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 27, 2000

                         Commission File Number 1-13226


                         PHOENIX RESTAURANT GROUP, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)


               GEORGIA                                           58-1861457
    -------------------------------                           ----------------
    (State or Other Jurisdiction of                           (I.R.S. Employer
     Incorporation or Organization)                          Identification No.)


        7373 N. SCOTTSDALE ROAD
      SUITE D-120, SCOTTSDALE AZ                                    85253
----------------------------------------                          ----------
(address of principal executive offices)                          (zip code)

                                 (480) 483-7055
              ----------------------------------------------------
              (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 [ ]

The number of outstanding shares of the issuer's class of common stock as of the
latest practicable date, is as follows:  13,485,277 shares of Common Stock, $.10
par value, as of November 20, 2000.
<PAGE>
                         PHOENIX RESTAURANT GROUP, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 27, 2000

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
PART I. FINANCIAL INFORMATION

ITEM 1. Unaudited Financial Statements

        Condensed Consolidated Balance Sheets -
        December 29, 1999 and September 27, 2000.............................  3

        Condensed Consolidated  Statements of Operations - 13-Week Periods
        ended  September  29,  1999 and  September  27,  2000 and  39-Week
        Periods ended
        September 29, 1999 and September 27, 2000............................. 4

        Condensed Consolidated Statements of  Cash Flows
        13-Week Periods ended September 29, 1999 and
        September 27, 2000 and 39-Week Periods ended
        September 29, 1999 and September 27, 2000............................. 5

        Notes to Condensed Consolidated Financial Statements.................. 6

ITEM 2. Management's Discussion and Analysis of Financial
        Condition and Results of Operations.................................. 11

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk........... 18

PART II. OTHER INFORMATION................................................... 19

SIGNATURES .................................................................. 20

                                       2
<PAGE>
PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

                         PHOENIX RESTAURANT GROUP, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

                                                                   SEPTEMBER 27,
                                                   DECEMBER 29,         2000
                                ASSETS                 1999          (UNAUDITED)
                                                    ---------         ---------
CURRENT ASSETS:
   Cash and cash equivalents                        $   1,491         $   2,120
   Receivables                                          2,244             2,009
   Inventories                                          1,087             1,093
   Deferred income taxes                               11,700            11,700
   Other current assets                                 4,761             1,157
   Net assets held for sale                            42,128            42,644
                                                    ---------         ---------
        Total current assets                           63,411            60,723
PROPERTY AND EQUIPMENT - Net                           20,619            18,946
INTANGIBLE ASSETS - Net                                11,117            10,528
OTHER ASSETS                                            3,220             3,040
                                                    ---------         ---------

TOTAL                                               $  98,367         $  93,237
                                                    =========         =========

                     LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Accounts payable                                  $  17,778         $  15,820
  Accrued compensation                                  5,237             5,563
  Accrued taxes                                         4,733             4,030
  Other current liabilities                            14,082            22,480
  Current debt obligations                             25,651            26,924
                                                    ---------         ---------
       Total current liabilities                       67,481            74,817
LONG-TERM DEBT - Less current portion                  54,908            51,395
OTHER LONG-TERM LIABILITIES                             5,214             7,423
                                                    ---------         ---------

        TOTAL LIABILITIES                             127,603           133,635
                                                    ---------         ---------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIT
   Preferred stock, $.01 par value; authorized,
     5,000,000 shares; issued and outstanding none
   Common stock $.10 par value; authorized,
     40,000,000 shares; 13,485,277 shares issued
     and outstanding                                    1,349             1,349
   Additional paid-in capital                          35,869            34,982
   Treasury stock, at cost, 403,456 shares                 --              (252)
   Accumulated deficit                                (66,454)          (76,477)
                                                    ---------         ---------

        TOTAL SHAREHOLDERS' DEFICIT                   (29,236)          (40,398)
                                                    ---------         ---------

TOTAL                                               $  98,367         $  93,237
                                                    =========         =========

See accompanying notes to condensed consolidated financial statements

                                       3
<PAGE>
                         PHOENIX RESTAURANT GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                       13-Week Periods Ended           39-Week Periods Ended
                                                            (Unaudited)                     (Unaudited)
                                                    ----------------------------    ----------------------------
                                                    September 29,  September 27,    September 29,  September 27,
                                                        1999           2000             1999           2000
                                                      --------       --------         ---------     ---------
<S>                                                 <C>            <C>              <C>           <C>
RESTAURANT SALES                                      $ 60,078       $ 54,906         $ 182,820     $ 166,900
                                                      --------       --------         ---------     ---------
RESTAURANT OPERATING EXPENSES:
  Food and beverage costs                               16,307         15,052            49,545        45,536
  Payroll and payroll related costs                     20,691         19,641            62,851        58,215
  Depreciation and amortization                          1,789            673             5,150         1,982
  Other restaurant operating expenses                   18,640         15,386            52,936        44,937
  Restructuring expense                                  8,326          6,750             8,326         6,750
  Charge for impaired assets                             5,500          1,080             8,500         1,080
                                                      --------       --------         ---------     ---------
       Total operating expenses                         71,253         58,582           187,308       158,500
                                                      --------       --------         ---------     ---------
RESTAURANT OPERATING INCOME (LOSS)                     (11,175)        (3,676)           (4,488)        8,400

ADMINISTRATIVE EXPENSES                                  3,014          3,504             8,795         9,578
                                                      --------       --------         ---------     ---------

OPERATING (LOSS)                                       (14,189)        (7,180)          (13,283)       (1,178)

INTEREST EXPENSE - Net                                   3,262          2,931             9,257         8,845
                                                      --------       --------         ---------     ---------
(LOSS) BEFORE INCOME TAXES AND EXTRAORDINARY ITEM      (17,451)       (10,111)          (22,540)      (10,023)

INCOME TAX (BENEFIT)                                        --             --              (731)           --
                                                      --------       --------         ---------     ---------

(LOSS) BEFORE EXTRAORDINARY ITEMS                      (17,451)       (10,111)          (21,809)      (10,023)

EXTRAORDINARY (LOSS) ON EARLY EXTINGUISHMENT OF
 DEBT net of income tax benefit of $686                     --             --            (1,273)           --
                                                      --------       --------         ---------     ---------

NET (LOSS)                                            $(17,451)      $(10,111)        $ (23,082)    $ (10,023)
                                                      ========       ========         =========     =========
Basic and diluted (loss) per share before
 extraordinary item                                   $  (1.29)      $   (.77)        $   (1.62)    $    (.77)
                                                      ========       ========         =========     =========
  Net (loss)                                          $  (1.29)      $   (.77)        $   (1.71)    $    (.77)
                                                      ========       ========         =========     =========
Basic and diluted weighted average shares Outstanding:
  Basic                                                 13,485         13,081            13,485        13,081
                                                      ========       ========         =========     =========
  Diluted                                               13,485         13,081            13,485        13,081
                                                      ========       ========         =========     =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

                         PHOENIX RESTAURANT GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                           13-Week Periods Ended          39-Week Periods Ended
                                                                (Unaudited)                   (Unaudited)
                                                        ----------------------------  ----------------------------
                                                        September 29,  September 27,  September 29,  September 27,
                                                            1999           2000           1999           2000
                                                          --------       --------       --------       --------
<S>                                                       <C>            <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
 Net (loss)                                              $(17,451)      $(10,111)      $(23,082)      $(10,023)
 Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
   Depreciation and amortization                            1,789            673          5,150          1,982
   Amortization of deferred financing costs                   120              4            301            191
   Restructuring expense                                    8,326          6,750          8,326          6,750
   Charge for impaired assets                               5,500          1,080          8,500          1,080
   Extraordinary items                                         --             --          1,273             --
   Deferred income taxes                                       --             --           (731)            --
   Deferred rent                                              177            103            230            300
   Other - net                                                349             74           (305)            40
 Changes in operating assets and liabilities,
  net of dispositions:
   Receivables                                               42            120           (487)           185
   Inventories                                               81            (50)           131             26
   Other current assets                                     (32)           378            558            280
   Accounts payable and accrued liabilities                 437            910           (261)         1,844
                                                       --------       --------       --------       --------
        Net cash (used in) provided by operating
          activities                                          (662)           (69)          (397)         2,655
                                                          --------       --------       --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property and equipment                        (1,317)          (201)        (3,724)        (1,215)
  Proceeds from sale of assets                                  --             --             --            145
                                                          --------       --------       --------       --------
        Net cash (used in) investing activities             (1,317)          (201)        (3,724)        (1,070)
                                                          --------       --------       --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Borrowings                                                   450            142          6,828            142
  Debt issuance costs                                         (304)            --         (1,337)            --
  Note receivable collections                                   90            103            823            300
  Principal reductions on long-term obligations             (1,041)          (320)        (2,827)        (1,398)
                                                          --------       --------       --------       --------
        Net cash (used in) provided by financing
         activities                                           (805)           (75)         3,487           (956)
                                                          --------       --------       --------       --------
NET CHANGE IN CASH AND CASH EQUIVALENTS                     (2,784)          (345)          (634)           629
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             4,480          2,465          2,330          1,491
                                                          --------       --------       --------       --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                $  1,696       $  2,120       $  1,696       $  2,120
                                                          ========       ========       ========       ========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
  Cash paid during the period for interest                $  1,980       $    679       $  6,044       $  2,546

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
 Exchange of note receivable for stock and note payable:
  Subordinated debenture                                                                               $  1,456
  Note receivable                                                                                      $  2,600
  Treasury stock                                                                                       $    252
  Additional paid-in capital                                                                           $    887
</TABLE>

See accompanying notes to condensed consolidated financial statements

                                       5
<PAGE>
                         PHOENIX RESTAURANT GROUP, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

(1)  BASIS OF PRESENTATION

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
Phoenix Restaurant Group, Inc. and subsidiaries have been prepared in accordance
with the rules and  regulations of the  Securities  and Exchange  Commission for
Form 10-Q and do not include all of the  information  and footnotes  required by
generally accepted accounting  principles for audited financial  statements.  In
management's opinion, all adjustments  (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.  However, these
operating results are not necessarily indicative of the results expected for the
full year. These statements  should be read in conjunction with the consolidated
financial statements and notes thereto and Management's  Discussion and Analysis
of Financial  Condition and Results of Operations  included in our Annual Report
on Form 10-K for the fiscal year ended  December  29, 1999 and in Part I, Item 2
of this Quarterly Report on Form 10-Q. Certain  reclassifications have been made
in the Condensed  Consolidated  Financial Statements to conform to the September
27, 2000 basis of presentation.

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities  in the normal  course of business.  From 1997 through 1999, we have
experienced net losses aggregating  approximately $51.5 million,  which includes
restructuring charges and asset impairment losses of $33.4 million. In the first
three fiscal  quarters of 2000 there has been a net loss of $10.0 million.  As a
result,  at September 27, 2000, we had a shareholders'  deficit of $40.4 million
and our current liabilities exceeded our current assets by $14.1 million.  These
factors,  among  others,  may  indicate  that at some  point in the  foreseeable
future, we will be unable to continue as a going concern.

The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and  classification of recorded asset amounts or the amounts and
classification  of  liabilities  that might be necessary  should we be unable to
continue as a going concern.  Our  continuation  as a going concern depends upon
our ability to generate sufficient cash flow to meet our obligations on a timely
basis,  to comply with the terms and covenants of our financing  agreements,  to
obtain additional financing or refinancing as may be required, and ultimately to
attain profitable operations. We are continuing our efforts to obtain additional
funds so that we can meet our obligations and sustain our operations.  There can
be no assurance that  additional  financing will be available to us or available
on satisfactory terms.

(2) RECLASSIFICATION

Included in other  current  assets at December  29, 1999 was a $2.6 million note
receivable  collateralized  by 403,456 shares of the Company's common stock.  In
August 1999, the Company  entered into a foreclosure  and  settlement  agreement
whereby the $2.6  million  note  receivable  was  exchanged  for $1.5 million in
Series B Notes Payable and the 403,456 shares of the Company's common stock. The
effective date of this transaction was January 3, 2000 at which time the Company
recorded  the  cancellation  of the $2.6 million  note  receivable  and the $1.5
million in Series B Notes Payable at face value while reflecting the transfer of
403,456 shares of common stock as treasury stock.  Originally,  the common stock
thus

                                       6
<PAGE>
acquired  was  classified  as  treasury  stock  with a  value  of  $1.1  million
representing the difference in the carrying value of the note receivable and the
Series B Notes Payable.  The Company has determined that the transaction  should
have been reflected as an  acquisition  of treasury stock for $252  representing
its market value at the effective  date.  Consequently,  the Company has reduced
the  previously  reported  carrying  value of the treasury  stock by $887 with a
corresponding   reduction  of   additional   paid-in   capital  of  $887.   This
reclassification has been reflected in the accompanying financial statements for
the period ended September 27, 2000.

(3) ACQUISITIONS AND DIVESTITURES

We sold or closed two Denny's and sixteen Black-eyed Pea restaurants in 1999 and
one Denny's and one Black-eyed Pea restaurant in the first  thirty-nine weeks of
2000.  All of  these  restaurants  were  underperforming.  We will  continue  to
evaluate the operating results of all remaining restaurants after the completion
of the disposition of certain  properties  currently held for sale. We intend to
sell or  close  any of those  restaurants  that do not  meet  our  criteria  for
operating results.

In October  1999,  we retained CNL Advisory  Services to act as our agent in the
sale of our  remaining  Denny's  restaurants.  In June  2000,  we  announced  an
agreement  to sell certain of our Denny's  restaurants.  We also  announced  the
receipt  of  letters  of  interest  for  the  sale  of  the  remaining   Denny's
restaurants. Both the agreement and the purchase proposals were subject to usual
and customary conditions to closing,  including buyer's satisfactory  completion
of due diligence and buyer's  obtaining  financing  for such  transactions.  The
agreement for sale of restaurants has expired on its terms, although discussions
regarding the purchase of restaurants are continuing with that party.

In October  2000,  we  reaffirmed  our intent to move forward with the announced
strategy  of  selling  our  Denny's  restaurants.  We are at  various  stages of
discussions with several  potential  buyers for the  restaurants.  We anticipate
that the sale of certain Denny's restaurants will occur by the end of the fiscal
year and the sale of the remaining Denny's  restaurants will occur by the end of
the first quarter of fiscal 2001. All such transactions are subject to usual and
customary conditions to closing. To the extent the sale of the Denny's occur, we
anticipate  using the  proceeds to reduce  outstanding  indebtedness  along with
payment of the costs associated with the transactions.

(4) DEBT AND OBLIGATIONS UNDER CAPITAL LEASES

On June 30,  1999,  CNL APF  Partners,  LP acquired  the  remaining  outstanding
indebtedness   under  our  existing  senior  credit  facility  and  advanced  an
additional $5.4 million to us. As part of this  transaction,  we issued to CNL a
$20.1 million interim balloon note. In August 1999, this debt was modified to be
interest  only  through  January  31,  2000.  As of January  31, 2000 the entire
principal  balance  was due.  We are  currently  in default on the note and have
classified  it as a current  liability.  As of  September  27, 2000  accrued and
unpaid  interest due to CNL totals $3.8 million.  In May 2000, we entered into a
non-binding letter of intent with CNL to extend the maturity date of the note to
September 30, 2000. We are  currently  negotiating  an extension in the maturity
date and waiver of default on this note. We cannot provide  assurance,  however,
that CNL will agree to any further  extension or waiver or that other  revisions
in the payment terms of the note will be acceptable to us.

At June 28, 2000,  we had  outstanding  $15.7 million book value of Series B 13%
Subordinated  Notes due 2003. We are in default due to  non-payment  of interest
since March 31, 1997. As of September

                                       7
<PAGE>
27, 2000 accrued and unpaid  interest due to these holders  totals $9.2 million.
Waivers for non-payment were received through June 1999 but not since that date.
No formal  notice of default  has been  received.  The par value of the Series B
Notes at September 27, 2000 is $16.8 million.

(5) RESTRUCTURING EXPENSE

When the decision to close a restaurant is made,  the Company incurs exit costs,
generally  for  the  accrual  of  the  remaining   leasehold   obligations  less
anticipated  sublease  income  related  to leased  units  that are to be closed.
During the third  quarter of 1999,  the Company  recorded  $8.3  million in such
costs,  primarily  associated  with  the  accrual  of  the  remaining  leasehold
obligations on restaurants closed or to be closed.

In the third quarter of 2000, the Company recorded approximately $6.8 million in
exit costs,  primarily  associated  with $600  related to three  Black-eyed  Pea
restaurants which the Company  anticipates closing by the end of the fiscal year
and $6.2  million to  reflect  increased  estimates  of  liabilities  related to
Black-eyed  Pea and  Denny's  restaurants  closed in prior  periods  because the
Company  determined  that the cost of subleasing  those  properties  will exceed
previous  estimates.  Approximately $9.2 million of accrued exit costs remain at
September 27, 2000.

The Company  continually  evaluates  the  operating  performance  of each of its
restaurants.   This  evaluation  process  takes  into  account  the  anticipated
resources  required to improve the  operating  performance  of  under-performing
restaurants  to  acceptable   standards  and  the  expected  benefit  from  that
improvement.  As  a  result  of  these  evaluations,  the  Company  could  close
additional restaurants in the future.

(6) IMPAIRMENT OF LONG-LIVED ASSETS AND ASSETS HELD FOR DISPOSAL

During  the  third  fiscal  quarter  of 2000,  the  Company  completed  an asset
impairment  analysis on its  operating  restaurants  and rental  properties  and
recorded an asset impairment  charge of approximately  $1.1 million.  The entire
amount of this  impairment  charge was related to the  Black-eyed Pea restaurant
division.  In the third fiscal  quarter of 1999,  the Company  recorded an asset
impairment charge of $5.5 million related to the Denny's restaurant division.

At September 27, 2000,  the carrying  value of the 97 Denny's  restaurants to be
disposed of was $42.6  million and is  reflected on the  Consolidated  Condensed
Balance  Sheet as net assets held for sale.  Under the  provisions  of SFAS 121,
depreciation and amortization are not recorded during the period in which assets
are being held for disposal.

(7) LITIGATION

During the third quarter of 2000, the Company  increased its litigation  reserve
by  $750.  This  additional  reserve  primarily  relates  to a court  settlement
achieved during the third quarter with regard to an employment  lawsuit filed in
Florida. This expense is reflected in administrative expenses.

In addition to the litigation  described  above, the Company is a party to other
legal  proceedings  incidental  to its business.  In the opinion of  management,
based upon information currently available,  the ultimate

                                       8
<PAGE>
liability  with respect to these other  actions will not  materially  affect the
operating results or the financial position of the Company.

(8) CONCENTRATION OF RISKS AND USE OF ESTIMATES

As of September 27, 2000,  the Company  operated 189  restaurants  in 20 states,
which  consists  of two  separate  concepts,  Black-eyed  Pea and  Denny's.  The
majority of the Company's restaurants are located in Texas, Arizona, Florida and
Oklahoma.  Both  concepts are  family-oriented  restaurants  offering full table
service and a broad menu. The Company believes there is no concentration of risk
with any single  customer,  supplier,  or small group of  customers or suppliers
whose failure or nonperformance would materially affect the Company's results of
operations.

The preparation of financial  statements in conformity  with generally  accepted
accounting  principles  requires  management to use judgment and make  estimates
that  affect  the  amounts  reported  in the  Consolidated  Condensed  Financial
Statements.   Management  believes  that  such  estimates  have  been  based  on
reasonable  and  supportable  assumptions  and that the resulting  estimates are
reasonable for use in the preparation of the  Consolidated  Condensed  Financial
Statements.  Changes in such estimates will be made as appropriate as additional
information becomes available and may affect amounts reported in future periods.

(9) BUSINESS SEGMENTS

We currently operate 189 family-oriented, full-service restaurants in 20 states.
We own and operate 92 Black-eyed  Pea  restaurants  including 81  restaurants in
Texas,  Oklahoma,  and Arizona.  We also own and operate 97 Denny's  restaurants
including 54 restaurants in Texas,  Florida,  and Arizona. We own the Black-eyed
Pea brand and  operate  the  Denny's  restaurants  under the terms of  franchise
agreements.

Our  revenue  and  restaurant   operating  income  for  the   thirteen-week  and
thirty-nine  week periods ended September 27, 2000 and September 29, 1999 are as
follows:

<TABLE>
<CAPTION>
                                          13-WEEK PERIOD ENDED         39-WEEK PERIOD ENDED
                                      ----------------------------  ----------------------------
                                      September 29,  September 27,  September 29,  September 27,
                                      -------------  -------------  -------------  -------------
<S>                                   <C>            <C>            <C>            <C>
                                          1999           2000           1999           2000
                                        --------       --------       ---------      ---------
REVENUES
  Black-eyed Pea                        $ 33,467       $ 28,159       $ 104,368      $  89,249
  Denny's                                 26,611         26,747          78,452         77,651
                                        --------       --------       ---------      ---------
     Total revenues                     $ 60,078       $ 54,906       $ 182,820      $ 166,900
                                        ========       ========       =========      =========

RESTAURANT OPERATING INCOME
  Black-eyed Pea                        $  1,514       $  1,542       $   7,460      $   7,700
  Denny's                                  1,539          2,520           5,098          8,344
  Restructuring expense                   (8,326)        (6,750)         (8,326)        (6,750)
  Charge for impaired assets              (5,500)        (1,080)         (8,500)        (1,080)
  Gain (loss) on sale of assets             (402)            92            (220)           186
                                        --------       --------       ---------      ---------
  Restaurant operating income (loss)     (11,175)        (3,676)         (4,488)         8,400
  Administrative expenses                  3,014          3,504           8,795          9,578
                                        --------       --------       ---------      ---------
  Operating (loss)                      $(14,189)      $ (7,180)      $ (13,283)     $  (1,178)
                                        ========       ========       =========      =========
</TABLE>

                                       9
<PAGE>
(10) SUBSEQUENT EVENTS

On October 18, 2000 we received  notification  from The American  Stock Exchange
(AMEX) that AMEX intends to file an application  to remove our  securities  from
listing and registration  with AMEX. As previously  disclosed,  our common stock
has not maintained the minimum requirements for continued listing on the AMEX.

We have notified  AMEX that we intend to appeal the decision to seek  delisting.
However,  there can be no  assurance  that an  appeal  of any  action by AMEX to
delist our securities  would be successful.  The Company  presently is exploring
alternative venues for the trading of its securities.

                                       10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

As of September 27, 2000, we operated 92 Black-eyed Pea restaurants in 8 states,
including 81 restaurants in Texas, Oklahoma, and Arizona.  Through September 27,
2000, comparable store sales decreased 12.9%, and average weekly sales decreased
7.0% as compared  with the first three fiscal  quarters of 1999. We believe that
the  decrease  in  comparable  store  sales  is  attributable  primarily  to the
elimination   of  television   advertising.   Carry-out   sales   accounted  for
approximately  12.6% and 11.3% of  restaurant  sales for the 13-week  period and
12.8% and 11.4% for the 39-week  period ended  September  27, 2000 and September
29, 1999, respectively.

As of  September  27,  2000,  we operated 97 Denny's  restaurants  in 17 states,
including 54 restaurants in Texas,  Florida, and Arizona.  Through September 27,
2000,  comparable store sales increased 1.2%, and average weekly sales increased
2.4% as compared  with the first three fiscal  quarters of 1999. We believe that
the  increases  are  the  result  of the  disposal  of  certain  underperforming
restaurants and the improvement in the operations of the remaining restaurants.

COMPARISON OF RESULTS OF OPERATIONS

     The following table presents,  for the periods indicated,  certain items in
the condensed consolidated statements of operations expressed as a percentage of
total restaurant sales.

<TABLE>
<CAPTION>
                                          13-WEEK PERIOD ENDED         39-WEEK PERIOD ENDED
                                      ----------------------------  ----------------------------
                                      September 29,  September 27,  September 29,  September 27,
                                      -------------  -------------  -------------  -------------
All amounts in percentages (%)             1999          2000            1999          2000
                                          -----         -----           -----         -----
<S>                                       <C>           <C>             <C>           <C>
Restaurant sales
Restaurant operating expenses:            100.0         100.0           100.0         100.0
  Food and beverage costs                  27.1          27.4            27.1          27.3
  Payroll and payroll related costs        34.5          35.8            34.3          34.9
  Depreciation and amortization             3.0           1.2             2.8           1.2
  Other restaurant operating expenses      31.0          28.0            29.0          27.0
  Restructuring expense                    13.9          12.3             4.6           4.0
  Charge for impaired assets                9.1           2.0             4.6            .6
                                          -----         -----           -----         -----
      Total operating expenses            118.6         106.7           102.4          95.0
                                          -----         -----           -----         -----
Restaurant operating income (loss)        (18.6)         (6.7)           (2.4)          5.0
Administrative expenses                     5.0           6.4             4.8           5.7
                                          -----         -----           -----         -----
Operating (loss)                          (23.6)        (13.1)           (7.2)          (.7)
Interest expense - net                      5.4           5.3             5.1           5.3
                                          -----         -----           -----         -----
(Loss) before income taxes and
  extraordinary items                     (29.0)        (18.4)          (12.3)         (6.0)
Income tax benefit                           --            --             (.4)           --
                                          -----         -----           -----         -----
(Loss) before extraordinary items         (29.0)        (18.4)          (11.9)         (6.0)
Extraordinary items                          --            --             (.7)           --
                                          -----         -----           -----         -----
Net (Loss)                                (29.0)        (18.4)          (12.6)         (6.0)
                                          =====         =====           =====         =====
</TABLE>

                                       11
<PAGE>
THIRTEEN-WEEK PERIOD ENDED SEPTEMBER 27, 2000 COMPARED WITH THIRTEEN-WEEK PERIOD
ENDED SEPTEMBER 29, 1999

     RESTAURANT  SALES.  Restaurant  sales  decreased $5.2 million,  or 8.6%, to
$54.9 million for the thirteen-week  period ended September 27, 2000 as compared
with  restaurant  sales of $60.1  million  for the  thirteen-week  period  ended
September  29, 1999.  This decrease was  attributable  primarily to a decline in
comparable  store sales of $4.3 million for the Black-eyed Pea  restaurants.  We
believe the decrease in comparable store sales is attributable  primarily to the
elimination of television advertising.  Restaurant sales were also impacted by a
decline of $2.3  million  due to the  closure or sale of  restaurants  offset by
sales from  restaurants  opened  during  fiscal  1999.  Our Denny's  restaurants
increased  comparable  store  sales by 1.7% during the third  fiscal  quarter of
2000.

     FOOD AND  BEVERAGE  COSTS.  Food and beverage  costs  increased to 27.4% of
restaurant  sales for the  thirteen-week  period  ended  September  27,  2000 as
compared  with 27.1% of  restaurant  sales for the  thirteen-week  period  ended
September 29, 1999.  This increase is due primarily to increases in pork,  steak
and coffee costs.

     PAYROLL AND PAYROLL  RELATED COSTS.  Payroll and payroll related costs were
35.8% of restaurant sales for the thirteen-week  period ended September 27, 2000
as compared with 34.5% of restaurant  sales for the  thirteen-week  period ended
September 29, 1999. This increase was attributable  primarily to the lower sales
volumes at the Black-eyed Pea  restaurants  and higher average wages  generally,
both  of  which  were  partially  offset  by  the  closure  of  under-performing
restaurants.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization of restaurant
equipment,  leasehold  improvements,  intangible  assets,  and  other  items was
$673,000 for the thirteen-week period ended September 27, 2000, as compared with
$1.8 million for the thirteen-week period ended September 29, 1999. In September
1999,  we  committed  to a plan  to  sell  all of our  Denny's  restaurants.  In
accordance with SFAS No. 121, the assets of these  restaurants were reclassified
as being held for sale and depreciation ceased. The decrease in depreciation and
amortization  of $1.1 million is due primarily to the cessation of  depreciation
on these assets.

     OTHER RESTAURANT  OPERATING EXPENSES.  Other restaurant  operating expenses
were 28.0% of restaurant sales for the thirteen-week  period ended September 27,
2000 as compared with 31.0% of  restaurant  sales for the  thirteen-week  period
ended  September 29, 1999.  New store opening  costs of  approximately  $-0- and
$611,000 were  expensed  when incurred in the third fiscal  quarters of 2000 and
1999, respectively. Occupancy costs were reduced by $813,000 in the third fiscal
quarter of 2000 due to the  renegotiation  of an equipment  lease in April 2000.
Excluding these items, other restaurant operating expenses would have been $16.2
million,  or 29.5% of sales,  for the  thirteen-week  period ended September 27,
2000 and $18.0 million,  or 30.0% of sales, for the  thirteen-week  period ended
September 29, 1999.  The remaining  decrease of $1.8 million is due primarily to
the  reduction in spending for  television  advertising  at the  Black-eyed  Pea
restaurants.

     RESTRUCTURING  EXPENSE.  In the third fiscal  quarter of 2000,  the Company
recorded a restructuring  expense of $6.75 million comprised of $550,000 related
to three Black-eyed Pea restaurants which the Company anticipates closing by the
end of the fiscal year and $6.2 million related to the increase in the estimated
liabilities  related to Black-eyed Pea and Denny's  restaurants  closed in prior
periods.  The increase in estimated  liabilities  is the result of the Company's
determination  that the costs  associated with subleasing  those properties will
exceed previous estimates.

                                       12
<PAGE>
In the third  fiscal  quarter of 1999,  the  Company  recorded  a  restructuring
expense of $8.3 million comprised of $3.0 million related to the closure of four
Black-eyed Pea restaurants and one Denny's  restaurant during the quarter,  $1.4
million to reflect the increase in estimated  liabilities related to restaurants
closed in prior periods and $3.9 million related to 16 Denny's  restaurants sold
in 1997  and  1998  for  which  the  Company  remains  contingently  liable  for
equipment, leases, rents and property taxes as a result of bankruptcy filings by
two buyers.

     CHARGE FOR  IMPAIRED  ASSETS.  In the third  fiscal  quarter  of 2000,  the
Company  recorded a charge of  approximately  $1.1 million for  impaired  assets
related to the Black-eyed Pea restaurant  division.  In the third fiscal quarter
of 1999,  the  Company  recorded a charge of $5.5  million for  impaired  assets
related to the Denny's restaurant division.

     RESTAURANT  OPERATING (LOSS).  Restaurant operating loss was $(3.7) million
or 6.7% of restaurant  sales, for the  thirteen-week  period ended September 27,
2000, as compared with $(11.2)  million,  or 18.6% of restaurant  sales, for the
thirteen-week  period  ended  September  29,  1999.  Restaurant  operating  loss
included  restructuring expenses and charges for impaired assets of $7.8 million
and $13.8 million in fiscal 2000 and 1999, respectively.

     ADMINISTRATIVE EXPENSES. Administrative expenses were $3.5 million, or 6.4%
of  restaurant  sales for the thirteen  week period ended  September 27, 2000 as
compared  with $3.0 million or 5.0% of  restaurant  sales for the  thirteen-week
period ended  September 29, 1999.  The increase of $490,000 was due primarily to
the  settlement  of an  employment  lawsuit  along with  increases  in legal and
professional fees.

     INTEREST EXPENSE - NET. Net interest  expense was $2.9 million,  or 5.3% of
restaurant  sales,  for the  thirteen-week  period ended  September  27, 2000 as
compared with $3.3 million,  or 5.4% of restaurant  sales, for the thirteen-week
period ended  September  29,  1999.  The  reduction  in interest  expense is due
primarily to deferred  financing costs being completely  amortized by the end of
1999 and no additional expense being incurred in 2000.

     INCOME TAX (BENEFIT).  We did not record  additional tax expense  (benefit)
associated  with the operating loss in 2000 due to the uncertainty of the future
utilization of the deferred income tax asset.

THIRTY-NINE  WEEK PERIOD ENDED SEPTEMBER 27, 2000 COMPARED WITH THIRTY-NINE WEEK
PERIOD ENDED SEPTEMBER 29, 1999

     RESTAURANT  SALES.  Restaurant  sales decreased $15.9 million,  or 8.7%, to
$166.9  million for the  thirty-nine  week period  ended  September  27, 2000 as
compared with restaurant sales of $182.8 million for the thirty-nine week period
ended September 29, 1999. This decrease was attributable  primarily to a decline
in comparable  store sales of $12.1 million for our Black-eyed Pea  restaurants.
We believe the decrease in comparable  store sales is attributable  primarily to
the elimination of television  advertising.  Restaurant sales were also impacted
by a decline of $9.6 million due to the closure or sale of 16 restaurants offset
by sales from eight  restaurants  opened  during 1999.  Our Denny's  restaurants
increased  comparable store sales by 1.2% during the first three fiscal quarters
of 2000.

                                       13
<PAGE>
     FOOD AND  BEVERAGE  COSTS.  Food and beverage  costs  increased to 27.3% of
restaurant  sales for the  thirty-nine  week period ended  September 27, 2000 as
compared with 27.1% of restaurant  sales for the  thirty-nine  week period ended
September 29, 1999.  This increase is due primarily to increases in pork,  steak
and coffee costs.

     PAYROLL AND PAYROLL  RELATED  COSTS.  Payroll  and  payroll  related  costs
increased to 34.9% of  restaurant  sales for the  thirty-nine  week period ended
September  27,  2000  as  compared  with  34.3%  of  restaurant  sales  for  the
thirty-nine  week period ended September 27, 1999. The increase in payroll costs
as a percentage of sales was  attributable  primarily to the lower sales volumes
at the Black-eyed Pea  restaurants and higher average wages  generally,  both of
which were partially offset by the closing of underperforming restaurants.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization of restaurant
equipment, leasehold improvements,  intangible assets, and other items decreased
to $2.0  million for the  thirty-nine  week period ended  September  27, 2000 as
compared with $5.2 million for the  thirty-nine  week period ended September 29,
1999.  In  September  1999,  we  committed  to a plan to sell all of our Denny's
restaurants.  In accordance  with SFAS No. 121, the assets of these  restaurants
were reclassified as being held for sale and depreciation  ceased.  The decrease
in  depreciation  and  amortization  of $3.2  million  is due  primarily  to the
cessation of depreciation on these assets.

     OTHER  RESTAURANT  OPERATING COSTS.  Other restaurant  operating costs were
27.0% of restaurant  sales for the  thirty-nine  week period ended September 27,
2000 as compared with 29.0% of restaurant  sales for the thirty-nine week period
ended September 29, 1999. New store opening costs of approximately $-0- and $1.2
million were  expensed  when  incurred in the  thirty-nine  week  periods  ended
September 27, 2000 and September 29, 1999,  respectively.  Occupancy  costs were
reduced by $1.6 million in the second and third  fiscal  quarters of 2000 due to
the renegotiation of an equipment lease in April,  2000.  Excluding these items,
other restaurant  operating expenses would have been $46.6 million,  or 27.9% of
sales,  for the  thirty-nine-week  period  ended  September  27,  2000 and $51.7
million, or 28.3% of sales, for the thirty-nine-week  period ended September 29,
1999.  The remaining  decrease of $5.1 million is due primarily to the reduction
in spending for television advertising at the Black-eyed Pea restaurants.

     RESTRUCTURING  EXPENSE.  In the first three  fiscal  quarters of 2000,  the
Company recorded a restructuring  expense of $6.75 million comprised of $550,000
related  to three  Black-eyed  Pea  restaurants  which the  Company  anticipates
closing by the end of the year and $6.2  million  related to the increase in the
estimated  liabilities  related to Denny's  restaurants closed in prior periods.
The  increase  in the  estimated  liabilities  is the  result  of the  Company's
determination  that the cost associated with  subleasing  those  properties will
exceed  previous  estimates.  In the first three  fiscal  quarters of 1999,  the
Company  recorded  charges of $8.3 million  comprised of $3.0 million related to
the closure of four Black-eyed Pea restaurants and one Denny's restaurant during
the third quarter, $1.4 million to reflect the increase in estimated liabilities
related to  restaurants  closed in prior periods and $3.9 million  related to 16
Denny's  restaurants  sold in 1997  and  1998  for  which  the  Company  remains
contingently liable for equipment,  leases, rents and property taxes as a result
of a pending bankruptcy filing by two buyers.

     CHARGE FOR IMPAIRED ASSETS. In the first three fiscal quarters of 2000, the
Company  recorded a charge of  approximately  $1.1 million for  impaired  assets
related to the  Black-eyed Pea  restaurant  division.  In the first three fiscal
quarters of 1999,  the Company  recorded a charge of $8.5  million for  impaired
assets related to the Denny's restaurant division.

                                       14
<PAGE>
     RESTAURANT  OPERATING  INCOME (LOSS).  Restaurant  operating  income (loss)
increased to $8.4 million, or 5.0% of restaurant sales, for the thirty-nine week
period ended  September  27, 2000 as compared  with $(4.5)  million,  or 2.4% of
restaurant  sales,  for the  thirty-nine  week period ended  September 29, 1999.
Restaurant operating income (loss) included  restructuring expenses and impaired
asset charges of $7.8 million and $16.8 million in 2000 and 1999, respectively.

     ADMINISTRATIVE EXPENSES. Administrative expenses were $9.6 million, or 5.7%
of restaurant sales for the thirty-nine week periods ended September 27, 2000 as
compared with $8.8 million,  or 4.8% of restaurant  sales for the  thirteen-week
period ended  September 29, 1999.  The increase of $783,000 was due primarily to
the  settlement  of an  employment  lawsuit  along with  increases  in legal and
professional fees.

     INTEREST EXPENSE - NET. Net interest  expense was $8.8 million,  or 5.3% of
restaurant  sales,  for the thirty-nine  week period ended September 27, 2000 as
compared with $9.3 million,  or 5.1% of restaurant  sales,  for the  thirty-nine
week period ended  September  29,  1999.  The  reduction in interest  expense is
primarily due to deferred financing costs being completely  amortized by the end
of 1999 and no additional expense being incurred in 2000.

     INCOME TAX BENEFIT. We did not record tax expense (benefit) associated with
the operating loss in 2000 due to the  uncertainty of the future  utilization of
the deferred income tax asset.

     EXTRAORDINARY  ITEMS.  The  extraordinary  items  related to  expensing  of
certain  deferred  financing  costs  associated with the early payoff of certain
debt obligations.

LIQUIDITY AND CAPITAL RESOURCES

Our strategy has been to: (a)  concentrate  on  developing  the  Black-eyed  Pea
concept and building it's brand identity;  (b) focus on restaurants that achieve
certain   operational   and   geographic   efficiencies;   (c)   sell  or  close
underperforming  restaurants;  and (d)  refinance our  indebtedness.  We sold or
closed two  Denny's  and  sixteen  Black-eyed  Pea  restaurants  in 1999 and one
Denny's and one Black-eyed Pea restaurant in the first three fiscal  quarters of
2000. All of these restaurants were underperforming.

In October  1999,  we retained CNL Advisory  Services to act as our agent in the
sale of our  remaining  Denny's  restaurants.  In June  2000,  we  announced  an
agreement  to sell certain of our Denny's  restaurants.  We also  announced  the
receipt  of  letters  of  interest  for  the  sale  of  the  remaining   Denny's
restaurants. Both the agreement and the purchase proposals were subject to usual
and customary conditions to closing,  including buyer's satisfactory  completion
of due diligence and buyer's  obtaining  financing  for such  transactions.  The
agreement for sale of restaurants has expired on its terms, although discussions
regarding the purchase of restaurants are continuing with that party.

In October  2000,  we  reaffirmed  our intent to move forward with the announced
strategy  of  selling  our  Denny's  restaurants.  We are at  various  stages of
discussions with several  potential  buyers for the  restaurants.  We anticipate
that the sale of certain Denny's restaurants will occur by the end of the fiscal
year and the sale of the remaining Denny's  restaurants will occur by the end of
the first quarter of fiscal 2001. All such transactions are subject to usual and
customary conditions to closing. To the extent the sale of the Denny's occur, we
anticipate  using the  proceeds to reduce  outstanding  indebtedness  along with
payment of the costs associated with the transactions.

                                       15
<PAGE>
The assets and liabilities related to the Denny's restaurants have been reported
as net assets  held for sale.  We continue to review net assets held for sale to
determine whether events or changes in circumstances  indicate that the carrying
value of the net assets may not be recoverable. We will continue to evaluate the
operating results of our restaurants  remaining after our currently  anticipated
sales.  We will  sell or  close  any of those  restaurants  that do not meet our
criteria for operating results.

We  operate  primarily  on a  cash  basis  with a  relatively  small  amount  of
receivables  and  inventory.  Therefore,  we believe that we are like many other
companies  in the  restaurant  industry  that  operate  with a  working  capital
deficit. Our working capital deficit was $14.1 million at September 27, 2000 and
$4.1 million at December 29, 1999. Our working capital  deficit  increased $10.0
million due  primarily to a charge for impaired  assets of $8.5 million which is
reflected  in other  current  liabilities  and the  exchange  of a current  note
receivable and a long-term subordinated note payable in the first fiscal quarter
of 2000 (which is described in Note 2 to the  Condensed  Consolidated  Financial
Statements  included in Part II, Item 1 of this Quarterly  Report on Form 10-Q.)
We anticipate that we will continue to operate with a working capital deficit.

The  accompanying  financial  statements  have been  prepared on a going concern
basis,  which  contemplates  the  realization of assets and the  satisfaction of
liabilities  in the normal  course of business.  From 1997 through 1999, we have
experienced net losses aggregating  approximately $51.5 million,  which includes
restructuring charges and asset impairment losses of $33.4 million. In the first
three fiscal  quarters of 2000 there has been a net loss of $10.0 million.  As a
result,  at September 27, 2000, we had a shareholders'  deficit of $40.4 million
and our current liabilities exceeded our current assets by $14.1 million.  These
factors,  among  others,  may  indicate  that at some  point in the  foreseeable
future, we will be unable to continue as a going concern.

The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability  and  classification of recorded asset amounts or the amounts and
classification  of  liabilities  that might be necessary  should we be unable to
continue as a going concern.  Our  continuation  as a going concern depends upon
our ability to generate sufficient cash flow to meet our obligations on a timely
basis,  to comply with the terms and covenants of our financing  agreements,  to
obtain additional financing or refinancing as may be required, and ultimately to
attain profitable operations. We are continuing our efforts to obtain additional
funds so that we can meet our obligations and sustain our operations.  There can
be no assurance that  additional  financing will be available to us or available
on satisfactory terms.

On June 30,  1999,  CNL APF  Partners,  LP acquired  the  remaining  outstanding
indebtedness   under  our  existing  senior  credit  facility  and  advanced  an
additional $5.4 million to us. As part of this  transaction,  we issued to CNL a
$20.1 million interim balloon note. In August 1999, this debt was modified to be
interest  only  through  January  31,  2000.  As of January  31, 2000 the entire
principal  balance  was due.  We are  currently  in default on the note and have
classified it as a current liability. In May 2000, we entered into a non-binding
letter of intent with CNL to extend the  maturity  date of the note to September
30, 2000.  We are  currently  negotiating  an extension in the maturity date and
waiver of default on this note. We cannot provide assurance,  however,  that CNL
will agree to an  extension  or waiver or that other  revisions  of the  payment
terms of the note that will be acceptable to us.

At June 28, 2000,  we had  outstanding  $15.7 million book value of Series B 13%
Subordinated  Notes due 2003. We are in default due to  non-payment  of interest
since March 31, 1997. As of September

                                       16
<PAGE>
27, 2000 accrued and unpaid  interest due to these holders  totals $9.2 million.
Waivers for non-payment were received through June 1999 but not since that date.
No formal  notice of default  has been  received.  The par value of the Series B
Notes at September 27, 2000 is $16.8 million.

SEASONALITY

Our  operating  results  fluctuate  from  quarter  to quarter as a result of the
seasonal  nature of the restaurant  industry and other  factors.  Our restaurant
sales are  generally  greater  in the second and third  fiscal  quarters  (April
through September) than in the first and fourth fiscal quarters (October through
March).  In 2000,  restaurant  sales  declined  in the second  and third  fiscal
quarters due to a change in the marketing program for Black-eyed Pea restaurants
and a reduction  in the number of  restaurants.  Occupancy  and other  operating
costs,  which remain relatively  constant,  have a  disproportionately  negative
effect on operating  results during quarters with lower  restaurant  sales.  Our
working capital requirements also fluctuate seasonally.

INFLATION

We do not believe that inflation has had a material effect on operating  results
in past years.  Although increases in labor, food or other operating costs could
adversely  affect  our  operations,  we  generally  have been able to modify our
operating procedures or to increase menu prices to offset increases in operating
costs.

NEW ACCOUNTING STANDARDS

In June 1998, the FASB issued SFAS No 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES.  This standard, as amended, is effective for the Company
on January 1, 2001. SFAS No. 133 establishes  accounting and reporting standards
for derivative instruments, including those imbedded in other contracts, and for
hedging  activities.  It requires all  derivatives  to be  recognized  as either
assets or  liabilities  in the  statement of financial  position and measured at
fair value.  We do not anticipate  that the effects of this  pronouncement  will
have a  material  impact on our  reported  operating  results  or our  financial
position.

At September  27,  2000,  we did not  participate  in any  derivative  financial
instruments or other  financial and commodity  instruments  for which fair value
disclosure would be required under Statement of Financial  Accounting  Standards
No. 107. We do not hold investment  securities that would require  disclosure of
market  risk and we do not  engage in  currency  speculation  or use  derivative
instruments to hedge against known or forecasted market exposures.

FORWARD LOOKING STATEMENTS

The  forward-looking  statements  included in this Form 10-Q relating to certain
matters involve risks and uncertainties,  including the ability of management to
successfully  implement  its  strategy  for  improving  the  performance  of the
Black-eyed  Pea  restaurants,  the ability of  management  to effect asset sales
consistent  with  projected  proceeds  and timing  expectations,  the results of
pending and threatened  litigation,  adequacy of management personnel resources,
shortages of restaurant  labor,  commodity price increases,  product  shortages,
adverse general economic conditions,  adverse weather conditions that may affect
the Company's markets,  turnover and a variety of other similar matters. Forward
looking  statements  generally can be  identified by the use of forward  looking
terminology such as "may", "will", "expect", "intend", "estimate", "anticipate",
"believe",  or  "continue"  (or the  negative  thereof) or similar

                                       17
<PAGE>
terminology.  Actual results and  experience  could differ  materially  from the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking statements as a result of a number of factors, including but not
limited to those discussed in Management's  Discussion and Analysis of Financial
Condition   and  Results  of   Operations   and  under  the   caption   "Special
Considerations"  included in Part 1., Item 1., of the Company's Annual Report on
Form 10-K.  Forward-looking  information provided by the Company pursuant to the
safe harbor  established under the Private  Securities  Litigation Reform Act of
1995 should be  evaluated  in the context of these  factors.  In  addition,  the
Company  disclaims  any intent or  obligation  to update  these  forward-looking
statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The  Company's  business is highly  competitive  with  respect to food  quality,
concept,  location,  service  and  price.  In  addition,  there  are a number of
well-established  food service competitors with substantially  greater financial
and other resources when compared to the Company.  The Company's  Black-eyed Pea
restaurants  have experienced  declining  customer traffic during the past three
years as a result of  intense  competition  and a change in  marketing  strategy
regarding  television  advertising.  The  Company  does not expect to be able to
significantly   improve   Black-eyed  Pea's  operating   margins  until  it  can
consistently increase its comparable restaurant sales.

The Company has assigned its leasehold interest to third parties with respect to
approximately 87 properties on which the Company remains  contingently liable to
the landlord for the  performance  of all  obligations  of the party to whom the
lease was  assigned  in the event that party does not  perform  its  obligations
under the lease.  The assigned leases are for restaurant  sites that the Company
has sold.  The  Company  currently  estimates  that there  will be no  liability
associated with these assigned leases as of September 27, 2000.

The Company subleases four properties to others.  The Company remains liable for
the  leasehold  obligations  in the event  these  third  parties do not make the
required lease payments.  The sublet properties are former restaurant sites that
the  Company  has  closed.  The  Company  estimates  its  contingent   liability
associated  with  these  sublet  properties  as  of  September  27,  2000  to be
approximately $1.1 million.

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<PAGE>
PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Not applicable.

ITEM 2. CHANGES IN SECURITIES

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Note 4 of the  Notes  to the  Condensed  Consolidated  Financial  Statements  is
incorporated herein by this reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. OTHER INFORMATION

Effective October 11, 2000, Robert M. Langford was named the Company's Chairman,
Chief  Executive  Officer and  Director.  William J. Howard  resigned as Interim
Chief  Executive  Officer and will remain  with the  Company as  Executive  Vice
President and Director.

Effective October 11, 2000, W. Craig Barber was named as the Company's President
and Director. William G. Cox formerly President and Chief Operating Officer will
continue as Chief Operating Officer and Director.

On October 18, 2000 we received  notification  from The American  Stock Exchange
(AMEX) that AMEX intends to file an application  to remove our  securities  from
listing and registration  with AMEX. As previously  disclosed,  our common stock
has not maintained the minimum requirements for continued listing on the AMEX.

We have notified  AMEX that we intend to appeal the decision to seek  delisting.
However,  there can be no  assurance  that an  appeal  of any  action by AMEX to
delist our securities  would be successful.  The Company  presently is exploring
alternative venues for the trading of its securities.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS.

     27.1 Financial Data Schedule.

(b) REPORTS ON FROM 8-K.

     Not applicable.

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<PAGE>
                                   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.



                                        PHOENIX RESTAURANT GROUP, INC.

Dated: November 20, 2000                By: /s/ James C. Todd
                                            ------------------------------------
                                            James C. Todd, Acting Chief
                                            Financial Officer (Duly authorized
                                            officer of the registrant, principal
                                            financial and accounting officer)

                                       20