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 OCTOBER 1, 1997

                         Commission File Number 1-13226


                                DENAMERICA CORP.
                                ----------------
             (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                            85253
-----------------------------------------              -------------------------
 (address of principal executive offices)                     (zip code)

                                 (602) 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 shares of the  issuer's  class of common  stock as of the  latest
practicable  date, is as follows:  
13,437,777 shares of Common Stock, $.10 par value, as of November 12, 1997.
---------------------------------------------------------------------------
<PAGE>
                                DENAMERICA CORP.
                          QUARTERLY REPORT ON FORM 10-Q
                      FOR THE QUARTER ENDED OCTOBER 1, 1997

                                TABLE OF CONTENTS


PART I.   FINANCIAL INFORMATION                                             Page

Item 1.   Financial Statements

          Condensed Consolidated  Balance Sheets - January 1, 1997 and
               October 1, 1997 ........................................       3

          Condensed  Consolidated  Statements  of Operations - 13-Week
               Period ended  October 1, 1997 and 13-Week  Period ended
               October 2, 1996 and  39-Week  Period  ended  October 1,
               1997 and 40-Week Period ended October 2, 1996 ..........       5

          Condensed  Consolidated  Statements  of Cash Flows - 13-Week
               Period ended  October 1, 1997 and 13-Week  Period ended
               October 2, 1996 and  39-Week  Period  ended  October 1,
               1997 and 40-Week Period ended October 2, 1996 ..........       6

          Notes to Condensed Consolidated Financial Statements ........       7

Item 2.  Management's Discussion and Analysis of Financial  Condition
               and Results of Operations ..............................       9

PART II.  OTHER INFORMATION ...........................................      18

          SIGNATURES ..................................................      20
                                  2
<PAGE>
PART I.   FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS

                   DENAMERICA CORP. AND SUBSIDIARIES

           Condensed Consolidated Balance Sheets (Unaudited)
                            (In thousands)



                                              January 1,     October 1,
                    Assets                      1997            1997
                    ------                    ----------     ----------

Current assets:
     Cash and cash equivalents .........       $  2,609       $    975
     Receivables .......................          4,102          4,132
     Inventories .......................          3,520          3,557
     Deferred income taxes .............          2,955          3,268
     Other current assets ..............          1,196          1,629
                                               --------       --------

          Total current assets .........         14,382         13,561
                                               --------       --------


Property and equipment, net ............         65,535         57,957

Intangibles, net .......................         80,113         79,902

Deferred financing costs, net ..........          3,801          4,302
Deferred income taxes ..................          7,174          7,174
Other assets ...........................          8,184          8,672
                                               --------       --------

                                               $179,189       $171,568
                                               ========       ========

 See accompanying notes to condensed consolidated financial statements.
                                  3
<PAGE>
                   DENAMERICA CORP. AND SUBSIDIARIES

     Condensed Consolidated Balance Sheets, Continued (Unaudited)
                            (In thousands)

                                               January 1,   October 1,
     Liabilities and Shareholders' Equity         1997         1997
     ------------------------------------      ----------   ----------

Current liabilities:
  Accounts payable .........................   $  18,202    $  17,046
  Accrued compensation and related costs ...       8,487        6,292
  Accrued taxes ............................       4,636        3,989
  Other current liabilities ................       8,424        6,433
  Current portion of long-term debt and
   obligations under capital leases ........       7,662        7,935
                                               ---------    ---------

   Total current liabilities ...............      47,411       41,695
                                               ---------    ---------

Long-term debt, less current portion .......      94,132       94,957
Deferred rent and other ....................      14,732       13,119
                                               ---------    ---------

   Total liabilities .......................     156,275      149,771
                                               ---------    ---------

Minority interest in joint ventures ........         786         --
                                               ---------    ---------

Shareholders' equity:
  Common stock .............................       1,340        1,342
  Additional paid-in capital ...............      35,706       35,781
  Accumulated deficit ......................     (14,918)     (15,326)
                                               ---------    ---------

   Total shareholders' equity ..............      22,128       21,797
                                               ---------    ---------

                                               $ 179,189    $ 171,568
                                               =========    =========

 See accompanying notes to condensed consolidated financial statements.
                                  4
<PAGE>
                   DENAMERICA CORP. AND SUBSIDIARIES

      Condensed Consolidated Statements of Operations (Unaudited)
                 (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                      Period ended              Period ended
                                                 -----------------------   ----------------------
                                                 October 2,   October 1,   October 2,  October 1,
                                                    1996         1997         1996        1997
                                                 ----------   ----------   ----------  ----------
                                                 (13 weeks)   (13 weeks)   (40 weeks)  (39 weeks)
<S>                                               <C>          <C>          <C>         <C>      
Restaurant sales ..............................   $  84,599    $  75,494    $ 163,772   $ 227,787
                                                  ---------    ---------    ---------   ---------

Restaurant operating expenses:
  Cost of food and beverage ...................      23,001       20,644       44,972      62,097
  Payroll and payroll related costs ...........      28,069       25,637       55,485      77,998
  Depreciation and amortization ...............       2,379        2,232        5,215       6,822
  Other restaurant operating expenses .........      22,030       19,892       42,104      61,567
                                                  ---------    ---------    ---------   ---------

   Total restaurant operating expenses ........      75,479       68,405      147,776     208,484
                                                  ---------    ---------    ---------   ---------
Restaurant operating income ...................       9,120        7,089       15,996      19,303
Administrative expenses .......................       3,223        3,006        6,404      10,579
                                                  ---------    ---------    ---------   ---------
Operating income ..............................       5,897        4,083        9,592       8,724
Interest expense, net .........................       2,930        3,220        6,581       9,587
                                                  ---------    ---------    ---------   ---------
Income (loss) before minority interest in joint
  venture, income taxes, and extraordinary item       2,967          863        3,011        (863)
Minority interest in joint venture ............          (7)         (23)           4        (184)
                                                  ---------    ---------    ---------   ---------

Income (loss) before income taxes and
  extraordinary item ..........................       2,974          886        3,007        (679)
Income tax (benefit) expense ..................       1,192          355        1,205        (271)
                                                  ---------    ---------    ---------   ---------
Income (loss)  before extraordinary item ......       1,782          531        1,802        (408)
Extraordinary item - loss on
  extinguishment of debt ......................        --           --            497        --
                                                  ---------    ---------    ---------   ---------

Net income (loss) income ......................       1,782          531        1,305        (408)
Preferred stock dividend and accretion ........        --           --            149        --
                                                  ---------    ---------    ---------   ---------

Net income (loss) applicable to common
 shareholders .................................   $   1,782    $     531    $   1,156   ($    408)
                                                  =========    =========    =========   =========

Net income (loss) per common share
  before extraordinary item ...................   $     .13    $     .04    $     .15   ($    .03)
                                                  =========    =========    =========   =========


Net income (loss) per common share ............   $     .13    $     .04    $    0.10   ($    .03)
                                                  =========    =========    =========   =========

Weighted average shares outstanding ...........      13,399       13,437       11,131      13,437
                                                  =========    =========    =========   =========
</TABLE>

 See accompanying notes to condensed consolidated financial statements.
                                       5
<PAGE>
                   DENAMERICA CORP. AND SUBSIDIARIES

      Condensed Consolidated Statements of Cash Flows (Unaudited)
                            (In thousands)
<TABLE>
<CAPTION>
                                                       Period ended            Period ended
                                                  ----------------------  ----------------------
                                                  October 2,  October 1,  October 2,  October 1,
                                                     1996        1997        1996        1997
                                                  ----------  ----------  ----------  ----------
                                                  (13 weeks)  (13 weeks)  (40 weeks)  (39 weeks)
<S>                                                <C>         <C>         <C>         <C>      
Cash flows from operating activities:
  Net income (loss) ............................   $  1,782    $    531    $  1,305    ($   408)
   Adjustments to reconcile net income
     to net cash provided by (used in)
     operating activities:
     Depreciation and amortization .............      2,379       2,232       5,215       6,822
     Amortization of deferred financing costs ..         83         154         211         441
     Minority interest in joint venture ........         (8)       (356)          9        (518)
     Deferred income taxes .....................        549         313         547        (313)
     Deferred rent - long term .................         57         188         189         605
     Other .....................................        237         507         734         374
   Changes in operating assets and liabilities:
       Receivables .............................        752        (786)       (647)        (30)
       Inventories .............................        (54)        104        (602)        (37)
       Prepaid expenses and other assets .......        188         397        (821)       (433)
       Accounts payable and accrued liabilities      (1,432)     (2,605)     (2,444)     (8,152)
                                                   --------    --------    --------    --------
       Net cash provided by (used in)
         operating activities ..................      4,533         679       3,696      (1,649)
                                                   --------    --------    --------    --------
Cash flows from investing activities:
  Purchase of property and equipment ...........     (3,498)     (2,261)     (7,410)     (5,267)
  Purchase of intangibles ......................       (751)       (198)     (1,285)     (1,696)
  Payments for Acquisition of BEP and Merger,
   net of cash acquired ........................       --          --          (231)       --
  Proceeds from the sale of assets .............      2,422       1,774       2,422       8,508
                                                   --------    --------    --------    --------
     Net cash (used in) provided by investing
       activities ..............................     (1,827)       (685)     (6,504)      1,545
                                                   --------    --------    --------    --------
Cash flows from financing activities:
  Borrowings, net ..............................       --        13,439      13,361      15,669
  Dividends on preferred stock .................       --          --          (124)       --
  Principal reductions on long-term obligations      (2,485)    (13,592)    (10,160)    (17,276)
  Issuance of Common Stock and other, net ......       (221)       --          (269)         77
                                                   --------    --------    --------    --------
     Net cash provided by financing activities .     (2,706)       (153)      2,808      (1,530)
                                                   --------    --------    --------    --------
     Net change in cash and cash equivalents ...       --          (159)       --        (1,634)
Cash and cash equivalents at beginning of period       --         1,134        --         2,609
                                                   --------    --------    --------    --------
Cash and cash equivalents at end of period .....   $   --      $    975    $   --      $    975
                                                   ========    ========    ========    ========
Supplemental schedule of cash flow information:
  Cash paid during period for:
  Interest .....................................   $  3,103    $  2,480    $  6,136    $  7,960
                                                   ========    ========    ========    ========
  Income taxes .................................   $     29        --      $     76        --
                                                   ========    ========    ========    ========
</TABLE>

 See accompanying notes to condensed consolidated financial statements.
                                       6
<PAGE>
                   DENAMERICA CORP. AND SUBSIDIARIES

         Notes to Condensed Consolidated Financial Statements
            (In thousands, except share and per share data)
                              (Unaudited)

(1)  Basis of Presentation
General

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
DenAmerica  Corp.  and  Subsidiaries  (the  "Company")  have  been  prepared  in
accordance  with the  instructions  to Form 10-Q and do not  include  all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial  statements.  In the opinion of the Company's management,
all adjustments  (consisting of normal recurring accruals)  considered necessary
for a fair presentation  have been included.  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 the Company's  Annual Report on Form 10-K for the fiscal
year ended January 1, 1997. Certain reclassifications have been made in the 1996
financial statements to conform to the 1997 presentation.

The  three-month  and  nine-month  periods  ended  October 1, 1997, as explained
below, are not comparable to the prior periods.

Mergers

On March 29, 1996,  Denwest  Restaurant  Corp.  ("DRC") merged with and into the
Company, with the Company being the surviving  corporation (the "Merger").  Upon
consummation  of the Merger,  the Company  changed its name from American Family
Restaurants,  Inc. ("AFR") to DenAmerica Corp. The Merger has been accounted for
as a reverse purchase under generally accepted accounting principles as a result
of which DRC is  considered  to be the  acquiring  entity  and AFR the  acquired
entity for accounting purposes.

On July 3, 1996, the Company  acquired all of the issued and outstanding  common
stock of  Black-eyed  Pea U.S.A.,  Inc.  ("BEP") from BEP Holdings,  Inc.  ("BEP
Holdings")  pursuant to a Stock Purchase Agreement (the "BEP  Acquisition").  In
accordance  with the terms and conditions of the Stock Purchase  Agreement,  the
effective accounting date of the BEP Acquisition was June 24, 1996.

In  accordance  with  the  accounting   rules  for  a  purchase  and  a  reverse
acquisition,  the  consolidated  financial  statements  presented  herein are as
follows:

         (i)      Consolidated  Statements  of Operations of the Company for the
                  periods  ended  October 1, 1997 (which  include the results of
                  operations  of the  Company  following  the Merger and the BEP
                  Acquisition) and October 2, 1996 (which include the results of
                  operations  of the AFR  restaurants  since the March 27,  1996
                  accounting date of the Merger and the results of operations of
                  BEP  since  the  June  24,  1996  accounting  date  of the BEP
                  Acquisition); and
                                  7
<PAGE>
         (ii)     Consolidated  Statements  of Cash Flows of the Company for the
                  periods  ended  October 1, 1997 (which  include the results of
                  operations  of the  Company  following  the Merger and the BEP
                  acquisition) and October 2, 1996 (which include the results of
                  operations  of the AFR  restaurants  since the March 27,  1996
                  accounting date of the Merger and the results of operations of
                  BEP  since  the  June  24,  1996  accounting  date  of the BEP
                  Acquisition).

(2)  Earnings Per Share

         Earnings  per  share  for the  period  ended  October  2, 1996 has been
computed  based upon the weighted  average  shares of (i) the  Company's  Common
Stock received in connection  with the Merger by the former  shareholders of DRC
after  deducting  preferred  stock dividends and accretion on preferred stock of
DRC  outstanding  prior  to the  Merger  and  (ii) the  Company's  common  stock
outstanding after the Merger. Earnings per share for the period ended October 1,
1997 has been  computed  based upon the  weighted  average of the common  shares
outstanding.

(3)  Other Matters

         On July 31, 1997, the Company sold its leasehold  interests in fourteen
Denny's and two non-Denny's  restaurants to an unrelated party for $2.1 million.
Proceeds  from this  transaction  were used to repay $1.0 million of senior debt
obligations  and  for  working  capital  purposes.   In  conjunction  with  this
transaction,  the Company recognized a gain of $250,000,  which is included as a
reduction of other restaurant operating expenses.

         On October 1, 1997 the Company purchased from a BEP franchisee  certain
assets and leasehold  interests in six  Black-eyed  Pea  restaurants  located in
Arizona.  In connection  with this  transaction,  the Company and the franchisee
settled certain threatened litigation.  Under this settlement,  the Company will
forego future royalty payments from thirteen  franchised  restaurants located in
Colorado  operated by the  franchisee.  The effect of the loss of royalty income
will be partially offset by operating income from the restaurants  acquired.  In
conjunction with the closing of this  transaction,  CNL Group,  Inc. and certain
affiliates  ("CNL") acquired certain assets directly from the BEP franchisee and
entered into operating leases with the Company. The value of the leases exceeded
the  purchase  price,  resulting  in the Company  receiving  approximately  $2.5
million in cash that has been recorded as a deferred  gain to be amortized  over
the life of the leases.

            As described  below,  on October 1, 1997, the Company entered into a
series of  transactions  with CNL. The Company  utilized the proceeds from these
transactions,  which totaled  approximately  $25.0 million, to repay senior debt
obligations of the Company.  The following is a summary of the transactions with
CNL:

                  A. The Company and CNL each had a 50%  interest in three joint
ventures,  which  operated  a total of 16  Denny's  restaurants,  of which  nine
restaurant  locations  were  leased  from CNL.  On October 1, 1997,  the Company
purchased  CNL's 50% interest in these joint ventures and the land and buildings
for the nine Denny's restaurants for $12.1 million. Consideration consisted of a
$7.7 million  promissory  note,  which  amortizes over 10 years with an interest
rate  of  9%,  and  a  $4.4  million  subordinated  convertible  debenture.  The
subordinated  convertible debenture bears interest of 5%, payable quarterly, and
is  convertible at the holder's  option through  October 2002 into the Company's
common stock at 90% of the share price immediately prior to the conversion.  The
Company subsequently entered into 15-year  sale/leaseback  arrangements with CNL
for the nine Denny's  restaurants  described above and received $8.0 million. No
gain or loss was recognized on these transactions.
                                  8
<PAGE>
                  B. The Company  entered into equipment  notes payable with CNL
totaling  approximately $12.5 million.  The notes payable are secured by certain
equipment located in 44 Denny's restaurants,  bear interest at 10%, and amortize
over a seven-year period. No gain or loss was recognized in connection with this
transaction.

                  C. The Company sold eight  buildings  located on ground leases
to CNL for proceeds of $4.6 million and entered into operating  leases for these
locations. No gain or loss was recognized on this transaction.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

Basis of Presentation

         Upon  consummation  of the Merger with AFR, the former  shareholders of
DRC owned an aggregate of approximately 53.0% of the outstanding voting power of
the Company immediately following the Merger.  Accordingly,  the Merger has been
accounted  for  as  a  reverse  purchase  under  generally  accepted  accounting
principles with an effective  accounting date of March 29, 1996, the last day of
DRC's first  quarter for fiscal 1996.  In addition,  on July 3, 1996 the Company
acquired all of the issued and  outstanding  common stock of BEP. The  effective
accounting date of the BEP Acquisition was June 24, 1996.

         The results of  operations  for the 1997 periods  have been  materially
impacted by the Merger and the BEP Acquisition.  For the nine-month period ended
October 1, 1997, revenue and related expenses increased significantly over prior
years  primarily  as a  result  of these  acquisitions.  As a  result,  the 1997
operating  results are not  comparable to prior periods.  In addition,  the 1997
period  contains  thirty-nine  weeks while the 1996  nine-month  period contains
forty weeks.

General

         As set forth below, the Company's restaurant operating income increased
by  approximately  $3.3 million and operating  income decreased by approximately
$900,000 for the thirty-nine  week period ended October 1, 1997 as compared with
the forty-week period ended October 2, 1996. For the thirteen-week  period ended
October 1, 1997,  restaurant  operating income and operating income decreased by
approximately $2.0 million and $1.8 million,  respectively, as compared with the
thirteen-week period ended October 2, 1996. The decrease in operating income for
the thirty-nine week period ended October 1, 1997 would have been  approximately
$2.5 million without the gain on sale of restaurants of $900,000 and the gain on
other  disposals of  approximately  $700,000  during this period.  These changes
result primarily from the Merger and the BEP Acquisition, the additional week of
operating  results in 1996,  and the decline in same store sales in 1997,  which
have  negatively  impacted  the  Company's  operating  results due to fixed cost
structure.

Denny's

         For the  thirteen-week  period  ended  October  1,  1997,  the  Company
operated 176 Denny's  restaurants  in 31 states as compared  with  operating 182
Denny's  restaurants in the comparable  prior year period.  In January 1996, the
Company and  Denny's,  Inc.  adopted the  "Breakaway  Breakfast"  value  pricing
promotion,  which offered five  breakfast  items for $1.99 or less. In September
1996, the Company withdrew from the Breakaway  Breakfast and increased the price
of the  Grand  Slam  breakfast  to  $2.99.  The  withdrawal  from the  Breakaway
Breakfast resulted in the decline of comparable Denny's restaurant sales of 5.8%
during the  thirty-nine  week period  ending  October 1, 1997  compared with the
prior year.  The average guest check  increased  from $4.97 in the third quarter
1996 to $5.21 for the 
                                       9
<PAGE>
third quarter of 1997;  however,  guest counts for the same period declined.  In
order to mitigate the possible material negative impact of the continued decline
in the Denny's  sales  levels,  the  Company has adopted a selective  restaurant
disposition strategy described below.

Black-eyed Pea

         For the  thirteen-week  period  ended  October  1,  1997,  the  Company
operated 92 Black-eyed Pea restaurants in 13 states and franchised 25 Black-eyed
pea  restaurants  in 5 states,  as compared  with  operating 99  Black-eyed  Pea
restaurants in the comparable prior year period.  As previously  described,  the
Company  purchased six  franchised  restaurant  locations in Arizona  during the
third  quarter  of 1997.  The  Company  also  opened  three new  Black-eyed  Pea
restaurants  during the third  quarter of fiscal 1997.  Subsequent to October 1,
1997,  the Company  opened an  additional  one  restaurant in its core market of
Texas and has five locations in various stages of development.  In addition, the
Company is under contract to purchase three restaurant locations in the Orlando,
Florida market from its Flordia franchisees.

         The  Company  operates  64  Black-eyed  Pea  restaurants  in Texas  and
Oklahoma,  which the Company  considers to be its core market for Black-eyed Pea
restaurants.  For the thirty-nine week period ended October 1, 1997,  comparable
same-store  sales  decreased  4.6%  for  all of  the  Company's  Black-eyed  Pea
restaurants. Comparable same-store sales in the core market decreased only 2.5%,
however,  during the  thirty-nine  week period ended October 1, 1997.  The guest
check average at the  Company's  Black-eyed  Pea  restaurants  is  approximately
$7.90. For the third quarter of 1997,  alcohol and carry-out sales accounted for
approximately  2.0% and 11.2%,  respectively,  of total  sales at the  Company's
Black-eyed Pea restaurants.
                                       10
<PAGE>
                       COMPARISON OF RESULTS OF OPERATIONS

         The following table presents, for the periods indicated,  certain items
in the condensed consolidated  statements of operations as a percentage of total
restaurant  sales.  As  discussed  above,  as a  result  of the  Merger  and BEP
Acquisition, these results are not comparable.
<TABLE>
<CAPTION>
                                                       Period ended            Period ended
                                                  ----------------------  ----------------------
                                                  October 2,  October 1,  October 2,  October 1,
                                                     1996        1997        1996        1997
                                                  ----------  ----------  ----------  ----------
                                                  (13 weeks)  (13 weeks)  (40 weeks)  (39 weeks)

<S>                                                 <C>         <C>         <C>         <C>   
Restaurant sales: ..........................        100.0%      100.0%      100.0%      100.0%

Restaurant operating expenses:
   Cost of food and beverages ..............         27.2        27.4        27.5        27.3
   Payroll and payroll related costs .......         33.2        34.0        33.9        34.2
   Depreciation and amortization ...........          2.8         3.0         3.2         3.0
   Other restaurant operating cost .........         26.0        26.2        25.7        27.0
                                                    -----       -----       -----       -----
       Total restaurant operating expenses .         89.2        90.6        90.3        91.5
                                                    -----       -----       -----       -----
Restaurant operating income ................         10.8         9.4         9.7         8.5
Administrative expenses ....................          3.8         4.0         3.9         4.6
                                                    -----       -----       -----       -----

Operating income ...........................          7.0         5.4         5.8         3.9
Interest expense ...........................          3.5         4.2         4.0         4.2
                                                    -----       -----       -----       -----

Income (loss) before income taxes and
  extraordinary item .......................          3.5         1.2         1.8         (.3)
Income tax expense (benefit) ...............          1.4          .5         0.7         (.1)
                                                    -----       -----       -----       -----

Income (loss) before extraordinary item ....          2.1          .7         1.1         (.2)
Extraordinary item - loss on extinguishment
       of debt .............................           --          --         0.3%         --
                                                    -----       -----       -----       -----

Net income (loss) ..........................          2.1%         .7%        0.8%        (.2)%
                                                    =====       =====       =====       =====
</TABLE>
<PAGE>
THIRTEEN-WEEK  PERIOD ENDED OCTOBER 1, 1997 COMPARED WITH  THIRTEEN-WEEK  PERIOD
ENDED OCTOBER 2, 1996

         Restaurant sales.  Restaurant sales decreased $9.1 million,  or 11%, to
$75.5  million for the  thirteen-week  period ended  October 1, 1997 as compared
with  restaurant  sales of $84.6  million  for the  thirteen-week  period  ended
October 2, 1996. This decrease was primarily attributable to the sale or closure
of certain underperforming restaurants and same-store sales decline

         Cost of Food and Beverage. Cost of food and beverage increased to 27.4%
of  restaurant  sales for the  thirteen-week  period  ended  October  1, 1997 as
compared  with 27.2% of  restaurant  sales for the  thirteen-week  period  ended
October  2,  1996,  primarily  as the  result of  several  promotional  programs
implemented in July 1997.

         Payroll and Payroll Costs. Payroll and payroll related costs were 34.0%
of  restaurant  sales for the  thirteen-week  period  ended  October  1, 1997 as
compared  with 33.2% of  restaurant  sales for the  thirteen-week  period  ended
October 2, 1996. This increase was primarily  attributable to the increased cost
of health insurance  benefits for the Denny's restaurant  employees,  as well as
the impact of minimum wage rate increases.

         Depreciation  and   Amortization.   Depreciation  and  amortization  of
restaurant equipment,  leasehold  improvements,  intangible assets,  pre-opening
costs,  and other items was $2.2 million,  or 3.0% of restaurant  sales, for the
thirteen-week period ended October 1, 1997, which is comparable to $2.4 million,
or 2.8% of restaurant sales, for the thirteen-week period ended October 2, 1996.

         Other Restaurant Operating Costs. Other restaurant operating costs were
26.2% of restaurant sales for the thirteen-week  period ended October 1, 1997 as
compared  with 26.0% of  restaurant  sales for the  thirteen-week  period  ended
October 2, 1996.  Included in the 1997 results is a gain of $250,000 relating to
the sale of a non-branded  restaurant.  Excluding  this gain,  other  restaurant
operating costs, expressed as percentage of revenue, would have been 26.7%. This
increase was primarily  attributable to the increased restaurant operating costs
associated with restaurants  acquired as a result of the BEP acquisition  (where
other  restaurant  operating  costs as a  percentage  of revenue are higher than
Denny's  operating  costs) and a decrease in comparable  same-store sales in the
Company's Denny's restaurants.

         Restaurant Operating Income. Restaurant operating income decreased $2.0
million to $7.1 million for the  thirteen-week  period ended October 1, 1997, as
compared with $9.1 million for the  thirteen-week  period ended October 2, 1996.
This decrease was principally the result of the factors described above.

         Administrative Expenses.  Administrative expenses were $3.0 million, or
4.0% of restaurant  sales, for the  thirteen-week  period ended October 1, 1997,
which is comparable  with $3.2 million,  or 3.8% of  restaurant  sales,  for the
thirteen-week period ended October 2, 1996.

         Interest  Expense.  Interest  expense  was  $3.2  million,  or  4.2% of
restaurant sales, for the thirteen-week period ended October 1, 1997 as compared
with $2.9 million,  or 3.5% of restaurant  sales, for the  thirteen-week  period
ended October 2, 1996.  The increase is the result of  amortization  of warrants
issued in connection  with the BEP  Acquisition  and the increase in outstanding
capital lease obligations.
                                       12
<PAGE>
         Income Tax  Expense.  The  Company  recorded  an income tax  expense of
approximately  $355,000,  an effective rate of 40%, for the thirteen-week period
ended October 1, 1997 as compared with income tax expense of approximately  $1.2
million, or an effective rate of 40%, for the thirteen week period ended October
2, 1996.

         Net Income.  The Company recorded net income of approximately  $531,000
for the thirteen  week period ended  October 1, 1997 as compared with net income
of $1.8 million for the thirteen-week  period ended October 2, 1996, as a result
of the factors described above.

THIRTY-NINE  WEEK PERIOD ENDED  OCTOBER 1, 1997 COMPARED WITH FORTY- WEEK PERIOD
ENDED OCTOBER 2, 1996

         Restaurant sales.  Restaurant sales increased $64.0 million,  or 39.1%,
to approximately $227.8 million for the thirty-nine week period ended October 1,
1997 as compared  with  restaurant  sales of $163.8  million for the  forty-week
period ended October 2, 1996.  This increase was primarily  attributable  to the
Merger and the BEP Acquisition.

         Cost of Food and Beverage. Cost of food and beverage decreased to 27.3%
of  restaurant  sales for the  thirty-nine  week period ended October 1, 1997 as
compared with 27.5% of restaurant sales for the forty-week  period ended October
2, 1996,  primarily as the result of discontinuing  several Denny's  promotional
programs  implemented  in January 1996 and the  conversion or sale of certain of
the Company's non-branded restaurants.

         Payroll and Payroll Costs. Payroll and payroll related costs were 34.2%
of  restaurant  sales for the  thirty-nine  week period ended October 1, 1997 as
compared with 33.9% of restaurant  sales for the forty week period ended October
2,  1996.  This  increase  was  primarily  attributable  to the  costs  of group
insurance  benefits provided to employees of the Company's Denny's  restaurants,
as well as the impact of minimum wage increases.

         Depreciation  and   Amortization.   Amortization  and  depreciation  of
restaurant equipment,  leasehold  improvements,  intangible assets,  pre-opening
costs and other items decreased to 3.0% of restaurant  sales for the thirty-nine
week period ended October 1, 1997 as compared with 3.2% of restaurant  sales for
the  forty-week  period ended October 2, 1996.  The increase of $1.6 million was
primarily  attributable to the amortization of intangible assets associated with
the 1996 acquisitions and an increase of $600,000 in amortization of pre-opening
costs.

         Other Restaurant Operating Costs. Other restaurant operating costs were
27.0% of restaurant  sales for the thirty-nine week period ended October 1, 1997
as compared  with 25.7% of  restaurant  sales for the  forty-week  period  ended
October 2, 1996. Included in the 1997 results is a gain of $1.7 million relating
to the  sale of  restaurants  and  other  assets.  Excluding  this  gain,  other
restaurant operating costs expressed as a percentage of revenue, would have been
27.8%.  This  increase  was  primarily   attributable  to  increased  restaurant
operating  costs  associated  with  restaurants  acquired as a result of the BEP
Acquisition (where other restaurant  operating costs as a percentage of revenues
are higher than Denny's  operating  costs),  a decrease in comparable same store
sales in the Company's Denny's restaurants, and the impact of a thirty-nine week
operating period in 1997 versus a forty-week operating period in 1996.

                                       13
<PAGE>
         Restaurant Operating Income. Restaurant operating income increased $3.3
million to  approximately  $19.3 million for the  thirty-nine  week period ended
October 1, 1997, as compared with $16.0 million for the forty-week  period ended
October  2, 1996.  This  increase  was  principally  the  result of the  factors
described above.

         Administrative  Expenses.  Administrative expenses increased to 4.6% of
restaurant  sales for the  thirty-nine  week  period  ended  October  1, 1997 as
compared with 3.9% of restaurant  sales for the forty- week period ended October
2, 1996.  This increase was primarily the result of declining same  store-sales,
the impact of the thirty-nine  week operating period in 1997 versus a forty-week
operating period in 1996, as well as the greater administrative support required
as a franchisor as opposed to operating solely as a franchisee.

         Interest  Expense.  Interest  expense  was  $9.6  million,  or  4.2% of
restaurant  sales,  for the  thirty-nine  week period  ended  October 1, 1997 as
compared with $6.6  million,  or 4.0% of  restaurant  sales,  for the forty week
period ended October 2, 1996. The increase is the result of the increased  level
of long-term debt associated with the 1996 acquisitions.

         Income  Tax  Expense  (Benefit).  The  Company  recorded  an income tax
benefit of approximately $271,000, an effective rate of 40%, for the thirty-nine
week  period  ended  October 1, 1997 as  compared  with  income  tax  expense of
approximately $1.2 million,  an effective rate of 40%, for the forty week period
ended October 2, 1996.

         Net Income  (Loss).  The Company  recorded a net loss of  approximately
$408,000 for the thirty-nine  week period ended October 1, 1997 as compared with
net  income of $1.2  million  after the  extraordinary  item for the forty  week
period ended October 2, 1996, as a result of the factors described above.

Liquidity and Capital Resources

         The  Company,   and  the  restaurant   industry   generally,   receives
substantially  all of its  revenues in cash with a  relatively  small  amount of
receivables.  Therefore,  like many other companies in the restaurant  industry,
the Company  operates with a working  capital  deficit.  The  Company's  working
capital  deficit  was $28.1  million  at  October  1, 1997 and $33.0  million at
January 1, 1997. The Company  believes that it has funded the excessive  working
capital  deficit  acquired  in the Merger and that its current  working  capital
deficit is consistent with the working capital position of restaurant  operators
of similar size. The Company anticipates that it will continue to operate with a
working capital deficit.

         Over the past three quarters, the Company has converted ten non-Denny's
and non-Black-eyed Pea restaurants to the Denny's concept.  In addition,  during
1997 the Company has closed ten restaurants  that were not achieving  designated
cash flow requirements. The Company intends to continue to evaluate its existing
restaurant  portfolio  and to  close  or sell  restaurants  as  appropriate.  As
described above, the Denny's operating results have been negatively  impacted by
same-store  sales  declines.  The Company intends to pursue a strategy to lessen
its  dependence  on the  Denny's  brand and has  identified  certain  geographic
markets where  restaurants  are available  for  disposition.  Proceeds from such
dispositions  will be used to retire  debt and to  reduce  the  working  capital
deficit.  As part of this  strategy,  in April  1997  the  Company  sold  eleven
non-branded  restaurants for cash and notes totaling $850,000,  and in July 1997
the  Company  sold  fourteen  Denny's  and  two  non-Denny's  restaurants  to an
unrelated  party for $2.1  million.  These  transactions  resulted  in a gain of
$900,000,  which has been included in the accompanying financial statements as a
reduction of other restaurant operating expenses.
                                       14
<PAGE>
         The Company  intends to continue to expand the number of its Black-eyed
Pea restaurants in its core market through the  development of new  restaurants.
To date in 1997, the Company has opened four new Black-eyed Pea  restaurants and
purchased  six  franchised   restaurants  located  in  Arizona,   including  the
associated  development  rights,  and has entered  into an agreement to purchase
three franchised  restaurants located in Florida.  The Company believes that the
Arizona market provides significant growth opportunities. These acquisitions are
a part of an overall  settlement of threatened  litigation by these franchisees.
Under the Arizona  agreement,  the Company will forego future  royalty  payments
from an  additional  thirteen  franchise  restaurants  located  in  Colorado  in
exchange for various releases and  indemnifications.  The loss of royalty income
will be partially offset by operating income from the restaurants acquired.

         The Company historically has satisfied its capital requirements through
credit  facilities and  sale/leaseback  financing.  The Company requires capital
principally  for the  development of new restaurants and to fund the acquisition
and conversion of existing restaurants.  Expenditures for property and equipment
and  intangibles  totaled  approximately  $2.5  million and $7.0 million for the
thirteen-week and thirty-nine week periods ended October 1, 1997,  respectively.
The  Company  currently  has  commitments  for  approximately  $40.0  million of
sale-leaseback financing through August 1998, which the Company believes will be
adequate to meet its financing needs during that period.

         The  Company  believes  that its future  capital  requirements  will be
primarily for the  development  of new  restaurants,  for  continued  restaurant
acquisitions, and for conversion of restaurants to the Denny's or Black-eyed Pea
concepts.  The Company  estimates that its costs to develop and open new Denny's
and Black-eyed Pea restaurants,  excluding real estate and building costs,  will
be  approximately  $350,000  to  $450,000  per  restaurant,  and that its  costs
associated  with the  conversion  of a  non-branded  restaurant  to the  Denny's
concept will be approximately $160,000 to $450,000 per restaurant.

         The Company was not in compliance with certain of its debt covenants at
October 1, 1997,  for which the  Company  has  received  waivers.  In  addition,
certain  holders of the Series B Notes  agreed to defer the  interest  due as of
September 30, 1997 until March 31, 1998.

         Net cash provided by (used in) operating activities decreased from $3.7
million  in the  first  forty-weeks  of  1996 to  ($1.6  million)  in the  first
thirty-nine  weeks of 1997.  This  decrease is  attributable  to a reduction  of
accounts  payable,  the payment of property taxes, and costs associated with the
closing and conversion of certain restaurants.

         Net cash (used in)  provided by  investing  activities  increased  from
($6.5  million) in the first  forty-weeks  of 1996 to $1.5  million in the first
thirty-nine weeks of 1997. This change primarily is attributable to the disposal
of approximately $5.2 million of various assets acquired in the BEP Acquisition.

         Net cash provided by (used in) financing activities decreased from $2.8
million  in the  first  forty-weeks  of  1996 to  ($1.5  million)  in the  first
thirty-nine  weeks of 1997. Cash (used in) financing  activities arose primarily
from the proceeds of borrowing  activities,  net of the principal  reductions in
long-term debt.
                                       15
<PAGE>
Seasonality

         The Company's  operating results fluctuate from quarter to quarter as a
result of the seasonal nature of the restaurant industry,  the temporary closing
of  existing  restaurants  for  conversion,  and other  factors.  The  Company's
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).  Occupancy and other operating  costs,  which remain  relatively
constant, have a disproportionately  negative effect on operating results during
quarters with lower restaurant sales. The Company's working capital requirements
also fluctuate  seasonally,  with its greatest needs occurring  during its first
and fourth quarters.

Inflation

         The Company does 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 the Company's  operations,  the Company
generally has been able to modify its operating procedures or to increase prices
to offset increases in its operating costs.

New Accounting Standards

         In February 1997,  the Financial  Accounting  Standards  Board ("FASB")
issued Statement of Financial  Accounting  Standards ("SFAS") No. 128, "Earnings
per Share",  effective for both interim and annual periods ending after December
15, 1997. This statement specifies the computation,  presentation and disclosure
of earnings per share for entities  with publicly held common stock or potential
common stock. The Company will provide the required  disclosures in its year-end
report.  The effect on the Company's  earning per share  disclosure  will not be
material for the periods presented.

         In June 1997,  the FASB  issued SFAS No. 130  "Reporting  Comprehensive
Income," which is effective for fiscal years  beginning after December 31, 1997.
The statement  changes the reporting of certain items currently  reported in the
stockholders' equity section of the balance sheet and establishes  standards for
reporting of  comprehensive  income and its  components in a full set of general
purpose financial statements.  The Company does not expect this standard to have
a material effect on the its financial statements.

         In June 1997,  the FASB also issued SFAS No.  131,  "Disclosures  About
Segments of an  Enterprise  and Related  Information,"  which is  effective  for
fiscal years beginning after December 31, 1997. This standard  requires segments
of a business  enterprise to be reported based on the way  management  organizes
and  evaluates   segments  within  the  company.   The  standard  also  requires
disclosures  regarding  products  and  services,  geographical  areas  and major
customers.  The Company  currently is evaluating  the impact of this standard on
its disclosures.

         The Company plans to adopt both SFAS No. 130 and No. 131 in 1998.
                                       16
<PAGE>
Forward Looking Statements

         This Report on Form 10-Q contains forward-looking statements, including
statements regarding the Company's business strategies,  the Company's business,
and the industry in which the Company operates. These forward-looking statements
are based primarily on the Company's expectations and are subject to a number of
risks and uncertainties,  some of which are beyond the Company's control. Actual
results could differ materially from the forward-looking  statements as a result
of  numerous   factors,   including  those  set  forth  in  Item  1  -  "Special
Considerations"  in the Company's Annual Report on Form 10-K for the fiscal year
ended January 1, 1997.
                                       17
<PAGE>
PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         On July 24, 1997 the Company  filed a lawsuit  against  Beck  Holdings,
Inc. f/k/a/ BEP Holdings, Inc., and Unigate Holdings, N.V. (the "defendants") in
the United States  District  Court for the District of Arizona (Civil Action No.
CIV 97-1546 PHX RGS). The lawsuit  alleged that the defendants  breached a stock
purchase  agreement and guaranty and violated  Sections 10(b) and 20(a) and Rule
10b-5 of the Securities Exchange Act of 1934, as well as A.R.S. Sections 44-1991
et seq. (the Arizona securities fraud statute). The lawsuit also asserted common
law claims for breach of the implied  covenant  of good faith and fair  dealing,
fraudulent  misrepresentation  and  negligent  misrepresentation.  All of  these
claims  related to the Company's  July 3, 1996  acquisition  of the  outstanding
capital  stock of BEP and the  defendants'  failure to indemnify  the Company in
connection  with a settlement the Company  reached in July 1997 with Arizona and
Colorado Black-eyed Pea restaurant  franchisees.  As part of the settlement with
these  franshisees,  the Company  agreed to acquire six Arizona  Black-eyed  Pea
restaurants for a purchase price of $3.25 million.  Other claims included in the
lawsuit involved alleged misrepresentations made by the defendants in connection
with the 1996 acquisition of BEP.

         On September 30, 1997, the Company,  BEP, and the defendants  agreed to
settle this lawsuit.  As part of the  settlement,  the Company has the option to
repurchase the promissory note issued to Beck Holdings,  Inc. in connection with
the purchase of BEP (the "BEP Purchase Note") for approximately $13.0 million on
or before March 27, 1998.  The BEP Purchase  Note had an  outstanding  principal
amount of approximately $15.3 million as of September 30, 1997. In addition, the
common  stock  purchase  warrant  issued to Beck  Holdings,  Inc. was amended to
provide  that (i) the warrant will not become  exercisable  until April 1, 1998,
and (ii) if any or all of the BEP Purchase Note is repaid on or before March 31,
1998,  the  warrant  will be  canceled  pro  rata  based  on the  amount  of the
outstanding principal that is repaid. As part of the settlement, the Company and
BEP on the one hand and the  defendants  on the other hand  released one another
for any  injury,  damage,  or loss  arising  directly  or  indirectly  from  the
Company's purchase of BEP, including claims that may be brought in the future by
past, present, or future Black-eyed Pea franchisees. The terms of the release do
not,  however,  relieve the defendants  from their  obligations to indemnify the
Company and BEP with respect to claims made by former Black-eyed Pea franchisees
whose status as a franchisee  terminated prior to the Company's purchase of BEP.
On October 23,  1997,  the court issued its final order  dismissing  the lawsuit
with prejudice.

ITEM 2. CHANGES IN SECURITIES

        Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        Not applicable.

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

        Not applicable
                                       18
<PAGE>
ITEM 5. OTHER INFORMATION

        Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)   Exhibits.

         3.1A     Articles of  Amendment  to the  Articles of  Incorporation  of
                  DenAmerica Corp., as filed on July 2, 1997.
         10.92.B  Amendment and Limited Consent and Waiver dated as of September
                  30, 1997 among DenAmerica  Corp., the Banks (as defined),  and
                  Banque Paribas, as agent.
         10.111   Loan and Security  Agreement dated as of September 30, 1997 by
                  and among DenAmerica  Corp., CNL Growth Corp.,  Midsouth Foods
                  I, Ltd., and Midsouth Foods II, Ltd.
         10.112   5-Year 5% Convertible Redeemable Debenture dated September 30,
                  1997 in the principal amount of $4,400,000.
         10.113   Subordinated  Promissory  Note dated September 30, 1997 in the
                  principal amount of $7,700,000.
         10.114   Registration  Rights  Agreement dated as of September 30, 1997
                  between DenAmerica Corp., and CNL Growth Corp.
         10.115   Agreement  dated  as  of  September  30,  1997  by  and  among
                  DenAmerica  Corp.,  Beck Holdings,  Inc. and Unigate Holdings,
                  NV.
         11.1     Statement regarding computation of per share income
         27.1     Summary Financial Information
                                       19
<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.

                                     DENAMERICA CORP.

Dated:  November 14, 1997            By: /s/ Todd S. Brown
                                        ------------------
                                        Todd S. Brown
                                        Vice President, Chief Financial Officer,
                                        and Treasurer

                                        (Duly authorized officer of the
                                        registrant, principal financial
                                        and accounting officer)
                                       20