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 JUNE 28, 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:  13,081,821 shares of Common Stock, $.10
par value, as of August 16, 2000.
<PAGE>
                         PHOENIX RESTAURANT GROUP, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 28, 2000


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

PART I.  FINANCIAL INFORMATION

ITEM 1   Unaudited Financial Statements

         Condensed Consolidated Balance Sheets -
         December 29, 1999 and June 28, 2000................................   3

         Condensed Consolidated  Statements of Operations - 13-Week Periods
         ended June 30, 1999 and June 28, 2000 and  26-Week  Periods  ended
         June 30, 1999 and June 28, 2000 ...................................   4

         Condensed Consolidated  Statements of Cash Flows - 13-Week Periods
         ended June 30, 1999 and June 28, 2000 and  26-Week  Periods  ended
         June 30, 1999 and June 28, 2000....................................   5

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

ITEM 2   Management's Discussion and Analysis of Financial
         Condition and Results of Operations................................   8

ITEM 3   Quantitative and Qualitative Disclosures about Market Risk.........  14


PART II. OTHER INFORMATION..................................................  15

         SIGNATURES.........................................................  16

                                        2
<PAGE>
PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

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


                                                        DECEMBER 29,  JUNE 28,
                                                           1999         2000
                                                         ---------    ---------
                                ASSETS                               (Unaudited)
CURRENT ASSETS:
  Cash and cash equivalents                              $   1,491    $   2,465
  Receivables                                                2,244        2,180
  Inventories                                                1,087        1,011
  Deferred income taxes                                     11,700       11,700
  Other current assets                                       4,761        1,451
  Net assets held for sale                                  42,128       42,809
                                                         ---------    ---------
     Total current assets                                   63,411       61,616
PROPERTY AND EQUIPMENT - Net                                20,619       20,054
INTANGIBLE ASSETS - Net                                     11,117       10,934
OTHER ASSETS                                                 3,220        3,212
                                                         ---------    ---------

TOTAL                                                    $  98,367    $  95,816
                                                         =========    =========
  LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES:
  Accounts payable                                       $  17,778    $  21,026
  Accrued compensation                                       5,237        5,146
  Accrued taxes                                              4,733        3,614
  Other current liabilities                                 14,082       14,067
  Current debt obligations                                  25,651       25,711
                                                         ---------    ---------
       Total current liabilities                            67,481       69,564
LONG-TERM DEBT - Less current portion                       54,908       51,877
OTHER LONG-TERM LIABILITIES                                  5,214        4,662
                                                         ---------    ---------

      Total liabilities                                    127,603      126,103
                                                         ---------    ---------
COMMITMENTS AND CONTINGENCIES (note 3)

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       35,869
  Treasury stock, at cost, 403,456 shares                       --       (1,139)
  Accumulated deficit                                      (66,454)     (66,366)
                                                         ---------    ---------

    TOTAL SHAREHOLDERS' DEFICIT                            (29,236)     (30,287)
                                                         ---------    ---------

TOTAL                                                    $  98,367    $  95,816
                                                         =========    =========

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 PERIOD ENDED      26-WEEK PERIOD ENDED
                                                 (UNAUDITED)               (UNAUDITED)
                                            ----------------------    ----------------------
                                            JUNE 30,     JUNE 28,     JUNE 30,     JUNE 28,
                                              1999         2000         1999         2000
                                            ---------    ---------    ---------    ---------
<S>                                         <C>          <C>          <C>          <C>
RESTAURANT SALES                            $  61,801    $  55,523    $ 122,742    $ 111,994
                                            ---------    ---------    ---------    ---------
RESTAURANT OPERATING
EXPENSES:
  Food and beverage costs                      16,775       15,263       33,238       30,484
  Payroll and payroll related costs            21,341       19,202       42,160       38,574
  Depreciation and amortization                 1,676          633        3,361        1,309
  Other restaurant operating expenses          17,425       14,671       34,296       29,551
  Charge for impaired assets                    3,000           --        3,000           --
                                            ---------    ---------    ---------    ---------
       Total operating expenses                60,217       49,769      116,055       99,918
                                            ---------    ---------    ---------    ---------

RESTAURANT OPERATING INCOME                     1,584        5,754        6,687       12,076

ADMINISTRATIVE EXPENSES                         2,950        3,100        5,781        6,074
                                            ---------    ---------    ---------    ---------

OPERATING INCOME (LOSS)                        (1,366)       2,654          906        6,002

INTEREST EXPENSE - Net                          3,389        3,043        5,995        5,914
                                            ---------    ---------    ---------    ---------
INCOME (LOSS) BEFORE INCOME
  TAXES                                        (4,755)        (389)      (5,089)          88

INCOME TAX (BENEFIT)                             (596)          --         (731)          --
                                            ---------    ---------    ---------    ---------
INCOME (LOSS) BEFORE
  EXTRAORDINARY ITEMS                          (4,159)        (389)      (4,358)          88

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

NET INCOME (LOSS)                           $  (5,432)   $    (389)   $  (5,631)   $      88
                                            =========    =========    =========    =========

Basic and diluted income (loss) per share
  Before extraordinary item                 $    (.31)   $    (.03)   $    (.32)   $     .01
                                            =========    =========    =========    =========
  Net income (loss)                         $    (.31)   $    (.03)   $    (.32)   $     .01
                                            =========    =========    =========    =========

Basic and diluted weighted average shares
  Outstanding:
    Basic                                      13,485       13,081       13,485       13,081
                                            =========    =========    =========    =========
    Diluted                                    13,485       13,081       13,485       13,559
                                            =========    =========    =========    =========
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                        4
<PAGE>
                         PHOENIX RESTAURANT GROUP, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                           13-WEEK PERIOD ENDED   26-WEEK PERIOD ENDED
                                                               (UNAUDITED)            (UNAUDITED)
                                                            ------------------     ------------------
                                                            JUNE 30,   JUNE 28,    JUNE 30,   JUNE 28,
                                                             1999       2000        1999       2000
                                                            -------    -------     -------    -------
<S>                                                         <C>        <C>         <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                         $(5,432)   $  (389)    $(5,631)   $    88
  Adjustments to reconcile net loss to net cash
    provided by (used in) operating activities:
      Depreciation and amortization                           1,676        633       3,361      1,309
      Amortization of deferred financing costs                   90         --         181        187
      Charge for impaired assets                              3,000         --       3,000         --
      Extraordinary items                                     1,273         --       1,273         --
      Deferred income taxes                                    (596)        --        (731)        --
      Deferred rent                                              (8)        82          53        197
      Other - net                                              (319)       (31)       (534)       (34)
      Changes in operating assets and liabilities
        net of dispositions:
          Receivables                                          (558)       720        (529)        65
          Inventories                                            99         37          50         76
          Other current assets                                  424       (217)        590        (98)
          Accounts payable and accrued liabilities              395        204        (698)     1,755
                                                            -------    -------     -------    -------
      Net cash provided by operating activities                  44      1,039         385      3,545
                                                            -------    -------     -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES
      Purchase of property and equipment                       (948)      (584)     (2,407)    (1,014)
      Purchase of intangibles                                   (84)        --        (120)        --
      Proceeds from sale of assets                               --        145          --        145
                                                            -------    -------     -------    -------
      Net cash provided by (used in) operating activities    (1,032)      (439)     (2,527)      (869)
                                                            -------    -------     -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES
      Borrowings                                              5,521         --       6,378         --
      Debt issuance costs                                    (1,033)        --      (1,033)        --
      Note receivable collections                               595        112         733        197
      Principal reductions on long-term obligations            (878)    (1,108)     (1,786)    (1,899)
                                                            -------    -------     -------    -------
          Net cash used in financing activities               4,205       (996)      4,292     (1,702)
                                                            -------    -------     -------    -------
NET CHANGE IN CASH AND CASH
      EQUIVALENTS                                             3,217       (396)      2,150        974
CASH AND CASH EQUIVALENTS AT
      BEGINNING OF PERIOD                                     1,263      2,861       2,330      1,491
                                                            -------    -------     -------    -------

CASH AND CASH EQUIVALENTS AT END OF
      PERIOD                                                $ 4,480    $ 2,465     $ 4,480    $ 2,465
                                                            =======    =======     =======    =======
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the period for interest:                   $ 2,191    $ 2,289     $ 4,064    $ 4,237
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
      Cancellation of related party notes:
          Subordinated debenture                                                              $ 1,456
          Note receivable                                                                     $ 2,600

          Treasury stock                                                                      $ 1,139
</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  Form
10-Q  and do not  include  all of the  information  and  footnotes  required  by
generally accepted accounting principles for complete financial  statements.  In
our  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.

We currently operate 189 family-oriented, full-service restaurants in 20 states,
primarily in the  southwestern,  midwestern,  western,  and southeastern  United
States.  We own and operate 92 Black-eyed Pea  restaurants,  primarily in Texas,
Arizona,  Oklahoma,  and the  Washington,  D.C. area. We also own and operate 97
Denny's restaurants,  which represents  approximately 5.4% of the Denny's system
and makes us the largest  Denny's  franchisee in terms of revenue and the number
of restaurants operated.

(2) 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 six months of 2000.
All of these restaurants were underperforming and geographically undesirable. We
believe that these sales and closures have improved our restaurant portfolio. We
will  continue to evaluate the operating  results of all  remaining  restaurants
after  our  currently  anticipated  sales.  We will  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.  On June 22, 2000, we entered into an
agreement to sell 56 Denny's  restaurants to an existing Denny's  franchisee for
$35.6  million  in cash.  The  consummation  of the sale is subject to usual and
customary conditions to closing,  including the buyer's satisfactory  completion
of its due diligence and inspection of the restaurants and the buyer's obtaining
financing  for the  transaction.  As of June 28,  2000,  we received  letters of
interest  for the  proposed  sale of the  other 41  Denny's  restaurants.  These
proposals  are subject to usual and customary  conditions to closing,  including
the buyers'  obtaining  financing for such  transactions.  To the extent that we
sell some or all of our remaining  Denny's  restaurants,  we intend to apply the
proceeds  to  reduce  our  outstanding   indebtedness  and  pay  customary  fees
associated with the closing of the transactions.

It is anticipated that the sale of all Denny's  restaurants will be completed by
the end of fiscal 2000.

                                        6
<PAGE>
(3) OTHER MATTERS

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 cannot provide  assurance,  however,  that we and CNL will agree to
any further  extension or other  revisions of the payment terms of the note that
will be acceptable to us.

Included in other  current  assets at December  31, 1999 was a $2.5 million note
receivable  from  shareholders  bearing  interest at 6%. The note was secured by
Series B Notes with a face  amount of  approximately  $1.5  million  and 403,456
shares of our company's  common  stock.  In the first quarter of fiscal 2000, we
entered  into an agreement  with the holder of the note  whereby the  securities
collateralizing  the note were used to redeem the  receivable.  The common stock
thus acquired has been  classified as treasury  stock with a value of $1,139,000
representing  the difference in carrying  value between the note  receivable and
the Series B Notes redeemed.

(4) BUSINESS SEGMENTS

We  operate   family-oriented,   full-service  restaurants  under  two  separate
concepts,  Black-eyed  Pea and  Denny's.  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  twenty
six-week periods ended June 28, 2000 and June 30, 1999 are as follows:

<TABLE>
<CAPTION>
                                          13-WEEK PERIOD ENDED     26-WEEK PERIOD ENDED
                                         ----------------------   ----------------------
REVENUES                                 June 30,     June 28,    June 30,     June 28,
                                           1999         2000        1999         2000
                                         ---------    ---------   ---------    ---------
<S>                                      <C>          <C>         <C>          <C>
Black-eyed Pea                           $  35,288    $  29,612   $  70,901    $  61,090
Denny's                                     26,513       25,911      51,841       50,904
                                         ---------    ---------   ---------    ---------
     Total revenues                      $  61,801    $  55,523   $ 122,742    $ 111,994
                                         =========    =========   =========    =========

RESTAURANT OPERATING INCOME
Black-eyed Pea                           $   2,504    $   2,771   $   5,946    $   6,158
Denny's                                      1,898        2,955       3,559        5,824
Charge for impaired assets                  (3,000)          --      (3,000)          --
Gain on sale of assets                         182           28         182           94
                                         ---------    ---------   ---------    ---------
     Total restaurant operating income       1,584        5,754       6,687       12,076
     Administrative expenses                 2,950        3,100       5,781        6,074
                                         ---------    ---------   ---------    ---------
     Total operating income (loss)       $  (1,366)   $   2,654   $     906    $   6,002
                                         =========    =========   =========    =========
</TABLE>

                                        7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

GENERAL

We currently  operate 92 Black-eyed Pea  restaurants  in 8 states,  including 81
restaurants in Texas, Oklahoma,  and Arizona.  Through June 28, 2000, comparable
same-store  sales  decreased  12.3%,  and average weekly sales decreased 5.4% as
compared  with the first  quarter of fiscal  1999.  This  decrease is  primarily
attributable to the shift from television  advertising to local store marketing.
Carry-out sales accounted for approximately  13.0% and 11.4% of restaurant sales
for the 13-week period and 12.9% and 11.5% for the 26-week period ended June 28,
2000 and June 30, 1999.

As of June 28, 2000, we operated 97 Denny's restaurants in 17 states,  including
54 restaurants in Texas, Florida, and Arizona. Through June 28, 2000, comparable
same-store  sales increased 1.0%, and average weekly sales remained  constant at
$20,200 per unit as compared  with the first two  quarters of fiscal  1999.  The
increase is the result of the  disposal of certain  underperforming  restaurants
and the improvement in the overall asset base.

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     26-WEEK PERIOD ENDED
                                         ----------------------   ----------------------
                                         June 30,     June 28,    June 30,     June 28,
                                           1999         2000        1999         2000
                                         ---------    ---------   ---------    ---------
<S>                                      <C>          <C>         <C>          <C>
Restaurant sales                             100%         100%        100%         100%
                                           -----        -----       -----        -----
Restaurant operating expenses:
  Food and beverage costs                   27.1         27.5        27.1         27.2
  Payroll and payroll related costs         34.5         34.6        34.4         34.4
  Depreciation and amortization              2.7          1.1         2.7          1.2
  Other restaurant operating expenses       28.2         26.4        28.0         26.4
  Charge for impaired assets                 4.9           --         2.4           --
                                           -----        -----       -----        -----
      Total operating expenses              97.4         89.6        94.6         89.2
                                           -----        -----       -----        -----
Restaurant operating income                  2.6         10.4         5.4         10.8
Administrative expenses                      4.8          5.6         4.7          5.4
                                           -----        -----       -----        -----
Operating income                            (2.2)         4.8          .7          5.4
Interest expense                             5.5          5.5         4.9          5.3
                                           -----        -----       -----        -----
Income (loss) before income taxes and
  extraordinary items                        (77)        (0.7)       (4.2)          .1
Income tax benefit                          (1.0)          --        (0.6)          --
                                           -----        -----       -----        -----
Loss before extraordinary items             (6.7)        (0.7)       (3.6)          .1
Extraordinary items                         (2.1)          --        (1.0)          --
                                           -----        -----       -----        -----
Net income (loss)                           (8.8%)       (0.7%)      (4.6%)         .1%
                                           =====        =====       =====        =====
</TABLE>

                                        8
<PAGE>
THIRTEEN-WEEK  PERIOD ENDED JUNE 28, 2000  COMPARED  WITH  THIRTEEN-WEEK  PERIOD
ENDED JUNE 30, 1999

     RESTAURANT  SALES.  Restaurant  sales decreased $6.3 million,  or 10.2%, to
$55.5 million for the thirteen-week  period ended June 28, 2000 as compared with
restaurant  sales of $61.8 million for the  thirteen-week  period ended June 30,
1999. This decrease was primarily  attributable to a decline in same-store sales
of $4.1 million for the Black-eyed Pea restaurants due to a reduced  emphasis on
television  advertising and a decline of $3.5 million due to the closure or sale
of Black-eyed Pea and Denny's  restaurants  offset by sales from new stores. Our
Denny's restaurants increased same-store sales by 0.5% during the second quarter
of 2000. Restaurant sales attributable to the Black-eyed Pea restaurants for the
second quarter of 2000 and 1999 totaled 53% and 57% of total  restaurant  sales,
respectively.

     FOOD AND  BEVERAGE  COSTS.  Food and beverage  costs  increased to 27.5% of
restaurant  sales for the  thirteen-week  period ended June 28, 2000 as compared
with 27.1% of restaurant sales for the thirteen-week period ended June 30, 1999.
This increase is primarily due to increases in pork and coffee costs.

     PAYROLL AND PAYROLL  RELATED COSTS.  Payroll and payroll related costs were
34.6% of restaurant  sales for the  thirteen-week  period ended June 28, 2000 as
compared with 34.5% of restaurant sales for the thirteen-week  period ended June
30, 1999.  This increase was primarily  attributable  to the lower sales volumes
from the change in the Black-eyed Pea restaurants  marketing  program and higher
average wages offset by the closing of higher cost restaurants.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization of restaurant
equipment,  leasehold  improvements,  intangible  assets,  and  other  items was
$633,000 for the thirteen-week period ended June 28, 2000, as compared with $1.7
million for the thirteen-week  period ended June 30, 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 $1.0  million is primarily  due to the  cessation  of  depreciation  on these
assets.

     OTHER RESTAURANT  OPERATING EXPENSES.  Other restaurant  operating expenses
were 26.4% of restaurant sales for the thirteen-week  period ended June 28, 2000
as compared with 28.2% of restaurant  sales for the  thirteen-week  period ended
June 30,  1999.  As a result of a change  in  accounting  principles,  new store
opening costs of approximately zero and $380,000, were expensed when incurred in
the second quarter of 2000 and 1999, respectively.  Occupancy costs were reduced
by  $813,000  in the  second  quarter  of 2000  due to the  renegotiation  of an
equipment  lease.  Excluding these items,  other restaurant  operating  expenses
would have been $15.5 million,  or 27.9% of sales, for the thirteen-week  period
ended June 28, 2000 and $17.0 million,  or 27.6% of sales, for the thirteen-week
period ended June 30, 1999. The remaining  decrease of $1.6 million is primarily
due to the reduction in television advertising.

     RESTAURANT OPERATING INCOME.  Restaurant operating income increased to $5.8
million,  or 10.4% of restaurant sales, for the thirteen-week  period ended June
28, 2000, as compared with $1.6 million,  or 2.6% of restaurant  sales,  for the
thirteen-week  period ended June 30, 1999.  Restaurant  operating income in 1999
included a $3.0  million  charge for  impaired  assets.  Excluding  this charge,
restaurant  operating income would have been $4.6 million, or 7.4% of restaurant
sales in 1999.  This increase was principally the result of the reduced level of
expenses described above.

                                        9
<PAGE>
     ADMINISTRATIVE EXPENSES. Administrative expenses were $3.1 million, or 5.6%
of  restaurant  sales,  for the  thirteen-week  period ended June 28,  2000,  as
compared with $3.0 million,  or 4.8% of restaurant  sales, for the thirteen-week
period  ended June 30,  1999.  The  increase of $150,000 was due to increases in
legal and  professional  fees offset by the  reduction in  administrative  costs
associated  with  the  restaurants  sold  and  closed.  Administrative  expenses
expressed as a percentage of restaurant sales, however, increased primarily as a
result of decreased same-store sales at the Black-eyed Pea restaurants.

     INTEREST EXPENSE - NET. Interest expense, net, was $3.0 million, or 5.5% of
restaurant sales, for the  thirteen-week  period ended June 28, 2000 as compared
with $3.4 million,  or 5.5% of restaurant  sales, for the  thirteen-week  period
ended June 30,  1999.  The change is the result of the  increase in  outstanding
debt in 2000  offset by the  recording  of  approximately  $239,000  in 2000 and
$600,000 in 1999,  which  represents  the accrual of the compound  effect of the
interest associated with the Series B notes.

     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.

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

     NET INCOME (LOSS). We recorded a net loss of approximately $389,000 for the
thirteen-week  period ended June 28, 2000 and a net loss of $5.4 million for the
thirteen-week  period ended June 30, 1999, as a result of the factors  described
above.

TWENTY-SIX  WEEK PERIOD ENDED JUNE 28, 2000 COMPARED WITH TWENTY-SIX WEEK PERIOD
ENDED JUNE 30, 1999

     RESTAURANT  SALES.  Restaurant  sales decreased $10.7 million,  or 8.8%, to
$112.0  million for the  twenty-six  week period ended June 28, 2000 as compared
with  restaurant  sales of $122.7 million for the  twenty-six  week period ended
June 30,  1999.  This  decrease  was  primarily  attributable  to a  decline  in
same-store  sales of $7.8 million for our  Black-eyed Pea  restaurants  due to a
reduced emphasis on television  advertising and a decline of $7.3 million due to
the closure or sale of Black-eyed  Pea and Denny's  restaurants  offset by sales
from new stores.  Our Denny's  restaurants  increased  same-store  sales by 1.0%
during the first two  quarters of 2000.  Restaurant  sales  attributable  to our
Black-eyed Pea  restaurants for the fiscal 2000 and 1999 periods totaled 55% and
58% of total restaurant sales, respectively.

     FOOD AND BEVERAGE  COSTS.  Cost of food and beverage  increased to 27.2% of
restaurant  sales for the twenty-six week period ended June 28, 2000 as compared
with 27.1% of  restaurant  sales for the  twenty-six  week period ended June 30,
1999. This increase is primarily due to increases in pork and coffee costs.

     PAYROLL AND PAYROLL  RELATED  COSTS.  Payroll  and  payroll  related  costs
remained  constant at 34.4% of restaurant  sales for the twenty-six week periods
ended  June 28,  2000  and  June  30,  1999.  Increases  in  payroll  costs as a
percentage of sales were attributable to the lower sales volumes from the change
in the Black-eyed Pea marketing program and higher average wages,  offset by the
closing of higher cost restaurants.

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<PAGE>
     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization of restaurant
equipment, leasehold improvements,  intangible assets, and other items decreased
to $1.3 million for the  twenty-six  week period ended June 28, 2000 as compared
with $3.4  million  for the  twenty-six  week  period  ended June 30,  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 $2.1 million is primarily due to the cessation
of depreciation on these assets.

     OTHER  RESTAURANT  OPERATING COSTS.  Other restaurant  operating costs were
26.4% of restaurant  sales for the twenty-six week period ended June 28, 2000 as
compared with 28.0% of  restaurant  sales for the  twenty-six  week period ended
June 30,  1999.  As a result of a change  in  accounting  principles,  new store
opening costs of approximately zero and $597,000, were expensed when incurred in
the twenty six-week period of 2000 and 1999, respectively.  Occupancy costs were
reduced by $813,000 in the second quarter of 2000 due to the renegotiation of an
equipment  lease.  Excluding these items,  other restaurant  operating  expenses
would have been $30.4 million, or 27.1% of sales, for the twenty six-week period
ended  June 30,  2000 and  $33.7  million,  or 27.5% of  sales,  for the  twenty
six-week  period ended June 30, 1999.  The decrease of $3.3 million is primarily
due to the reduction in television advertising.

     RESTAURANT OPERATING INCOME. Restaurant operating income increased to $12.1
million, or 10.8% of restaurant sales, for the twenty-six week period ended June
28, 2000 as compared with $6.7 million,  or 5.4% of  restaurant  sales,  for the
twenty-six week period ended June 30, 1999.  Restaurant operating income in 1999
included a $3.0  million  charge for  impaired  assets.  Excluding  this charge,
restaurant  operating income would have been $9.7 million, or 7.9% of restaurant
sales, in 1999. This increase was principally the result of the reduced level of
expenses described above.

     ADMINISTRATIVE EXPENSES. Administrative expenses increased to $6.1 million,
or 5.4% of restaurant  sales for the twenty-six  week period ended June 28, 2000
as compared with $5.8 million,  or 4.7% of restaurant  sales, for the twenty-six
week  period  ended June 30,  1999.  This  increase  of  $293,000  is  primarily
attributable to increased legal and professional  fees,  offset by the reduction
in  administrative  costs  associated  with the  restaurants  sold  and  closed.
Administrative  expenses expressed as a percentage of restaurant sales, however,
increased primarily as a result of decreased  same-store sales at our Black-eyed
Pea restaurants.

     INTEREST  EXPENSE - NET.  Interest  expense  was $5.9  million,  or 5.3% of
restaurant sales, for the twenty-six week period ended June 28, 2000 as compared
with $6.0 million,  or 4.9% of restaurant  sales, for the twenty-six week period
ended June 30,  1999.  The change is the result of the  increase in  outstanding
debt in 2000  offset by the  recording  of  approximately  $430,000  in 2000 and
$600,000 in 1999,  which  represents  the accrual of the compound  effect of the
interest associated with the Series B notes.

     INCOME TAX BENEFIT. We did not record tax expense (benefit) associated with
the operating income 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.

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<PAGE>
     NET INCOME (LOSS). We recorded net income of approximately  $88,000 for the
twenty  six-week  period  ended June 28, 2000 and a net loss of $5.6 million for
the twenty  six-week  period  ended June 30,  1999,  as a result of the  factors
described above.

LIQUIDITY AND CAPITAL RESOURCES

Our strategy has been to: (a)  concentrate  on  developing  the  Black-eyed  Pea
concept  and brand  identity;  (b) focus on  restaurants  that  achieve  certain
operational and geographic  efficiencies;  and (c) sell or close underperforming
restaurants  and 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 six months of 2000. All of these  restaurants  were
underperforming and geographically  undesirable. We believe that these sales and
closures have improved our restaurant portfolio.

In October  1999,  we retained CNL Advisory  Services to act as our agent in the
sale of our remaining Denny's restaurants.  On June 22, 2000, we entered into an
agreement to sell 56 Denny's  restaurants to an existing Denny's  franchisee for
$35.6  million  in cash.  The  consummation  of the sale is subject to usual and
customary conditions to closing,  including the buyer's satisfactory  completion
of its due diligence and inspection of the restaurants and the buyer's obtaining
financing  for the  transaction.  As of June 28,  2000,  we received  letters of
interest  for the  proposed  sale of the  other 41  Denny's  restaurants.  These
proposals  are subject to usual and customary  conditions to closing,  including
the buyers' obtaining financing for such transactions.

To the extent that we sell some or all of our remaining Denny's restaurants,  we
intend to apply the  proceeds  to reduce our  outstanding  indebtedness  and pay
customary fees associated with the closing of the  transactions.  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, and the restaurant  industry  generally,  operate  primarily on a cash basis
with a relatively  small amount of receivables  and inventory.  Therefore,  like
many other  companies  in the  restaurant  industry,  we operate  with a working
capital  deficit.  Our working capital deficit was $7.9 million at June 28, 2000
and $4.1 million at December 29, 1999.  Our working  capital  deficit  increased
$3.8 million  primarily due to the cancellation of a current note receivable and
a  long-term  subordinated  note in the first  quarter of 2000 as  described  in
"Other  Matters" in the notes under Item 1 of this 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
asset impairment losses of $33.4 million.  In the first six months of 2000 there
has been a net  gain of  $88,000.  As a  result,  as of June  28,  2000 we had a
shareholders'  deficit of $30.3 million and our current liabilities exceeded our
current assets by $7.9 million.  These factors,  among others, may indicate that
we will be unable to continue  as a going  concern  for a  reasonable  period of
time.

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

                                       12
<PAGE>
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 successful operations. We are continuing our efforts to obtain additional
funds so that we can meet our obligations and sustain  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 cannot provide assurance, however, that we and CNL will agree to an
extension  or other  revisions  of the  payment  terms of the note  that will be
acceptable to us.

At June 28,  2000,  we had  outstanding  $15,563,000  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 June 28, 2000  accrued and unpaid  interest due to
these holders totals  $8,383,000.  Waivers for non-payment were received through
June 1999 but not since that date. The holders of the Subordinated  Notes cannot
pursue their rights under a default  until thirty months after the default date.
No formal  notice of default  has been  received.  The par value of the Series B
Notes at June 28, 2000 is $16,794,000.

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  $948,000 from the first quarter to
the second  quarter due to a shift in the marketing  program for  Black-eyed Pea
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  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 fiscal years
beginning after June 15, 2000. 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 have not  completed  the process of
evaluating  the impact  that will  result  from  adopting  SFAS No.  133. We are
therefore  unable to disclose the impact that adopting SFAS No. 133 will have on
our financial position and results of operations when such statement is adopted.

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<PAGE>
FORWARD LOOKING STATEMENTS

This  Report  on  Form  10-Q  contains  forward-looking  statements,   including
statements regarding our business strategies,  our business, and the industry in
which we operate.  These  forward-looking  statements are based primarily on the
our expectations and are subject to a number of risks and uncertainties, some of
which are beyond our 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 our Annual Report on Form 10-K for
the fiscal year ended December 29, 1999.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

At June 28, 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.

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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

     Not applicable.

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

     Not applicable.

ITEM 5. OTHER INFORMATION

     Effective July 31, 2000,  Brian McAlpine  resigned as the Company's  Acting
     Chief  Financial  Officer.  James C. Todd,  who has served as the Company's
     Controller since August 1990, was named as Acting Chief Financial Officer.

     Effective August 11, 2000, Jack M. Lloyd resigned as the Company's Chairman
     of the Board, Chief Executive Officer and Director.  William J. Howard, the
     Company's  Executive Vice  President,  was named as Interim Chief Executive
     Officer.

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: August 11, 2000                 By: /s/ James C. Todd
                                           -------------------------------------
                                           James C. Todd, Acting Chief Financial
                                           Officer (Duly authorized officer of
                                           the registrant, principal financial
                                           and accounting officer)

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