UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


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

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1999

                         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                               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 shares of the  issuer's  class of common  stock as of the  latest
practicable  date, is as follows:  13,485,277  shares of Common Stock,  $.10 par
value, as of November 15, 1999.
<PAGE>
                         PHOENIX RESTAURANT GROUP, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 29, 1999


                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
PART I. FINANCIAL INFORMATION

ITEM 1    Unaudited Financial Statements

          Condensed Consolidated Balance Sheets -
            December 30, 1998 and September 29, 1999.......................    3

          Condensed Consolidated  Statements of Operations - 13-Week
            Periods ended September 30, 1998 and September 29, 1999
            and 39-Week Periods ended September 30, 1998 and
            September 29, 1999.............................................    4

          Condensed Consolidated Statements of Cash Flows - 13-Week Periods
            ended September 30, 1998 and September 29, 1999
            and 39-Week Periods ended September 30, 1998 and
            September 29, 1999.............................................    5

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

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

PART II.  OTHER INFORMATION................................................   16

          SIGNATURES.......................................................   17

                                        2
<PAGE>
PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS

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


                                                     December 30,  September 29,
                                                        1998          1999
                                                      ---------     ---------
                                                                   (Unaudited)
                                     ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                           $   2,330     $   1,696
  Receivables                                             2,636         2,075
  Inventories                                             2,917         1,227
  Other current assets                                    5,533         4,645
  Assets held for sale                                       --        42,105
                                                      ---------     ---------
      Total current assets                               13,416        51,748
PROPERTY AND EQUIPMENT, Net                              55,648        21,278
INTANGIBLE ASSETS, Net                                   50,580        12,654
DEFERRED INCOME TAXES                                     5,578         6,995
OTHER ASSETS                                              9,285         6,443
                                                      ---------     ---------
TOTAL                                                 $ 134,507     $  99,118
                                                      =========     =========

                      LIABILITIES AND SHAREHOLDERS' DEFICIT

CURRENT LIABILITIES:
  Accounts payable                                    $  18,026     $  15,994
  Accrued compensation                                    5,402         5,829
  Accrued taxes                                           5,089         4,289
  Other current liabilities                               8,946        13,942
  Current portion of long-term debt                      20,791         6,293
                                                      ---------     ---------
      Total current liabilities                          58,254        46,347
LONG-TERM DEBT, Less current portion                     72,494        75,058
OTHER LONG-TERM LIABILITIES                               7,093         4,129
                                                      ---------     ---------
      Total liabilities                                 137,841       125,534
                                                      ---------     ---------
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 issued and
    outstanding                                           1,349         1,349
  Additional paid-in capital                             35,869        35,869
  Accumulated deficit                                   (40,552)      (63,634)
                                                      ---------     ---------
      Total shareholders' deficit                        (3,334)      (26,416)
                                                      ---------     ---------
TOTAL                                                 $ 134,507     $  99,118
                                                      =========     =========

See accompanying notes to condensed consolidated financial statements

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

<TABLE>
<CAPTION>
                                          13-Week Periods Ended         39-Week Periods Ended
                                         ------------------------      ------------------------
                                       September 30,  September 29,  September 30,  September 29,
                                           1998           1999           1998           1999
                                         ---------      ---------      ---------      ---------
<S>                                      <C>            <C>            <C>            <C>
RESTAURANT SALES                         $  62,231      $  60,078      $ 197,177      $ 182,820
                                         ---------      ---------      ---------      ---------
RESTAURANT OPERATING EXPENSES:
  Food and beverage costs                   17,086         16,307         54,193         49,545
  Payroll and payroll related costs         21,294         20,691         67,418         62,851
  Depreciation and amortization              1,940          1,789          5,669          5,150
  Other restaurant operating expenses       17,865         18,640         54,848         52,936
  Charge for impaired assets and other          --         13,826             --         16,826
                                         ---------      ---------      ---------      ---------
      Total operating expenses              58,185         71,253        182,128        187,308
                                         ---------      ---------      ---------      ---------
RESTAURANT OPERATING INCOME (LOSS)           4,046        (11,175)        15,049         (4,488)

ADMINISTRATIVE EXPENSES                      3,142          3,014          9,193          8,795
                                         ---------      ---------      ---------      ---------
OPERATING INCOME (LOSS)                        904        (14,189)         5,856        (13,283)

INTEREST EXPENSE, Net                        2,881          3,262          9,429          9,257
                                         ---------      ---------      ---------      ---------
LOSS BEFORE INCOME TAXES AND
  EXTRAORDINARY ITEM                        (1,977)       (17,451)        (3,573)       (22,540)

INCOME TAX BENEFIT                            (794)            --         (1,293)          (731)
                                         ---------      ---------      ---------      ---------
LOSS BEFORE EXTRAORDINARY
  ITEM                                      (1,183)       (17,451)        (2,280)       (21,809)

EXTRAORDINARY LOSS (GAIN),
  Net of tax of ($914)and $686                  --             --         (1,371)         1,273
                                         ---------      ---------      ---------      ---------
NET LOSS                                 $  (1,183)     $ (17,451)     $    (909)     $ (23,082)
                                         =========      =========      =========      =========
Basic and diluted (loss) per share:
  Before extraordinary item              $    (.09)     $   (1.29)     $    (.17)     $   (1.62)
                                         =========      =========      =========      =========
  Net (loss)                             $    (.09)     $   (1.29)     $    (.07)     $   (1.71)
                                         =========      =========      =========      =========
Basic and diluted weighted average
shares outstanding:
  Basic                                     13,485         13,485         13,453         13,485
  Diluted                                   13,485         13,485         13,453         13,485
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                        4
<PAGE>
                 PHOENIX RESTAURANT GROUP, INC. AND SUBSIDIARIES
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                      13-Week Periods Ended          39-Week Periods Ended
                                                     ------------------------       -----------------------
                                                    September 30,  September 29,  September 30,  September 29,
                                                       1998            1999           1998           1999
                                                     --------        --------       --------       --------
<S>                                                  <C>             <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss                                           $ (1,183)       $(17,451)      $   (909)      $(23,082)
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
      Depreciation and amortization                     1,940           1,789          5,669          5,150
      Amortization of deferred financing costs            246             120            738            301
      Charge for impaired assets and other                             13,826                        16,826
      Extraordinary item                                   --              --         (1,371)         1,273
      Deferred income taxes                              (794)             --         (1,293)          (731)
      Deferred rent                                        63             177            209            230
      Other                                               263             349           (568)          (305)
      Changes in operating assets and
        liabilities net of dispositions:
          Receivables                                     221              42            748           (487)
          Inventories                                       5              81            198            131
          Other current assets                           (442)            (32)           227            558
          Accounts payable and accrued liabilities         52             437         (5,353)          (261)
                                                     --------        --------       --------       --------
        Net cash provided by (used in)
          operating activities                            371            (662)        (1,705)          (397)
                                                     --------        --------       --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of property and equipment                     (875)         (1,317)        (2,062)        (3,724)
  Purchase of intangibles                                (220)             --           (289)            --
  Proceeds from the sale of assets                         --              --         25,900             --
                                                     --------        --------       --------       --------
        Net cash provided by (used in)
          investing activities                         (1,095)         (1,317)        23,549         (3,724)
                                                     --------        --------       --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings, net                                         325             450          3,996          6,828
  Debt issuance costs                                      --            (304)            --         (1,337)
  Note receivable collections                             269              90          1,983            823
  Principal reductions on long-term obligations          (935)         (1,041)       (28,134)        (2,827)
  Other                                                    75              --             75             --
                                                     --------        --------       --------       --------
        Net cash provided by (used in)
          financing activities                           (266)           (805)       (22,080)         3,487
                                                     --------        --------       --------       --------
NET CHANGE IN CASH AND CASH
  EQUIVALENTS                                            (990)         (2,784)          (236)          (634)
CASH AND CASH EQUIVALENTS AT
  BEGINNING OF PERIOD                                   2,021           4,480          1,267          2,330
                                                     --------        --------       --------       --------
CASH AND CASH EQUIVALENTS AT END OF
  PERIOD                                             $  1,031        $  1,696       $  1,031       $  1,696
                                                     ========        ========       ========       ========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid during the period for:
  Interest                                           $  2,205        $  1,980       $  7,556       $  6,044
                                                     ========        ========       ========       ========
</TABLE>

See accompanying notes to condensed consolidated financial statements

                                        5
<PAGE>
                 PHOENIX RESTAURANT GROUP, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

(1) BASIS OF PRESENTATION

The  accompanying  unaudited  condensed  consolidated  financial  statements  of
Phoenix  Restaurant  Group,  Inc. and  Subsidiaries  (the  "Company")  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.  Effective July 2, 1999, the Company changed its name from
DenAmerica  Corp.  to  Phoenix  Restaurant  Group,  Inc.  In the  opinion of the
Company's management,  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 the  Company's
Annual Report on Form 10-K for the fiscal year ended December 30, 1998.

The Company currently operates 194 family-oriented,  full-service restaurants in
23 states, primarily in the southwestern,  midwestern, western, and southeastern
United  States.  The Company owns and operates 95  Black-eyed  Pea  restaurants,
primarily in Texas, Georgia, Arizona,  Oklahoma, and the Washington,  D.C. area.
The Company  also owns and  operates 99 Denny's  restaurants,  which  represents
approximately  5.8% of the  Denny's  system and makes the  Company  the  largest
Denny's  domestic  franchisee in terms of revenue and the number of  restaurants
operated.

(2) 1998 ASSET DIVESTITURES

In  March  1998,  the  Company  completed  the  sale  of 63  Denny's  and  eight
non-branded  restaurants,  of which six were closed, to a Denny's franchisee for
gross proceeds of $28.7 million. Net cash proceeds of $25.2 million were used to
repay debt obligations at a $2.4 million discount.  The Company has included the
$2.4 million  before-tax  discount as an extraordinary  item in the accompanying
1998 financial statements.

In a separate  transaction  completed in March 1998,  the Company also sold five
Denny's  restaurants for cash of $700,000 plus a note in the principal amount of
$400,000.  The Company  has  recorded a gain of  approximately  $575,000 on this
transaction, which is included as a partial offset to other restaurant operating
expenses.

(3) OTHER MATTERS

On June 30, 1999, the Company  consummated a $20.1 million  financing  agreement
with  CNL  APF  Partners,   LP  ("CNL")  whereby  CNL  purchased  the  remaining
outstanding indebtedness under the Company's existing senior credit facility and
advanced an additional  $5.4 million to the Company.  In August 1999,  this debt
was modified to be interest  only through  January 31, 2000.  As a result of the
Company's  decision to sell the remaining Denny's  restaurants,  the Company and
CNL have agreed to modify the financing agreement. As of September 29, 1999, the
Company was in  compliance  with the terms and  conditions  of its various  debt
agreements.

In conjunction  with the  aforementioned  transaction,  the Company and Denny's,
Inc. entered into an agreement whereby approximately $2.6 million of royalty and
advertising  obligations  were  converted  into  notes  payable.   Approximately
$800,000 of these notes payable were satisfied through the cancellation of

                                        6
<PAGE>
a Denny's  development  rights  agreement  and the transfer or assignment of two
restaurant leasehold properties from the Company to Denny's,  Inc. The remaining
note payable of $1.8 million bears interest at 11%, is due in November 2000, and
is secured by the leasehold interests and equipment in four Denny's restaurants.
In connection with these transactions,  consideration  received approximated the
Company's carrying value.

As of June 30, 1999, in connection with the CNL transaction described above, the
Company wrote off  approximately  $2.0 million of deferred  financing costs. The
Company included the $2.0 million  before-tax amount as an extraordinary item in
the accompanying financial statements.

During the second and third  quarters of 1999,  the Company  identified  certain
Denny's  restaurants  which  will be sold over the next  several  quarters.  The
Company  determined  that the carrying  value of the assets exceeds the probable
purchase price  attributable to these  restaurants and has recorded a charge for
impaired  goodwill and intangible  assets of $3.0 and $5.5 million in the second
and third quarters, respectively, in the accompanying financial statements.

In the third quarter of 1999, the Company  recorded  charges of (1) $3.0 million
related to four  Black-eyed Pea restaurants  and one Denny's  restaurant  closed
during the  quarter,  and (2) $1.4  million to reflect  increased  estimates  of
liabilities  related to restaurants  closed in prior periods because the Company
determined that the cost and timing of subleasing  those  properties will exceed
previous  estimates.  The Company recorded an additional  charge of $3.9 million
related to 16 Denny's  restaurants  sold  during 1997 and 1998 where the Company
remains contingently liable for equipment leases, rents, and property taxes as a
result of a pending  bankruptcy filing by one buyer and  non-performance  by the
other buyer.

(4)  SUBSEQUENT EVENTS

In October  1999,  the Company  entered into an agreement to transfer the assets
and  certain  liabilities  associated  with 21  Denny's  restaurants  to William
Howard,  the Company's  Executive Vice President,  in exchange for consideration
valued at  approximately  $19.5 million.  Under the  agreement,  Mr. Howard will
contribute  to the Company  approximately  1.7 million  shares of the  Company's
common stock and approximately 147,000 common stock purchase warrants,  having a
combined fair market value of $1.3 million; Mr. Howard will assume approximately
$7.5 million in principal and interest under a subordinated  note payable to Mr.
Howard; and the Company will contribute other liabilities totaling approximately
$1.9 million.  The  transaction is subject to usual and customary  conditions to
closing, including arrangements for financing  and obtaining consents of various
lenders, landlords, and the Denny's franchisor. The Company recorded a charge of
$3.0 million for impaired assets associated with these restaurants in the second
quarter and increased the charge in the third quarter by $402,000.

In addition to the sale described  above,  in October 1999 the Company  retained
CNL Advisory  Services to act as its agent in the  disposition  of the Company's
remaining  78 Denny's  restaurants.  A charge of $5.5  million for the  impaired
assets  was  recorded  in the third  quarter  in  connection  with this  planned
disposition.

The Company  intends to use the proceeds from the sales of these  restaurants to
reduce  its  outstanding  debt and for other  corporate  purposes.  The  Company
believes that these steps will better position the Company for profitability and
enhanced shareholder value.

                                        7
<PAGE>
(5) BUSINESS SEGMENTS

The  Company  operates  family-oriented,   full-service  restaurants  under  two
separate concepts,  Black-eyed Pea and Denny's.  The Company owns the Black-eyed
Pea brand and  operates  the Denny's  restaurants  under the terms of  franchise
agreements.  The two  concepts  have  separate  management  teams and  reporting
infrastructures.  The Company's revenue and restaurant  operating income for the
thirteen-week  and  thirty  nine-week  periods  ended  September  30,  1998  and
September 29, 1999 are as follows (in thousands):

<TABLE>
<CAPTION>
                                         13-Week Periods Ended          39-Week Periods Ended
                                      ----------------------------   ----------------------------
                                      September 30,  September 29,   September 30,  September 29,
REVENUE                                  1998            1999            1998           1999
                                       ---------       ---------       ---------      ---------
<S>                                    <C>             <C>             <C>            <C>
Black-eyed Pea                         $  34,866       $  33,467       $ 106,727      $ 104,368
Denny's                                   27,311          26,611          89,980         78,452
Non-branded                                   54              --             470             --
                                       ---------       ---------       ---------      ---------
  Total revenues                       $  62,231       $  60,078       $ 197,177      $ 182,820
                                       =========       =========       =========      =========

RESTAURANT OPERATING INCOME (LOSS)

Black-eyed Pea                         $   1,996       $   1,514       $   8,796      $   7,460
Denny's                                    2,081           1,539           5,824          5,098
Non-branded                                  (31)             --            (146)            --
Charge for impaired assets and other          --         (13,826)             --        (16,826)
Gain (loss) on sale of assets                 --            (402)            575           (220)
                                       ---------       ---------       ---------      ---------
  Restaurant operating income (loss)       4,046         (11,175)         15,049         (4,488)
  Administrative expenses                  3,142           3,014           9,193          8,795
                                       ---------       ---------       ---------      ---------
  Operating income (loss)              $     904       ($ 14,189)      $   5,856      ($ 13,283)
                                       =========       =========       =========      =========
</TABLE>

                                        8
<PAGE>
ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS GENERAL

In two  separate  transactions  in  March  1998,  the  Company  sold 68  Denny's
restaurants and eight non-branded restaurants to unrelated parties. As a result,
the operating  results for the 39-week period ending  September 29, 1999 are not
comparable with the 1998 results.

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 Periods Ended          39-Week Periods Ended
                                        ----------------------------   ----------------------------
                                        September 30,  September 29,   September 30,  September 29,
                                           1998           1999            1998           1999
                                           -----          -----           -----          -----
<S>                                        <C>            <C>             <C>            <C>
Restaurant Sales                           100.0%         100.0%          100.0%         100.0%
                                           -----          -----           -----          -----
Restaurant operating expenses:
  Food and beverage costs                   27.5           27.1            27.5           27.1
  Payroll and payroll related costs         34.2           34.5            34.2           34.3
  Depreciation and amortization              3.1            3.0             2.9            2.8
  Other restaurant operating expenses       28.7           31.0            27.8           29.0
  Charge for impaired assets and other        --           23.0              --            9.2
                                           -----          -----           -----          -----
      Total operating expenses              93.5          118.6            92.4          102.4
                                           -----          -----           -----          -----
Restaurant operating income (loss)           6.5          (18.6)            7.6           (2.4)

Administrative expenses                      5.1            5.0             4.7            4.8
                                           -----          -----           -----          -----
Operating income (loss)                      1.4          (23.6)            2.9           (7.2)

Interest expense, net                        4.6            5.4             4.8            5.1
                                           -----          -----           -----          -----

Loss before income taxes and
  extraordinary item                        (3.2)         (29.0)           (1.9)         (12.3)

Income tax benefit                          (1.3)            --            (0.7)          (0.4)
                                           -----          -----           -----          -----

Loss before extraordinary item              (1.9)         (29.0)           (1.2)         (11.9)

Extraordinary loss (gain)                     --             --             (.7)            .7
                                           -----          -----           -----          -----

Net loss                                    (1.9)%        (29.0)%          (0.5)%        (12.6)%
                                           =====          =====           =====          =====
</TABLE>

                                        9
<PAGE>
THIRTEEN-WEEK PERIOD ENDED SEPTEMBER 29, 1999 COMPARED WITH THIRTEEN-WEEK PERIOD
ENDED SEPTEMBER 30, 1998

     RESTAURANT  SALES.  Restaurant  sales  decreased $2.2 million,  or 3.5%, to
$60.1 million for the thirteen-week  period ended September 29, 1999 as compared
with  restaurant  sales of $62.2  million  for the  thirteen-week  period  ended
September 30, 1998.  The Company  operated 95 Black-eyed  Pea  restaurants in 10
states in the third quarter of 1999 and 104  Black-eyed  Pea  restaurants  in 14
states during the third quarter of 1998. For the 13-week period ended  September
29, 1999,  comparable Black-eyed Pea same-store sales decreased 2.9% as compared
with the same period in fiscal 1998. The Company operated 99 Denny's restaurants
in 18 states in the third  quarter  of 1999 and 101  Denny's  restaurants  in 19
states during the third quarter of 1998. For the 13-week period ended  September
29, 1999,  comparable  Denny's  same-store sales decreased 0.4% as compared with
the same period in fiscal 1998. The overall  decrease is primarily  attributable
to the  decrease  in  the  total  number  of  restaurants  operated  during  the
respective periods.

     FOOD AND  BEVERAGE  COSTS.  Food and beverage  costs  decreased to 27.1% of
restaurant  sales for the  thirteen-week  period  ended  September  29,  1999 as
compared  with 27.5% of  restaurant  sales for the  thirteen-week  period  ended
September 30, 1998. This decrease is primarily a result of management's  ongoing
efforts to reduce food costs by implementing  more efficient and  cost-effective
practices in food preparation, as well as favorable commodity prices.

     PAYROLL AND PAYROLL  RELATED COSTS.  Payroll and payroll related costs were
34.5% of restaurant sales for the thirteen-week  period ended September 29, 1999
as compared with 34.2% of restaurant  sales for the  thirteen-week  period ended
September  30, 1998.  This  increase  was  primarily  attributable  to increased
employee benefit costs and a slight increase in the average hourly wage rates.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization of restaurant
equipment,  leasehold improvements,  intangible assets, and other items was $1.8
million for the thirteen-week  period ended September 29, 1999, as compared with
$1.9  million for the  thirteen-week  period  ended  September  30,  1998.  This
decrease of $151,000 was primarily  attributable to a reduction in the number of
restaurants due to store closings and store sales.

     OTHER RESTAURANT  OPERATING EXPENSES.  Other restaurant  operating expenses
were 31.0% of restaurant sales for the thirteen-week  period ended September 29,
1999 as compared with 28.7% of  restaurant  sales for the  thirteen-week  period
ended  September  30,  1998.  Included in the 1999 results is a loss of $402,000
related to the proposed sale of 21 Denny's  restaurants to William  Howard,  the
Company's  Executive Vice  President.  In addition,  in 1999 the Company adopted
Statement of Position 98-5,  which requires that the Company expense  preopening
costs as they are incurred.  Prior to 1999,  such expenses were  capitalized and
amortized  over a period  of one  year.  As a result  of the  change,  new store
opening costs of approximately $611,000 were expensed when incurred in the third
quarter.  Excluding these items, other restaurant operating expenses,  expressed
as a percentage  of revenue,  would have been 29.3% and 28.7% in fiscal 1999 and
1998, respectively.

     CHARGE FOR IMPAIRED ASSETS AND OTHER.  The Company  recorded charges of (1)
$3.0  million  related  to four  Black-eyed  Pea  restaurants  and  one  Denny's
restaurant closed during the quarter,  and (2) $1.4 million to reflect increased
estimates of liabilities  related to restaurants closed in prior periods because
the Company  determined that the cost and timing of subleasing  those properties
will exceed previous  estimates.  The Company  recorded an additional  charge of
$3.9 million related to 16 Denny's  restaurants  sold during 1997 and 1998 where
the Company remains contingently liable for equipment leases, rents and property
taxes  as  a  result   of  a  pending   bankruptcy   filing  by  one  buyer  and
non-performance  by the other  buyer.  During  the third  quarter,  the  Company
approved  a  plan  to  sell  its  remaining  Denny's  restaurants.  The  Company
determined that the carrying value of the assets to be sold exceeds the probable
purchase price  attributable to these  restaurants and has recorded a charge for
impaired  goodwill and intangible  assets of $5.5 million.  The total charge for
impaired assets and other for the third quarter was $13.8 million.

     RESTAURANT  OPERATING INCOME (LOSS).  Restaurant operating income decreased
to a loss of $11.2  million for the  thirteen-week  period ended  September  29,
1999, as compared with income of $4.0 million for the thirteen-week period ended
September  30,  1998.  This  decrease  was  principally  the result of the $13.8
million Charge for Impaired Assets and Other and the factors described above.

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<PAGE>
     ADMINISTRATIVE EXPENSES. Administrative expenses were $3.0 million, or 5.0%
of restaurant  sales, for the  thirteen-week  period ended September 29, 1999 as
compared with $3.1 million,  or 5.1% of restaurant  sales, for the thirteen-week
period  ended  September  30,  1998.  This  decrease of  $128,000  is  primarily
attributable to efforts by management to reduce administrative costs and improve
efficiency.

     INTEREST  EXPENSE,  NET.  Net  interest  expense  was $3.3  million for the
thirteen-week  period ended September 29, 1999 as compared with $2.9 million for
the  thirteen-week  period ended September 30, 1998. The change is the result of
both an increase in the  outstanding  debt and a higher interest rate associated
with the debt transaction negotiated during the second quarter of fiscal 1999.

     INCOME TAX BENEFIT.  The Company has not recorded a tax benefit  associated
with  the  charge  for  impaired  assets  and for  operating  losses  due to the
uncertainty of the future utilization of the existing deferred income tax asset.

THIRTY-NINE  WEEK PERIOD ENDED SEPTEMBER 29, 1999 COMPARED WITH THIRTY-NINE WEEK
PERIOD ENDED SEPTEMBER 30, 1998

     RESTAURANT  SALES.  Restaurant  sales decreased $14.4 million,  or 7.3%, to
$182.8  million for the  thirty-nine  week period  ended  September  29, 1999 as
compared with restaurant sales of $197.2 million for the thirty-nine week period
ended September 30, 1998.  This decrease was primarily  attributable to the sale
and/or closing of certain  restaurants during 1998 and 1999. For the thirty-nine
week period ended September 29, 1999, comparable same-store sales decreased 1.7%
and increased  2.1% for the Company's  Black-eyed  Pea and Denny's  restaurants,
respectively as compared with the same period in fiscal 1998.

     FOOD AND BEVERAGE  COSTS.  Cost of food and beverage  decreased to 27.1% of
restaurant  sales for the  thirty-nine  week period ended  September 29, 1999 as
compared with 27.5% of restaurant  sales for the  thirty-nine  week period ended
September 30, 1998,  primarily as the result of management's  ongoing efforts to
reduce food costs by implementing more efficient and cost-effective practices in
food preparation, as well as favorable commodity prices.

     PAYROLL AND PAYROLL  RELATED COSTS.  Payroll and payroll related costs were
34.3% of restaurant  sales for the  thirty-nine  week period ended September 29,
1999 as compared with 34.2% of restaurant  sales for the thirty-nine week period
ended  September 30, 1998.  This increase was primarily  attributable  to higher
employee benefit costs and a slight increase in the average hourly wage rates.

     DEPRECIATION AND AMORTIZATION.  Depreciation and amortization of restaurant
equipment, leasehold improvements,  intangible assets, and other items decreased
to 2.8% of restaurant  sales for the thirty-nine week period ended September 29,
1999 as compared with 2.9% of restaurant  sales for the thirty-nine  week period
ended September 30, 1998. The decrease of $519,000 was primarily attributable to
a reduction in the number of restaurants due to store closings and store sales.

     OTHER  RESTAURANT  OPERATING COSTS.  Other restaurant  operating costs were
29.0% of restaurant  sales for the  thirty-nine  week period ended September 29,
1999 as compared with 27.8% of restaurant  sales for the thirty-nine week period
ended  September  30, 1998.  Included in the 1999 and 1998 results are gains and

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<PAGE>
(losses)  of  ($220,000)  and  $575,000,  respectively,  relating to the sale of
restaurants.  In addition,  in 1999, the Company  adopted  Statement of Position
98-5,  which  requires  that the Company  expense  preopening  costs as they are
incurred.  Prior to 1999 such expenses  were  capitalized  and amortized  over a
period of one year.  As a result of the  change in  accounting  principles,  new
store opening costs of approximately $1.2 million were expensed when incurred in
fiscal 1999. Excluding these items, other restaurant operating costs,  expressed
as a percentage of revenue, would have been 28.2% for 1999 and 28.1% for 1998.

     CHARGE FOR IMPAIRED ASSETS AND OTHER.  The Company  recorded charges of (1)
$3.0  million  related  to four  Black-eyed  Pea  restaurants  and  one  Denny's
restaurant  closed during the period,  and (2) $1.4 million to reflect increased
estimates of liabilities  related to restaurants closed in prior periods because
the Company  determined that the cost and timing of subleasing  those properties
will exceed previous  estimates.  The Company  recorded an additional  charge of
$3.9 million related to 16 Denny's  restaurants  sold during 1997 and 1998 where
the Company remains contingently liable for equipment leases, rents and property
taxes  as  a  result   of  a  pending   bankruptcy   filing  by  one  buyer  and
non-performance  by the other buyer.  During the period,  the Company approved a
plan to sell its remaining Denny's restaurants.  The Company determined that the
carrying  value of the assets to be sold  exceeds the  probable  purchase  price
attributable  to  these  restaurants  and has  recorded  a charge  for  impaired
goodwill and  intangible  assets of $3.0 million in the second  quarter and $5.5
million in the third quarter. The total charge for impaired assets and other for
the thirty-nine week period ended September 29, 1999 was $16.8 million.

     RESTAURANT  OPERATING INCOME (LOSS).  Restaurant operating income decreased
$19.5  million to a loss of $4.5 million for the  thirty-nine  week period ended
September 29, 1999 as compared with income of $15.0 million for the  thirty-nine
week period ended  September 30, 1998.  This decrease was principally the result
of the $16.8  million  Charge  for  Impaired  Assets  and Other and the  factors
described above.

     ADMINISTRATIVE EXPENSES. Administrative expenses decreased $398,000 to 4.8%
of restaurant  sales for the thirty-nine week period ended September 29, 1999 as
compared with 4.7% of  restaurant  sales for the  thirty-nine  week period ended
September  30, 1998.  This increase in  administrative  expenses as a percent of
restaurant sales is primarily  attributable to the decrease in revenue without a
proportional decrease in administrative expenses.

     INTEREST  EXPENSE,  NET. Net interest expense was $9.3 million,  or 5.1% of
restaurant  sales,  for the thirty-nine  week period ended September 29, 1999 as
compared with $9.4 million,  or 4.8% of restaurant  sales,  for the  thirty-nine
week period ended September 30, 1998. The net decrease of $172,000 is the result
of the decrease in long term debt  following the sale of certain  restaurants in
1998 offset by new financing with CNL in June 1999. These factors resulted in an
increase in interest  expense of $267,000  and  $381,000 in the second and third
quarters of 1999 as compared to the same periods in 1998.

     INCOME  TAX  BENEFIT.  The  Company  recorded  an  income  tax  benefit  of
approximately  $731,000, or an effective rate of 12.8%, for the thirty-nine week
period  ended  September  29,  1999 as  compared  with  income  tax  benefit  of
approximately  $1.3 million,  or an effective rate of 36.2%, for the thirty-nine
week period ended September 30, 1998. The Company has not recorded a tax benefit
associated  with the charges for impaired  assets and the operating  loss in the
third quarter of 1999 due to the  uncertainty  of the future  utilization of the
existing deferred income tax asset.

     EXTRAORDINARY  ITEM. The  extraordinary  item relates to expensing  certain
deferred  financing  costs  in 1999  and the  gain  associated  with  the  early
extinguishment of debt in 1998.

LIQUIDITY AND CAPITAL RESOURCES

The Company's strategy has been to (i) focus on restaurants that achieve certain
operational and geographic efficiencies; (ii) refinance certain debt obligations
to better match operating cash flows with debt amortization;  and (iii) position
itself  for  growth.  During  the first  quarter of 1998,  the  Company  sold 76
underperforming  restaurants  and used the proceeds from these  transactions  to
repay certain debt  obligations.  The Company  believes that these  transactions
improved  its  overall  portfolio  of  operating  restaurants.  Net cash used in
operating activities improved from approximately $1.7 million used in operations
in fiscal 1998 to $397,000  used in  operations  in fiscal 1999. In an effort to
continue  to  improve  its  operating  asset  base,  the  Company  currently  is
negotiating  letters  of intent  with  unrelated  parties  to  purchase  certain
underperforming or closed restaurants. The Company believes that these

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<PAGE>
transactions  will be  completed  over the next  several  quarters.  The Company
cannot provide assurance, however, regarding whether it will complete any or all
of these transactions or the timing of these transactions.

On June 30, 1999, the Company  consummated a $20.1 million  financing  agreement
with CNL whereby  CNL  purchased  approximately  $14.7  million of  indebtedness
remaining outstanding under the Company's senior credit facility and advanced an
additional  $5.4 million to the Company.  The Company  believes that its current
cash resources,  expected cash flows from operations, and additional borrowings,
as necessary,  will be sufficient to fund the Company's capital needs during the
next 12 months at its current level of operations,  apart from the capital needs
resulting from additional development of restaurants.

The Company receives  substantially all of its revenue 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  was  $5.4  million  at  September  29,  1999 due to
reclassifying  assets  as held for sale,  as  compared  with a  working  capital
deficit of $44.8  million at December  30, 1998.  Included in the December  1998
working capital deficit is approximately $15.0 million of debt obligations under
the senior  credit  facility,  which was in default  at that time.  The  Company
anticipates  that it will  continue to operate  with a working  capital  deficit
after the sale of assets held for sale.

The Company has historically  satisfied its capital  requirements through credit
facilities  and   sale-leaseback   financings.   The  Company  requires  capital
principally for the development of new restaurants and maintenance  expenditures
on its  existing  restaurants.  Currently,  the Company is in various  stages of
development of seven Black-eyed Pea  restaurants,  which it expects to open over
the next several  quarters.  The Company estimates that its costs to develop and
open new Black-eyed Pea  restaurants,  excluding real estate and building costs,
will be approximately $350,000 to $450,000 per restaurant.  The Company believes
that its  financing  commitments  will be adequate to meet its  financing  needs
during the  remainder of 1999.  During the 39-week  period ended  September  29,
1999, the Company borrowed approximately $1.3 million to finance its development
activities associated with new Black-eyed Pea restaurants.

In October  1999,  the Company  entered into an agreement to transfer the assets
and  certain  liabilities  associated  with 21  Denny's  restaurants  to William
Howard,  the Company's  Executive Vice President,  in exchange for consideration
valued at  approximately  $19.5 million.  Under the  agreement,  Mr. Howard will
contribute  to the Company  approximately  1.7 million  shares of the  Company's
common stock and approximately 147,000 common stock purchase warrants,  having a
combined fair market value of $1.3 million; Mr. Howard will assume approximately
$7.5 million in principal and interest under a subordinated  note payable to Mr.
Howard; and the Company will contribute other liabilities totaling approximately
$1.9 million.  The  transaction is subject to usual and customary  conditions to
closing, including arrangements for financing  and obtaining consents of various
lenders, landlords, and the Denny's franchisor. The Company recorded a charge of
$3.0 million for impaired assets associated with these restaurants in the second
quarter and increased the charge in the third quarter by $402,000.

In addition to the sale described  above,  in October 1999 the Company  retained
CNL Advisory  Services to act as its agent in the  disposition  of the Company's
remaining  78 Denny's  restaurants.  A charge of $5.5  million for the  impaired
assets  was  recorded  in the third  quarter  in  connection  with this  planned
disposition.

The Company  intends to use the proceeds from the sales of these  restaurants to
reduce  its  outstanding  debt and for other  corporate  purposes.  The  Company
believes that these steps will better position the Company for profitability and
enhanced shareholder value.

SEASONALITY

The Company's operating results fluctuate from quarter to quarter as a result of
the seasonal nature of the restaurant industry 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.

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.

                                       13
<PAGE>
YEAR 2000 COMPLIANCE

Many currently installed computer systems and software products may not function
properly  when  processing  dates  that begin on or after  January 1, 2000.  The
Company is  currently  upgrading  its internal  computer  network to improve its
management information systems in general, as well as to ensure that its systems
will not  malfunction as a result of "Year 2000" issues.  The Company  currently
does not  anticipate  any  material  adverse  effects  related  to the Year 2000
issues.  The Company has identified four primary systems that could be adversely
impacted  by the Year  2000  issue.  These  systems  are (1)  point-of-sale  and
restaurant   back-office  accounting  systems  in  all  of  its  Black-eyed  Pea
restaurants;  (2) point-of-sale and restaurant back-office accounting systems in
all of its Denny's  restaurants;  (3) the Company's internal  accounting systems
and software;  and (4) third-party  systems,  including computer systems used by
the Company's food suppliers,  financial  institutions,  credit card processors,
and  utility  companies.  The  Company  is in  the  process  of  converting  the
point-of-sale  and  back-office  accounting  systems at its  Black-eyed  Pea and
Denny's  restaurants.   This  conversion,   which  includes  upgrading  existing
software,  is scheduled to be  completed  by December  1999.  The vendor for the
Company's internal corporate  accounting systems has advised the Company that it
will be able to modify those systems to be Year 2000 compliant  during 1999. The
vendor has  modified  the line code for those  software  products.  The  Company
currently  anticipates  that its costs to bring its  computer  systems into Year
2000 compliance  should not exceed $500,000.  The Company has obtained Year 2000
compliance  certification  from all significant  third-parties  that the Company
depends upon, including food suppliers,  financial institutions, and credit card
transaction processors.  All significant  third-parties have advised the Company
that their systems are or will be Year 2000  compliant  during 1999. The Company
intends to continue to identify  technology  systems that may be subject to Year
2000 risks and to monitor  and test those  systems  throughout  1999.  Following
completion of the  third-party  assessment and testing of  modifications  to its
internal  accounting  systems,  the Company will continue to develop contingency
plans to address those potential  adverse  consequences,  if any,  identified as
remaining with respect to Year 2000 issues.

NEW ACCOUNTING STANDARDS

In April 1998, the American Institute of Certified Public Accountants  ("AICPA")
issued  Statement of Position 98-5 "Reporting the Cost of Start-up  Activities".
This statement requires companies to expense the cost of start-up  activities as
incurred. The Company adopted this statement in fiscal 1999.

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging  Activities  ("SFAS No.  133") that is  effective  for fiscal  years
beginning after June 15, 1999. The FASB subsequently  delayed the effective date
of SFAS No. 133 for one year, to fiscal years beginning after June 15, 2000. The
delay, published as Statement of Financial Accounting Standards No. 137, applies
to quarterly and annual financial statements.  The Company has not completed the
process of evaluating  the impact that will result from the adoption of SFAS No.
133, however, on a preliminary basis,  management does not believe that eventual
adoption will have a significant impact on the Company's financial statements.

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

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<PAGE>
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  December  30,
1998.

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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

     On October 15, 1999,  Todd S. Brown  resigned as the Company's  Senior Vice
President, Chief Financial Officer, Treasurer, and as a director of the Company.
Brian McAlpine,  the Company's Vice President - Finance,  was named Acting Chief
Financial  Officer.  Mr.  McAlpine has served as Vice  President - Finance since
October  1997 and served as Director of  Planning  from July 1996 until  October
1997.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  EXHIBITS.

          27.1 Financial Data Schedule.

     (b)  REPORTS ON FORM 8-K.

          Not applicable.

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<PAGE>
                                   SIGNATURES

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


                                        PHOENIX RESTAURANT GROUP, INC.

Dated: November 18, 1999                By: /s/ Brian McAlpine
                                            ------------------------------------
                                            Brian McAlpine
                                            Vice President - Finance and
                                            Acting Chief Financial Officer
                                            (Duly authorized officer of the
                                            registrant, principal financial
                                            and accounting officer)


                                       17