<PAGE>

                       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 28, 1999

                                       OR

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

                          COMMISSION FILE NO. 333-4578

                            CAFETERIA OPERATORS, L.P.

             INCORPORATED IN DELAWARE I.R.S. EMPLOYER IDENTIFICATION
                                  NO.75-2186655

     3001 E. PRESIDENT GEORGE BUSH HIGHWAY, SUITE 200, RICHARDSON, TX 75082

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 808-2923


-------------------------------------------------------------------------------
        Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 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
                                    --      --


                                  Page 1 of 18
                        Exhibit Index Located on Page 17


<PAGE>


                            CAFETERIA OPERATORS, L.P.


                                      INDEX


PART I.     FINANCIAL INFORMATION                                          PAGE


   Item 1.  Financial Statements
            Condensed Consolidated Balance Sheets -
            September 28, 1999(Unaudited) and December 29, 1998               3

            Unaudited Condensed Consolidated Statements
            Of Operations - For the thirteen weeks ended
            September 28, 1999 and September 29, 1998
                                                                              5
            Unaudited Condensed Consolidated Statements
            of Operations - For the thirty-nine weeks
            ended September 28, 1999 and September 29, 1998                   6

            Unaudited Condensed Consolidated Statement
            of Stockholders' Deficit - For the thirty-nine weeks
            ended September 28, 1999                                          7

            Unaudited Condensed Consolidated Statements
            of Cash Flows - For the thirty-nine weeks
            ended September 28, 1999 and September 29, 1998                   8

            Notes to Unaudited Condensed Consolidated
            Financial Statements                                              9

   Item 2.  Management's Discussion and Analysis of Financial
            Condition and Results of Operations                              12

   Item 3.  Quantitative and Qualitative Disclosure about Market Risk        14

PART II.    OTHER INFORMATION

   Item 1.  Legal Proceedings                                                16

   Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES


                                       2
<PAGE>


                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                               September 28,           December 29,
                                                                    1999                   1998
                                                                    ----                   ----
                                                                (Unaudited)
<S>                                                        <C>                    <C>
ASSETS

Current assets:
     Cash and cash equivalents                             $     6,373            $   11,478
     Accounts and notes receivable, net                          1,126                   623
     Inventories                                                 6,990                 7,014
     Prepaid expenses and other                                  1,087                   422
                                                           -----------            ----------
          Total current assets                                  15,576                19,557

Property, plant and equipment, net                              53,471                48,320
Receivable from affiliates                                      13,389                12,991
Other assets                                                       850                   503
                                                           -----------            ----------
                                                           $    83,286            $   81,371
                                                           -----------            ----------
                                                           -----------            ----------
















See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>


                                                  (Continued on following page)


                                       3
<PAGE>

                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS (Continued)
                             (dollars in thousands)





<TABLE>
<CAPTION>
                                                                 September 28,          December 29,
                                                                         1999                  1998
                                                                         ----                  ----
                                                                     (Unaudited)

LIABILITIES AND PARTNERS' DEFICIT
<S>                                                               <C>                   <C>
Current liabilities:
     Current portion of long-term debt                            $    5,493            $     5,493
     Trade accounts payable                                            5,240                  3,990
     Other payables and accrued expenses                              15,971                 17,199
     Reserve for store closings - current portion                      1,147                  1,316
                                                                  -----------           -----------

          Total current liabilities                                   27,851                 27,998

Reserve for store closings, net of current portion                     2,662                  3,280
Long-term debt, net of current portion                                57,966                 60,712
Other payables                                                        16,017                 15,586
Excess of future lease payments over fair value,
     net of amortization                                               2,024                  2,330

Contingencies
Partners' deficit                                                    (23,234)               (28,535)
                                                                  -----------           ------------
                                                                  $   83,286            $    81,371
                                                                  -----------           ------------
                                                                  -----------           ------------
















See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>


                                       4
<PAGE>

                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                   Thirteen weeks ended
                                                          ----------------------------------------
                                                          September 28,           September 29,
                                                              1999                     1998
                                                              ----                     ----
<S>                                                       <C>                     <C>
Sales                                                     $    47,788             $     48,011

Costs and expenses:
     Cost of sales (excluding depreciation)                    14,552                   14,152
     Selling, general and administrative                       28,228                   29,082
     Depreciation and amortization                              2,432                    2,538

                                                               45,212                   45,772
                                                          ------------            ------------

Operating income                                                2,576                    2,239

Interest expense                                                   85                       62
                                                          ------------            ------------

Net income                                                $     2,491             $      2,177
                                                          ------------            ------------
                                                          ------------            ------------
















See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>


                                       5
<PAGE>

                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                                         Thirty-nine weeks ended
                                                                                -------------------------------------------
                                                                                September 28,            September 29,
                                                                                  1999                       1998
                                                                                  ----                       ----
<S>                                                                          <C>                        <C>
Sales                                                                         $   140,987               $    142,255

Costs and expenses:
     Cost of sales (excluding depreciation)                                        42,164                     41,918
     Selling, general and administrative                                           85,421                     85,927
     Depreciation and amortization                                                  7,303                      7,557
     Net special charges                                                              566
                                                                              ------------              ------------

                                                                                  135,454                    135,402
                                                                              ------------              ------------

Operating income                                                                    5,533                      6,853

Interest expense                                                                      232                        176
                                                                              ------------              ------------

Net income                                                                    $     5,301               $      6,677
                                                                              ------------              ------------
                                                                              ------------              ------------
















See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>


                                       6
<PAGE>

                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
         UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF PARTNERS' DEFICIT
               FOR THE THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1999

                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                              Accumulated
                                                                                 Other            Total
                                   General                 Limited           Comprehensive       Partners'
                                   Partner                 Partner              Income            Deficit
                                 -----------             ----------             ------          ----------
<S>                              <C>                     <C>                   <C>              <C>
Balance at
 December 29, 1998               $  (40,650)             $  12,972             $ (2,857)        $ (28,535)

Net income                            5,301                                                         5,301
                                 -----------             ----------           -----------       ---------

Balance at
 September 28, 1999              $  (35,349)             $  12,972             $ (2,857)        $ (23,234)
                                 -----------             ----------           -----------       ---------
                                 -----------             ----------           -----------       ---------
















See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>


                                       7
<PAGE>

                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
            UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)


<TABLE>
<CAPTION>
                                                                    Thirty-nine weeks ended
                                                                    -----------------------
                                                                  September 28, September 29,
                                                                    1999              1998
                                                                    ----              ----
<S>                                                              <C>              <C>
Cash flows from operating activities:
  Net income                                                     $  5,301         $  6,677
    Adjustments to reconcile net income to net
      cash provided by operating activities:
        Depreciation and amortization                               7,303            7,557
        Gain on disposition of assets                                 148              (46)
        Other, net                                                    334              300
        Changes in operating assets and liabilities:
          Accounts and notes receivable                              (378)             148
          Inventories                                                  24             (697)
          Prepaid expenses and other                                 (647)             137
          Trade accounts payable, other payables,
            accrued expenses and other liabilities                     22            2,476
                                                                 --------         --------

        Net cash provided by operating activities                  11,811           16,552
                                                                 --------         --------

Cash flows from investing activities:
  Purchases of property, plant and equipment                      (15,495)          (6,269)
  Expenditures charged to reserve for store closings                 (940)          (1,045)
  Proceeds from the sale of property, plant and equipment           2,756            1,106
  Other, net                                                          (19)              15
                                                                 --------         --------

         Net cash used in investing activities                    (13,698)          (6,193)
                                                                 --------         --------

Cash flows from financing activities:
  Payment of indebtedness                                          (2,746)          (2,746)
  Increase in receivables from affiliates                            (398)          (1,247)
  Other, net                                                          (74)             199
                                                                 --------         --------

         Net cash used in financing activities                     (3,218)          (3,794)
                                                                 --------         --------

Increase (decrease) in cash and cash equivalents                   (5,105)           6,565

Cash and cash equivalents at beginning of period                   11,478            4,395
                                                                 --------         --------

Cash and cash equivalents at end of period                       $  6,373         $ 10,960
                                                                 --------         --------
                                                                 --------         --------

Supplemental disclosure of cash flow information:
  Interest paid, including $2,746 of interest in 1999
    and 1998 classified as payment of indebtedness               $  2,905         $  2,850
                                                                 --------         --------
                                                                 --------         --------

Non-cash investing activity:
  Note receivable for sale of asset                              $    125           $    -
                                                                 --------         --------
                                                                 --------         --------





See accompanying notes to unaudited condensed consolidated financial statements.
</TABLE>


                                       8
<PAGE>

                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE A:           Summary of Significant Accounting Policies

     Cafeteria Operators, L.P., a Delaware limited partnership (the
"Partnership"), is wholly owned by Furr's/Bishop's, Incorporated (the
"Company") and operates 97 cafeterias and a buffet. The financial statements
presented herein are the unaudited condensed consolidated financial
statements of the Partnership and its majority owned subsidiaries.

     The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q and do
not include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in
conjunction with the consolidated financial statements, and notes thereto,
which are included in the Partnership's Form 10-K for the year ended December
29, 1998. In the opinion of management, the accompanying unaudited condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation.

     The results of operations for the thirty-nine weeks ended September 28,
1999 may not be indicative of the results that may be expected for the fiscal
year ending December 28, 1999.

NOTE B:           Income Tax

     For state and federal income tax purposes, the Partnership is not a
tax-paying entity. As a result, the taxable income or loss, which may vary
substantially from income or loss reported for financial reporting purposes, is
included in the state and federal returns of individual partners. Accordingly,
no provision for income taxes is reflected in the accompanying financial
statements.


NOTE C:           Special Charges

     For the quarter ended March 30, 1999, the Partnership recognized a special
charge of $566,000 for the costs associated with the move of the Partnership's
support center from Lubbock, Texas to Richardson, Texas.








                                       9
<PAGE>

NOTE D:           Business Segments

     Following is a summary of segment information of the Partnership for the
thirteen weeks ended September 28, 1999 and September 29, 1998:

<TABLE>
<CAPTION>
                                                          Cafeterias                Dynamic Foods                   Total
                                                          ----------                -------------               ------------
<S>                                                    <C>                          <C>                         <C>
1999:
   External revenues                                   $      47,425                $         363               $     47,788
   Intersegment revenues                                         -                         15,115                     15,115
   Depreciation and amortization                               2,196                          236                      2,432
   Segment profit                                              2,445                           46                      2,491

1998:
   External revenues                                          47,757                          254                     48,011
   Intersegment revenues                                         -                         14,925                     14,925
   Depreciation and amortization                               2,335                          203                      2,538
   Segment profit                                              1,755                          422                      2,177
</TABLE>

Following is a summary of segment information of the Partnership for the
thirty-nine weeks ended September 28, 1999 and September 29, 1998:

<TABLE>
<CAPTION>
                                                          Cafeterias                Dynamic Foods                   Total
                                                          ----------                -------------               ------------
<S>                                                    <C>                          <C>                         <C>
1999:
   External revenues                                   $     140,120                $         867               $    140,987
   Intersegment revenues                                         -                         44,794                     44,794

   Depreciation and amortization                               6,591                          712                      7,303
   Segment profit                                              4,665                          636                      5,301

1998:
   External revenues                                         141,480                          775                    142,255
   Intersegment revenues                                         -                         43,616                     43,616
   Depreciation and amortization                               6,943                          614                      7,557
   Segment profit                                              5,565                        1,112                      6,677
</TABLE>

Following is a reconciliation of revenue of the reportable segments to the
Partnership's consolidated totals for the thirteen and thirty-nine weeks ended
September 28, 1999 and September 29, 1998:


<TABLE>
<CAPTION>
                                                        Thirteen Weeks Ended                    Thirty-nine Weeks Ended
                                                        --------------------                    ------------------------
                                                 September 28,         September 29,         September 28,       September 29,
                                                     1999                  1998                 1999                1998
                                                 -------------         -------------         ------------        --------
<S>                                              <C>                   <C>                   <C>                 <C>

Revenues
 Total revenues of reportable segments           $    62,903           $  62,936             $ 185,781           $ 185,871
 Elimination of inter-segment revenue                (15,115)            (14,925)              (44,794)            (43,616)
                                                 ------------          ----------            ----------          ----------
     Total consolidated revenues                 $    47,788           $  48,011             $ 140,987           $ 142,255
                                                 ------------          ----------            ----------          ----------
                                                 ------------          ----------            ----------          ----------
</TABLE>


                                       10
<PAGE>

NOTE E:           New Accounting Pronouncements

     On January 1, 1999, the Partnership adopted the American Institute of
Certified Public Accountants Statement of Position (SOP) 98-1, "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use".
SOP 98-1 requires companies to capitalize certain internal-use software costs
once certain criteria are met. Adoption of this statement did not have a
material impact on the Partnership's consolidated financial position, results
of operations or cash flows.

     On January 1, 1999, the Partnership adopted the American Institute of
Certified Public Accountants SOP 98-5, "Reporting on the Costs of Start-up
Activities". SOP 98-5 requires costs of start-up activities to be expensed
when incurred. Adoption of this statement did not have a material impact on
the Partnership's consolidated financial position, results of operations or
cash flows.

NOTE F:           Contingencies

     As discussed in Part II, Item 1 of this report on Form 10-Q and in the
Partnership's 1998 Form 10-K, the Partnership, in the ordinary course of
business, is a party to various legal action. In the opinion of management,
these actions ultimately will be disposed of in a manner which will not have a
material adverse effect upon the Partnership's equity, results of operations,
and liquidity and capital resources after consideration of the applicable
amounts previously accrued.


                                       11
<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

THIRTEEN WEEKS ENDED SEPTEMBER 28, 1999 COMPARED TO THIRTEEN WEEKS ENDED
SEPTEMBER 29, 1998

     RESULTS OF OPERATIONS. Sales for the third fiscal quarter of 1998 were
$47.8 million, a decrease of $223 thousand from the same quarter of 1998.
Operating income for the third quarter of 1999 was $2.6 million compared to
$2.2 million in the comparable period in the prior year. The net income for
the third quarter of 1999 was $2.5 million compared to $2.2 million in the
third quarter of 1998.

     SALES. Restaurant sales in comparable units were 1.6% higher in the
third quarter of 1999 than the same quarter of 1998 due primarily to the
Partnership's reimaging program. Sales for the third fiscal quarter were $333
thousand lower than the same period of the prior year due to there being a
net of three fewer units included in the operating results. Sales by Dynamic
Foods to third parties were $109 thousand higher in the third quarter of 1999
than the third quarter of the prior year.

     COST OF SALES. Excluding depreciation, cost of sales was 30.5% of sales
for the third quarter of 1999 as compared to 29.5% for the same quarter of
1998. Fish costs in the current period were significantly higher than the
prior year period.

     SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
("SG&A") expense was lower in the aggregate by $854 thousand in the third
quarter of 1999 as compared to 1998. Changes in SG&A expense included increases
of $250 thousand in marketing expense and $230 thousand in labor and related
expense. Other changes in SG&A expense included decreases of $1.3 million in
workers' comp and casualty insurance expense due to improved risk management
efforts and claims experience.

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
lower by $106 thousand in the third quarter of 1999 due primarily to the
writing off of property, plant and equipment lacking a useful life in
restaurants being remodeled during the current year.

     INTEREST EXPENSE. Interest expense was $85 thousand in the third quarter
of 1999, which was $23 thousand higher than the comparable period in the
prior year. In accordance with SFAS No. 15, the Partnership's debt that was
restructured at January 2, 1996 was recorded at the sum of all future
principal and interest payments and there is no recognition of interest
expense thereon.

THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1999 COMPARED TO THIRTY-NINE WEEKS ENDED
SEPTEMBER 29, 1998

     RESULTS OF OPERATIONS. Sales for the first thirty-nine weeks of 1999
were $141.0 million, a decrease of $1.3 million from the same period of 1998.
Operating income for the first thirty-nine weeks of 1999 was $5.5 million
compared to $6.9 million in the comparable period in the prior year.
Operating income for the thirty-nine weeks of 1999 included a special charge
of $566 thousand. The net income for the first thirty-nine weeks of 1999 was
$5.3 million compared to $6.7 million in the same period of 1998.

     SALES. Restaurant sales in comparable units were 1.8% higher in the
first thirty-nine weeks of 1999 than the same period of 1998 due primarily to
the Partnership's reimaging program. Sales for the first thirty-nine weeks
were $1.4 million lower than the same period of the prior year due to there
being a net of three fewer units included in operating results. Sales by
Dynamic Foods to third parties were $92 thousand higher in the first
thirty-nine weeks of 1999 than the same period of the prior year.

     COST OF SALES. Excluding depreciation, cost of sales was 29.9% of sales
for the first thirty-nine weeks of 1998 as compared to 29.5% for the same
period of 1998. Fish costs in the current period were significantly higher
than the prior year period.

     SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
("SG&A") expense was lower in the aggregate by $506 thousand in the first
thirty-nine weeks of 1999 as

                                       12
<PAGE>

compared to 1998. Changes in SG&A expense included increases in 1999 of $1.3
million in labor and related expense and $475 thousand in marketing expense.
Other changes in SG&A expense included decreases of $1.8 million in workers'
comp and casualty insurance expense due to improved risk management efforts and
claims experience.

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization expense was
lower by $254 thousand in the first thirty-nine weeks of 1999 due primarily to
the writing off of property, plant and equipment lacking a useful life in
restaurants being remodeled during the current year.

     SPECIAL CHARGES. Operating income for the thirty-nine weeks ended
September 28, 1999 included a special charge of $566 thousand to reflect the
cost of the move of the Partnership's support center from Lubbock, Texas to
Richardson, Texas.

     INTEREST EXPENSE. Interest expense was $232 thousand in the first
thirty-nine weeks of 1999, which was $56 thousand higher than the comparable
period in the prior year. In accordance with Statement of Financial
Accounting Standards No. 15, the Partnership's debt that was restructured at
January 2, 1996 was recorded at the sum of all future principal and interest
payments and there is no recognition of interest expense thereon.

                       LIQUIDITY AND CAPITAL RESOURCES OF
                   CAFETERIA OPERATORS, L.P. AND SUBSIDIARIES


     During the thirty-nine weeks ended September 28, 1999, cash provided by
operating activities of the Partnership was $11.8 million compared to $16.6
million in the same period of 1998. The Partnership made capital expenditures
of $15.5 million during the first thirty-nine weeks of 1999 compared to $6.3
million during the same period of 1998. Most of the increase over the prior
year related to the remodels of twenty cafeterias. Cash and cash equivalents
were $6.4 million at September 28, 1999 compared to $11.5 million at
September 29, 1998. The current ratio of the Partnership was .56:1 at
September 28, 1999 compared to .69:1 at September 29, 1998 and .70:1 at
December 29, 1998. The Partnership's total assets at September 28, 1999
aggregated $83.3 million, compared to $82.8 million at September 29, 1998 and
$81.4 million at December 29, 1998.

     The Partnership's restaurants are a cash business. Funds available from
cash sales are not needed to finance receivables and are not generally needed
immediately to pay for food, supplies and certain other expenses of the
restaurants. Therefore, the business and operations of the Partnership have
not historically required proportionately large amounts of working capital,
which is generally consistent with similar restaurant companies.

     Total scheduled maturities of long-term debt and interest classified as
long-term debt of the Partnership and its subsidiaries over the next five
calendar years are: $2.7 million in the remainder of 1999, $5.5 million in
2000 and $55.3 million in 2001.

     The Partnership has outstanding $61.0 million of 12% Notes due December
31, 2001, which includes $15.1 million of interest to maturity. The
semi-annual interest payments of $2.7 million on the 12% Notes are due on
each March 31 and September 30. The obligations under the 12% Notes are
secured by a security interest in and a lien on all of the personal property
of the Partnership and mortgages on all fee and leasehold properties of the
Partnership (to the extent such properties are mortgageable).

     The Partnership has outstanding $2.5 million of 10.5% Notes due December
31, 2001. A


                                       13
<PAGE>

semi-annual cash interest payment of approximately $134 thousand is due on each
June 30 and December 31.

                         YEAR 2000 READINESS DISCLOSURE

     Some computers, software, and other equipment include computer code in
which calendar year data is abbreviated to only two digits. As a result, some
of these systems will not operate correctly after 1999 because they may
interpret "00" to mean 1900, rather than 2000. These problems are widely
expected to increase in frequency and severity as the year 2000 approaches,
and are commonly referred to as the "Year 2000 Problem."

     The Partnership believes that it has identified all significant digital
systems and applications that will require modification to ensure Year 2000
compliance. The Partnership has completed the modification, upgrading, and
replacing of the digital systems that have been identified as adversely
affected by Y2K. The Partnership's total costs of this effort during the 1998
and 1999 fiscal years has been approximately $400 thousand, which is being
funded through operating cash flows.

     The Year 2000 Problem may also affect parties who provide critical goods
and services to the Partnership, for example banks, credit card companies,
utility providers and suppliers of raw and processed foodstuffs to the
Partnership's restaurants and its Dynamic Foods operation. The Partnership
has evaluated the extent to which the Partnership's operations are vulnerable
to Year 2000 problems of its material vendors and has sought assurance of
their Year 2000 compliance status. Management believes that the Partnership's
reliance upon large volumes of independent consumer transactions at 100
restaurant locations, operation of its own trucking fleet and utilization of
the Dynamic Foods division to provide the majority of its food products limit
some aspects of the Partnership's Year 2000 exposure. However, the
Partnership's ability to assure Year 2000 compliance by many critical vendors
is very limited.

     The Partnership has sent Y2K readiness questionnaires to all of its
major vendors. Although not all vendors have provided the Partnership with
Year 2000 compliance assurances, the Partnership does not anticipate any
material problems with its major vendors. However, the Partnership has
completed contingency plans to address the possibility of significant
performance failures by its major vendors. There is no assurance that the
Partnership can adequately plan for contingencies that may be associated with
Year 2000 failures by these third parties, or that alternative suppliers will
be available and themselves unaffected by Year 2000 problems. In particular,
management is not able to predict with any assurance the effect of Year 2000
problems in the food product industry or among the suppliers of utilities
such as electricity, water and telecommunications to the Partnership, and
specifically to its Dynamic Foods operation. An interruption of the operation
of Dynamic Foods could require the Partnership to close its restaurants until
service can be resumed.

            QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Partnership is exposed to market risk from changes in commodity
prices. The Partnership purchases certain commodities used in food
preparation. These commodities are generally purchased based upon market
prices established with vendors. These purchase arrangements may contain
contractual features that limit the price paid by establishing certain price
floors or caps. The Partnership does not use financial instruments to hedge
commodity prices because these purchase arrangements help control the
ultimate cost paid and any commodity price aberrations are generally short
term in nature.

     The Partnership's long term debt does not expose it to market risk as
all interest accrues at fixed rates. The Partnership does not use derivative
financial instruments to manage overall borrowing costs.

     The discussion in "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" of the Partnership's plans, and
management's expectations, relating to the Partnership's business, including
Year 2000 compliance, as well as other portions of this report, includes
certain statements that may constitute "forward-looking" information (as
defined in the Private Securities Litigation Reform Act of 1995). Words such
as "anticipate," "estimate," "project" and similar expressions are intended
to identify such forward-looking

                                       14
<PAGE>

statements. Such forward-looking statements are subject to certain risks,
uncertainties and assumptions, including without limitation those discussed
in this "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and elsewhere in this report. Should one or more of
these risks materialize, or should any of the underlying assumptions prove
incorrect, actual results of current and future operations may vary
materially from those anticipated, estimated or projected. Prospective
investors are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of their dates. The Partnership assumes no
obligation to update any such forward-looking statements.

                                       15
<PAGE>

                                     PART II

                                OTHER INFORMATION


Item 1. LEGAL PROCEEDINGS


     (a)     The Partnership and certain of its subsidiaries, the Cavalcade
          Pension Plan, the Cavalcade Pension Plan Committee, Kmart
          Corporation and its pension plan and Michael Levenson have since
          1996 been defendants in a lawsuit brought against them in U.S.
          District Court in Denver, Colorado by Robert H. Aull ("Plaintiff"),
          a former employee of the Partnership and a participant in the
          Cavalcade Pension Plan. The Plaintiff requested that the Court
          certify a class of other plaintiffs who are similarly situated and
          sought unspecified damages.

             The Plaintiff's allegations (all of which are disputed by the
          defendants in the case) included: (i) that accrued benefits under the
          Cavalcade Pension Plan were improperly reduced during the period from
          1988 to 1993, (ii) the "freeze" of the Plan on June 30, 1989 was
          improper, (iii) an insufficient amount of assets was transferred from
          the Kmart Corporation pension plan to the Cavalcade Pension Plan in
          connection with the acquisition of the Company from Kmart effected by
          Mr. Levenson and his affiliates in 1988 and (iv) rent concessions
          allowed to the Partnership by Kmart commencing in 1993 constituted
          prohibited transactions that bestowed illegal benefits upon the
          Partnership and Mr. Kevin Lewis, former Chairman of the Board of the
          Company.

             The Partnership, the Cavalcade Pension Plan, the members of the
          Cavalcade Pension Plan Committee, Kmart Corporation and its pension
          plan have entered into a definitive settlement agreement (the
          "Agreement") with the plaintiff and his counsel that would resolve
          all outstanding claims among them. The Agreement is subject to (1)
          confirmation by an independent actuary of the calculations that
          support the proposed settlement and (2) approval of the settlement
          as "fair" to all members of the plaintiff class by the court after
          notice to all purported class members and a hearing. The Agreement
          has been filed with the court. The Partnership expected the
          required hearing would be completed by the end of the second
          quarter of 1999. Delays in obtaining confirmation by the
          independent actuary have delayed the likely date of the fairness
          hearing to the fourth quarter of 1999. The Partnership is not able
          to provide assurance that the conditions to the proposed settlement
          will be satisfied or that the proposed settlement will be
          implemented as described herein.

             As a result of the settlement of the Aull litigation and the
          concurrent resolution of an IRS audit of the Plan that focused on
          substantially identical issues, the Partnership has recognized a
          special charge of $5.8 million in the fourth quarter of 1998, of
          which approximately $2.2 million relates to resolution of the IRS
          audit and is not contingent upon actuarial review or the fairness
          hearing in the Aull litigation.

             The anticipated cash impact of the proposed settlement on the
          Partnership includes payment in 2000 of approximately $1.5 million
          of expenses for legal and professional fees, with the remainder of
          the settlement to be paid to the Plan in future years to fund
          increased benefit payments to former and current employees. The
          settlement will not require any funding payments to the Plan by the
          Partnership in 1999 but is expected to require payments by the
          Partnership to the Plan of approximately $1.7 million in 2000 and
          approximately $850 thousand in 2001, with additional funding
          payments required in subsequent years in amounts that are expected
          to decline over time, subject to the overall funding status of the
          Plan. The Agreement provides for Kmart Corporation's pension plan
          to transfer $700 thousand to the Cavalcade Pension Plan to fund a
          portion of the additional benefits required by the Agreement.
          Management does not believe that payment of these amounts in 1999
          and subsequent years will have a material adverse effect on the
          Partnership's planned operations.

                                       16
<PAGE>

             The Partnership filed a declaratory judgement lawsuit in the
          State District Court in Lubbock, Texas, in which it asks the Court
          to find that the Partnership is not obligated to make severance
          payments that have been demanded by Theodore Papit, the former
          President and CEO of the Company. Mr. Papit submitted his
          resignation on May 28, 1998, following the election at the
          Company's annual meeting of shareholders of a slate of directors
          proposed by Teacher's Insurance and Annuity Association of American
          ("TIAA"), the Company's largest shareholder at that time. He
          subsequently demanded payment of more than $500 thousand of
          severance and other amounts that he claimed were owing to him under
          a "President and Chief Executive Officer Agreement" dated March 23,
          1998. This Agreement was approved by a split vote of the Board of
          Directors after TIAA had publicly announced that it might take
          action affecting the control of the Company. The Partnership has
          requested a jury trial and believes that there are a number of
          grounds that will support the Court in granting the requested
          relief, among them being that the Agreement is void as an
          interested party transaction that did not receive the necessary
          approval of independent, disinterested directors, the terms of the
          Agreement are not fair to the Partnership and the Agreement was
          entered into by the Partnership without the benefit of full
          disclosure by Mr. Papit and consideration by the Board of Directors
          of material information regarding his management of the Partnership.

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS

          Exhibit 27-Financial Data Schedule

     (b)  REPORTS ON FORM 8-K

             No reports on Form 8-K were filed during the quarter ended
          September 28, 1999.


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                                   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.



                            CAFETERIA OPERATORS, L.P.
         by FURR'S/BISHOP'S, INCORPORATED, its Managing General Partner






BY:    /s/Phillip Ratner                             /s/ Paul G. Hargett
       ----------------------------------            --------------------------
       Phillip Ratner                                Paul G. Hargett
       President and Chief Executive Officer         Chief Financial Officer


DATE:   November 9, 1999


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