<PAGE>   1
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                           _________________________

                                   FORM 10-Q

(Mark One)

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

             For quarterly period ended December 31, 1998,

                                      OR

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

             For the transition period from __________________ to
             __________________.

                        Commission file number 0-25886

                        GARDEN FRESH RESTAURANT CORP.

            (Exact name of registrant as specified in its charter)

            Delaware                                      33-0028786
(State or other jurisdiction                              (I.R.S. Employee
of incorporation 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:  (619) 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.  Yes / X /     No  /   /


        APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                       DURING THE PRECEDING FIVE YEARS:

        Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  Yes /  /     No  /  /

                    APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares of Common Stock, $.01 par value, outstanding as of
February 3, 1999 was 5,544,910.  There are no other classes of common stock.

<PAGE>   2
                        GARDEN FRESH RESTAURANT CORP.
                                  FORM 10-Q

                                    INDEX
                                                                          PAGE

PART I:   FINANCIAL INFORMATION

          Item 1:    Unaudited Condensed Financial Statements

                     Condensed Balance Sheet at September 30, 1998 and
                     December 31, 1998                                       3

                     Condensed Statement of Income for the three months
                     ended December 31, 1997 and December 31, 1998           4

                     Condensed Statement of Cash Flows for the three
                     months ended December 31, 1997 and December 31, 1998    5

                     Notes to Unaudited Condensed 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                                                   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 to a Vote of Security Holders    15
          Item 5:    Other Information                                      15
          Item 6:    Exhibits and Reports on Form 8-K                       15

<PAGE>   3

GARDEN FRESH RESTAURANT CORP.
CONDENSED BALANCE SHEET
(Dollars in thousands)

                                       September 30, 1998     December 31, 1998
                                                                 (Unaudited)
ASSETS

  Cash                                      $       3,382         $         957

  Inventories                                       3,579                 3,631

  Other current assets                                660                   968

  Deferred income taxes                               376                   204
                                               ----------            ----------
      Total current assets                          7,997                 5,760
     	
Property and equipment, net                        74,601                80,081

Intangible and other assets                         2,334                 2,262
                                               ----------            ----------
Total assets                                $      84,932         $      88,103
                                               ==========            ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

   Accounts payable                         $       3,657         $       3,174

   Current portion of long-term debt                5,712                 8,494

   Accrued liabilities                              5,081                 6,510

   Deferred income taxes                              618                   580
                                               ----------            ----------
       Total current liabilities                   15,068                18,758

Accrued rent                                        1,292                 1,265

Deferred compensation                                 171                   266

Long term debt, net of current portion              9,154                 7,747

Shareholders' equity:

   Common stock, $.01 par value; 12,000,000
   shares authorized at September 30, 1998
   and December 31, 1998, respectively;
   5,544,217 and 5,561,233 issued and
   outstanding at September 30, 1998 and
   December 31, 1998, respectively                     56                    56

   Paid-in capital                                 58,542                59,245

   Retained earnings                                  649                 1,490

   Treasury stock                                      --                  (724)
                                               ----------            ----------
        Total shareholders' equity                 59,247                60,067
                                               ----------            ----------

Total liabilities and shareholders' equity  $      84,932         $      88,103
                                               ==========            ==========


See notes to unaudited condensed financial statements.

<PAGE>   4

GARDEN FRESH RESTAURANT CORP.
CONDENSED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)

                                                Three Months Ended
                                          December 31,         December 31,
                                                 1997                 1998

NET SALES                                $     23,903         $     28,448
                                          -----------          -----------
COST AND EXPENSES:

Cost of sales                                   6,280                7,474

Restaurant operating expenses:

   Labor                                        7,187                8,802

   Occupancy and other                          5,783                6,344

General and administrative expenses             1,581                1,803

Depreciation and amortization                   1,685                2,219
                                          -----------          -----------
Total operating expenses                       22,516               26,642
                                          -----------          -----------

OPERATING INCOME                                1,387                1,806

Interest income                                    41                   33

Interest expense                                 (460)                (391)

Other expense, net                                (16)                 (41)
                                          -----------          -----------

INCOME BEFORE INCOME TAXES                        952                1,407

Provision for income taxes                       (366)                (566)
                                          -----------          -----------

NET INCOME                               $        586         $        841
                                          ===========          ===========

Basic net income per share               $        .14         $        .15
                                          ===========          ===========
Shares used in computing
basic net income per share                      4,277                5,575
                                          ===========          ===========

Diluted net income per share             $        .13         $        .14
                                          ===========          ===========

Shares used in computing
diluted net income per share                    4,591                5,872
                                          ===========          ===========


See notes to unaudited condensed financial statements.

<PAGE>   5

GARDEN FRESH RESTAURANT CORP.
CONDENSED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

                                                      Three Months Ended
                                          December 31, 1997 December 31, 1998
OPERATING ACTIVITIES:

Net income                                      $       586       $       841

Adjustments to reconcile net income
to net cash provided by operating activities:

     Depreciation and amortization expenses           1,684             2,219

     Loss on disposal of property                        16                41

     Deferred income taxes                              285               134

     Tax benefits from exercize of stock options         --               160

     Changes in operating assets and liabilities:

       Increase in inventories                         (226)              (52)

       Increase in other assets                        (457)             (308)

       Decrease in accounts payable                  (1,663)             (483)

       Increase in accrued liabilities                1,010               706

       Decrease in accrued rent                         (21)              (27)

       Increase in deferred compensation                 --                95
                                                   --------          --------

Net cash provided by operating activities             1,214             3,326
                                                   --------          --------

INVESTING ACTIVITIES:

Acquisition of property and equipment:

     New restaurant development                      (4,986)           (6,471)

     Existing restaurant additions                     (262)             (681)

Increase in intangible and other assets                (512)             (516)
                                                   --------          --------

Net cash used in investing activities                (5,760)           (7,668)
                                                   --------          --------

FINANCING ACTIVITIES:

Proceeds from long term debt                          3,871             2,650

Repayment of long term debt                          (1,524)           (1,275)

Net proceeds from issuance of common stock              209               542
                                                   --------          --------

Net cash provided by financing activities             2,556             1,917
                                                   --------          --------

Net decrease in cash                                 (1,990)           (2,425)

Cash at beginning of period                           2,345             3,382
                                                   --------          --------

Cash at end of period                           $       355      $        957
                                                   ========          ========

See notes to unaudited condensed financial statements.

<PAGE>   6

GARDEN FRESH RESTAURANT CORP.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

1.     UNAUDITED CONDENSED FINANCIAL STATEMENTS

       The accompanying condensed financial statements have been prepared by
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 generally accepted accounting principles.  For
further information, refer to the financial statements and notes thereto for
the fiscal year ended September 30, 1998 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 of
common shares outstanding during the period.  Diluted net income per share is
computed based on the weighted average number of common shares and common
stock equivalents, 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.

       Common stock equivalents of 314,000 and 297,000 shares for the three
month periods ended December 31, 1997 and December 31, 1998, 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.

3.     PREPARATION OF FINANCIAL STATEMENTS

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

4.     STOCK REPURCHASE

       In October 1998, the Company announced that it intended to repurchase
up to 500,000 shares of its outstanding common stock.  On December 31, 1998,
the Company repurchased 50,000 shares of common stock at $14.50 per share with
transaction settled on January 4, 1999.

       Subsequently, on January 22, 1999 and January 29, 1999, the Company
repurchased 10,000 shares of common stock each at $14.38 per share and $14.50
per share, respectively, with transactions settled on January 27, 1999 and
February 3, 1999, respectively.

<PAGE>   7

GARDEN FRESH RESTAURANT CORP.
STATEMENT OF OPERATING DATA

   ITEM 2:  MANAGEMENT'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 the words "expects," "will," "may,"
"anticipates," "believes," "intends" and "seeks" are forward looking
statements.  These forward looking statements, including statements regarding
the Company's expansion efforts and plans to open new restaurants, are based
on information available to the Company on the date hereof, and the Company
assumes no obligation to update any such forward looking statement.  It is
important to note that the Company's actual results could differ materially
from those in such forward looking statements.  Among factors that could cause
actual results to differ materially are the factors set forth below under the
heading "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.


QUARTERLY RESULTS

The following table sets forth the percentage of net sales of certain items
included in the Company's statement of income for the periods indicated.
(unaudited)

                                               Three Months Ended
                                        December 31,      December 31,
                                               1997              1998

NET SALES                                    100.0%            100.0%
                                             -----             -----

COST AND EXPENSES:

  Cost of sales                               26.3%             26.3%

  Restaurant operating expenses:

    Labor                                     30.1%             30.9%

    Occupancy and other                       24.2%             22.3%

  General and administrative expenses          6.6%              6.3%

  Depreciation and amortization expenses       7.0%              7.8%
                                             -----             -----

  Total operating expenses                    94.2%             93.6%
                                             -----             -----

OPERATING INCOME                               5.8%              6.4%

  Interest income                              0.2%               .1%

  Interest expense                            (1.9%)            (1.4%)

  Other expense, net                           (.1%)             (.1%)
                                             -----             -----

INCOME BEFORE INCOME TAXES                     4.0%              5.0%

Provision for income taxes                    (1.5%)            (2.0%)
                                             -----             -----

NET INCOME                                     2.5%              3.0%
                                             =====             =====

<PAGE>   8

RESULTS OF OPERATIONS

THREE MONTHS ENDED DECEMBER 31, 1998 COMPARED TO THREE MONTHS ENDED DECEMBER
31, 1997

       NET SALES.  Net sales for the three months ended December 31, 1998
increased 18.8% to $28.4 million from $23.9 million for the comparable 1997
period.  This increase was primarily due to the opening of seven restaurants
since the comparable 1997 period and the increase in comparable restaurant
sales of 5.3%.

       COST OF SALES.  Cost of sales for the three months ended December 31,
1998 increased 19.0% to $7.5 million from $6.3 million for the comparable 1997
period.  As a percentage of net sales, cost of sales were 26.3%, which
approximated the comparable 1997 period.

       LABOR EXPENSE.  Labor expense for the three months ended December 31,
1998 increased 22.2% to $8.8 million from $7.2 million for the comparable 1997
period.  This increase was due to the seven restaurants opened since the
comparable 1997 period.  As a percentage of net sales, the labor expense
increased 0.8% from 30.1% in the comparable 1997 period due to an increase in
the California minimum wage effective March 1, 1998, and the addition of seven
new restaurants which utilized higher than historical labor hours.

       OCCUPANCY AND OTHER OPERATING COSTS.  Occupancy and other operating
costs for the three months ended December 31, 1998 increased 8.6% to $6.3
million from $5.8 million for the comparable 1997 period.  This was due to the
addition of seven new restaurants.  Occupancy and other operating costs as a
percentage of net sales decreased to 22.3% from 24.2% for the comparable 1997
period.  This was due to lower occupancy costs associated with more favorable
rents in newer stores, higher sales volume and lower supplies expenses.

       GENERAL AND ADMINISTRATIVE EXPENSES.  General and administrative
expenses for the three months ended December 31, 1998 increased 12.5% to $1.8
million from $1.6 million for the comparable 1997 period.  This increase was
due to personnel, training and relocation costs associated with supporting
stores in new regions.  As a percentage of net sales, general and
administrative expenses decreased 0.3% to 6.3% from 6.6% for the comparable
1997 period.

       DEPRECIATION AND AMORTIZATION EXPENSES.  Depreciation and amortization
expenses for the three months ended December 31, 1998 increased 29.4% to $2.2
million from $1.7 million for the comparable 1997 period.  This increase was
due to depreciation and amortization for the new restaurants opened since the
comparable 1997 period.  Depreciation and amortization expense as a percentage
of net sales was 7.8%, up from 7.0% for the comparable 1997 period due to
amortization of pre-opening costs for restaurants opened late in fiscal 1998.

       INTEREST INCOME.  Interest income for the three months ended December
31, 1998 decreased 19.5% to $33,000 from $41,000 for the comparable 1997
period.  The decrease in interest income was primarily due to a reduction in
accounts payable.

       INTEREST EXPENSE.  Interest expense for the three months ended December
31, 1998 decreased 20.0% to $0.4 million from $0.5 million for the comparable
1997 period.  Interest expenses decreased due to the pay down of debt since
the comparable 1997 period.


LIQUIDITY AND CAPITAL RESOURCES

       The Company finances its cash requirements principally from cash flow
from operating activities, bank debt, mortgage and capital lease financing and
equity financing.  The Company does not have significant receivables or
inventory, and receives trade credit based upon negotiated terms when
purchasing food and supplies.  For the three months ended December 31, 1998,
the Company generated $3.3 million in cash flow from operating activities,
received $2.7 million from bank debt and mortgage financing (with repayments
of $1.3 million), and an additional $0.5 million from the sale of the
Company's Common Stock pursuant to stock options and the Company's Employee
Stock Purchase Plan.  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 and/or buildings when favorable conditions are
<PAGE>   9

available.  The Company currently owns the land and buildings for 23
restaurants, including the land for certain sites the Company expects to open
in fiscal 2000.  During the first three months of fiscal 1999, the Company
opened one restaurant.  Capital expenditures totalled $7.2 million during the
first three months of fiscal 1999 and $5.2 million for the comparable period
in fiscal 1998.  As of December 31, 1998 the Company operated 58 salad buffet
restaurants and one small quick service restaurant.

       The cash investment to open the one restaurant during the three month
period ending December 31, 1998 was $3.0 million including land and buildings,
and excluding pre-opening costs.  The pre-opening costs for the one restaurant
opened was $0.2 million.  The Company has signed five leases and purchased
eight sites to be opened in fiscal 1999.  In addition, the Company has signed
one lease to be opened in fiscal 2000.  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 budgeted capital
expenditures for fiscal 1999 of $31.4 million for new restaurant openings, the
Company has budgeted $2.4 million in expenditures for fiscal 1999 for capital
improvements at existing sites.  See "Business Risks - Expansion Risks."

       The Company will need to rely on funds generated from operations to
finance a portion of the expansion currently planned for fiscal 1999, as well
as any expansion taking place after fiscal 1999.  Should the Company's results
of operations or its rate of growth fail to be adequate to finance expansion
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, and could be
required to seek additional financing in the future.  There can be no
assurance that the Company will be able to raise such capital when needed on
satisfactory terms or at all.  See "Business Risk - Capital Requirements."

IMPACT OF INFLATION

       The primary inflationary factors affecting the Company's operations
include food and beverage and labor costs.  The Company does not believe that
inflation has materially affected earnings during the past three years.
Substantial increases in costs and expenses, particularly food, supplies,
labor 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.

NEW ACCOUNTING STANDARD

       In April 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities."  This SOP requires that the costs of start-up activities, which
is inclusive of pre- opening costs, should be expensed as incurred.  This new
accounting standard is effective for financial statements for fiscal years
beginning after December 15, 1998.  Earlier application is encouraged in
fiscal years for which annual financial statements have not been issued.
Restatement of previously issued financial statements is not permitted.

       As is typical in the restaurant industry, the Company defers its
restaurant pre-opening costs and amortizes them over the twelve-month period
following the opening of each respective restaurant.  At December 31, 1998,
total deferred pre-opening costs were $1.2 million.  For the three months
ended December 31, 1997 and December 31, 1998, pre-opening expense
amortization was approximately $0.3 million and $0.6 million, respectively.
The Company has determined it will adopt SOP 98-5 in fiscal 2000.  Upon
adoption, the Company will recognize the cumulative effect of a change in
accounting principle, net of any related income tax effect.

       While total cash flows are unaffected by this change, pre-opening costs
previously reported as cash used in investing activities will be reported as a
component of net cash provided by operating activities.

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.

<PAGE>   10

CERTAIN OPERATING RESULTS AND CONSIDERATIONS

       In fiscal 1997 and 1998, respectively, the Company experienced an
increase of 4.7% and an increase of 7.5% in comparable restaurant sales.  In
the first three months of fiscal 1998 and 1999, respectively, the Company's
comparable restaurant sales increased by 9.8% and 5.3%, respectively.  The
Company's newer restaurants have not historically experienced significant
increases in guest volume following their initial opening period.  In
addition, the Company does not believe it has significant latitude to achieve
comparable restaurant sales growth through price increases.  As a result, the
Company does not believe that recent comparable restaurant sales is 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.

EXPANSION RISKS

       The Company opened eight salad buffet restaurants in fiscal 1998 and
has opened one restaurant to date in fiscal 1999, all of which are in new
regions (Pacific Northwest, Houston, Atlanta, Utah and Las Vegas).  The
Company currently intends to open 14 additional restaurants in fiscal 1999.
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.  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 upfront 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
requirements, 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.

       Since its inception the Company has closed three non-performing
restaurants.  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.

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 a 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.
<PAGE>   11

CAPITAL REQUIREMENTS

       In addition to funds generated from operations, and public stock
offerings the Company will need to obtain external financing to complete its
expansion plans for fiscal year 1999 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's dependence 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,
rent increases resulting from the rent escalation provisions in the Company's
leases, and the availability of experienced management and hourly employees
may also adversely affect the Company.  The Company believes relatively
favorable inflation rates and part-time labor supplies in its principal market
areas 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.

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.
While the Company has managed to absorb the increases to date without
reduction in profitability there can be no assurance that the Company will be
able to do so 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 SYSTEMS AND YEAR 2000

       The year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year.  Certain
information technology systems and their associated software ("IT Systems"),
and certain equipment that utilizes programmable logic chips to control
aspects of their operation ("embedded chip equipment"), may recognize "00" as
the year 1900, "01" as the year 1901, etc.  The year 2000 issue could result,
at the Company and elsewhere, in system failures or miscalculations causing
disruptions of operations, including, among other things, a temporary
inability to process transactions or to engage in other normal business
activities.

THE COMPANY'S STATE OF READINESS.  The Company is addressing the year 2000
issue, including efforts relating to IT Systems and embedded chip equipment
used within the Company, efforts to assess issues the Company faces if third
parties who do business with the Company are not prepared for the year 2000,
and contingency planning.  The Company has determined that its proprietary
accounting and management information software, and the hardware upon which it
runs, is year 2000 compliant; however, certain third party software will
require updates or replacement, which are scheduled for implementation during
the first quarter of 1999.  The Company completed its review of embedded chip
equipment and has concluded that additional verification is required and will
be year 2000 compliant by mid-1999.

       The Company's operations are also dependent on the year 2000 readiness
of third parties who do business with the Company.  In particular, the
Company's IT Systems interact with commercial electronic transaction
<PAGE>   12

processing systems to handle customer credit card purchases, and the Company
is dependent on third-party suppliers of such infrastructure elements
including, but not limited to, telephone service, electric power and water and
banking services.  Although the Company has not been put on notice that any
known third party problem will not be resolved, the Company has limited
information and no assurance of the year 2000 readiness of third parties.

       The Company has used and continues to use internal resources to
identify, correct, upgrade or replace and test internally deployed IT Systems
and embedded chip equipment for year 2000 compliance.

COSTS.  The Company did not incur significant cost to enable its proprietary
accounting and management information software, and the hardware upon which it
runs, to be year 2000 compliant.  The Company believes that the cost of
modifying the standard, non-proprietary software will be borne by the
licensors, and accordingly does not believe it will incur significant costs
with respect to such year 2000 compliance.  Aggregate costs for year 2000
issues have been and are estimated to be below $25,000 and are being expensed
as incurred.

RISKS.  The Company intends and expects to implement the changes necessary to
address the year 2000 issue for IT Systems and embedded chip equipment used
within the Company.  The Company presently believes that, with modifications
to existing software, conversions to new software, and appropriate remediation
of embedded chip equipment, the year 2000 issue is not reasonably likely to
pose significant operational problems for the Company's IT Systems and
embedded chip equipment so modified and converted.  However, if unforeseen
difficulties arise or such modifications, conversions and replacements are not
completed timely, or if the Company's vendors' or suppliers' systems are not
modified to become year 2000 compliant, the year 2000 issue may have a
material adverse impact on the Company's business, financial condition and
results of operations.

       The Company is presently unable to assess the likelihood that the
Company will experience significant operational problems due to unresolved
year 2000 problems of third parties who do business with the Company.  There
can be no assurance that other entities will achieve timely year 2000
compliance; if they do not, year 2000 problems could have a material impact on
the Company's operations.  Similarly there can be no assurance that the
Company can timely mitigate its risks to a supplier's failure to resolve its
year 2000 issues.  If such mitigation is not achievable, year 2000 problems
could have a material adverse impact on the Company's business, financial
condition and results of operations.

       The Company's estimates of the costs of achieving year 2000 compliance
and the date by which year 2000 compliance will be achieved are based on
management's best estimates, which were derived using numerous assumptions
about future events including the continued availability of certain resources,
third party modification plans and other factors.  However, there can be no
assurance that these estimates will be achieved, and actual results could
differ materially from these estimates.

       The Company presently believes that the most reasonably likely worst
case scenarios that the Company might confront with respect to year 2000
issues have to do with a decline in business due to consumer preoccupation
with media and news reports of actual or anticipated events and actual events
over which the Company has no control, including, but not limited to, power
failure, disruption of water and telephone service, or problems experienced by
other companies without any connection to the Company.  If the Company
experiences loss of power or similar services in any affected geographic area,
the Company would be forced to temporarily close stores.

CONTINGENCY PLANS.  The Company has a small number of suppliers who provide
the majority of the Company's inventory, including fresh produce and grocery
staples.  The Company believes these suppliers are or will be year 2000
compliant by June of 1999.  As part of the Company's normal contingency
planning, it has identified alternative suppliers.  However, there can be no
assurance that there will be no disruption of supply resulting in the
Company's inability to maintain operations.  In the event that the parties
from whom the Company licenses software do not achieve year 2000 compliance in
a timely manner, the Company believes that it can acquire alternative software
that is compliant and that performs substantially the same function as its
current software, without significant cost.  Additionally, in the event the
Company needs to replace equipment which uses embedded systems, the Company
believes it can do so without significant cost.
<PAGE>   13

SEASONALITY AND QUARTERLY FLUCTUATIONS

       The Company's business experiences seasonal fluctuations, as a
disproportionate amount of the Company's 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

       Twenty-eight of the Company's 58 existing salad buffet restaurants are
located in California, and twelve are located in Florida.  Accordingly, the
Company is susceptible to fluctuations in its business caused by adverse
economic or other conditions in this region, including natural disasters or
other acts of God. 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
new restaurant 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.

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.
<PAGE>   14

     ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                                Not Applicable

<PAGE>   15

                         PART II - OTHER INFORMATION


Item 1.       Legal Proceedings

                    The Company is from time to time the subject of
              complaints, threat letters or litigation from guests alleging
              illness, injuries or other food quality, health or operational
              concerns.  Adverse publicity resulting from such allegations may
              materially adversely affect the Company and its restaurants,
              regardless of whether such allegations are valid or whether the
              Company is liable.  The Company is also the subject of
              complaints or allegations from former or prospective employees
              from time to time.  The Company believes that the lawsuits,
              claims and other legal matters to which it has become subject in
              the course of its business are not material to the Company's
              financial position or results of operations.  Nevertheless, an
              existing or future lawsuit or claim could result in an adverse
              decision against the Company that could adversely affect the
              Company or its business.

Item 2.       Changes in Securities                               Not Applicable

Item 3.       Default upon Senior Securities                      Not Applicable

Item 4.       Submission of Matters to a Vote of Security
              Holders                                             Not Applicable

Item 5.       Other Information                                   Not Applicable

Item 6.       Exhibits and Reports on Form 8-K

              (a)   Exhibits:

                    The Exhibits required by Item 6(a) of this report are
                    listed in the Exhibit Index on page 17 herewith.

              (b)   Report on Form 8-K:

                    No reports on Form 8-K have been filed by the Company
                    during the fiscal quarter ended December 31, 1998.



<PAGE>   16

                                  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:   February 5, 1999

                           GARDEN FRESH RESTAURANT CORP.
                           (Registrant)


                           /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)


<PAGE>   17

                                EXHIBIT INDEX

EXHIBIT NO.   DESCRIPTION                                            Page Number


3.1  *        Restated Certificate of Incorporation of Garden Fresh
              Restaurant Corp.

3.2  **       Bylaws of Garden Fresh Restaurant Corp., as amended.            --

10.1 **       Form of Indemnity Agreement for executive officers and
              directors.                                                      --

10.2 **       The Company's Restaurant Management Stock Option Plan, as
              amended.                                                        --

10.3 **       The Company's Key Employee Stock Option Plan, as amended.       --

10.4 **       The Company's 1995 Outside Director Stock Option Plan.          --

10.5 **       The Company's 1995 Key Employee Stock Option Plan, as
              amended.                                                        --

10.6 ***      Form of Executive Employment Agreement                          --

10.7 ***      Wells Fargo Bank Revolving Line of Credit Note                  --

10.8 ****     The Company's 1998 Stock Option Plan                            --

10.9 ****     The Company's Variable Deferred Compensation Plan for
              Executives                                                      --

10.13**       Park Terrace Office Park lease between the Company and Park
              Terrace Partners dated November 1, 1991                         --

10.14*****    Indemnification Agreement between the Company and David
              Qualls dated April 28,1998.                                     --

27.1          Financial Data Schedule                                         --


*     Incorporated by reference from Exhibit 4.1 filed with the Company's
      Registration Statement on Form S-8 (No. 33-93568) filed June 16, 1995.

**    Incorporated by reference from the Exhibits with corresponding numbers
      filed with the Company's Registration Statement on Form S-1 (No.
      33-90404), as amended by Amendment No.  1 to Form S-1 filed on April 19,
      1995, Amendment No.  2 to Form S-1 filed May 8, 1995, Amendment No.  3
      to Form S-1 filed May 15, 1995, Exhibit 10.2 is incorporated by
      reference from Exhibits 10.2 and 10.2A, Exhibit 10.3 is incorporated by
      reference from Exhibits 10.3 and 10.3A and Exhibit 10.5 is incorporated
      by reference from Exhibit 10.5 and 10.5A.

***   Incorporated by reference from the Exhibits with corresponding numbers
      filed with the Company's Form 10-Q filed with the SEC on February 13,
      1998.

****  Incorporated by reference from the Exhibits with corresponding numbers
      filed with the Company's Form 10-Q filed with the SEC on April 28, 1998.

***** Incorporated by reference from the Exhibits with corresponding numbers
      filed with the Company's Form S-1 (No. 33-51267) filed with the SEC on
      April 29, 1998.