UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q



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

For the quarterly period ended September 30, 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:  000-28590


                              Fine Host Corporation
             (Exact name of registrant as specified in its charter)

                 Delaware                               06 - 1156070
        (State or other jurisdiction of               (I.R.S. Employer
         incorporation or organization)               Identification No.)

            3 Greenwich Office Park
                 Greenwich, CT                               06831
   (Address of principal executive offices)                (Zip code)

                                (203) 629 - 4320
               (Registrant's telephone number including area code)

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


Indicate  the number of shares  outstanding  of each of the  issuers  classes of
common stock, as of the latest practicable date.

Class                                      Outstanding as of November 13, 1998
-----                                      -----------------------------------
Common stock, $.01 par value                          9,047,970 shares


<PAGE>



                                                                  

                     FINE HOST CORPORATION AND SUBSIDIARIES
                                      INDEX

                         Part I - Financial Information


                                                                     Page No.
Item 1 - Financial Statements (unaudited)                            --------  
------
* Consolidated Balance Sheets - September 30, 1998 and
  December 31, 1997                                                     3
                                                                             
* Consolidated Statements of Operations - Three and Nine Months              
  Ended September 30, 1998 and September 24, 1997                       4
                                                                             
* Consolidated Statements of Cash Flows - Nine Months Ended                  
  September 30, 1998 and September 24, 1997                             5
                                                                             
* Notes to Consolidated Financial Statements                           6 - 8
                                                                      

Item 2 - Management's Discussion and Analysis of Financial
-------  Condition and Results of Operations                           9 - 14
                                                                             
                                                                             
Item 3 - Quantitative and qualitative disclosures about market risk      14  
------                                                                    
                                                                                
                           Part II - Other Information                          
                                                                                
Item 1 - Legal Proceedings                                                 
------                                                                15 - 16  
                                                                                
Item 5 - Other Information                                                     
------                                                                   16     
                                                                                
Item 6 - Exhibits and Reports on Form 8-K                                16 
------                                                                          
                                                                                
       - Signature                                                       17 
                                                                                
       - Exhibit Index                                                   18 
                                                                                
       - Financial Data Schedule                                         19 
                                                                              
                                                                                
<PAGE>                                                                


Part I.  Financial Information
Item 1.  Financial Statements


                     FINE HOST CORPORATION AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                  (amounts in thousands, except per share data)
<TABLE>
<CAPTION>
                                                              September 30, 1998        December 31, 1997                        
                                                              ------------------        ----------------- 
                                                                  (unaudited)                                            
<S>                                                               <C>                      <C>
Current assets:                                                                                                        
  Cash and cash equivalents                                         $ 76,790                  $109,722                           
  Accounts receivable, net of allowance for bad debts                 38,743                    29,712                           
  Inventories                                                          7,085                     6,241                           
  Prepaid expenses and other current assets                            2,146                     1,940                           
                                                                    --------                  --------                           
       Total current assets                                          124,764                   147,615                           
                                                                                                                       
Contract rights, net                                                  31,521                    36,152                           
Fixtures and equipment, net                                           21,265                    24,269                           
Excess of cost over net assets acquired, net                          48,948                    55,551                           
Contract loans and notes receivable                                   25,769                    15,481                           
Other assets                                                           9,703                    11,110                           
                                                                    --------                  --------                      
       Total assets                                                 $261,970                  $290,178                           
                                                                    ========                  ========                           
                                                                                                                       
                    LIABILITIES AND STOCKHOLDERS' EQUITY                                                               
                                                                                                                       
Current liabilities:                                                                                                   
  Accounts payable and accrued expenses                             $ 42,173                  $ 41,270                           
  Current portion of capital lease obligations                           386                       464                           
  Current portion of subordinated debt                                 2,307                     2,219                           
                                                                    --------                  --------                         
       Total current liabilities                                      44,866                    43,953                           
                                                                                                                       
Convertible subordinated notes                                       175,000                   175,000                           
Capital lease obligations                                                346                       574                           
Subordinated debt                                                      3,204                     5,187                           
                                                                    --------                  --------                        
       Total liabilities                                             223,416                   224,714                           
                                                                    --------                  --------                         
                                                                                                                       
                                                                                                                       
Stockholders' equity:                                                                                                  
                                                                                                                       
  Common Stock, $.01 par value, 25,000 shares authorized,                                                              
  9,048 and 9,060 issued and outstanding at                                                                            
  September 30, 1998 and December 31, 1997, respectively                  91                        91                           
  Treasury Stock, 12 shares at September 30, 1998                        (74)                        -                           
  Additional paid-in capital                                         102,949                   102,949                           
  Accumulated deficit                                                (64,330)                  (37,420)                           
  Receivables from stockholders for purchase of Common Stock             (82)                     (156)                            
                                                                    --------                  --------                          
       Total stockholders' equity                                     38,554                    65,464              
                                                                    --------                  --------           
          Total liabilities and stockholders' equity                $261,970                  $290,178                           
                                                                    ========                  ========                           
</TABLE>
                                                                              
                                                              






See accompanying notes to unaudited consolidated financial statements.



<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (amounts in thousands, except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                 Three Months Ended            Nine Months Ended              
                                                             September 30, September 24,  September 30, September 24,        
                                                                  1998        1997             1998         1997              
                                                             ------------  ------------   ------------  ------------        
<S>                                                           <C>          <C>             <C>         <C>                    
Net sales                                                      $ 77,737     $ 68,134        $ 237,006   $ 179,698             
Cost of sales                                                    70,881       63,999          218,482     167,747             
                                                               --------     --------         --------     -------             
  Gross profit                                                    6,856        4,135           18,524      11,951             
General and administrative expenses                               7,187        7,053           24,047      21,545             
Special  and restructuring charges                                1,803            -            9,260           -             
Provision for asset impairment and disposal                       1,886          129            8,522         804             
                                                               --------     --------         --------     -------             
  Loss from operations                                           (4,020)      (3,047)         (23,305)    (10,398)            
Interest expense, including amortization of debt issuance costs   2,809          632            8,433       1,827             
Interest income                                                   1,461          100            4,938         481             
                                                               --------     --------         --------     -------             
  Loss before income tax expense (benefit)                       (5,368)      (3,579)         (26,800)    (11,744)            
Income tax expense (benefit)                                         30         (921)             110      (3,030)            
                                                               --------     --------         --------     -------             
  Net loss                                                     $ (5,398)    $ (2,658)        $(26,910)  $  (8,714)            
                                                               ========     ========         ========   =========             
Basic and  diluted loss per share                                                                                     
   of Common Stock                                             $   (.60)    $   (.30)        $  (2.97)  $   (1.02)            
                                                               ========     ========         ========   =========             
Average number of shares                                                                                              
   of Common Stock outstanding                                    9,048        8,958            9,057       8,549
                                                               ========     ========         ========   =========
</TABLE>
                                                                              
                                                                               



See accompanying notes to unaudited consolidated financial statements.



<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                             (amounts in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                              Nine Months Ended                     
                                                                       September 30,     September 24,          
                                                                           1998              1997               
                                                                       -------------     ------------           
                                                                                                      
<S>                                                                    <C>                 <C>   
Cash flows from operating activities:                                                                    
Net loss                                                                $(26,910)           $(8,714)            
Adjustments to reconcile net loss to net cash used in                                                    
   operating activities:                                                                                 
   Depreciation and amortization                                           8,507              6,301             
   Amortization of debt issuance costs                                       668                338             
   Deferred income tax benefit                                                 -             (3,179)            
   Asset impairment losses and loss on sale of fixtures and equipment      4,032                804             
   Loss on disposition of businesses                                       4,490                  -             
   Special and restructuring charges                                       9,260                  -             
   Provision for bad debts                                                   463                568             
   Changes in operating assets and liabilities,  net of effects from                                     
    acquisition of businesses:                                                                           
     Accounts receivable                                                  (8,889)            (3,607)            
     Inventories                                                          (1,123)            (1,164)            
     Prepaid expenses and other current assets                              (215)              (722)            
     Accounts payable and accrued expenses                                (9,828)            (5,611)            
        Other assets                                                         390                197             
                                                                         --------           -------             
        Net cash used in operating activities                            (19,155)           (14,789)            
                                                                         --------           -------             
                                                                                                         
Cash flows from investing activities:                                                                    
     Direct payments to acquire contracts                                   (344)            (7,128)            
     Purchases of fixtures and equipment                                  (3,755)            (5,836)            
     Proceeds from disposal of businesses                                  2,839                528             
     Acquisition of businesses, net of cash acquired                         441            (40,352)            
     Issuance of contract notes receivable                               (12,211)                 -             
     Collection of notes receivable                                        1,454                910             
                                                                         -------            -------             
      Net cash used in investing activities                              (11,576)           (51,878)            
                                                                         -------            -------             
                                                                                                         
Cash flows from financing activities:                                                                    
     Proceeds from issuance of common stock                                    -             59,191             
     Borrowings under long-term debt agreement                                 -             59,061             
     Issuance of subordinated debt                                             -              1,233             
     Payment of capital leases and long-term debt                           (306)           (50,024)            
     Payment of subordinated debt                                         (1,895)            (2,469)            
     Proceeds from exercise of options                                         -                508             
                                                                         -------            -------             
      Net cash (used in) provided by financing activities                 (2,201)            67,500             
                                                                         -------            -------             
                                                                                                         
Net (decrease) increase in cash                                          (32,932)               833             
Cash, beginning of period                                                109,722              4,747             
                                                                         -------            -------             
Cash, end of period                                                      $76,790            $ 5,580             
                                                                         =======            =======             
</TABLE>
                                                                               
                                                                              
                                                                       
See accompanying notes to unaudited consolidated financial statements.


<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  (amounts in thousands, except per share data)
                                   (unaudited)

     The unaudited  consolidated  financial  statements  include the accounts of
Fine Host  Corporation  (the "Company") and its wholly owned  subsidiaries.  All
significant intercompany transactions and accounts have been eliminated.

     The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally  accepted  accounting  principles for
interim  financial  information and with the  instructions to Form 10-Q and Rule
10-01 of Regulation  S-X.  Accordingly,  they do not include all the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of Management,  all adjustments (consisting
of normal recurring accruals)  considered necessary for a fair presentation have
been included.  Operating  results for the nine months ended  September 30, 1998
are not necessarily  indicative of the results that may be expected for the year
ending  December 30, 1998. The  accompanying  unaudited  consolidated  financial
statements  should  be read  in  conjunction  with  the  consolidated  financial
statements of the Company and notes  thereto for the fiscal year ended  December
31, 1997 included in the Company's Annual Report on Form 10-K.

     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 those estimates.

Certain prior year and quarter  amounts and balances have been  reclassified  to
conform to the current presentation.

1.   Description of Business

     The Company  provides  contract  food  service  management  to six distinct
markets  within the contract food service  industry:  the recreation and leisure
market - arenas, stadiums,  amphitheaters,  civic centers and other recreational
facilities ("Recreation and Leisure"); the convention center market ("Convention
Centers");  the education  market - colleges,  universities  and  elementary and
secondary  schools  ("Education");   the  business  dining  market  -  corporate
cafeterias,  office complexes and manufacturing plants ("Business Dining");  the
healthcare market - long term care facilities and hospitals  ("Healthcare")  and
the corrections market prisons and jails ("Corrections"). The Company is subject
to seasonal  revenue  variations  relating  to (i) sports  seasons at arenas and
stadiums and (ii) educational facilities.

     References  herein to "we" and "our"  refer to Fine  Host  Corporation  and
consolidated subsidiaries unless the context specifically requires otherwise.

2.   Recent Accounting Pronouncements

     In June  1997,  the FASB  issued  SFAS No.  130,  "Reporting  Comprehensive
Income."  SFAS No. 130  establishes  standards  for the reporting and display of
comprehensive income and its components (revenues,  expenses,  gains and losses)
in a full set of general-purpose financial statements. SFAS No. 130 is effective
for fiscal years beginning after December 15, 1997. The adoption of SFAS No. 130
does not have an impact on the Company.

     In June 1997, the FASB issued SFAS No. 131,  "Disclosures about Segments of
an Enterprise and Related  Information." SFAS No. 131 establishes  standards for
the way that public  business  enterprises  report  information  about operating
segments  in annual and interim  financial  statements  and related  disclosures
about products and services, geographic areas, and major customers. SFAS No. 131
is effective for fiscal years  beginning  after  December 15, 1997.  The Company
will adopt SFAS No. 131 for the fiscal year ending December 30, 1998.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments and Hedging  Activities."  SFAS No. 133  establishes  accounting and
reporting standards for derivative instruments and hedging activities.  SFAS No.
133 is effective for all fiscal  quarters of fiscal years  beginning  after June
15, 1999. The adoption of SFAS No. 133 is not expected to have a material impact
on the Company.


<PAGE>



                     FINE HOST CORPORATION AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  (amounts in thousands, except per share data)
                                   (unaudited)


3.   Special And Restructuring Charges

     On February  6, 1998,  the  Company  filed a Current  Report on Form 8-K in
which the Company's financial  statements for the years ended December 25, 1996,
December  27,  1995 and  December  28,  1994  were  restated  from  the  amounts
previously   reported  to  (i)  reflect  certain  items  previously   improperly
capitalized  as period  costs;  (ii) adjust  previously  recorded  reserves  and
accruals for certain items; (iii) expense items that had previously been charged
to inappropriately  established acquisition liabilities;  (iv) write-off certain
non-performing  assets;  (v)  properly  recognize  revenue  related  to  certain
contracts and  agreements;  and (vi) record  adjustments  for the  settlement of
certain terminated  contracts.  All previously filed Form 10-Qs for 1997 and the
1996 10-K were amended and filed with the Securities and Exchange  Commission to
reflect the restatement ("Restatement").

     The Company incurred costs in the three and nine months ended September 30,
1998 totaling $1,803 and $9,260, respectively,  representing the costs of legal,
accounting, financial advisors, management consulting fees, severance, retention
bonuses and the cost of rescinding  the 10 year lease that was signed in October
1997 for the  relocation  of its  corporate  headquarters.  In  connection  with
management's  turnaround and business plan (the "Plan"), the Company anticipates
that it will incur additional  restructuring charges in connection with the Plan
throughout the remainder of 1998 and during 1999.

4.   Provision For Asset Impairment And Disposal

       The  provision  for  asset  impairment  and  disposal   consists  of  the
following:

<TABLE>
<CAPTION>
                                                 Three Months Ended                 Nine Months Ended
                                            September 30,  September 24,     September 30,  September 24,
                                                    1998   1997                      1998   1997
                                            ------------   ------------      ------------   ------------
<S>                                               <C>     <C>                      <C>     <C>    
Loss (gain) on sale of assets                       $(84)  $     -                  $4,240  $     -
Impairment loss on assets to be sold                   -         -                   1,613        -
Impairment losses on terminated                             
 contracts and business shutdowns                  1,972       129                   2,640      804
Other                                                 (2)        -                      29        -
                                                   ------  -------                  ------  -------
               Total                              $1,886   $   129                  $8,522  $   804
                                                   ======  =======                  ======  =======
</TABLE>


5.   Accounts Payable and Accrued Expenses

     Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
                                                                       September 30,    December 31,             
                                                                           1998             1997                
                                                                       ------------     ------------             
<S>                                                                      <C>               <C>                
               Accounts payable                                           $10,225           $11,794            
               Accrued wages and benefits                                   7,435             8,275            
               Accrued rent to clients                                      5,440             4,070            
               Severance, fees and other liabilities relating to                                   
                  acquisition of businesses                                 2,030             4,755            
               Deferred income                                              3,102             3,138            
               Accrued interest                                             4,301             1,836            
               Accrued other, including sales tax liabilities               9,640             7,402            
                                                                          -------           -------            
                  Total                                                   $42,173           $41,270            
                                                                          =======           =======            
</TABLE>
<PAGE>


                     FINE HOST CORPORATION AND SUBSIDIARIES                    
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  (amounts in thousands, except per share data)
                                   (unaudited)

6.   Convertible Subordinated Notes

     On October 27, 1997,  the Company  issued $175.0  million of 5% Convertible
Subordinated  Notes due 2004 (the  "Convertible  Notes") in a private  placement
under  Rule  144A of the  Securities  Act of 1933.  The  Convertible  Notes  are
unsecured  obligations of the Company and are convertible into common stock at a
conversion price of $44.50 per share. The net proceeds of $169.1 million,  after
deducting discounts and certain expenses, were used to repay approximately $50.0
million in  outstanding  obligations  under the Company's  then existing  $200.0
million  credit  facility.  The  remaining  proceeds were invested in short-term
investments in accordance with the Company's  investment  policy.  In connection
with the  offering  of the  Convertible  Notes,  we had  agreed  to file a shelf
registration  statement,  which would cause the  Convertible  Notes to be freely
tradeable.  We have not filed the shelf Registration  Statement and,  therefore,
are obligated to pay liquidated  damages on the Convertible  Notes, from January
25, 1998, in the amount of $.05 per week per thousand dollar  principal  amount,
subject to  increase  every  quarter up to a maximum of  approximately  1.3% per
annum. At September 30, 1998, the interest rate including liquidated damages was
5.78%.  On November 2, 1998 the Company  paid  $4,970,  consisting  of $4,375 of
interest and $595 in  liquidated  damages then due and owing on the  Convertible
Notes.

7.   Depreciation and Amortization

     Depreciation and Amortization,  excluding the amortization of debt issuance
costs, is as follows:

<TABLE>
<CAPTION>
                                    Three Months Ended          Nine Months Ended                    
                                September 30, September 24, September 30, September 24,              
                                        1998  1997                  1998  1997                       
                                ------------  ------------  ------------  ------------               
<S>                                 <C>      <C>                 <C>     <C>                        
Depreciation and Amortization        $ 2,935  $1,992              $8,507  $ 6,301                    
                                     =======  =======             ======  =======                    
</TABLE>
                                
8.   Income Taxes

     For the three  and nine  months  ended  September  30,  1998,  the  Company
recorded state tax provisions of $30 and $110,  respectively.  In addition,  the
Company had, for Federal income tax  reporting,  an estimated net operating loss
carry  forward of  approximately  $43,000 that expires at various  dates through
2013.

9.   Loss Per Share

     SFAS No. 128 requires the disclosure of a reconciliation  of the numerators
and   denominators  of  the  basic  and  diluted  per  share   computations  for
income/(loss).  Since the inclusion of dilutive  potential  common shares (stock
options and convertible notes) would be antidilutive, meaning inclusion of these
potential  common shares would  decrease loss per share  amounts,  the Company's
calculations of basic and diluted loss per share are the same.

<TABLE>
<CAPTION>
                                        Three Months Ended          Nine Months Ended                                     
                                    September 30, September 24, September 30, September 24,          
                                            1998  1997                  1998  1997                   
                                    ------------  ------------  ------------  ------------           
                                                                                                     
<S>                                    <C>        <C>               <C>       <C>                    
Net Loss                               $ (5,398)  $ (2,658)         $(26,910) $ (8,714)              
                                       ========   ========          ========  ========               
                                                                                            
Basic and diluted shares                  9,048      8,958             9,057     8,549               
                                       ========   ========          ========  ========               
                                                                                            
Basic and diluted loss per share         $ (.60)  $   (.30)          $ (2.97)  $ (1.02)              
                                       ========   ========          ========  ========               
</TABLE>
                                                                              

<PAGE>



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

    From  time  to  time  the  Company  and  its   representatives  may  provide
information,  whether orally or in writing, including certain statements in this
Form 10-Q under this Item  which are deemed to be  "forward-looking"  within the
meaning of the Private  Securities  Litigation  Reform Act of 1995  ("Litigation
Reform Act"). These forward-looking statements and other information relating to
the Company are based on the beliefs of management as well as  assumptions  made
by and information currently available to management.

    The words "anticipate,"  "believe,"  "estimate," "expect," "intend," "will,"
and  similar  expressions,  as  they  relate  to the  Company  or the  Company's
management, are intended to identify forward-looking statements. Such statements
reflect the current  views of the Company with respect to future  events and are
subject to certain risks,  uncertainties and assumptions.  Should one or more of
these risks or uncertainties materialize, or should underlying assumptions prove
incorrect,  actual results may vary materially  from those  described  herein as
anticipated, believed, estimated or expected.

    In accordance with the Litigation  Reform Act, we are making investors aware
that such  "forward-looking"  statements,  because they relate to future events,
are by their very nature  subject to many  important  factors  which could cause
actual results to vary materially from those contained in the  "forward-looking"
statements.  These  factors  are  detailed  from  time to time in the  Company's
filings with the Securities and Exchange Commission.

     The Company  was formed in 1985 and has grown to become a leading  provider
of  food  and  beverage   concession,   catering  and   ancillary   services  to
approximately  900  facilities  in 41 states.  The Company  targets six distinct
markets  within the contract food service  industry:  the recreation and leisure
market  ("Recreation  and Leisure"),  serving arenas,  stadiums,  amphitheaters,
civic centers and other  recreational  facilities;  the convention center market
("Convention   Centers");   the   educational  and  school   nutrition   markets
("Education"), which the Company entered in 1994, serving colleges, universities
and since 1996,  elementary and secondary  schools;  the business  dining market
("Business  Dining"),  which the  Company  entered  in 1994,  serving  corporate
cafeterias,  office complexes and  manufacturing  plants;  the healthcare market
("Healthcare"),  serving  long term care  facilities  and  hospitals,  which the
Company   substantially   entered   in   1997;   and  the   corrections   market
("Corrections"), serving prisons and jails, which the Company entered in 1996.


Results of Operations

     The  following  table  sets  forth,  for  the  periods  indicated,  certain
financial data as a percentage of net sales:

<TABLE>
<CAPTION>
                                                 Three Months Ended              Nine Months Ended       
                                            September 30,   September 24,   September 30,   September 24,
                                                 1998           1997            1998           1997
                                            ------------    ------------    ------------    ------------
                                                                    
<S>                                             <C>            <C>            <C>             <C>              
Net sales                                        100.0%         100.0%         100.0%          100.0%           
Cost of sales before depreciation                                                                     
   and amortization                               88.0           91.0           88.8            89.8            
Depreciation and amortization                      3.2            2.9            3.4             3.5            
                                                -------       -------          ------         ------            
  Gross profit                                     8.8            6.1            7.8             6.7            
General and administrative expenses                9.2           10.4           10.1            12.0            
Special and restructuring charges                  2.3              -            3.9               -            
Provision for asset impairment                                                                        
   and disposal                                    2.4            0.2            3.6             0.5           
                                                -------       -------          ------         ------            
  Loss from operations                            (5.1)          (4.5)          (9.8)           (5.8)           
Interest expense, net of interest income           1.8            0.8            1.5             0.7            
                                                -------       -------          ------         ------    
  Loss before income tax expense (benefit)        (6.9)          (5.3)         (11.3)           (6.5)           
Income tax expense (benefit)                       0.0           (1.4)           0.0            (1.7)           
                                                -------       -------          ------         ------            
  Net loss                                        (6.9)%         (3.9)%        (11.3)%          (4.8)%          
                                                =======       =======          ======         ======           
</TABLE>

<PAGE>


     The  following  table sets forth Net Sales  attributable  to our  principal
operating  markets,  expressed in dollars (in  thousands) and as a percentage of
total net sales:

<TABLE>
<CAPTION>
                                                   Three Months Ended                    Nine Months Ended
                                             September 30,     September  24,      September 30,     September 24,
                                                   1998             1997               1998              1997                      
                                             ------------      -------------       ------------      ------------

<S>                                        <C>      <C>       <C>      <C>      <C>       <C>      <C>      <C>  
       Recreation and Leisure               $22,637   29.1%    $20,124   29.5%   $ 41,056   17.3%   $ 39,835  22.2%
       Convention Centers                    11,901   15.3      14,869   21.8      44,897   18.9      48,069  26.7
       Education                             13,787   17.7      11,312   16.6      59,732   25.2      37,936  21.2
       Business Dining                       13,584   17.5      13,810   20.3      45,561   19.2      40,071  22.3
       Health Care                            8,401   10.8       3,139    4.6      25,226   10.6       4,777   2.6
       Corrections                            5,833    7.5       2,306    3.4      16,609    7.0       4,050   2.3
       Other                                  1,594    2.1       2,574    3.8       3,925    1.8       4,960   2.7 
                                            ------- ------     ------- ------    -------- ------    -------- -----
       Total                                $77,737  100.0%    $68,134  100.0%   $237,006  100.0%   $179,698 100.0%
                                            ======= ======     ======= ======    ======== ======    ======== =====
</TABLE>

     A  significant  portion  of our  growth  to  date  has  been  derived  from
acquisitions.  We acquired  five  companies in the 1997 fiscal year.  In January
1997,  we acquired  Serv-Rite  Corporation  ("Serv-Rite"),  serving the Business
Dining  and  Education  markets,  for a  purchase  price of  approximately  $8.0
million.  In August  1997,  we  acquired  Statewide  Industrial  Catering,  Inc.
("Statewide"),  serving the Education market, for approximately $3.2 million and
Best, Inc. ("Best"), serving the Healthcare, Corrections, Education and Business
Dining markets,  for approximately  $26.0 million.  In October 1997, we acquired
Total Food  Service  Direction,  Inc.  ("Total"),  serving the  Business  Dining
market,  for  approximately  $4.9 million.  Also, in December  1996, we acquired
Service  Dynamics Corp.  ("Service  Dynamics"),  serving the Business Dining and
Education  markets,  for a purchase  price of  approximately  $3.0 million.  The
purchase price for each of the foregoing  acquisitions  includes debt assumed by
the  Company  as part of the  acquisition.  We  continue  to  eliminate  certain
redundant  operations  through  closings  of offices and  termination  of excess
personnel from certain of the acquired companies.


Three Months Ended September 30, 1998 Compared to Three Months Ended
September 24, 1997

    Net Sales.  Our net sales  increased  14.1% to $77.7  million  for the three
months ended  September  30, 1998 from $68.1  million for the three months ended
September 24, 1997.

   Recreation and Leisure net sales  increased 12.5% to $22.6 million from $20.1
million.  New business  accounted for 28.7% or $6.5 million of net sales and was
primarily  related  to the  Baltimore  Ravens and Tampa Bay  Buccaneer  Football
Stadiums,  and The Theatre at Bayou Place. Same unit performance decreased 11.3%
or $2.1  million  versus the  comparable  prior year period.  This  decrease was
primarily a result of lower  attendance at Florida  Marlins  baseball  games. In
addition,  lost business accounted for a $1.9 million decline as a result of the
expiration of contracts for Montage Mountain and Lackawanna County Stadium.

   Convention  Centers net sales  decreased  20.0% to $11.9  million  from $14.9
million.  Our contract with Orange County  Convention  Center  ("OCCC")  expired
effective August 8, 1998,  reducing sales by $4.0 million from the third quarter
in 1997.  Net sales and gross  profit at OCCC for the nine  month  period  ended
September 30, 1998 were $10.9 million and $0.5  million,  respectively,  and for
the  year  ended  December  31,  1997  were  $17.6  million  and  $1.2  million,
respectively.  The decrease at OCCC was  partially  offset by increases at other
facilities, as a result of the timing of events from year to year.

   Education net sales increased 21.9% to $13.8 million from $11.3 million. Same
unit performance  increased 10.7% or $0.9 million over the comparable prior year
period.  New and acquired business  accounted for approximately  $2.9 million or
21% of net sales.  School district business  increased by $0.7 million primarily
due to new  business.  Higher  Education  increased  by $2.1  million due to the
acquisitions  of Total and Best,  and to a lesser  extent,  from new business at
Alfred  University and Oregon Health Sciences  University.  These increases were
partially offset by the expiration of certain contracts.


<PAGE>


    Business  Dining  net  sales  decreased  1.6% to $13.6  million  from  $13.8
million.  New and acquired business accounted for approximately 23% of net sales
or $3.1 million  primarily from the  acquisition of Total.  These increases were
offset by the disposition of the Republic  vending business in December 1997 and
the Republic business dining accounts in April 1998.

    Healthcare net sales  increased  from $3.1 million to $8.4 million.  Because
the acquisition of Best occurred in August 1997, the 1997 results do not include
a full quarter of operations from Best. The inclusion of Best for the full three
months in 1998  accounted  for the majority of the $5.3 million of the increased
volume over 1997.

    Corrections net sales  increased from $2.3 million to $5.8 million.  New and
acquired business  accounted for approximately $3.4 million or 58% of net sales.
This increase is attributable to the timing of the Best acquisition.

     Gross Profit.  Gross profit increased to $6.9 million or 8.8% of net sales,
from $4.1  million  or 6.1% of net  sales for the  comparable  1997  period.  An
additional bad debt provision and other charges amounted to $1.4 million or 2.1%
of net sales during the 1997 period. The gross profit improvement was a function
of the shift in business market mix to a more profitable  client base,  combined
with  improved  purchasing  power  gained  from  increased  volumes  of food and
beverages.

     General and Administrative  Expenses.  General and administrative  expenses
("G&A")  increased to $7.2 million for the three months ended September 30, 1998
from $7.1 million for the three months ended September 24, 1997.  However,  as a
percentage of net sales,  G&A declined from 10.4% to 9.2%. We intend to continue
to reduce the G&A percentage by implementing continued productivity  initiatives
and expense  controls,  especially in our  Education and Business  Dining market
areas.

   Special and  Restructuring  Charges.  In connection with the Restatement,  we
incurred costs of $0.3 million in the three months ended  September 30, 1998 for
legal,  accounting,  financial  advisors  and  management  consulting  fees.  In
addition,  restructuring  charges totaled $1.5 million,  primarily  representing
professional  fees,  employee  severance  and retention  bonuses  related to the
implementation of the Plan.

   Provision for Asset  Impairment  and Disposal.  During the three month period
ended  September  30,  1998,  we recorded  an  impairment  loss of $1.9  million
primarily relating to a write-off of intangible assets on terminated contracts.

    Operating  Loss.  Operating  loss  increased  to $4.0  million for the three
months ended  September  30, 1998,  from $3.0 million for the three months ended
September 24, 1997, primarily as a result of the factors discussed above.

     Interest Expense, Net. Interest expense, net of interest income,  increased
to $1.3 million for the three months ended  September 30, 1998 from $0.5 million
for the 1997 period due to increased debt levels  resulting from the Convertible
Notes.

Nine Months Ended September 30, 1998 Compared to Nine Months Ended
September 24, 1997

   Net  Sales.  Our net sales  increased  31.9% to $237.0  million  for the nine
months ended  September  30, 1998 from $179.7  million for the nine months ended
September 24, 1997.

   Recreation  and Leisure net sales  increased 3.1% from $39.9 million to $41.1
million.  New business  accounted  for $7.6  million or 18.5% of net sales.  The
increased  business was primarily  related to the Baltimore Ravens and Tampa Bay
Buccaneer Football Stadiums, the Arizona Memorial Coliseum, the Oregon Museum of
Science and  Industry  and The  Theatre at Bayou  Place.  Same unit  performance
decreased  8.7% or  $3.1  million  versus  the  comparable  prior  year  period,
principally  from  lower  attendance  at  Florida  Marlins  baseball  games.  In
addition,  lost business accounted for a $4.5 million decline as a result of the
OnCenter's decision to provide its food service internally and the expiration of
contracts at Montage Mountain and Lackawanna County Stadium.

   Convention  Centers net sales of $44.9 million were 6.6% lower than the $48.1
million  reported in the comparable  period in 1997. New business at Westchester
County Center and increased net sales at the Oregon  Convention Center were more
than offset by the loss of OnCenter and OCCC.


<PAGE>


   Education net sales increased 57.5% to $59.7 million from $37.9 million. Same
unit  performance  decreased 5.3% or $1.5 million over the comparable prior year
period. New and acquired business  accounted for approximately  $24.2 million or
40.5% of net  sales,  of which  $17.4  million  pertained  to  increased  school
district business due to the acquisition of Statewide and Best. Higher Education
provided  an  additional  increase  of  $9.2  million,  principally  due  to the
acquisitions  of Total and Best,  and to a lesser  extent,  from new business at
Alfred  University and Oregon Health Sciences  University.  These increases were
partially offset by the expiration of certain  contracts in the normal course of
business.

   Business  Dining  net  sales  increased  13.7% to $45.6  million  from  $40.1
million. New and acquired business was $12.7 million or approximately 28% of net
sales  primarily from the  acquisition of Total.  These increases were partially
offset by the disposition of the Republic  vending business in December 1997 and
the Republic business dining accounts in April 1998.

     Healthcare  net sales  increased  from $4.8 million to $25.2  million.  The
acquisition  of Best  accounted  for  approximately  $18.1 million or 72% of net
sales.

   Corrections net sales  increased from $4.1 million to $16.6 million.  New and
acquired business accounted for approximately $12.3 million or 74% of net sales.
This increase is primarily attributable to the acquisition of Best.

    Gross  Profit.  Gross profit was $18.5  million as compared to $12.0 million
achieved for the comparable 1997 period.  The gross profit percentage  increased
to 7.8% versus 6.7% of net sales.  The acquisitions of Best, Total and Statewide
were  responsible for the increased volume attained in business markets yielding
higher margins,  thereby  improving  gross profit  results.  Lower overhead from
strategically  sold or closed business dining units also served to enhance gross
profit margin.

    General and Administrative Expenses. G&A expenses increased to $24.0 million
for the nine months  ended  September  30, 1998 from $21.5  million for the nine
months ended September 24, 1997. The increase was primarily  attributable to the
overhead of acquired companies, particularly Best, Total and Statewide. However,
as a  percentage  of net sales G&A  declined  from 12.0% to 10.1%.  We intend to
continue  to reduce G&A  expense as a  percentage  of net sales by  implementing
continued productivity initiatives and expense controls.

    Special and Restructuring  Charges.  In connection with the Restatement,  we
incurred  costs of $6.7  million in the nine months  ended  September  30, 1998.
Costs  totaling  $6.1  million  were  related  to legal,  accounting,  financial
advisors and management consulting fees, severance.  The additional $0.6 million
was  attributable  to the cost of  rescinding,  in January of 1998,  the 10 year
lease  that was  signed in  October  of 1997  pertaining  to the  relocation  of
corporate  headquarters.  Restructuring charges totaled $2.6 million,  primarily
representing professional fees, employee severance and retention bonuses related
to the implementation of the Plan.

   Provision for Asset Impairment and Disposal. As part of the implementation of
our Plan,  during the nine month period ended  September  30, 1998, we completed
the disposition of certain Business Dining, Education and Recreation and Leisure
contracts. The loss on the disposition of the assets related to these contracts,
which  included  inventory,  fixtures and equipment  and allocated  goodwill and
contract rights,  totaled $4.2 million.  In addition,  we recorded an impairment
loss  of  $4.3  million  primarily  relating  to a  write-off  of  tangible  and
intangible assets on terminated  contracts.  The prior year provision pertaining
to the write down of contract loans related to a Recreation and Leisure contract
and an Education contract.

    Operating  Loss.  Operating  loss  increased  to $23.3  million for the nine
months ended  September  30, 1998,  from $10.4 million for the nine months ended
September 24, 1997, primarily as a result of the factors discussed above.

    Interest  Expense,  Net. Net interest expense  increased to $3.5 million for
the nine months ended  September 30, 1998 from $1.3 million for the 1997 period.
This was due to the increased debt level resulting from the Convertible Notes.



<PAGE>



Liquidity and Capital Resources

   At September  30,  1998,  we had cash and cash  equivalent  balances of $76.8
million and our current assets of $124.8 million exceeded current liabilities of
$44.9 million,  resulting in working  capital of $79.9 million.  Working capital
was $103.7  million at  December  31,  1997.  The cash  balances  are  primarily
attributable  to the  proceeds  from the  issuance of the  Convertible  Notes in
October 1997. The decline in working  capital  included $11.6 million of capital
expenditures as discussed below.

     Cash flows used in investing  activities were  approximately  $11.6 million
for the nine months ended  September  30, 1998.  On May 18, 1998 we paid in full
our outstanding  obligation with respect to a Standby Letter of Credit issued by
BankBoston,  N.A. for the benefit of the Maryland Stadium  Authority  ("MSA") in
the  amount of $10.0  million,  which  Letter of Credit was issued to secure our
obligation to pay MSA in connection  with our Concessions  Management  Agreement
with the Baltimore Ravens Limited Partnership dated August 14, 1997. We advanced
$1.1  million  for  the  Orlando  Airport  contract  to  purchase  fixtures  and
equipment.

     For the three and nine months ended  September 30, 1998,  operating  EBITDA
(defined as earnings before interest,  taxes,  depreciation and amortization and
excluding  the special and  restructuring  charges and the  provision  for asset
impairment  and  disposal)  was a positive  $2.6  million  and a  positive  $3.0
million, respectively.

   In October 1997, we issued, through a private placement pursuant to Rule 144A
under the Securities Act of 1933, the Convertible  Notes. The Convertible  Notes
are unsecured  obligations of the Company and are convertible  into common stock
at a conversion  price of $44.50 per share.  The net proceeds of $169.1 million,
after deducting underwriting discounts and certain expenses,  were used to repay
approximately  $50.0 million in  outstanding  debt under a then existing  credit
facility. The remaining net proceeds were invested in short term investments. In
connection with the offering of the  Convertible  Notes, we had agreed to file a
shelf  registration  statement,  which would cause the  Convertible  Notes to be
freely  tradeable.  We have not  filed  the shelf  Registration  Statement  and,
therefore,  are obligated to pay liquidated  damages on the  Convertible  Notes,
from  January  25,  1998,  in the  amount of $.05 per week per  thousand  dollar
principal  amount,  subject  to  increase  every  quarter  up  to a  maximum  of
approximately 1.3% per annum. At September 30, 1998, the interest rate including
liquidated  damages  was 5.78%.  On  November  2, 1998 the  Company  paid $4,970
consisting  of $4,375 of interest  and $595 in  liquidated  damages then due and
owing on the Convertible Notes.

   We have developed the Plan, and have  extensively  reviewed the business base
underlying the contracts for our  approximately  900 operating  locations.  This
process was undertaken with the assistance of our outside management consultants
and  approximately 30 members of our management  team.  Among other things,  the
Plan   contemplates  a  reduction  in  overhead  through  the  consolidation  of
duplicative accounting sites acquired as part of the 1996 and 1997 acquisitions,
a  consolidation  of the  Company's  Education  and  Business  Dining and School
Nutrition Services divisions under one leadership,  together with a reduction in
duplicative field overhead, and a reduction of both food and labor costs through
continuing  efforts  in  procurement  and  labor  scheduling.  There  can  be no
assurance,  however,  that such cost savings can be achieved. In connection with
the Plan we incurred  professional fees,  employee severance costs and retention
bonuses  totaling $1.5 million during the third quarter of 1998. These costs are
included  in Special and  Restructuring  Charges in the  condensed  consolidated
statement  of  operations.  It is  anticipated  that  we will  incur  additional
severance and other incremental costs for the remainder of 1998 and during 1999.

   Management  has  met  with  certain  holders  (the  "Note  Holders"),  of the
Company's  Convertible Notes, who have formed a committee comprised of the three
largest Note Holders,  holding in excess of $100 million of the  aggregate  $175
million of  Convertible  Notes  issued in  October  1997,  to  discuss  possible
restructuring.  There can be no assurance  that the Company and the Note Holders
will be able to reach agreement on the terms of restructuring. Our cash position
at September 30, 1998 was $76.8 million,  which we believe will be sufficient to
satisfy our cash requirements for at least the next twelve months.  However,  if
the plaintiffs prevail in the Note Holders' and Shareholders' suits described in
Part II Item 1 - Legal  Proceedings,  the outcome could have a material  adverse
effect on the  Company's  financial  position,  results of  operations  and cash
flows. Capital to meet these potential cash flow demands may not be available to
the Company when required.


<PAGE>



Year 2000 Compliance

     The year 2000 ("Y2K") problem stems from computer programs written in a way
that differentiates  calendar years by utilizing two rather than four digits. As
a result,  many  information  systems  may be unable to properly  recognize  and
process date  sensitive  information  beyond  December 31, 1999.  The Company is
addressing  the Y2K  situation by  establishing  processes  for  evaluating  and
managing the risks associated with this issue.

     The Company is currently  replacing or  upgrading  its computer  systems to
make them Y2K compliant,  and expects to have remediation completed by the first
quarter of 1999 for all  significant  computer  systems.  Testing is expected to
continue  throughout  1999.  The new  information  systems are estimated to cost
approximately $3.0 million, a substantial  portion of which will be capitalized.
Spending  for the Y2K project is not  expected to have a material  impact on the
Company's  results of  operations  or cash flows.  Although the Company does not
currently have a complete  contingency  plan for Y2K  compliance,  it intends to
develop one during fiscal year 1999.

     While the Company believes all necessary work will be completed in a timely
basis,  there can be no guarantee  that all systems  will be fully  compliant by
December  31,  1999.  Estimated  time and  costs may  vary,  particularly  where
external systems of other companies and government agencies on which the Company
relies must be converted in a timely manner.

     The  Company  is in the  process of  evaluating  the Y2K  readiness  of all
internally  engineered  systems and all types of purchased hardware and software
systems used within the enterprise and is obtaining, where feasible, contractual
warranties  from  system  vendors  that  their  products  (i) are or will be Y2K
compliant by December 31, 1999, or (ii) will be replaced or updated by a product
with similar or improved  functional  characteristics  that are  compliant.  The
Company requires Y2K contractual warranties from all vendors of new software and
hardware.  In  addition,  the  Company is testing  newly  purchased  significant
hardware and software systems in an effort to ensure their Y2K compliance.

     The Company has entered formal  communications  with most of its suppliers,
banks and other business partners or vendors seeking assurances they will be Y2K
compliant.   Although  no  method  exists  for  achieving   certainty  that  any
significant  business  partners will function without  disruption after December
31,  1999,  the  Company's  goal is to obtain as much  detailed  information  as
possible about its significant  partners' Y2K plans.  This process should assist
in identifying  those  companies  that  potentially  pose a significant  risk of
failure  to  perform  their  obligations  to the  Company as a result of the Y2K
problem. The Company is planning, where appropriate,  to review such significant
partners throughout 1999 to confirm their level of preparedness for 2000, and to
make  adjustments  where  necessary to avoid  utilization  of those partners who
present an unacceptable level of risk.

     The Company  currently is not  dependent on a single  source for any of its
products  or  services.  In the  event a  significant  supplier,  bank or  other
business partner or vendor were unable to provide services to the Company due to
a Y2K failure, the Company believes it would have adequate alternate sources for
such products or services.  There can be no guarantee,  however, that similar or
identical  products  or  services  would  be  available  on the same  terms  and
conditions or that the Company would not  experience  some adverse  effects as a
result of switching to such alternate sources.

     Like most  business  enterprises,  the  Company is  dependent  upon its own
internal computer  technology and relies upon timely performance by its business
partners.  A large-scale Y2K program failure could impair the Company's  ability
to timely deliver food service or administer its accounts  payable or receivable
functions,  resulting  in  potential  lost sales  opportunities  and  additional
expenses. The Company's Y2K program seeks to identify and minimize this risk and
includes testing of its internally engineered systems and purchased hardware and
software,  to  ensure,  to the extent  feasible,  all such  systems  will be Y2K
compliant. The Company is continually refining its understanding of the risk the
Y2K situation poses to its significant  business partners based upon information
obtained through surveys and interviews. The refinement will continue throughout
1998 and 1999.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

   Not applicable.


<PAGE>


Part II.  Other Information
Item 1.  Legal Proceedings


   In January 1996, the Company was served with a complaint  naming it as one of
five  defendants  in a lawsuit  brought by multiple  plaintiffs  in the New York
State Supreme Court  alleging  damages  arising out of the Woodstock II Festival
held in August 1994 in  Saugerties,  New York.  The  promoter of the festival is
also a defendant.  According to the complaint,  the plaintiffs were hired by the
Company (which had a concession  agreement with the promoter of the festival) as
subcontractors of food, beverage and/or merchandise.  In their complaint,  which
seeks  approximately  $5.9  million,   the  plaintiffs  allege  damages  arising
primarily  from the failure to provide  adequate  security and prevent  festival
attendees  from bringing food and beverages in to the festival.  The Company and
the promoter  have made  cross-demands  for  indemnification  against each other
under applicable provisions of their concession agreement. On April 4, 1996, the
other  defendants  named  in  the  suit  answered  the  complaint  and  asserted
cross-claims  for  contribution   and   indemnification   against  the  Company.
Thereafter,  the Company  answered the complaint and asserted a cross-claim  for
indemnification  against the promoter and a cross-claim for contribution against
all of its co-defendants.

   The Company has also sued a former client in the  Jefferson  Circuit Court of
the Commonwealth of Kentucky for certain amounts owed by the former client under
the food service contract between the parties, and the former client has filed a
counterclaim  against the Company seeking  unspecified damages for the Company's
alleged tortious interference with a prospective  contractual  relationship with
another food service provider.

   The Company does not believe that any  liabilities  relating to the foregoing
legal proceedings are likely to be,  individually or in the aggregate,  material
to its consolidated financial position, results of operations or cash flows.

    Between  December  15, 1997 and March 25, 1998,  13  purported  class action
lawsuits  were filed in the United  States  District  Court for the  District of
Connecticut  against the Company and certain of its  officers  and/or  directors
(the "Shareholder Litigation"). The complaints assert various claims against the
Company,  including  claims alleging  violations of Sections 10(b), and 20(a) of
the Securities Exchange Act of 1934 and/or violations of Sections 11, 12(2), and
15 of the Securities Act of 1933 and various rules  promulgated  thereunder,  as
well as fraud  and  negligent  misrepresentation.  On  February  13,  1998,  the
plaintiffs in the actions filed a Motion for  Consolidation  and for Appointment
as Lead  Plaintiffs  and for  Approval  of A  Selection  of  Lead  Counsel  (the
"Motion").  On March 25, 1998, the Motion was granted.  Lead Plaintiffs  filed a
Consolidated  Amended  Complaint on May 14, 1998. On June 29, 1998,  the Company
and certain of the  individual  defendants  moved to dismiss the claim  asserted
under Section 11 of the Securities Act of 1933. The other individual  defendants
moved to dismiss the complaint in its entirety.  On October 22, 1998,  the Court
granted  the motion to dismiss  the entire  complaint  as to certain  individual
defendants  and denied the Company's  motion to dismiss the claim asserted under
Section 11 of the Securities Act of 1933.

   On or about January 30, 1998, the Company and certain other  individuals were
named as defendants in an action arising out of the issuance and sale in October
1997  of  $175  million  in the  aggregate  principal  amount  of the  Company's
Convertible  Notes  (the  "Bondholder  Litigation").  The  plaintiffs  allegedly
purchased  the  Convertible  Notes in the  aggregate  principal  amount  of $7.5
million.  The Amended  Complaint  filed on or about April 22, 1998 in the United
States  District  Court for the Southern  District of New York,  alleges,  among
other things, that the Offering Memorandum prepared by the Company in connection
with the offering contained materially false information.  The complaint asserts
various  claims against the Company,  including  claims  alleging  violations of
Sections  10(b),  18(a) and  20(a) of the  Securities  Exchange  Act of 1934 and
various  rules   promulgated   thereunder,   as  well  as  fraud  and  negligent
misrepresentation. The relief sought by plaintiffs includes compensatory damages
of $1.5 million  plus  interest,  punitive  damages of $0.5  million,  costs and
disbursements,  and attorneys' fees. On July 10, 1998, Plaintiffs filed a Second
Amended  Complaint.  On July 29, 1998,  the Company moved to dismiss the Section
10(b), fraud and negligent misrepresentation, counts of the complaint. The other
individual  defendants moved to dismiss the complaint in its entirety. On August
7,  1998,  the  Judicial  Panel on  Multidistrict  Litigation  ordered  that the
Bondholder  Litigation matter be transferred to the District of Connecticut and,
with the consent of that court,  be  assigned  to the judge  presiding  over the
Shareholder Litigation for coordinated or consolidated pretrial proceedings with
the  Shareholder  Litigation.  On October 22, 1998, the Court in the District of
Connecticut  dismissed the negligent  misrepresentation  count of the Complaint,
and otherwise  denied the defendants'  motions to dismiss the Complaint.  If the
plaintiffs prevail in the Shareholder  Litigation and/or Bondholder  Litigation,
the  results of such an outcome  could  have a  material  adverse  effect on the
Company's financial condition,  results of operations and cash flows. Capital to
meet these potential obligations from sources such as selling assets, curtailing
expansion  or proceeds  from debt or equity  sources may not be available to the
Company  when  required.  (See  Part I,  Item 2 -  Management's  Discussion  and
Analysis of  Financial  Condition  and  Results of  Operations  - Liquidity  and
Capital Resources)


<PAGE>


   On February 19, 1998, the Securities and Exchange  Commission issued a formal
order of investigation  into the events relating to the December 12 and 15, 1997
announcements  as described in the Company's Form 10-K for the fiscal year ended
December 31, 1997.

   The Company is involved in certain other legal proceedings  incidental to the
normal  conduct  of  its  business.  The  Company  does  not  believe  that  any
liabilities  relating to such other legal proceedings to which it is a party are
likely to be,  individually  or in the aggregate,  material to its  consolidated
financial position, results of operations or cash flows.


Item 5.  Other Information

Recent Developments

   Effective  as of  September  3, 1998,  the Company  retained  BT Alex.  Brown
Incorporated ("BT Alex. Brown") as financial advisor to provide the Company with
restructuring  advice.  The Company  committed to pay BT Alex. Brown an advisory
fee of $75,000 per month (the "Advisory Fees") for up to eight (8) months.  Upon
completion of the  restructuring  BT Alex.  Brown would be entitled to a success
fee of $1.3 million less the aggregate Advisory Fees received.

   Effective as of September 30, 1998,  Catherine B. James resigned as director,
Executive Vice President,  Chief Financial Officer and Treasurer of the Company.
Pursuant to a letter  agreement  dated  September 15, 1998, the Company paid Ms.
James  $270,000 in  exchange  for a release of the  Company.  In  addition,  the
Company agreed to indemnify Ms. James, and to advance  expenses,  to the fullest
extent permitted under Section 145 of the Delaware General Corporation Law.

     Effective as of September 30, 1998, Richard L. Hall was elected Senior Vice
President,  Chief Accounting Officer and Treasurer of the Company.  Mr. Hall was
executive vice president and chief  financial  officer of Hardee's Food Systems,
Inc. prior to joining the Company.

     Effective  as of October 26,  1998,  Thomas P. Smith was named to the newly
created position of Senior Vice President - Sales and Marketing for the Company.
Mr.  Smith will be  responsible  for new  business  development  for all Company
market segments. Mr. Smith served in senior sales capacities at Restaura,  Inc.,
Daka Inc. and Canteen Corporation prior to joining the Company.

Item 6.  Exhibits and Reports on Form 8-K

A)  Exhibits


   10.19 Letter Agreement dated as of September 15, 1998 between the Company and
         Catherine B. James.

   27    Financial Data Schedule


B)       Reports on Form 8-K:

    1. On July 8, 1998,  the  Company  reported  on Form 8-K under Item 5, Other
Events,  that its Common Stock would no longer be traded on the Nasdaq  National
Market.  The  Company  informed  Nasdaq  that it did  not  expect  to  meet  the
conditions for continued listing on the Nasdaq National Market.  The decision to
discontinue  further appeals to Nasdaq was motivated by  management's  desire to
focus its efforts on implementing the already developed  turnaround and business
plan to restructure the Company's business and financial affairs.  Since July 9,
1998, the Common Stock has been traded on the OTC Bulletin Board.


-------------------------------------------------------------------------------


Omitted from Part II are items which are  inapplicable or to which the answer is
negative for the period presented.


<PAGE>


                                    SIGNATURE


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.


Fine Host Corporation


By /s/ Richard L. Hall                
   -------------------
Richard L. Hall
Senior Vice President and Chief Accounting Officer
(Duly Authorized Officer and Principal Financial Officer)


Date:  November 16, 1998


<PAGE>


                                  EXHIBIT INDEX



   Exhibit No.                     Description

   10.19 Letter Agreement dated as of September 15, 1998 between the Company and
         Catherine B. James.

   27    Financial Data Schedule