<PAGE>   1
================================================================================

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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


                For the quarterly period ended December 28, 1997

                                       OR

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

                      For the transition from ____ to ____

                        Commission file number 001-13222

                           STATER BROS. HOLDINGS INC.
             (Exact name of registrant as specified in its charter)


            Delaware                                     33-0350671
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
 incorporation or organization)


          21700 Barton Road
          Colton, California                               92324
(Address of principal executive offices)                 (Zip Code)

Registrant's telephone number, including area code     (909) 783-5000



                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report.)


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 preceeding 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 January 23, 1998, there were issued
                      and outstanding 50,000 shares of the
                        registrant's Class A Common Stock

================================================================================


                                       1
<PAGE>   2




                           STATER BROS. HOLDINGS INC.
                                DECEMBER 28, 1997


                                      INDEX

<TABLE>
<CAPTION>


PART I  FINANCIAL INFORMATION (UNAUDITED)                                   PAGE


<S>                                                                         <C>
ITEM 1. FINANCIAL STATEMENTS

        CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF 
           SEPTEMBER 28, 1997 AND DECEMBER 28, 1997                          3

        CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR 
           THE 13 WEEKS ENDED DECEMBER 29, 1996 AND DECEMBER 28, 1997        5

        CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) 
           FOR THE 13 WEEKS ENDED DECEMBER 29, 1996 AND
           DECEMBER 28, 1997                                                 6

        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)               7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS                                  9


PART II OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS                                                   18

ITEM 2. CHANGES IN SECURITIES                                               18

ITEM 3. DEFAULTS UPON SENIOR SECURITIES                                     18

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 18

ITEM 5. OTHER INFORMATION                                                   18

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                    18


SIGNATURES                                                                  20
</TABLE>


                                       2
<PAGE>   3


PART I - FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

                           STATER BROS. HOLDINGS INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                                 (In thousands)


                                     ASSETS

<TABLE>
<CAPTION>
                                                            SEPT. 28,         DEC. 28,
                                                              1997              1997
                                                            --------          --------
<S>                                                         <C>              <C> 
Current Assets
    Cash and cash equivalents ....................          $ 59,086          $ 58,584
    Receivables ..................................            21,481            20,554
    Inventories ..................................           115,513           114,654
    Prepaid expenses .............................             4,667             6,604
    Deferred income taxes ........................             2,978             2,979
    Properties held for sale .....................             1,342             1,205
                                                            --------          --------

Total current assets .............................           205,067           204,580

Investment in unconsolidated affiliate ...........            10,313             9,264


Property and equipment
    Land .........................................            16,443            16,476
    Buildings and improvements ...................            87,605            90,112
    Store fixtures and equipment .................            86,644            91,206
    Property subject to capital leases ...........            14,368            14,368
                                                            --------          --------
                                                             205,060           212,162


    Less accumulated depreciation and amortization            96,203            98,909
                                                            --------          --------
                                                             108,857           113,253


Deferred income taxes ............................             4,699             4,699
Deferred debt issuance costs, net ................            14,273            14,117
Lease guarantee escrow ...........................             8,069             8,219
Other assets .....................................             7,199             7,250
                                                            --------          --------


Total assets .....................................          $358,477          $361,382
                                                            ========          ========
</TABLE>




     See accompanying notes to unaudited consolidated financial statements.


                                        3
<PAGE>   4

                           STATER BROS. HOLDINGS INC.
                     CONSOLIDATED BALANCE SHEETS (Continued)
                                   (Unaudited)
                      (In thousands, except share amounts)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>

                                                                              SEPT. 28,           DEC. 28,
                                                                                 1997               1997
                                                                              ---------           ---------
<S>                                                                          <C>                  <C>
Current Liabilities
    Accounts payable ...............................................          $  66,834           $  62,340
    Accrued payroll and related expenses ...........................             23,851              21,427
    Other accrued liabilities ......................................             21,113              29,906
    Current portion of capital lease obligations ...................              1,256               1,262
                                                                              ---------           ---------

Total current liabilities ..........................................            113,054             114,935

Long-term debt, less current portion ...............................            265,000             265,000
Capital lease obligations, less current portion ....................              5,661               5,344
Long-term portion of self-insurance and other reserves .............              7,409               7,409
Other long-term liabilities ........................................              3,939               3,906

Stockholders' equity (deficit) 
    Class A Common Stock, $.01 par value:
       Authorized shares - 100,000
       Issued and outstanding shares -50,000 .......................                  1                   1
    Additional paid-in capital .....................................             12,715              12,715
    Retained earnings (deficit) ....................................            (49,302)            (47,928)
                                                                              ---------           ---------

Total stockholders' equity (deficit) ...............................            (36,586)            (35,212)
                                                                              ---------           ---------

Total liabilities and stockholders' equity (deficit) ...............          $ 358,477           $ 361,382
                                                                              =========           =========

</TABLE>



     See accompanying notes to unaudited consolidated financial statements.

                                        4
<PAGE>   5

                           STATER BROS. HOLDINGS INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
               (In thousands, except per share and share amounts)
<TABLE>
<CAPTION>


                                                                        13 Weeks Ended
                                                                 -----------------------------
                                                                  DEC. 29,           DEC. 28,
                                                                    1996               1997
                                                                 ---------           ---------
<S>                                                              <C>                 <C>      
Sales .................................................          $ 433,400           $ 430,918
Cost of goods sold ....................................            332,574             332,622
                                                                 ---------           ---------
Gross profit ..........................................            100,826              98,296

Operating expenses:
    Selling, general and administrative expenses ......             85,096              84,567
    Depreciation and amortization .....................              3,275               3,619
    Consulting fees ...................................                375                --
                                                                 ---------           ---------
Total operating expenses ..............................             88,746              88,186
                                                                 ---------           ---------

Operating profit ......................................             12,080              10,110

Interest income .......................................                469                 721
Interest expense ......................................             (4,995)             (7,527)
Equity in earnings (loss) from unconsolidated affiliate               (443)             (1,049)
Other income - net ....................................               --                    71
                                                                 ---------           ---------

Income before income taxes ............................              7,111               2,326
Income taxes ..........................................              2,916                 953
                                                                 ---------           ---------

Net income ............................................          $   4,195           $   1,373

Less preferred dividends ..............................              1,816                --
                                                                 ---------           ---------

Earnings available to common shareholders .............          $   2,379           $   1,373
                                                                 =========           =========

Earnings per common share .............................          $   47.58           $   27.46
                                                                 =========           =========

Average common shares outstanding .....................             50,000              50,000
                                                                 =========           =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.
                                    

                                       5

<PAGE>   6


                           STATER BROS. HOLDINGS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                                     13 Weeks Ended
                                                                             ----------------------------
                                                                             DEC. 29,            DEC. 28,
                                                                               1996                1997
                                                                              --------           --------
<S>                                                                          <C>                <C>  
OPERATING ACTIVITIES:
Net income .........................................................          $  4,195           $  1,373
Adjustments to reconcile net income to net cash provided
  by operating activities:
    Depreciation and amortization ..................................             3,275              3,619
    Provision for deferred income taxes ............................            (2,087)                (1)
    Loss (gain) on disposals of assets .............................              --                  (71)
    Net undistributed loss in investment in unconsolidated affiliate               443              1,049
    Changes in operating assets and liabilities:
     (Increase) decrease in receivables ............................              (816)               927
     (Increase) decrease in inventories ............................             2,400                859
     (Increase) decrease in prepaid expenses .......................            (1,935)            (1,937)
     (Increase) decrease in other assets ...........................              (767)              (501)
     Increase (decrease) in accounts payable .......................           (18,452)            (4,494)
     Increase (decrease) in accrued liabilities and long-term
      portion of self-insurance reserves ...........................             4,833              6,337
                                                                              --------           --------

Net cash (used by) provided by operating activities ................            (8,911)             7,160
                                                                              --------           --------

INVESTING ACTIVITIES:
Investment in unconsolidated affiliate .............................            (5,000)              --
Purchase of property and equipment .................................            (2,544)            (7,621)
Proceeds from sale of property and equipment and properties
  held for sale ....................................................            16,010                270
                                                                              --------           --------

Net cash (used by) provided by investing activities ................             8,466             (7,351)
                                                                              --------           --------

FINANCING ACTIVITIES:
Dividends paid on preferred stock ..................................            (1,816)              --
Principal payments on capital lease obligations ....................              (286)              (311)
                                                                              --------           --------

Net cash (used by) financing activities ............................            (2,102)              (311)
                                                                              --------           --------

Net (decrease) in cash and cash equivalents ........................            (2,547)              (502)
Cash and cash equivalents at beginning of period ...................            45,279             59,086
                                                                              --------           --------

Cash and cash equivalents at end of period .........................          $ 42,732           $ 58,584
                                                                              ========           ========

Interest paid ......................................................          $    195           $    150
Income taxes paid ..................................................          $    550           $      0
</TABLE>




     See accompanying notes to unaudited consolidated financial statements.

                                       6

<PAGE>   7




                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                DECEMBER 28, 1997

NOTE 1 - BASIS OF PRESENTATION

         In the opinion of management, the accompanying unaudited consolidated
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of Stater Bros. Holdings Inc. (the
"Company") and its subsidiaries as of September 28, 1997 and December 28, 1997
and the results of its operations and cash flows for the thirteen weeks ended
December 28, 1997 and December 29, 1996. These consolidated financial statements
should be read in conjunction with the audited financial statements and notes
thereto included in the Company's latest annual report filed on Form 10-K. The
operating results for the thirteen weeks ended December 28, 1997 are not
necessarily indicative of the results of operations for a full year.

NOTE 2 - INCOME TAXES

         The provision for income taxes for the thirteen weeks ended December
29, 1996 and December 28, 1997 consists of the following:
<TABLE>
<CAPTION>

                                                        13 Weeks Ended
                                                  ----------------------------
                                                  Dec. 29,            Dec. 28, 
                                                    1996                 1997
                                                  ----------         ----------
                                                         (In thousands)


<S>                                               <C>                <C>       
       Federal Income Taxes                       $    2,506         $      737
       State Income Taxes                                410                216
                                                  ----------         ----------
                                                  $    2,916         $      953
                                                  ==========         ==========
</TABLE>

NOTE 3 - UNCONSOLIDATED AFFILIATE

         The Company owns 50% of Santee Dairies LLC. Through its wholly owned
subsidiary, Santee Dairies, Inc. ("Santee"), it operates a fluid milk processing
plant located in Los Angeles, California, and the Company is not the controlling
stockholder. Accordingly, the Company accounts for its investment in Santee
Dairies LLC using the equity method of accounting and recognized losses of
$1,049,000 and $443,000 for the thirteen weeks ended December 28, 1997 and
December 29, 1996, respectively. The Company is a significant customer of Santee
which supplies the Company with a substantial portion of its fluid milk and
dairy products.

Summary of unaudited financial information for Santee Dairies LLC is as follows:
<TABLE>
<CAPTION>

                                                       13 Weeks Ended
                                                 ----------------------------    
                                                 Dec. 29,            Dec. 28, 
                                                   1996               1997
                                                 ---------         ---------- 
                                                        (In thousands)


<S>                                         <C>                <C>       
       Current Assets                           $   17,589         $   38,787
       Non-current assets                           48,179             96,657
       Current liabilities                          35,672             34,078
       Non-current liabilities                       4,255             83,011
       Shareholder's equity                         25,841             18,355

       Sales                                        50,138             43,892
       Gross Profit                                  4,353              3,628
       Net income (loss)                        $     (768)        $   (2,098)
</TABLE>

                                       7
<PAGE>   8

                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                DECEMBER 28, 1997

NOTE 4 - CONSULTING AGREEMENT AND COVENANT NOT TO COMPETE

         In March 1994, the Company entered into a five-year Consulting
Agreement with Craig Corporation ("Craig"), previously a shareholder of the
Company, whereby the Company paid Craig $1.5 million per year and Craig provided
the Company with consultation and advise in connection with general business
issues, financial management consulting, real estate acquisition and development
and product diversification matters. Consulting fees expense amounted to
$375,000 for the thirteen weeks ended December 29, 1996. The agreement to make
consulting payments to Craig was terminated, at the election of the Company, in
August 1997. Additionally, on March 8, 1994, the Company paid Craig $5.0 million
which is amortized to earnings over the five-year term of the covenant not to
compete included in the Consulting Agreement.

NOTE 5 - RECLASSIFICATIONS

         Certain amounts in the prior periods have been reclassified to conform
to the current period financial statement presentation.

NOTE 6 - USE OF ESTIMATES

         The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE 7 - SERIES B PREFERRED STOCK REDEMPTION

         In August 1997, the Company redeemed all of the outstanding shares of
its Series B Preferred Stock for approximately $69.4 million plus accrued and
unpaid dividends of approximately $4.6 million. The redemption of the Series B
Preferred Stock was funded from the proceeds of a debt offering of $100 million
of 9% Senior Subordinated Notes due 2004.


                                        8
<PAGE>   9

                           STATER BROS. HOLDINGS INC.
                                DECEMBER 28, 1997


PART I - FINANCIAL INFORMATION (CONTD.)


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

          RECAPITALIZATION TRANSACTION
          In March 1994, the Company completed a Recapitalization Transaction
          (the "Recapitalization") which transferred effective voting control of
          the Company to La Cadena Investments ("La Cadena"), reclassified the
          Company's outstanding equity, provided for certain cash payments and
          distributions to Craig Corporation ("Craig"), previously a shareholder
          of the Company, and provided the Company with an option to acquire
          Craig's remaining equity in the Company. The Recapitalization was
          funded through an offering of $165.0 million of 11% Senior Notes due
          2001 (the "11% Notes") which are listed and traded on the American
          Stock Exchange.

          Effective March 8, 1996, pursuant to options available to the Company,
          the Company exercised its right to convert all of its outstanding
          shares of Common Stock (previously held by Craig) into 693,650 shares
          of its Series B Preferred Stock. The Series B Preferred Stock had a
          redemption value of approximately $69.4 million and paid dividends at
          the rate of 10.5% per annum. In August 1997, the Company redeemed all
          of the outstanding shares of its Series B Preferred Stock for $69.4
          million plus accrued and unpaid dividends.

          In July 1997, the Company issued $100 million of 9% Senior
          Subordinated Notes due 2004 (the "9% Notes") under Rule 144A of the
          Securities Act of 1933. Proceeds from the issuance of the 9% Notes
          were used as follows (a) $69.4 million to redeem the Series B
          Preferred Stock, (b) $4.6 million to pay accrued dividends due from
          the Series B Preferred Stock, (c) $4.9 million to obtain consents from
          the holders of the Company's 11% Senior Notes due 2001 to permit the
          issue of the 9% Notes, (d) $2.0 million to La Cadena for financial
          advise relating to the transaction, (e) $3.4 million for fees and
          expenses of the transaction. The remaining proceeds from the issuance
          of the 9% Notes were used for general corporate purposes, including
          capital expenditures. The 9% Notes are listed and traded on the
          American Stock Exchange.

          OWNERSHIP OF THE COMPANY
          Effective August 1997, La Cadena became the sole shareholder of the
          Company and holds all of the shares of the Company's Class A Common
          Stock which are entitled to 1.1 votes per share. La Cadena Investments
          is a California General Partnership whose partners include Jack H.
          Brown, Chairman of the Board, President and Chief Executive Officer of
          the Company and other members of senior management of the Company.
          Jack H. Brown has a majority interest in La Cadena and is the managing
          general partner with the power to vote the shares of the Company held
          by La Cadena.

                                       9
<PAGE>   10



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          RESULTS OF OPERATIONS
          The following table sets forth certain income statement components
          expressed as a percent of sales for the thirteen weeks ended December
          29, 1996 and December 28, 1997.
<TABLE>
<CAPTION>
                                                       13 Weeks Ended
                                                 ----------------------------
                                                  Dec. 29,            Dec. 28, 
                                                   1996                1997
                                                 --------            --------- 
<S>                                              <C>                 <C>    
          Sales                                  100.00%             100.00%
          Gross profit                             23.26               22.81
          Operating expenses:
             Selling, general and 
             administrative expense                19.63               19.62
             Depreciation and amortization           .76                 .84
             Consulting fees                         .09                   -
          Operating profits                         2.78                2.35
          Interest income                            .11                 .17
          Interest expense                         (1.15)              (1.75)
          Equity in (loss) from
             unconsolidated affiliate               (.10)               (.24)
          Other income (loss) - (net)                  -                 .01
          Earnings before income taxes              1.64%                .54%
</TABLE>

          Total sales for the thirteen weeks ended December 28, 1997, the first
          quarter of fiscal 1998, decreased .57% and amounted to $430.9 million
          compared to $433.4 million for the same period in the prior year. Like
          store sales decreased 1.41% for the thirteen week period ended
          December 28, 1997. The Company operated 110 and 111 supermarkets at
          December 29, 1996 and December 28, 1997, respectively.

          The decrease in like store sales in the first quarter of 1998 was due
          to competitor new store openings and aggressive competitor pricing
          strategies during the Thanksgiving and Christmas holidays.

          Gross profits for the thirteen weeks ended December 28, 1997, amounted
          to $98.3 million or 22.81% of sales compared to $100.8 million or
          23.26% of sales in the same period of the prior year. The decrease in
          gross profits for the first quarter of fiscal 1998, as a percent of
          sales, was due to aggressive competitive pricing in selected areas of
          Southern California. The Company adjusted its pricing strategy as
          necessary to retain its everyday low price marketing position and
          reflects the Company's commitment to retain its existing customer
          base.

          Operating expenses include selling, general and administrative
          expenses, depreciation and amortization, and consulting expenses. For
          the thirteen weeks ended December 28, 1997, selling, general and
          administrative expenses amounted to $84.6 million or 19.62% of sales.
          For the thirteen weeks ended December 29, 1996, selling, general and
          administrative expenses amounted to $85.1 million or 19.63% of sales.

                                       10
<PAGE>   11



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          RESULTS OF OPERATIONS (CONTD.)
          Depreciation and amortization expenses amounted to $3.6 million for
          the thirteen weeks ended December 28, 1997 and amounted to $3.3
          million for the like period of the prior year and included
          amortization of $250,000 in both years from a five-year prepaid
          covenant not to compete.

          Effective March 8, 1994, and in conjunction with the Recapitalization
          Transaction, the Company entered into a consulting agreement with
          Craig Corporation whereby the Company was required to pay Craig
          Corporation $375,000 per quarter for up to five years. The agreement
          to make consulting payments to Craig was terminated at the election of
          the Company, in August 1997. Consulting fees expense of $375,000 was
          recognized during the thirteen weeks ended December 29, 1996.

          Operating profit for the thirteen weeks ended December 28, 1997
          amounted to $10.1 million or 2.35% of sales compared to $12.1 million
          or 2.78% of sales for the thirteen weeks ended December 29, 1996.

          Interest expense amounted to $7.5 million for the thirteen weeks ended
          December 28, 1997 compared to $5.0 million for the like period ending
          December 29, 1996. Interest expense for the thirteen weeks ended
          December 28, 1997 and December 29, 1996 includes amortization of
          $694,000 and $295,000, respectively, from fees and expenses incurred
          to acquire debt. The increase in interest expense in the first quarter
          of fiscal 1998 when compared to the first quarter of fiscal 1997, is
          due to the interest paid or accrued on the Company's 9% Notes which
          were issued in July 1997.

          The increase in the Company's equity in loss from unconsolidated
          affiliate in the first quarter of fiscal 1998 was due to increases in
          expenses such as depreciation and rent expenses associated with a
          planned move in March 1998, to a new facility located in City of
          Industry, California. Additionally sales and gross profits at Santee
          Dairies LLC ("Santee") have been reduced due to a reduction of
          by-product bulk sales, such as cream, to unrelated third parties.
          Santee is constructing a new fluid milk and dairy products processing
          facility in City of Industry. The Company believes Santee will vacate
          the Los Angeles facility in March 1998 and will thereafter, occupy the
          new facility which is located in City of Industry, California.

          Income before income taxes amounted to $2.3 million and $7.1 million
          for the thirteen weeks ended December 28, 1997 and December 29, 1996,
          respectively.

          Net income for the thirteen week first quarter of fiscal 1998 ended
          December 28, 1997, amounted to $1.4 million compared to $4.2 million
          for the quarter ended December 29, 1996.

                                       11
<PAGE>   12



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES
          The Company historically has funded its daily cash flow requirements
          through funds provided by operations and through borrowings from
          short-term revolving credit facilities. The Company's short-term Bank
          Credit Agreement is between a bank and Stater Bros. Markets, a wholly
          owned subsidiary of the Company and consists of revolving credit
          facilities for working capital purposes of $15.0 million, which was
          available at December 28, 1997, and a $25.0 million standby letter of
          credit facility maintained pursuant to its workers' compensation and
          general liability self-insurance requirements. The Bank Credit
          Agreement expires on June 1, 1998.

          Working capital amounted to $89.6 million at December 28, 1997 and
          $92.0 million at September 28, 1997, and the Company's current ratios
          were 1.78:1, and 1.81:1, respectively. Fluctuations in working capital
          and current ratios are not unusual in the industry.

          The net cash provided by operating activities in the first quarter of
          fiscal 1998 amounted to $7.2 million and consisted of reductions in
          accounts payable, net of decreases in inventories and receivables and
          increases due from the accrual of interest expense due on the
          Company's 11% Senior Notes and 9% Senior Subordinated Notes. The
          increase of $6.3 million in accrued liabilities and long term portion
          of self-insurance reserves reflects the accrual for interest expense
          on the Company's 11% Notes which is paid September 1 and March 1 and
          on the Company's 9% Notes which is paid July 1 and January 1 of each
          year.

          Net cash used by operating activities in the first quarter of fiscal
          1997 (ended December 29, 1996), amounted to $8.9 million and consisted
          of reductions in accounts payable, net of decreases in inventories,
          the timing of interest payments due on the Company's 11% Senior Notes
          and the deferred tax benefits arising from the October 1996 sale and
          leaseback transaction. As of September 29, 1996, the Company had
          increased its inventory and related accounts payable in anticipation
          of the implementation of the Company's 60th Anniversary Marketing
          Program in the first quarter of fiscal 1997. Accordingly, as of
          December 29, 1996, the Company's investment in inventories and related
          accounts payable are reflected at more traditional balances. The
          increase of $4.8 million in accrued liabilities and long term portion
          of self-insurance reserves reflects the accrual for interest due on
          the Company's 11% Senior Notes, such interest payments are due
          September 1 and March 1 of each year. The increase in the deferred tax
          benefit of $2.1 million was due primarily to the timing difference
          between tax and book requirements for recognizing the gain and
          resulting tax liability from the October 1996 sale and leaseback
          transaction.


                                       12
<PAGE>   13



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)
          Net cash used by investing activities for the thirteen weeks ended
          December 28, 1997, amounted to $7.4 million, compared to net cash
          provided by investing activities of $8.5 million for the first quarter
          of fiscal 1997. The difference in net cash used by or provided by
          investing activities between the comparable periods is due to the
          Company's capital expenditures during such periods, net of proceeds
          from asset dispositions and the Company's additional investment in
          Santee Dairies LLC. Capital expenditures for the thirteen week periods
          amounted to $7.6 million in the first quarter of 1998 compared to $2.5
          million in the like period of 1997. During the thirteen weeks ended
          December 28, 1997, the Company opened a new 43,000 square foot
          supermarket in Laguna Hills, California, remodeled two supermarkets
          and continued to construct its new supermarket in Yucaipa, California.

          In October 1996 (fiscal 1997), the Company completed a sale and
          leaseback transaction with an unrelated third party for four of the
          Company's supermarkets. The net proceeds from the sale of the four
          supermarkets amounted to approximately $16.0 million, which
          approximated fair market value. The Company entered into leases for
          the four supermarkets with initial terms of 20 years and with options
          available to the Company which extend the lease terms up to an
          additional 20 years. The Company believes the rents due under the
          leases approximate fair market rents. The gains from the sale of the
          supermarkets were approximately $2.5 million and were deferred and
          will be amortized into income over the initial term of the leases.

          In November 1996, for approximately $200,000, the Company increased
          its ownership in Santee Dairies, Inc. to 50%. Additionally, during the
          first quarter of fiscal 1997, the Company increased its investment in
          Santee Dairies, Inc. by approximately $4.8 million. Hughes Family
          Markets ("Hughes"), located in Irwindale, California, retained a 50%
          ownership in Santee Dairies, Inc. Both the Company and Hughes
          subsequently exchanged all of the Common Stock of Santee Dairies, Inc.
          for equal interests in Santee Dairies Limited Liability Company.
          Santee Dairies, Inc. is a wholly owned subsidiary of Santee Dairies
          LLC. Santee Dairies, Inc. operates a fluid milk processing plant in
          Los Angeles, California and is constructing a new fluid milk and other
          fluid dairy products processing plant in City of Industry, California.
          Mr. Jack H. Brown, Chairman of the Board, President and Chief
          Executive Officer of Stater Bros. Markets also serves as Chairman of
          the Board and Chief Executive Officer of Santee. Santee provides the
          Company's supermarkets with a significant amount of high quality fluid
          milk and other dairy products.

          Net cash used by financing activities amounted to $311,000 and $2.1
          million for the first quarters of fiscal 1998 and 1997, respectively,
          and consisted of payments on the Company's capitalized lease
          obligations and the accretion or payment of dividends on the Company's
          Series B Preferred Stock. In August 1997, the Company redeemed all of
          the outstanding shares of its Series B Preferred Stock for $69.4
          million plus accrued and unpaid dividends.

                                       13
<PAGE>   14



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)
          The Company is subject to certain covenants associated with its 11%
          Senior Notes due 2001, its 9% Senior Subordinated Notes due 2004, and
          covenants included in the Bank Credit Agreement between a bank and
          Stater Bros. Markets, a wholly owned subsidiary of the Company. As of
          December 28, 1997, the Company was in compliance with all such
          convenants. However, there can be no assurance that the Company will
          be able to achieve the expected operating results or implement the
          capital expenditure strategy upon which future compliance with such
          covenants is based.

          THE BANK FACILITIES
          Stater Bros. Markets, the Company's operating subsidiary, and Bank of
          America National Trust and Savings Association (the "Bank") entered
          into a Credit Agreement in March 1994, as amended and effective June
          1, 1996, whereby the Bank provides Stater Bros. Markets with a
          revolving operating line of credit (the "Operating Facility") with a
          maximum availability of $15.0 million which was available at December
          28, 1997 and a revolving letter of credit facility (the "LC Facility")
          with a maximum availability of $25.0 million (collectively, the "Bank
          Facilities"). As of December 28, 1997, approximately $15.5 million of
          the LC Facility was available to the Company. The Bank Credit
          Agreement expires on June 1, 1998. The Company intends to renew or
          replace its Bank Credit Agreement with a facility with terms and
          conditions at least as favorable as the existing Bank Credit
          Agreement.

          The Bank Facilities also contain certain financial and other covenants
          applicable to Stater Bros. Markets, including without limitation,
          requirements to (i) maintain a minimum current ratio of at least
          1.20:1; (ii) maintain minimum tangible net worth plus debt
          subordinated to the Bank (as defined) of at least $145.0 million;
          (iii) maintain a ratio of total liabilities to tangible net worth plus
          debt subordinated to the Bank of not in excess of 1.30:1; (iv)
          maintain a minimum fixed charge coverage ratio (as defined) of at
          least 1.10:1 for each consecutive four fiscal quarters beginning with
          the four fiscal quarters ending on Stater Bros. Markets' 1996 fiscal
          year end; (v) limit the sale of assets; (vi) prohibit additional
          indebtedness except for normal trade credit and indebtedness secured
          only by real property constructed or acquired within the prior twelve
          months; (vii) prohibit additional liens except for liens for
          indebtedness secured by real property pursuant to clause (v); (viii)
          prohibit the acquisition of other business entities; (ix) restrict the
          payment of dividends (as discussed below); (x) prohibit changes of
          ownership; (xi) prohibit the liquidation, consolidation or merger of
          the business; and (xii) repay all advances outstanding under the
          Operating Facility and not draw any new advances for at least 5
          calendar days each month.

                                       14
<PAGE>   15



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)
           THE BANK FACILITIES (CONTD.)
          As of December 28, 1997, for purposes of the Bank Facilities, Stater
          Bros. Markets was in compliance with all restrictive covenants and had
          (i) a current ratio of 1.94:1, (ii) tangible net worth and debt
          subordinated to the Bank of $211.5 million; (iii) a ratio of total
          liabilities to tangible net worth and debt subordinated to the Bank of
          0.53:1 and (iv) a fixed charge coverage ratio (as defined in the Bank
          Facilities) of 2.61:1. If for any reason Stater Bros. Markets is
          unable to comply with the terms of the Bank Facilities, including the
          covenants contained therein, such noncompliance would result in an
          event of default under the Bank Facilities, and could result in
          acceleration of the payment of indebtedness then outstanding under
          Bank Facilities or, in certain situations, the prohibition of payments
          of dividends or advances to the Company. In addition, no amendment,
          waiver or supplement may be made to the Indenture without the prior
          written consent of the Bank if such amendment, waiver or supplement
          adversely affects the rights of the Bank as lender to Stater Bros.
          Markets.

          The financial and operational covenants contained in the Bank
          Facilities significantly limit Stater Bros. Markets' ability to pay
          dividends and make loans or advances to the Company, the primary
          source of anticipated cash for the Company, and could limit the
          Company's ability to respond to changing business and economic
          conditions, and to finance future operations or capital needs
          including the Company's ability to achieve its plans to remodel and
          expand existing supermarkets and open new supermarkets.

          The Company is also subject to certain covenants associated with its
          11% Senior Notes due 2001 and its 9% Senior Subordinated Notes due
          2004. As of December 28, 1997, the Company was in compliance with all
          such covenants. However, there can be no assurance that the Company
          will be able to achieve the expected operating results or implement
          the capital expenditure strategy upon which future compliance with
          such covenants is based.

           THE REDEMPTION OF SERIES B PREFERRED STOCK
          Effective March 8, 1996, the Company exercised its option to convert
          the Company's 50,000 shares of Common Stock held by Craig Corporation
          into 693,650 shares of the Company's Series B Preferred Stock. The
          Series B Preferred Stock was redeemed by the Company, in August 1997,
          for $69.4 million plus accrued and unpaid dividends. Funds used to
          redeem the Series B Preferred Stock were provided by the issue of $100
          million of 9% Senior Subordinated Notes due 2004.

                                       15
<PAGE>   16



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES (CONTD.)
          THE REDEMPTION OF SERIES B PREFERRED STOCK (CONTD.)
          The 9% Notes are due in 2004 and are general unsecured obligations of
          the Company, subordinated in right of payment to the 11% Senior Notes
          and all other present and future Senior Indebtedness of the Company,
          including the Company's obligations under the revolving credit
          agreement and effectively subordinated to all indebtedness and other
          obligations of the subsidiaries of the Company. Interest on the 9%
          Notes is payable semi-annually in arrears on January 1 and July 1 of
          each year. The proceeds from the issuance of the 9% Notes were used
          (approximately) as follows; (a) $69.4 million to redeem all of the
          outstanding shares of the Company's Series B Preferred Stock, (b) $4.6
          million to pay accrued dividends on the Series B Preferred Stock, (c)
          $4.9 million to obtain the consent from the holders and (d) $2.0
          million to La Cadena for financial advise relating to the transaction,
          (e) $3.4 million for fees and expenses of the transaction. The
          remaining proceeds from the issuance of the 9% Notes were used for
          general corporate purposes, including capital expenditures. The 9%
          Notes are listed and trade on the American Stock Exchange.

          LABOR RELATIONS
          The Company and other major supermarket employers in Southern
          California negotiated a four-year contract, beginning October 1995,
          with the United Food and Commercial Workers Union. The Company's
          collective bargaining agreement with the International Brotherhood of
          Teamsters was renewed in 1994 and expires in September 1998.
          Management believes it has good relations with its employees.

          RECENT ACCOUNTING STANDARDS The Financial Accounting Standards Board
          has issued Statement of Financial Accounting Standards ("SFAS") No.
          128, "Earnings per Share"; No. 130, "Reporting on Comprehensive
          Income"; and No. 131, "Disclosures about Segments of an Enterprise and
          Related Information", all of which were adopted by the Company at the
          beginning of its fiscal year ending on September 27, 1998 (fiscal
          1998). The Company believes that the adoption of SFAS No. 128, No. 130
          and No. 131 will not have material effect on its financial position or
          its results of operations in fiscal 1998.

                                       16
<PAGE>   17



                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

          CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE
          PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

          The Private Securities Litigation Reform Act of 1995 provides a "safe
          harbor" for forward-looking statements. Certain information contained
          in the Company's filings with the Securities and Exchange Commission
          (as well as information included in oral statements or other written
          statements made or to be made by the Company) includes statements that
          are forward-looking, such as statements relating to plans for future
          activities. Such forward-looking information involves important risks
          and uncertainties that could significantly affect results in the
          future and, accordingly, such results may differ from those expressed
          in any forward-looking statements made by or on behalf of the Company.
          These risks and uncertainties include, but are not limited to, those
          relating to domestic economic conditions, seasonal and weather
          fluctuations, expansion and other activities of competitors, changes
          in federal or state laws and the administration of such laws and the
          general condition of the economy.

                                       17
<PAGE>   18



                           STATER BROS. HOLDINGS INC.
                                DECEMBER 28, 1997

PART II - OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

          Various legal actions and claims are pending against the Company in
          the ordinary course of business. In the opinion of management and its
          general legal counsel, the ultimate resolution of such pending legal
          actions and claims will not have a material adverse effect on the
          Company's consolidated financial position or its results of
          operations.

          For a description of legal proceedings, please refer to the footnote
          entitled "Legal Proceedings" contained in the Notes to Consolidated
          Financial Statements section of the Company's Form 10-K for the fiscal
          year ended September 28, 1997.


ITEM 2.   CHANGES IN SECURITIES

          None


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None


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

          None


ITEM 5.   OTHER INFORMATION

          None


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits

               Exhibits are as follows:

<TABLE>
<CAPTION>

               EXHIBIT NO.            DESCRIPTION
               -----------            -----------

              <S>                     <C>                              
                   11                 Calculation of Earnings Per Common Share.
                   27                 Financial Data Schedule
</TABLE>

                                       18
<PAGE>   19



                           STATER BROS. HOLDINGS INC.
                                DECEMBER 28, 1997

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K (contd.)

          (a)  Exhibits (contd.)


                  Copies of Exhibits listed herein can be obtained by writing
                  and requesting such Exhibits from: Corporate Secretary, P. O.
                  Box 150, Colton, California 92324.

          (b)  Reports on Form 8-K

               None


                                       19
<PAGE>   20

                           STATER BROS. HOLDINGS INC.

                                   Signatures

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



               Date:  February 9, 1998      /s/ Jack H. Brown
                                            ------------------------------------
                                            Jack H. Brown
                                            Chairman of the Board, President,
                                            and Chief Executive Officer



               Date:  February 9, 1998      /s/   Dennis N. Beal
                                            ------------------------------------
                                            Dennis N. Beal
                                            Vice President, Finance and
                                            Chief Financial Officer
                                            (Chief Accounting Officer)



                                       20