Securities And Exchange Commission
                             Washington, D.C. 20549

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

                                   Form 10-QSB

[X]       Quarterly Report Pursuant to Section 13 or 15(d)
          of the Securities Exchange Act of 1934

[ ]       Transition Report Pursuant to Section 13 or 15(d)
          of the Securities Exchange Act of 1934

                  For the Transition Period From _____ to _____

                      Commission File Number __0-21397____

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

                               Coffee People, Inc.
             (Exact name of registrant as specified in its charter)

          Oregon                                    93-1073218
(State or other jurisdiction of                  (I.R.S Employer
incorporation or organization)                   Identification No.)

                15100 SW Koll Pkwy, Suite J, Beaverton, OR 97006
                                 (503) 672-9603

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 [   ]

As of March 31, 1997, there were 3,241,892 shares of the registrant's Common
Stock outstanding.
--------------------------------------------------------------------------------


<PAGE>



                               COFFEE PEOPLE, INC.

                                      INDEX


  No.                                                                   Page
-------                                                                 ----

PART I.    FINANCIAL INFORMATION

Item 1.    Financial Statements                                           3

Item 2.    Management's Discussion and Analysis
           of Financial Condition and Results of
           Operations                                                     7


PART II.   OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K                              14

Signatures                                                               15





<PAGE>


PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements

                               COFFEE PEOPLE, INC.
                                 BALANCE SHEETS
                             (Dollars in thousands)

                                     ASSETS

                                                March 31,       December 31,
                                                  1997              1996
                                              ------------      ------------
                                               (Unaudited)
Current assets:
    Cash and cash equivalents                 $      8,400      $     10,274
    Accounts receivable                                 24                26
    Inventories                                        258               205
    Prepaid expenses                                   188               141
    Income taxes receivable                            110                 -
    Deferred tax assets                                 28                28
    Other current assets                                65                96
                                              ------------      ------------
      Total current assets                           9,073            10,770

Property and equipment, net                          7,340             5,513
Other assets                                           143               129
                                              ============      ============
      Total assets                            $     16,556      $     16,412
                                              ============      ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term
      debt and capital
      lease obligations                       $        105      $        115
    Current portion of long-term
      debt to related parties                           20                20
    Accounts payable                                   722               533
    Construction accounts payable                      371               321
    Accrued liabilities                                445               262
    Income taxes payable                                 -                47
                                              ------------      ------------
      Total current liabilities                      1,663             1,298

Deferred tax liability                                  86                86
Long-term debt and capital
  lease obligations                                    242               267
Long-term debt to related parties                      154               159

Stockholders' equity:
    Common stock, no par value;
      authorized, 50,000,000 shares;
      issued and outstanding,
      3,241,892 and 3,237,432 shares                14,496            14,492
    Stock subscription notes receivable               (286)             (281)
    Retained earnings                                  201               391
                                              ------------      ------------
      Total stockholders' equity                    14,411            14,602
                                              ------------      ------------
      Total liabilities and
        stockholders' equity                  $     16,556      $     16,412
                                              ============      ============

                 See accompanying notes to financial statements

<PAGE>



                               COFFEE PEOPLE, INC.
                              STATEMENTS OF INCOME
                (Dollars in thousands, except per share amounts)
                                   (Unaudited)

                                                   Three Months Ended
                                          -------------------------------------
                                             March 31,           March 31,
                                               1997                1996
                                          -----------------   -----------------

Revenues:
   Retail sales                            $    3,160           $   2,793
   Wholesale and other                             33                  52
                                           ----------           ---------
      Total revenues                            3,193               2,845

Cost of sales and related
   occupancy expenses                           1,559               1,334

Store operating expenses                        1,134                 873

Other operating expenses                            -                  13

Depreciation and amortization                     203                 114

General and administrative expenses               717                 419

                                           ----------           ---------
      Income (loss) from operations              (420)                 92

Other income, net                                 126                  37

Interest expense                                  (15)                (22)
                                           ----------           ---------

      Income (loss) before benefit
        (provision) for income taxes             (309)                107

Benefit (provision) for income taxes              119                 (41)
                                           ----------           ---------

Net income (loss)                          $     (190)          $      66
                                           ==========           =========

Earnings (loss) per share                  $    (0.06)          $     .03
                                           ==========           =========

Shares used in computing
   earnings per share                       3,271,184           2,033,342

                 See accompanying notes to financial statements


<PAGE>



                               COFFEE PEOPLE, INC.
                            STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                   (Unaudited)

                                                         Three Months Ended
                                                    ----------------------------
                                                       March 31,       March 31,
                                                         1997            1996
                                                    -------------   ------------

CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                 $      (190)    $      66
   Adjustments to reconcile net
     income (loss) to net cash provided
     (used) by operating activities--
      Depreciation and amortization                          203           114
      Interest income on stock subscription                   (5)           (5)
      Changes in operating assets and
        liabilities:
         Accounts receivable                                   2           (10)
         Inventories                                         (53)           25
         Prepaid expenses                                    (47)           27
         Income taxes receivable                            (110)            -
         Other current assets                                 31             -
         Accounts payable                                    189          (240)
         Accrued liabilities                                 183            59
         Income taxes payable                                (47)          (61)
                                                     -----------     ---------
      Net cash provided (used) by
        operating activities                                 156           (25)

CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment, net                (2,030)         (167)
   Change in other assets                                    (14)            -
   Construction accounts payable                              50             -
                                                     -----------     ---------
         Net cash used in investing activities            (1,994)         (167)

CASH FLOWS FROM FINANCING ACTIVITIES:
   Repayment of debt and capital lease
     obligations                                             (35)         (206)
   Repayment of related party debt                            (5)           (4)
   Proceeds from private placement                             -         3,725
   Issuance of common stock, net                               4             6
                                                     -----------     ---------
         Net cash (used) provided by
           financing activities                              (36)        3,521

                                                     -----------     ---------
(DECREASE) INCREASE IN CASH                               (1,874)        3,329

CASH, beginning of period                                 10,274           260

                                                     ===========     =========
CASH, end of period                                  $     8,400     $   3,589
                                                     ===========     =========

                 See accompanying notes to financial statements.



<PAGE>


                               COFFEE PEOPLE, INC.
                          NOTES TO FINANCIAL STATEMENTS

               For the Three Months Ended March 31, 1997 and 1996
                                   (Unaudited)

NOTE 1.  FINANCIAL STATEMENT PRESENTATION:

The interim financial data is unaudited; however, in the opinion of management,
the interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results for the interim
periods. The financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading.

NOTE 2.  SUBSEQUENT EVENTS

Acquisition
-----------
In April 1997, the Company signed a definitive agreement to acquire 15 specialty
coffee retail stores in Arizona from The Coffee Plantation, Inc., an Arizona
corporation ("Coffee Plantation"). The purchase price will be approximately $8.2
million, plus the cost of inventory to be purchased at closing and will be
accounted for under the purchase method of accounting. Thirteen of the units are
located in Phoenix and two in Tucson. The Company will also be acquiring the
wholesale coffee bean operations of Coffee Plantation.


Facilities
----------
In April 1997, the Company opened a new store in Los Angeles, California and
closed one of its stores in Portland, Oregon. The closure was planned as a
result of the stores' lease expiration and its close proximity to one of the
Company's top producing stores. The Company believes that the closure of this
store will not have a material impact on results of operations for 1997.


Employee Stock Purchase Plan
----------------------------
On May 1, 1997, 4,173 shares were issued at $4.52 for the subscription period
ended April 30, 1997. The purchase price for each share is the lesser of 85
percent of the fair market value of such share on the first day of the
subscription period or 85 percent of the fair market value on the last day of
the subscription period. The fair market value is the average of the NASDAQ
closing bid and asked prices on April 30, 1997.


<PAGE>


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

         The following discussion contains forward looking statements within the
meaning of the federal securities laws and involves a number of risks and
uncertainties. Actual results and trends may differ materially from the
statements contained in this discussion, depending on a variety of factors. Such
factors include, but are not limited to, the price and availability of green
coffee and other raw materials, successful execution of the Company's expansion
plans, the ability of the Company to manage growth, the impact of competition,
acceptance of the Company's products and image outside of Oregon and other risks
detailed in the Company's annual report on Form 10-KSB and its Registration
Statement on Form SB-2, effective September 25, 1996, both of which are on file
with the Securities and Exchange Commission.

OVERVIEW
--------

         Coffee People sells coffee beverages, coffee beans, cookies, pastries
and coffee related merchandise through retail specialty coffee stores. The first
Coffee People store opened in 1983. As of March 31, 1997, the Company operated
29 stores.

         In January 1996, the Company raised net proceeds of $3,725,000 in a
private placement of Common Stock. In September 1996, the Company completed an
initial public offering in which it raised net proceeds of $9,717,000 from the
sale of 1,225,000 shares of Common Stock. The Company intends to use the net
proceeds from the public offering and the private placement to build or acquire
stores.

         During the period from September 1996 through March 31, 1997, the
Company opened ten of the approximately 30 stores which it planned to open by
December 31, 1997. In April 1997, the Company signed a definitive agreement to
purchase 15 specialty coffee retail stores in Arizona from The Coffee
Plantation, Inc. The Company intends to continue to open or acquire stores
during the remainder of 1997 to enable it to meet its 30-store goal. This is a
forward-looking statement. Actual results may differ depending upon a variety of
factors, including the Company's ability to successfully close the acquisition
of the Coffee Plantation stores, to find optimal store locations at favorable
lease rates and the ability to construct new stores within budgeted amounts.

         New stores typically incur higher than normal operating costs and lower
than normal revenues during the first few months of store operation. Based on
its overall experience at its Portland stores, on average the Company expects a
store to break even at the store level by the third month of operation and to
make a profit after allocation of corporate general and administrative expenses
by the sixth month of operation. Two of the three stores opened during the
fourth quarter of 1996, however, continue to incur operating losses at the store
level. There can be no assurance that future stores will meet the Company's
expectations for profitability.

<PAGE>

         Store opening costs, including employee recruiting and training and new
store marketing and promotion expenses, are expensed by the Company as incurred.
The concentration of these costs in periods when a large number of new stores
are being opened is expected to significantly affect the Company's operating
results for such periods.

         As new markets are developed and as new stores mature, the Company
expects average store sales from stores in that market to increase. However, as
the Company strives to build overall market share, annual average store sales
and year-over-year comparable store sales comparisons may decline as new stores
are built in relatively close proximity to existing stores.


RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

         Revenues. Total revenues increased 12.2% to $3,193,000 for the three
months ended March 31, 1997 from $2,845,000 for the same period in 1996. Retail
sales increased 13.1% to $3,160,000 for the 1997 period from $2,793,000 for the
1996 period.

         Comparable store sales for the 19 stores open for the full three months
ended March 31, 1997 and 1996 increased 3.5%, after removing the effect of the
leap-year day in February 1996, primarily due to a price increase in September
1996 on coffee beverages. Comparable store sales during the quarter were
adversely affected by a 10.6% decline in sales at one of the Company's stores
located in a shopping center that is undergoing redevelopment and by a 20.9%
decline in a store located in close proximity to one of the Company's top
producing stores. The lease on the latter store expired and the store was closed
in April 1997.

         The increase in comparable store sales represents 23.9% of the overall
increase in retail sales. Incremental sales from the stores opened in the fourth
quarter of 1996 and the first quarter of 1997 contributed 76.1% of the increase.

         Wholesale and other sales decreased 36.5% to $33,000 for the three
months ended March 31, 1997 from $52,000 for the same period in 1996. The
decrease was expected due to the Company's decision to turn over the servicing
of the Company's wholesale business to an outside firm. These sales primarily
represent sales made to the outside firm at a fixed mark-up over cost.

         Costs and expenses. Cost of sales and related occupancy expenses as a
percentage of total revenues increased to 48.8% for the three months ended March
31, 1997 as compared to 46.9% for the same period in 1996. The primary
components were an increase of 0.9% in cost of sales and an increase of 1.0% in
occupancy costs. The increase in both cost of sales and occupancy as a
percentage of total revenues is due primarily to the effect of the new stores
opened during the fourth quarter of 1996 and first quarter of 1997 which stores
have lower sales levels and, consequently, higher cost of sales and occupancy
expenses as a percentage of sales.

         Store operating expenses as a percentage of retail sales increased to
35.9% for the three months ended March 31, 1997 from 31.3% for the same period
in 1996. The increase is due primarily to higher initial operating expenses
associated with the three new stores opened in the fourth quarter of 1996 and
the seven new stores opened in the first quarter of 1997. The initial store
operating expenses include employee recruiting and training and new store
marketing and promotion expenses.

<PAGE>

         Depreciation and amortization as a percentage of total revenues
increased to 6.4% for the three months ended March 31, 1997 from 4.0% for the
same period in 1996, due primarily to the impact of higher design and build-out
costs for the stores opened in 1996 and 1997. These stores carry higher
depreciation expense as a percentage of total revenues than stores opened prior
to 1996.

         General and administrative expenses increased to $717,000 for the three
months ended March 31, 1997 from $419,000 for the same period in 1996 due
primarily to the addition of key management personnel, increased legal,
accounting and professional fees associated with being a public company, and
other costs necessary to achieve the Company's growth plans. As a percentage of
total revenues, general and administrative expenses increased to 22.5% for the
three months ended March 31, 1997 from 14.7% for the same period in 1996.

         Average store sales and store contribution margin. For the three months
ended March 31, 1997, the Company's 15 neighborhood and drive-through stores
open for the full period achieved average store sales of $151,000 and an average
store contribution margin of 14.3% compared to $171,000 and 21.6%, respectively,
for the 12 stores open during the full period of 1996. The decline in average
store sales and store contribution margins is due to the three stores opened in
the fourth quarter of 1996. Two of the three stores continue to incur operating
losses. Without the effect of the three new stores the Company achieved average
store sales for the period of $172,000 and an average store contribution margin
of 20.2%. The six airport stores and one kiosk store open for the full period
achieved average store sales of $112,000 and an average store contribution
margin of 15.6%, respectively, compared to $102,000 and 9.6% for six airport
stores and one kiosk open for the full period of 1996. The increase in store
contribution margins at the Company's airport stores is due primarily to
increased transaction volumes and lower labor costs as a percentage of sales at
the airport stores.

         Other income. Other income as a percentage of total revenues increased
to 3.9% for the three months ended March 31, 1997 from 1.3% for the same period
in 1996 due to interest earned on the proceeds from the Company's initial public
offering in September 1996.

         Interest Expense. Interest expense as a percentage of total revenues
decreased to 0.5% for the three months ended from 0.8% for the same period in
1996, due primarily to a decrease in principal amount outstanding on existing
debt.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         The Company plans to open or acquire approximately 27 new retail stores
during 1997 including the seven new stores opened during the first quarter of
1997. The Company estimates that the cost of constructing a new neighborhood
coffee house based on its prototype design, including site selection costs,
lease negotiation, store design, permitting, architectural fees, construction
supervision, leasehold improvements and equipment, will be approximately
$325,000. There can be no assurance, however, that costs of constructing new
stores will not substantially exceed this estimate. In addition, the cost of
acquiring existing stores may exceed the cost of building new stores.

<PAGE>

         In April 1997, the Company signed a definitive agreement to acquire 15
Coffee Plantation stores in Arizona in a cash transaction. The cost of the
acquisition will be approximately $8.2 million, plus the cost of inventory at
closing. Of the total purchase price, $6.0 million is being financed with the
proceeds from a five-year term loan from Bank of America. The remaining amount
will come from company cash reserves.

         Working capital as of March 31, 1997 totaled $7,410,000 as compared to
$9,472,000 at December 31, 1996.

         As of March 31, 1997 the Company had $8,400,000 in cash and
equivalents.

         For the three months ended March 31, 1997 and for the same period in
1996, cash provided by operating activities was $156,000 and net cash used by
operating activities was $25,000, respectively. For the three months ended March
31, 1997, the Company had net cash used by financing activities of $36,000. For
the three months ended March 31, 1997 and for the same period in 1996, net cash
used in investing activities was $1,994,000 and $167,000 respectively. The
primary use of net cash used in investing activities was capital expenditures
for new retail stores.

         For the three months ended March 31, 1996, net cash provided by
financing activities totaled $3,521,000 primarily as a result of net proceeds of
$3,725,000 from the Company's private placement completed in January 1996.

         The Company has a bank line of credit providing for borrowings through
August 1, 1997 of up to $500,000. Borrowings bear interest at the rate of 0.5%
over the bank's prime rate (8.5% as of March 31, 1997) and are secured by
substantially all of the Company's assets, including accounts receivable,
inventories, trade fixtures and equipment. As of March 31, 1997 there were no
borrowings outstanding under the line of credit; however, $73,000 of the line
was reserved for a letter of credit dated September 1996. The line of credit
agreement contains restrictive covenants relating to certain financial ratios as
well as the bank's standard covenants and restrictions. As of March 31, 1997,
the Company was in compliance with all such debt covenants.

         The Company believes that anticipated cash flow from operations,
existing cash and bank debt will be sufficient to meet the Company's anticipated
capital requirements for planned expansion through the end of 1997.

COFFEE PRICES AND OTHER EXPENSES AND RISKS
------------------------------------------

         Coffee prices are volatile and the Company has experienced price
fluctuations for its purchased coffee. During the first part of 1997, the
commodities markets have witnessed a significant increase in the price of green
coffee, with prices more than doubling from a level in the $1.15 per pound range
in December 1996 to over $2.50 per pound in April 1997. The Company's supply
agreement provides for the Company to purchase its coffee at a fixed amount over
green cost. As a result, the Company's cost of coffee will fluctuate with the
price of green coffee. The Company is currently experiencing higher costs for
coffee as lower-cost inventories have been consumed and as forward commitments
have been replaced with commitments at higher prices. If coffee prices remain at
their current levels, the Company will continue to incur substantially higher
prices for coffee. The Company's ability to raise prices in response to rising
coffee prices may be limited by competitive pressures if other major specialty
coffee retailers do not raise prices. The Company's inability to pass through
higher coffee prices in the form of higher retail prices for beans and beverages
could have a material adverse effect on the Company's earnings.

<PAGE>

         On November 5, 1996, Oregon voters passed a ballot initiative which
will raise the state minimum wage over a three-year period from $4.75 per hour
to $6.50 per hour. Prior to 1997 the Company paid all employees, other than
newly hired employees participating in a 20-hour training program, above the
minimum wage in effect in 1997. In compliance with this initiative, the Company
pays all employees at or above the minimum wage in effect in 1997. The Company
does not expect the new minimum wage to have a material adverse effect on
earnings in 1997. It is uncertain what impact, if any, the minimum wage increase
will have on the Company's operating results beyond 1997; any impact is expected
to be mitigated to some extent, however, by the Company's planned continued
expansion outside Oregon.

         The Company's future results of operations and earnings could also be
significantly affected by other factors, such as the Company's ability to find
optimal store locations at favorable lease rates, increased competition within
the specialty coffee industry, the Company's continued ability to hire, train,
and retain qualified personnel, the Company's continued ability to obtain
adequate capital to finance it's planned expansion and the Company's ability to
successfully assimilate new and acquired stores into its existing operations and
management structure.

NEW ACCOUNTING STANDARDS
------------------------

         Statement of Financial Accounting Standards No. 128, "Earnings per
Share," simplifies the standards for computing earnings per share and makes them
comparable to international EPS standards. It replaces primary EPS with basic
EPS that excludes dilution and uses the weighted-average number of common shares
outstanding for the period. The Company is in the process of analyzing the
impact of this statement and does not believe that it will have a material
impact on earnings per share and anticipates adopting the provisions of the
statement for 1997.

         Statement of Financial Accounting Standards No. 129, "Disclosure and
Information about Capital Structure," applies only to nonpublic entities.

<PAGE>



PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  11 Statement Regarding Computation of Per Share Earnings

                  27 Financial Data Schedule


         (b)      Report on Form 8-K

                  No current Reports on Form 8-K were filed during the period
covered by this report.



<PAGE>



                                                    SIGNATURES


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

                               Coffee People, Inc.



                               /s/ Kenneth B. Ross
                               -----------------------
                               Kenneth B. Ross
                               Chief Financial Officer

                               Signing on behalf of the registrant
                               and as principal financial officer