing diluted net income per share        |          | 5,761              |          |   | 5,695             |   |      | 5,809   |   |   | 5,683   |  
|                                                             |          |                    |          |   |                   |   |      |        

4

|GARDEN FRESH RESTAURANT CORP.                                 |                   |         |               |   |         |  
|------------------------------------------------------------- | ----------------- | ------- | ------------- | - | ------- | -
|STATEMENTS OF CASH FLOWS                                      |                   |         |               |   |         |  
|(Dollars in thousands)                                        |                   |         |               |   |         |  
|(Unaudited)                                                   | Nine months ended |        
|                                                              |                   |        
|                                                              | June 30, 2000     |         | June 30, 2001 |  
|                                                              |                   |         |               |  
|OPERATING ACTIVITIES:                                         |                   |         |               |   |         |  
|Net income                                                    | $                 | 3,329   |               | $ | 3,238   |  
|Adjustments to reconcile net income to net cash               |                   |         |               |   |         |  
|provided by operating activities:                             |                   |         |               |   |         |  
|Cumulative effect of accounting change, net of tax benefit    |                   | 1,233   |               |   | -       |  
|Depreciation and amortization                                 |                   | 6,949   |               |   | 9,170   |  
|Loss on disposal of property and equipment                    |                   | 275     |               |   | 243     |  
|Provision for deferred income taxes                           |                   | 1,766   |               |   | 1,886   |  
|Tax benefits from exercise of common stock options            |                   | 9       |               |   | -       |  
|Amortization of deferred gain on sale-leaseback of properties |                   | (1      | )             |   | (26     | )
|Changes in operating assets and liabilities:                  |                   |         |               |   |         |  
|Increase in inventories                                       |                   | (1,913  | )             |   | (1,031  | )
|Increase in other current assets                              |                   | (1,386  | )             |   | (3,733  | )
|Increase (decrease) in accounts payable                       |                   | 1,019   |               |   | 498     |  
|Increase in accrued liabilities                               |                   | 2,526   |               |   | 2,727   |  
|Increase (decrease) in other liabilities                      |                   | 322     |               |   | 99      |  
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|Net cash provided by operating activities                     |                   | 14,128  |               |   | 13,071  |  
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|INVESTING ACTIVITIES:                                         |                   |         |               |   |         |  
|Acquisition of property and equipment:                        |                   |         |               |   |         |  
|New restaurant development                                    |                   | (29,089 | )             |   | (20,826 | )
|Existing restaurant additions                                 |                   | (3,142  | )             |   | (6,517  | )
|Decrease in accounts payable                                  |                   | -       |               |   | (1,458  | )
|Increase in intangible and other assets                       |                   | (585    | )             |   | (304    | )
|Proceeds from sale-leaseback transactions                     |                   | 2,593   |               |   | 9,985   |  
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|Net cash used in investing activities                         |                   | (30,223 | )             |   | (19,120 | )
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|FINANCING ACTIVITIES:                                         |                   |         |               |   |         |  
|Borrowings (repayments) under line of credit                  |                   | 5,509   |               |   | (3,500  | )
|Proceeds from long-term debt                                  |                   | 16,600  |               |   | 17,441  |  
|Repayment of long-term debt                                   |                   | (5,542  | )             |   | (8,060  | )
|Net proceeds from issuance of common stock                    |                   | 251     |               |   | 155     |  
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|Net cash provided by financing activities                     |                   | 16,818  |               |   | 6,036   |  
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|Net increase (decrease) in cash and cash equivalents          |                   | 723     |               |   | (13     | )
|                                                              |                   |         |               |   |         |  
|Cash and cash equivalents at beginning of period              |                   | 911     |               |   | 2,058   |  
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|Cash and cash equivalents at end of period                    | $                 | 1,634   |               | $ | 2,045   |  
|                                                              |                   |         |               |  
|                                                              |                   |         |               |   |         |  
|Supplemental disclosure of non-cash transactions:             |                   |         |               |   |         |  
|Property and equipment asset purchases in accounts payable    | $                 | 2,064   |               | $ | 993     |  

See notes to unaudited financial statements.

5

GARDEN FRESH RESTAURANT CORP.
NOTES TO UNAUDITED FINANCIAL STATEMENTS

|1. | UNAUDITED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by Garden Fresh Restaurant Corp. (the Company) without audit and reflect all adjustments, consisting of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair statement of financial position and the results of operations for the interim periods. The statements have been prepared in accordance with the regulations of the Securities and Exchange
Commission and do not necessarily include certain information and footnote disclosures necessary to present the statements in accordance with accounting principles generally accepted in the United States of America. For further information, refer to
the financial statements and notes thereto for the fiscal year ended September 30, 2000 included in the Companys Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2. | NET INCOME PER SHARE
Basic net income per share is computed based on the weighted average number of common shares outstanding during the period. Diluted net income per share is computed based on the weighted average number
of common shares and dilutive potential common shares, which includes options under the Companys stock option plans computed using the treasury stock method and common shares expected to be issued under the Companys Employee Stock
Purchase Plan.

     Potential issuances of common stock of 108,000 and 19,000 shares for the three month periods ended June 30, 2000 and 2001, respectively, and 165,000 and 15,000 shares for the nine month periods ended June
30, 2000 and 2001, respectively, were used to calculate diluted earnings per share. There were no reconciling items in calculating the numerator for basic and diluted earnings per share for any of the periods presented. Shares related to stock
options of 498,000 and 1,074,000 for the three month periods ended June 30, 2000 and 2001, respectively, and 249,000 and 944,000 shares for the nine month periods ended June 30, 2000 and 2001, respectively, were excluded from the calculation of
diluted net income per share, as the effect of their inclusion would be anti-dilutive.

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3. | SETTLEMENT OF INSURANCE CLAIM
The Company recorded other income of $1,284,000 during the first quarter of fiscal 2001 related to the settlement of an insurance claim for the loss of assets in a fire at the Companys Point Loma
restaurant in December 1999.                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|4. | PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States of America, 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 reporting period. Actual results could differ from
these estimates.

6

GARDEN FRESH RESTAURANT CORP.

ITEM 2: MANGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

INTRODUCTION

The statements contained in this Form 10-Q that are not purely historical are forward looking statements, including statements regarding the Companys expectations, hopes, beliefs, intentions or
strategies regarding the future. Statements which use words such as expects, will, may, could, anticipates, believes, intends, attempts, and
seeks are forward looking statements. These forward looking statements, including statements regarding the Companys (i) plans to open new restaurants, (ii) plans to increase operational efficiency and improve labor utilization,
(iii) budgeted capital expenditures for new restaurant openings and improvements at existing sites, (iv) timing for implementation of its new accounting software program, (v) need to obtain additional financing, (vi) future restaurant sales, and
(vii) strategic marketing programs and effects of such programs are all based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward looking statements. It is important to note
that the Companys actual results could differ materially from those in such forward-looking statements. Among the factors that could cause actual results to differ materially are the factors set forth under the heading Managements
Discussion and Analysis of Financial Condition and Results of Operations - Business Risks. In particular, the Companys expansion efforts and plans to open new restaurants could be affected by the Companys ability to locate suitable
restaurant sites, construct new restaurants in a timely manner and obtain additional funds, while the Companys plans to increase operational efficiency could be affected by difficulties in assimilating new accounting software as well as
escalating costs of both utilities and fuel, as well as increased labor costs for the distribution center.

QUARTERLY RESULTS

The following table sets forth the percentage of net sales of certain items included in the Companys statement of operations for the periods indicated.

(Unaudited)

|                                                   | Three Months Ended |    |               | Nine months Ended |               | 
|-------------------------------------------------- | ------------------ | -- | ------------- | ----------------- | ------------- | 
|                                                   | June 30, 2000      |    | June 30, 2001 |                   | June 30, 2000 | 
|                                                   |                    |    |               |                   |               | 
|NET SALES                                          | 100.0              | %  |               | 100.0             | %             | 
|                                                   |                    |    |               |                   |               | 
|COST AND EXPENSES:                                 |                    |    |               |                   |               | 
|Cost of sales                                      | 25.4               | %  |               | 24.8              | %             | 
|Restaurant operating expenses:                     |                    |    |               |                   |               | 
|Labor                                              | 30.8               | %  |               | 32.0              | %             | 
|Occupancy and other expenses                       | 20.2               | %  |               | 23.7              | %             | 
|General and administrative expenses                | 6.0                | %  |               | 6.2               | %             | 
|Restaurant opening costs                           | 2.4                | %  |               | 0.5               | %             | 
|Depreciation and amortization expenses             | 5.9                | %  |               | 6.2               | %             | 
|                                                   |                    |    |               |                   |               | 
|Total costs and expenses                           | 90.7               | %  |               | 93.4              | %             | 
|                                                   |                    |    |               |                   |               | 
|Operating income                                   | 9.3                | %  |               | 6.6               | %             | 
|Interest income                                    | 0.1                | %  |               | 0.0               | %             | 
|Interest expense                                   | (2.2               | %) |               | (2.5              | %)            | 
|Other income (expense), net                        | 0.0                | %  |               | (0.2              | %)            | 
|                                                   |                    |    |               |                   |               | 
|Income before income taxes and                     |                    |    |               |                   |               | 
|cumulative effect of accounting change             | 7.2                | %  |               | 3.9               | %             | 
|Provision for income taxes                         | (2.8               | %) |               | (1.5              | %)            | 
|                                                   |                    |    |               |                   |               | 
|Income before cumulative effect                    |                    |    |               |                   |               | 
|of accounting change                               | 4.4                | %  |               | 2.4               | %             | 
|                                                   |                    |    |               |                   |               | 
|Cumulative effect of accounting for startup costs, |                    |    |               |                   |               | 
|net of income tax benefit                          | -                  |    |               | -                 |               | 
|                                                   |                    |    |               |                   |               | 
|Net income                                         | 4.4                | %  |               | 2.4               | %             | 
|                                                   |                    |    |               |                   |               | 

7

RESULTS OF OPERATIONS

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

Net Sales.Net sales for the three months ended June 30, 2001 increased 22.0% to $52.1 million from $42.7 million for the comparable 2000 period. This increase was primarily
due to the opening of eleven new salad buffet restaurants and the re-opening of one existing salad buffet restaurant since the comparable 2000 period and the increase in comparable restaurant sales of 3.5%. The increase in same store sales is due to
higher prices, which were partially offset by decreased same store guest counts of 1.8% versus the comparable 2000 period.See Business Risks - Certain Operating Results and Considerations".

Costs of Sales.Costs of sales for the three months ended June 30, 2001 increased 19.4% to $12.9 million from $10.8 million for the comparable 2000 period. This increase was
due primarily to the addition of eleven new salad buffet restaurants and the reopening of one existing salad buffet restaurant since the comparable 2000 period. As a percentage of net sales, costs of sales decreased to 24.8% from 25.4% since the
comparable 2000 period as a result of an increase in average meal price across most markets effective July 2000.See Business Risks  Certain Operating Results and Considerations.

Labor Expense.Labor expense for the three months ended June 30, 2001 increased 27.5% to $16.7 million from $13.1 million for the comparable 2000 period. This increase was due
primarily to an increase in the minimum wage in California and increases in staff in connection with the addition of eleven new salad buffet restaurants and the reopening of one existing salad buffet restaurant since the comparable 2000 period. As a
percentage of net sales, the labor expense increased 1.2% to 32.0% from 30.8% in the comparable 2000 period due primarily to an increase in the employee hourly wage rates.See Business Risks  Minimum
Wage.

Occupancy and Other Expenses.Occupancy and other expenses for the three months ended June 30, 2001 increased 43.0% to $12.3 million from $8.6 million for the comparable 2000
period. Occupancy and other expenses as a percentage of net sales increased 3.5% to 23.7% from 20.2% for the comparable 2000 period. This was due primarily to planned marketing expenses, higher utility costs in California and higher natural gas
costs in our other markets, higher property insurance costs as a result of increased rate pressure throughout the insurance industry, increases in base rent associated with sale-leasebacks, and repair and maintenance costs for aging restaurants.See Business Risks  Planned Operating Expenditures and Business Risks - Results of Energy Crisis."

General and Administrative Expenses.General and administrative expenses for the three months ended June 30, 2001 increased 23.1% to $3.2 million from $2.6 million for the
comparable 1999 period. These increases were primarily due to personnel costs, including planned increases to field supervision and human resources to support both the additional eleven new salad buffet restaurants opened and one existing salad
buffet restaurant reopened since the comparable 2000 period and future restaurant openings. As a percentage of net sales, general and administrative expenses increased 0.2% to 6.2% from 6.0% for the comparable 2000 period.

Restaurant Opening Costs.Restaurant opening costs for the three months ended June 30, 2001 decreased 70% to $0.3 million from $1.0 million from the 2000 period. Restaurant
opening costs as a percentage of net sales decreased 1.9% to 0.5% from 2.4% for the comparable 2000 period. This decrease results from fewer new restaurant openings during the quarter compared to the same quarter in fiscal 2000. Three salad buffet
restaurants and one Slurp! restaurant were opened during fiscal 2001 third quarter compared to eight salad buffet restaurants opened during third quarter fiscal 2000.

Depreciation and Amortization Expenses.Depreciation and amortization expenses for the three months ended June 30, 2001 increased 28.0% to $3.2 million from $2.5 million for
the comparable 2000 period. Depreciation and amortization expense as a percentage of net sales increased 0.3% to 6.2% from 5.9% for the comparable 2000 period. These increases were due to additional depreciation for the eleven new salad buffet
restaurants opened and one existing salad buffet restaurant reopened since the comparable 2000 period, partially offset by decreased depreciation expense associated with the sale-leaseback of four restaurant locations during fiscal 2001.

Interest Income.Interest income for the three months ended June 30, 2001 and 2000 was unchanged at $37,000.



8



Interest Expense.Interest expense for the three months ended June 30, 2001 increased 44.4% to $1.3 million from $0.9 million for the comparable 2000 period due to additional
borrowing activity resulting from higher capital expenditures for existing stores, seasonal funding requirements, and higher capital costs for new sites.

Other Income (Expense), net.Other income (expense), net for the three months ended June 30, 2001 and 2000 was ($103,000) and $29,000, respectively.

9



Nine months Ended June 30, 2001 Compared to Nine months Ended June 30, 2000

Net Sales.Net sales for the nine months ended June 30, 2001 increased 23.3% to $146.8 million from $119.1 million for the comparable 2000 period. This increase was primarily
due to the opening of eleven new salad buffet restaurants and the re-opening of one existing salad buffet restaurant since the comparable 2000 period and the increase in comparable restaurant sales of 4.0%. The same store sales increase is due to
higher prices, which were partially offset by decreased same store guest counts of 1.3% versus the comparable 2000 period.See Business Risks  Certain Operating Results and Considerations.

Costs of Sales.Costs of sales for the nine months ended June 30, 2001 increased 20.6% to $36.3 million from $30.1 million for the comparable 2000 period. This increase was
due to the eleven new salad buffet restaurants and the re-opening of one existing salad buffet restaurant since the comparable 2000 period. As a percentage of net sales, costs of sales decreased to 24.8% from 25.3% in the comparable 2000 period as a
result of an increase in average meal price across most markets effective July 2000.See Business Risks  Certain Operating Results and Considerations.

Labor Expense.Labor expense for the nine months ended June 30, 2001 increased 27.2% to $47.7 million from $37.5 million for the comparable 2000 period. This increase was due
primarily to an increase in the minimum wage in California and the addition of eleven new salad buffet restaurants and the re-opening of one existing salad buffet restaurant since the comparable 2000 period. As a percentage of net sales, the labor
expense increased 1.0% to 32.5% from 31.5% in the comparable 2000 period due primarily to an increase in the employee hourly wage rates.See Business Risks  Minimum Wage.

Occupancy and Other Expenses.Occupancy and other operating costs for the nine months ended June 30, 2001 increased 37.8% to $34.6 million from $25.1 million for the
comparable 2000 period. This was due primarily to planned marketing expenses, higher utility costs in California and higher natural gas costs in our other markets, higher property insurance costs as a result of increased rate pressure throughout the
insurance industry, increases in base rent associated with sale-leasebacks, and repair and maintenance costs for aging restaurants.See Business Risks  Planned Operating Expenditures and Business Risks 
Results of Energy Crisis.

General and Administrative Expenses.General and administrative expenses for the nine months ended June 30, 2001 increased 28.9% to $9.8 million from $7.6 million for the
comparable 2000 period. These increases were primarily due to personnel costs, including planned increases to field supervision and human resources, to support both the additional eleven new salad buffet restaurants opened and one existing salad
buffet restaurant re-opened since the comparable 2000 period and future restaurant openings. As a percentage of net sales, general and administrative expenses increased 0.2% to 6.6% from 6.4% for the comparable 2000 period.

Restaurant Opening Costs.Restaurant opening costs for the nine months ended June 30, 2001 decreased 33.3% to $1.4 million from $2.1 million from the 2000 period. Restaurant
opening costs as a percentage of net sales decreased 0.7% to 1.0% from 1.7% for the comparable 2000 period. This was the result of fewer new restaurant openings during the nine months ended June 30, 2001 compared to the same period in fiscal
2000.

Depreciation and Amortization Expenses.Depreciation and amortization expenses for the nine months ended June 30, 2001 increased 33.3% to $9.2 million from $6.9 million for
the comparable 2000 period. Depreciation and amortization expense as a percentage of net sales increased 0.4% to 6.2% from 5.8% for the comparable 2000 period. These increases were due to additional depreciation for the eleven new salad buffet
restaurants opened and one existing salad buffet restaurant re-opened since the comparable 2000 period, partially offset by decreased depreciation expense associated with the sale-leaseback of four restaurant locations during fiscal 2001.

Interest Income.Interest income for the nine months ended June 30, 2001 and 2000 was $147,000 and $104,000, respectively.

Interest Expense.Interest expense for the nine months ended June 30, 2001 increased 44.0% to $3.6 million from $2.5 million for the comparable 2000 period due to additional
borrowing activity resulting from higher capital expenditures for existing stores, seasonal funding requirements, and higher capital costs for new sites.



10

Other Income (Expense), net.Other income (expense), net for the nine months ended June 30, 2001 was $1.1 million compared to $0.1 million for the comparable 2000 period. This increase resulted primarily
from the insurance settlement related to the loss of assets in a fire at a restaurant in San Diego, California.

11

LIQUIDITY AND CAPITAL RESOURCES

The Company finances its cash requirements principally from cash flow from operating activities, bank debt, mortgage and capital lease financing, sale-leaseback of owned properties and sale of Company
stock. The Company does not have significant receivables and receives trade credit based upon negotiated terms when purchasing food and supplies. For the nine months ended June 30, 2001, the Company generated $13.1 million from operating activities,
repaid $3.5 million under its bank line of credit, and obtained $17.4 million from equipment and mortgage financing (with repayments of $8.1 million). The Companys principal capital requirement has been for funding the development of
restaurants. Historically the Company has primarily leased the land and buildings for its restaurant operations. The Company does purchase land or land and buildings when favorable conditions are available. The Company currently owns the land or
land and buildings for 27 restaurants, including the land for certain sites the Company expects to open during the balance of fiscal 2001. During the first nine months of fiscal 2001 the Company opened three owned salad buffet restaurant sites, four
leased salad buffet restaurant sites, one leased Slurp! location, and one leased kitchen facility, reopened one leased restaurant site and completed sale-leasebacks for four restaurant sites. Capital expenditures during the first nine months of
fiscal 2001 and 2000 totaled $19.1 million (net of $10.0 million in proceeds from sale-leasebacks) and $30.2 million (net of $2.6 million in proceeds from sale-leasebacks), respectively. As of June 30, 2001, the Company operated 91 salad buffet
restaurants, 1 Ladles restaurant, and 1 Slurp! restaurant.

The cash investment required for the opening of seven new salad buffet restaurants, one Slurp! location, and one kitchen facility, the reopening of one existing salad buffet restaurant and the
construction of future additional restaurants during the nine month period ending June 30, 2001 was $20.8 million including land and buildings, and excluding restaurant opening costs. The cash investment to open a new restaurant typically includes
the purchase or installation of furniture, fixtures, equipment and leasehold improvements, and in the case of an owned site, the purchase of land and a building. In addition to remaining budgeted capital expenditures for fiscal 2001 of $10.5 million
for new restaurant openings, the Company has a remaining budgeted $0.3 million in expenditures for fiscal 2001 for capital improvements at existing sites.See Business Risks  Expansion Risks.

The restaurant opening costs incurred during the nine-month period ending June 30, 2001 for the opening of seven new salad buffet restaurants, one Slurp! location, and one kitchen facility, the
reopening of one existing salad buffet restaurant and the construction of future additional restaurants during the nine month period ending June 30, 2001 was $1.4 million. For restaurant sites planned to open in fiscal 2001 and 2002 the Company has
signed four leases, and purchased three sites.See Business Risks  Expansion Risks.

In addition to funds generated from operations, sale-leaseback of owned properties and public stock offerings, the Company will need to obtain external financing to complete its expansion plans for
fiscal year 2001 and beyond. There can be no assurance that such funds will be available when needed. Additionally, should the Companys results of operations decrease or should costs or capital expenditures rise, the Company may not have the
ability to open new restaurants at its desired pace or at all, because capital may not be available.See Business Risks  Capital Requirements.

IMPACT OF INFLATION

The primary inflationary factors affecting the Companys operations include food and beverage and labor costs. Minimum wage increases have affected earnings during the current fiscal year.
Substantial increases in costs and expenses, particularly food, supplies, labor, utilities, and operating expenses, could have a significant impact on the Companys operating results to the extent that such increases cannot be passed along to
guests through price increases.

BUSINESS RISKS

The Companys business is subject to a number of risks. A comprehensive summary of such risks can be found in the Companys Form 10-K. In addition to other information in this Form 10-Q,
shareholders and prospective investors should consider carefully the following factors in evaluating the Company and its business.



12

Certain Operating Results and Considerations



In fiscal 1999 and 2000, the Company experienced an increase of 3.7% and 3.1%, respectively, in comparable restaurant sales. In the first nine months of fiscal 2000 and 2001, the Companys
comparable restaurant sales increased 3.4% and 4.0% respectively. The Companys restaurants have not historically experienced significant increases in guest volume following their initial opening period (15 months) due to the fact that most
sites open immediately at average or greater than average guest volume. As a result, the Company does not believe that recent comparable restaurant sales are indicative of future trends in comparable restaurant sales. The Company believes that it
may from time to time in the future experience declines in comparable restaurant sales, and that any future increases in comparable restaurant sales would be modest.

In July 2000, the Company increased prices in most of its markets. To date, this increase has resulted in fewer guests. While additional price increases may be considered in the future, the Company does
not believe it has significant latitude to achieve comparable restaurant sales growth through price increases.

Expansion Risks

The Company opened ten salad buffet restaurants in fiscal 1999, seventeen in fiscal 2000, and has opened seven restaurants to date in fiscal 2001, five in existing regions (Arizona, Southern California,
Northern California, and Missouri) and two located in suburbs of Chicago, Illinois. A location in San Diego, California was reopened subsequent to being rebuilt after the December 31, 1999 fire. The Company currently intends to open two additional
salad buffet restaurants in fiscal 2001.

During fiscal 2000 the Company opened its first Ladles, A Soup and Salad Takery, a take-out restaurant concept targeted for on-the-go families and busy professionals located in San Diego,
California. During fiscal 2000 the Company opened and closed its second Ladles, A Soup and Salad Takery, restaurant located in San Diego, California. In June 2001 the Company opened the first SLURP! The Soup Experience, a new
concept in quick service, take-away dining. Located in San Diego, California, SLURP! is designed to fit into guests' busy schedules, offering soup and other to-go items in a high energy, irreverent atmosphere. Operating results for Slurp! for the
third quarter ended June 30, 2001 were limited and did not provide significant data to indicate that the concept has or will achieve market acceptance.

The Companys ability to achieve its expansion plans will depend on a variety of factors, many of which may be beyond the Companys control, including the Companys ability to locate
suitable restaurant sites, negotiate acceptable lease or purchase terms, obtain required governmental approvals, construct new restaurants in a timely manner, attract, train and retain qualified and experienced personnel and management, operate its
restaurants profitably and obtain additional capital, as well as general economic conditions and the degree of competition in the particular region of expansion. The Company has experienced, and expects to continue to experience, delays in
restaurant openings from time to time. Since its inception the Company has closed three non-performing salad buffet restaurants and one small quick service restaurant. Given the number of restaurants in current operation and the Companys
projected expansion rate there can be no assurances that the Company will not close restaurants in the future. Any closure could result in a significant write off of assets, which could adversely affect the Companys business, financial
condition and results of operations.

The Company incurs substantial costs in opening a new restaurant and, in the Companys experience, new restaurants experience fluctuating operational levels for some time after opening. Owned
restaurants generally require significantly more up-front capital than leased restaurants, as a result of which an increase in the percentage of owned restaurant openings as compared to historical practice would increase the overall capital required
to meet the Companys growth plans. There can be no assurance that the Company will successfully expand or that the Companys existing or new restaurants will be profitable. The Company has encountered intense competition for restaurant
sites, and in many cases has had difficulty buying or leasing desirable sites on terms that are acceptable to the Company. In many cases, the Companys competitors are willing and able to pay more than the Company for sites. The Company expects
these difficulties in obtaining desirable sites to continue for the foreseeable future.

13



Restaurant Industry and Competition

The restaurant industry is highly competitive. Key competitive factors in the industry include the quality and value of the food products offered, quality of service, price,
dining experience, restaurant location and the ambiance of the facilities. The Company's primary competitors include mid-priced, full-service casual dining restaurants, as well as traditional self-service buffet and other soup and salad restaurants
and healthful and nutrition-oriented restaurants. The Company competes with national and regional chains, as well as individually owned restaurants. The number of buffet and casual restaurants with operations generally similar to the Company's has
grown substantially in the last several years and the Company believes competition among buffet-style and casual restaurants has increased and will continue to increase as the Company's competitors expand operations in various geographic areas. Such
increased competition could increase the Company's operating costs or adversely affect its revenues. The Company believes it competes favorably in the industry, although many of the Company's competitors have been in existence longer than the
Company, have more established market presence and have substantially greater financial, marketing and other resources than the Company, which may give them certain competitive advantages. In addition, the restaurant industry has few non-economic
barriers to entry. Therefore, there can be no assurance that third parties will not be able to successfully imitate and implement the Company's concept. The Company has encountered intense competition for restaurant sites, and in many cases has had
difficulty buying or leasing desirable sites on terms that are acceptable to the Company. In many cases, the Company's competitors are willing and able to pay more than the Company for sites. The Company expects these difficulties in obtaining
desirable sites to continue for the foreseeable future.

Capital Requirements

In addition to funds generated from operations, sale-leaseback of owned properties and public stock offerings, the Company will need to obtain external financing to complete its expansion plans for
fiscal year 2001 and beyond. There can be no assurance that such funds will be available when needed. Additionally, should the Company's results of operations decrease or should costs or capital expenditures rise, the Company may not have the
ability to open new restaurants at its desired pace or at all, because capital may not be available.

Cost Sensitivity

The Company's profitability is highly sensitive to increases in food, labor and other operating costs. The Company'sdependence on frequent deliveries of fresh produce and groceries
subjects it to the risk that shortages or interruptions in supply caused by adverse weather or other conditions could materially adversely affect the availability, quality and cost of ingredients. In addition, unfavorable trends or developments
concerning factors such as inflation, food, labor, and employee benefit costs (including increases in hourly wage and minimum unemployment tax rates See Business Risks - Minimum Wage), rent increases resulting from the rent escalation provisions in the Companys leases, increased costs of both utilities and fuel, higher property insurance costs as a result of increased rate pressure throughout the insurance
industry, and the availability of experienced management and hourly employees may also adversely affect the Company. The Company believes recent relatively favorable inflation rates and part-time labor supplies in its principal market area have
contributed to relatively stable food and labor costs in recent years. However there can be no assurance that these conditions will continue or that the Company will have the ability to control costs in the future.See
Business Risks  Reliance on Key Suppliers and Distributors".

Minimum Wage

The Company has experienced increases in the hourly wage rate due to increases in the federal minimum wage and in the California minimum wage and due to the tight part-time labor market resulting from
historically low unemployment levels. These increases have resulted in a decrease in the Companys profitability. The Company expects to continue to be impacted by increasing wage costs in California where the minimum wage rate increased by
$0.50 per hour on January 2, 2001. While there can be no assurance that the Company will be able to manage and absorb these increases in the future, the Company is exploring strategic ideas on how to better manage labor utilization in order to
minimize the impact.

14

Planned Operating Expenditures

The Company has incurred planned marketing expenditures during the first nine months of fiscal 2001 in order to implement strategic marketing programs designed to benefit the Company in subsequent quarters. Expenditures related to
these programs include advertising production costs, media expenses, and research. For the first nine months of fiscal 2001 the results of certain new promotional programs were not as successful originally planned. The Company continues to incur
marketing expenditures related to the development of future promotional programs designed to enhance our stores' position in the marketplace through an extensive analysis of the Companys core branding. In addition, the Company is expanding
local store marketing programs and implementing pricing tests in select markets. There can be no assurance these programs will be successful and will benefit the Company by increasing guest counts and revenues in the future.

Since May 2000 the Company has converted six locations to leased from owned as part of a plan to reduce debt. Such conversions result in an increase in store rent expense for the converted location.
Should the Company continue to convert owned locations to leased locations, store rent expense will continue to increase as a result.

Effects of Energy Crisis

The Company continues to experience increased energy costs related to the California energy crisis and to higher natural gas prices in its other markets. In addition to higher utility costs, the
California energy crisis has resulted in electricity shortages that have caused power providers to implement rolling blackouts throughout the state. Disruptions in the power supply could occur in areas where Company restaurants are located, causing
those restaurants to experience temporary interruptions in operations. Such interruptions in operations may result in lost revenue and affect store profitability. The increased utility and natural gas costs were not part of the Companys
original plan and will continue to affect the Companys profitability. In addition, there can be no assurance that the interruptions in power supplies resulting from the energy shortages in California will not also impact the Companys
operating results and ability to control costs in the future.

Importance of Key Employees

The Company is heavily dependent upon the services of its officers and key management personnel involved in restaurant operations, purchasing, expansion and administration. In particular, the Company is
dependent upon the management and leadership of its four executive officers, Michael P. Mack, David W. Qualls, R. Gregory Keller and Kenneth J. Keane. The loss of any of these four individuals could have a material adverse effect on the
Companys business, financial condition and results of operations. The success of the Company and its individual restaurants depends upon the Companys ability to attract and retain highly motivated, well-qualified restaurant operations
and other management personnel. The Company faces significant competition in the recruitment of qualified employees.

Computer Information System

The core component of the Companys cost management program is the Companys computer information system. The Company has developed a proprietary computer accounting and management information
system that is fully integrated throughout the Company, including in each restaurant. The Company believes that, as compared to off-the-shelf software applications, this system provides significantly greater access to restaurant operating data and a
much shorter management reaction time. The system is used as a critical planning tool by corporate and restaurant managers in four primary areas: production, labor, food cost and financial and accounting controls. The system generates forecasts of
estimated guest volumes and other predictive data, which assist restaurant managers in developing automated production reports that detail the daily quantity and timing of batch production of various menu offerings and food preparation requirements.
The computerized system also acts as a scheduling tool for the general managers, producing automated daily labor reports outlining the restaurants staffing needs based on changing trends and guest volume forecasts. Corporate management,
through daily information updates, has complete access to restaurant data and can react quickly to changing trends. The Company can quickly analyze the cost of its menu and make corporate-wide menu adjustments to minimize the impact of shifting food
prices and food waste. Weekly computer-generated profit and loss statements and monthly accounting department-generated profit and loss statements are reviewed at the corporate, regional and restaurant management levels.

Because of the Companys growth and additional needs in the areas of distribution, construction and regional management reporting, the component of the system that provides the Companys
formal accounting reports is in the process

15



of being replaced with a commercial software package. The Company has selected a package and implementation began during the Companys fiscal 2001 second quarter. The Company expects to complete the system conversion and begin
live transaction processing during the first quarter of fiscal 2002.

Seasonality and Quarterly Fluctuations

The Companys business experiences seasonal fluctuations, as a disproportionate amount of the Company net income is generally realized in the second, third and fourth fiscal quarters due to
higher average sales and lower average costs. Quarterly results have been and are expected to continue to fluctuate as a result of a number of factors, including the timing of new restaurant openings. As a result of these factors, net sales and net
income on a quarterly basis may fluctuate and are not necessarily indicative of the results that may be achieved for a full fiscal year.

Geographic Concentration: Restaurant Base

Thirty-five of the Companys ninety-one existing salad buffet restaurants are located in California, and eighteen are located in Florida. Accordingly, the Company is susceptible to fluctuations in
its business caused by adverse economic or other conditions in these regions, including natural disasters or other acts of God. In addition, in California, higher utility costs will continue to affect the Companys profitability in this region.
As a result of the Companys continued concentration in California and Florida, adverse economic or other conditions in either state could have a material adverse effect on the Companys business. The Companys significant investment
in, and long-term commitment to, each of its restaurant sites limits its ability to respond quickly or effectively to changes in local competitive conditions or other changes that could affect the Companys operations. In addition, the Company
has a small number of restaurants relative to some of its competitors. Consequently, a decline in the profitability of an existing restaurant or the introduction of an unsuccessful concept could have a more significant effect on the Companys
result of operations than would be the case in a company with a larger number of restaurants.

Reliance on Key Suppliers and Distributors

Beginning April 2000 the company began utilization of its delivery and distribution center for the West Coast restaurants. In addition, the Company utilizes sole source suppliers for certain produce and
grocery items. In order to minimize price fluctuations, the Company enters into fixed price supply contracts that generally have terms of two months to one year and generally do not have minimum purchase requirements. However, in the event that the
distribution center or the Companys suppliers are unable to make the required deliveries due to shortages or interruptions caused by adverse weather or other conditions, or are relieved of their contract obligations due to the invocation of an
act of God provision, the Company would need to renegotiate these contracts or purchase such products elsewhere. In addition to the West Coast distribution center, the Company has several local produce distributors that are governed by one program
and one main grocery distributor. All produce and groceries purchased by the Company are channeled from the growers and other suppliers to the Companys restaurants and central kitchen through these distributors. In the event that any of these
distributors were to cease distribution on behalf of the Company, the Company would be required to make alternate arrangements for produce and grocery distribution. There can be no assurance that the companys distribution expense would not be
greater under such alternate arrangements.See Business Risks - Cost Sensitivity.

Volatility of Stock Price

The market price of the Companys common stock has fluctuated since the initial public offering of its common stock in May 1995. Quarterly operating results of the Company and other restaurant
companies, daily transactional volume, changes in general conditions in the economy, the financial markets or the restaurant industry, natural disasters or other developments affecting the Company or its competitors could cause the market price of
the common stock to fluctuate substantially. In addition, in recent years the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies
for reasons unrelated to the operating performance of these companies.

16

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to the Companys operations result primarily from changes in short-term interest rates as the Companys line of credit is tied to the prime rate, or LIBOR rounded to the
nearest whole 1/8 of 1% plus 2%. As of June 30, 2001, the Company had $8.5 million in debt outstanding under these credit facilities, a decrease of $3.5 million since September 30, 2000. Based on a hypothetical 50 basis point adverse change in prime
rates, net interest expense would increase by approximately $43,000 on an annual basis, and likewise would decrease earnings and cash flows. The Company cannot predict market fluctuations in interest rates and their impact on debt, nor can there be
any assurance that long-term fixed rate debt will be available at favorable rates, if at all. Consequently, future results may differ materially from the estimated results due to adverse changes in interest rates or debt availability.

The Company did not have any foreign currency or other market risk or any derivative financial instruments at June 30, 2001.

17

|PART II  OTHER INFORMATION
|---------------------------
|                           
|Item 1.                    
|                           
|Item 2.                    
|                           
|Item 3.                    
|                           
|Item 4.                    
|                           
|Item 5.                    
|                           
|Item 6.                    
|                           
|                           
|                           
|                           
|                           
|                           
|                           
|                           

18

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.



|DATED:         | GARDEN FRESH RESTAURANT CORP.               
|-------------- | --------------------------------------------
|               | (Registrant)                                
|August 9, 2001 |                                             
|               | /s/ Michael P. Mack                         
|               | Michael P. Mack                             
|               | Chief Executive Officer/President           
|               | (Principal Executive Officer)               
|               |                                             
|               | /s/ David W. Qualls                         
|               | David W. Qualls                             
|               | Chief Financial Officer                     
|               | (Principal Accounting and Financial Officer)

19

|EXHIBIT INDEX
|-------------
|             
|EXHIBIT NO.  
|             
|3.1*         
|             
|3.2**        
|             
|4.1******    
|             
|10.1**       
|             
|10.2**       
|             
|10.3**       
|             
|10.4**       
|             
|10.5**       
|             
|10.6***      
|             
|10.7***      
|             
|10.8****     
|             
|10.9****     
|             
|10.9A****    
|10.13**      
|             
|10.14*****   
|             
|             
|*            
|             
|**           
|             
|             
|             
|             
|***          
|             
|             
|****         
|             
|             
|             
|*****        
|             
|             
|******       



20