<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 March 30, 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)


<TABLE>
<CAPTION>

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


         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 April 18, 1997, there were issued and outstanding
             50,000 shares of the registrant's Class A Common Stock






                                       1

<PAGE>   2
                           STATER BROS. HOLDINGS INC.
                                 MARCH 30, 1997


                                      INDEX

<TABLE>
<CAPTION>



PART I        FINANCIAL INFORMATION (UNAUDITED)                                           PAGE
<S>           <C>                                                                         <C>   


Item 1.       Financial Statements

              Consolidated Balance Sheets (Unaudited) as of September 29, 1996
                 and March 30, 1997                                                         3

              Consolidated Statements of Income (Unaudited) for the 26 weeks ended
                 March 24, 1996 and March 30, 1997                                          5

              Consolidated Statements of Income (Unaudited) for the 13 weeks ended
                 March 24, 1996 and March 30, 1997                                          6

              Consolidated Statements of Cash Flows (Unaudited) for the 26 weeks
                 ended March 24, 1996 and March 30, 1997                                    7

              Notes to Consolidated Financial Statements (Unaudited)                        8

Item 2.       Management's Discussion and Analysis of Financial
              Condition and Results of Operations                                          10


PART II       OTHER INFORMATION


Item 1.       Legal Proceedings                                                            17

Item 2.       Changes in Securities                                                        17

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                                                                                 19
</TABLE>




                                       2


<PAGE>   3

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

                                     ASSETS

<TABLE>
<CAPTION>
                                                         SEPT. 29,       MAR. 30,
                                                           1996            1997
                                                         --------        --------
<S>                                                      <C>             <C>     
Current Assets
   Cash and cash equivalents ....................        $ 45,279        $ 41,065
   Receivables ..................................          19,009          17,979
   Inventories ..................................         117,372         115,797
   Prepaid expenses .............................           3,357           6,449
   Deferred income taxes ........................           4,710           4,710
   Properties held for sale .....................           1,787           1,771
                                                         --------        --------

Total current assets ............................         191,514         187,771

Investment in unconsolidated affiliate ..........           7,626          12,047


Property and equipment
   Land .........................................          18,688          14,603
   Buildings and improvements ...................          89,856          81,260
   Store fixtures and equipment .................          78,570          82,601
   Property subject to capital leases ...........          14,368          14,368
                                                         --------        --------
                                                          201,482         192,832


   Less accumulated depreciation and amortization          87,267          90,896
                                                         --------        --------
                                                          114,215         101,936


Deferred income taxes ...........................           5,295           7,382
Deferred debt issuance cost, net ................           5,221           4,630
Lease guarantee escrow ..........................           6,701           7,825
Other assets ....................................           7,722           7,352
                                                         --------        --------


Total assets ....................................        $338,294        $328,943
                                                         ========        ========
</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
            
<TABLE>
<CAPTION>
                                                                   SEPT. 29,         MAR. 30,
                                                                    1996              1997
                                                                  ---------         ---------
<S>                                                               <C>               <C>      
Current Liabilities
   Accounts payable ......................................        $  79,271         $  63,461
   Accrued payroll and related expenses ..................           23,981            23,652
   Other accrued liabilities .............................           23,607            25,032
   Current portion of capital lease obligations ..........            1,182             1,180
                                                                  ---------         ---------

Total current liabilities ................................          128,041           113,325

Long-term debt ...........................................          165,000           165,000
Capital lease obligations, less current portion ..........            6,917             6,340
Long-term portion of self-insurance reserves..............           10,332             9,475

Other long-term liabilities ..............................            2,526             4,408
10.5% Cumulative Series B Preferred Stock:
   (stated value $100 per share)
      Authorized shares - 693,650
      Issued and outstanding shares - 693,650 ............           69,365            69,365

Stockholders' equity 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 deficit ......................................          (41,953)          (37,036)
   Less option to acquire stock ..........................          (14,650)          (14,650)
                                                                  ---------         ---------

Total stockholders' equity ...............................          (43,887)          (38,970)
                                                                  ---------         ---------

Total liabilities and stockholders' equity ...............        $ 338,294         $ 328,943
                                                                  =========         =========
</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>
                                                                      26 Weeks Ended
                                                                MAR. 24,          MAR. 30,
                                                                  1996             1997
                                                               ---------         ---------
<S>                                                            <C>               <C>      
Sales .................................................        $ 814,963         $ 864,822
Cost of goods sold ....................................          629,154           666,301
                                                               ---------         ---------
Gross profit ..........................................          185,809           198,521

Operating expenses
   Selling, general and administrative expenses .......          155,616           167,152
   Depreciation and amortization ......................            6,162             6,561
   Consulting fees ....................................              750               750
                                                               ---------         ---------
Total operating expenses ..............................          162,528           174,463
                                                               ---------         ---------

Operating profit ......................................           23,281            24,058

Interest income .......................................              707               995
Interest expense ......................................           (9,924)           (9,979)
Equity in earnings (loss) from unconsolidated affiliate             (548)             (579)
Other income (loss) - net .............................             (176)               (3)
                                                               ---------         ---------

Income before income taxes ............................           13,340            14,492
Income taxes ..........................................            5,402             5,943
                                                               ---------         ---------

Net income ............................................        $   7,938         $   8,549

Less preferred dividends ..............................              339             3,632
                                                               ---------         ---------

Earnings available to common shareholders .............        $   7,599         $   4,917
                                                               =========         =========

Earnings per common share .............................        $   79.71         $   98.34

Average common shares outstanding .....................           95,330            50,000
                                                               =========         =========

Shares outstanding at end of period ...................           50,000            50,000
                                                               =========         =========
</TABLE>









     See accompanying notes to unaudited consolidated financial statements.



                                       5


<PAGE>   6

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


<TABLE>
<CAPTION>
                                                                     13 Weeks Ended
                                                                MAR. 24,          MAR. 30,
                                                                  1996              1997
                                                               ---------         ---------
<S>                                                            <C>               <C>      
Sales .................................................        $ 406,223         $ 431,422
Cost of goods sold ....................................          312,675           333,727
                                                               ---------         ---------
Gross profit ..........................................           93,548            97,695

Operating expenses
   Selling, general and administrative expenses .......           77,803            82,056
   Depreciation and amortization ......................            3,104             3,286
   Consulting fees ....................................              375               375
                                                               ---------         ---------
Total operating expenses ..............................           81,282            85,717
                                                               ---------         ---------

Operating profit ......................................           12,266            11,978

Interest income .......................................              449               526
Interest expense ......................................           (4,966)           (4,984)
Equity in earnings (loss) from unconsolidated affiliate             (276)             (136)
Other income (loss) - net .............................             (178)               (3)
                                                               ---------         ---------
Income before income taxes ............................            7,295             7,381
Income taxes ..........................................            2,954             3,027
                                                               ---------         ---------

Net income ............................................        $   4,341         $   4,354

Less preferred dividends ..............................              339             1,816
                                                               ---------         ---------

Earnings available to common shareholders .............        $   4,002         $   2,538
                                                               =========         =========

Earnings per common share .............................        $   44.14         $   50.76

Average common shares outstanding .....................           90,659            50,000
                                                               =========         =========

Shares outstanding at end of period ...................           50,000            50,000
                                                               =========         =========
</TABLE>




     See accompanying notes to unaudited consolidated financial statements.





                                       6

<PAGE>   7


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


<TABLE>
<CAPTION>
                                                                          26 Weeks Ended
                                                                     MAR. 24,        MAR. 30,
                                                                      1996             1997
                                                                    --------         --------
<S>                                                                 <C>              <C>     
OPERATING ACTIVITIES:
Net income .................................................        $  7,938         $  8,549
Adjustments to reconcile net income to net cash provided
 by operating activities:
   Depreciation and amortization ...........................           6,162            6,561
   Provision for deferred income taxes .....................              --           (2,087)
   Gain (loss) on disposals of assets ......................             176                3
   Net undistributed loss in investment in unconsolidated
affiliate ..................................................             548              579
   Changes in operating assets and liabilities:
    (Increase) decrease in receivables .....................          (1,417)           1,030
    (Increase) decrease in inventories .....................            (922)           1,575
    (Increase) decrease in prepaid expenses ................            (825)          (3,092)
    (Increase) decrease in other assets ....................             859             (725)
    Increase (decrease) in accounts payable ................          (7,625)         (15,810)
    Increase (decrease) in accrued liabilities and long-term
     portion of self-insurance reserves ....................           2,221             (406)
                                                                    --------         --------

Net cash (used by) provided by operating activities ........           7,115           (3,823)
                                                                    --------         --------

INVESTING ACTIVITIES:
Investment in unconsolidated affiliate .....................              --           (5,000)
Purchase of property and equipment .........................          (8,704)          (7,192)
Proceeds from sale of property and equipment and properties
 held for sale .............................................          18,565           16,010
                                                                    --------         --------

Net cash (used by) provided by investing activities ........           9,861            3,818
                                                                    --------         --------

FINANCING ACTIVITIES:

Dividends paid or accrued on preferred stock................            (339)          (3,632)
Redemption of common stock .................................         (69,365)              --
Issuance of preferred stock ................................          69,365               --
Principal payments on capital lease obligations                         (532)            (577)
                                                                    --------         --------

Net cash (used by) financing activities ....................            (871)          (4,209)
                                                                    --------         --------

Net increase (decrease) in cash and cash equivalents .......          16,105           (4,214)
Cash and cash equivalents at beginning of period ...........          26,308           45,279
                                                                    --------         --------

Cash and cash equivalents at end of period .................        $ 42,413         $ 41,065
                                                                    ========         ========
Interest paid ..............................................        $  9,703         $  9,466
Income taxes paid ..........................................        $  3,775         $  3,225
</TABLE>




     See accompanying notes to unaudited consolidated financial statements.



                                       7

<PAGE>   8
                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                 MARCH 30, 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 March 24, 1996 and March 30, 1997 and the
results of its operations and cash flows for the twenty-six weeks ended March
24, 1996 and March 30, 1997. 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 twenty-six weeks ended March 30, 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 twenty-six weeks ended March 24,
1996 and March 30, 1997 consists of the following:


<TABLE>
<CAPTION>
                                                           26 Weeks Ended
                                                           --------------
                                                    Mar. 24, 1996  Mar. 30, 1997
                                                    -------------  -------------
                                                            (In thousands)
<S>                                                   <C>                 <C>   
Federal Income Taxes                                  $4,635              $4,594
State Income Taxes                                       767               1,349
                                                      ------              ------
                                                      $5,402              $5,943
                                                      ======              ======
</TABLE>


NOTE 3 - CONVERSION OF COMMON STOCK

     Effective March 8, 1996, the Company converted the Company's 50,000 shares
of Common Stock held by Craig Corporation ("Craig") into 693,650 shares of the
Company's Series B Preferred Stock. The Series B Preferred Stock is redeemable
by the Company in whole but not in part for $69.4 million plus accrued and
unpaid dividends. The holders of the Series B Preferred Stock can, beginning in
the year 2009, cause the Company to redeem such Preferred Stock. Dividends on
the Preferred Stock are paid quarterly in arrears at the rate of 10.5 per annum
through September 2002, and beginning in October 2002, will increase to 12% per
annum and will increase by 100 basis points per year thereafter to a maximum
rate of 15% per annum.

NOTE 4 - UNCONSOLIDATED AFFILIATE

     Prior to November 1996, and since 1986, Stater Bros. Markets, a wholly
owned subsidiary of the Company, owned 49.6% of Santee Dairies, Inc., ("Santee")
an operator of a fluid milk processing plant located in Los Angeles, California.
In November 1996 and for approximately $200,000, Stater Bros. Markets increased
its ownership in Santee to 50%, but is not the controlling shareholder.
Additionally, during the quarter ended December 29, 1996, Stater Bros. Markets
acquired Preferred Stock issued by Santee for an aggregate amount of $4.8
million. It is not anticipated that Santee will issue dividends on either its
Preferred Stock or Common Stock in the foreseeable future. Santee is not a
significant subsidiary of Stater Bros. Markets or the Company, and accordingly
the Company accounts for its investment in Santee Dairies Inc. using the equity
method of accounting. The Company recognized undistributed losses from its
investment in Santee Dairies, Inc. of $136,000 and $276,000 for the thirteen
weeks ended March 30, 1997 and March 24, 1996, respectively. For the twenty-six
weeks year to date, the Company recognized losses of $579,000 and $548,000 for
1997 and 1996, respectively.





                                       8


<PAGE>   9
                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)
                                 MARCH 30, 1997

NOTE 5 - CONSULTING AGREEMENT AND COVENANT NOT TO COMPETE

     Pursuant to the Consulting Agreement dated as of September 3, 1993 (the
"Consulting Agreement"), effective and commencing March 8, 1994, Craig will
render consulting services to the Company for a five-year period. In
consideration for such consulting services, the Company will pay Craig $1.5
million per year, payable quarterly during the term of the Consulting Agreement.
The Company will have the right to terminate its obligations under the
Consulting Agreement in the event it exercises its option to redeem the Series B
Preferred Stock prior to the expiration of the Consulting Agreement.
Additionally, in accordance with the terms of the Consulting Agreement, Craig
has agreed not to engage in any business that competes with the Company in any
of the five counties in which the Company operates until the end of the
five-year period of the Consulting Agreement. The Company paid Craig $5.0
million on March 8, 1994 which is amortized to earnings over the five-year term
of the covenant not to compete included in the Consulting Agreement.

NOTE 6 - RECLASSIFICATIONS

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

NOTE 7 - 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 8 - ADOPTION OF ACCOUNTING STANDARD

     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" (SFAS 121), which the
Company adopted at the beginning of fiscal year 1997. Management believes that
the adoption of SFAS 121 will not have a material adverse effect on the
Company's financial position or its results of operations for fiscal 1997.









                                       9


<PAGE>   10
                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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, 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
         which are listed and trade on the American Stock Exchange.

         Effective March 8, 1996, pursuant to options available to the Company
         included in a certain Option Agreement entered into in March 1994, as
         part of the Recapitalization between the Company and Craig, the Company
         exercised its right to convert all of the Common Stock held by Craig
         Corporation into 693,650 shares of 10.5% Series B Preferred Stock. The
         redemption value of the Series B Preferred Stock is $100 per share for
         an aggregate value of $69,365,000. Dividends on the Series B Preferred
         Stock are due quarterly in arrears.

         Effective March 8, 1996, La Cadena became the sole Common Shareholder
         of the Company and holds all of the shares of 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.

         RESULTS OF OPERATIONS

         The following table sets forth certain income statement components
         expressed as a percent of sales for the thirteen and twenty-six weeks
         ended March 24, 1996 and March 30, 1997.


<TABLE>
<CAPTION>
                                              Thirteen Weeks         Twenty-Six Weeks
                                              ----------------      -----------------
                                              1996       1997        1996       1997
                                             ------     ------      ------     ------ 
         <S>                                 <C>        <C>         <C>        <C>    
         Sales                               100.00%    100.00%     100.00%    100.00%
         Gross profit                         23.03      22.64       22.80      22.96
         Selling, general and
          administrative expense              19.16      19.02       19.09      19.33
         Depreciation and amortization          .76        .76         .76
                                                                                  .76
         Consulting fees                        .09        .09         .09        .09
         Other (income)(net)                  --          (.09)      --          (.05)
         Interest expense                      1.22       1.15        1.22       1.15
         Earnings before income taxes          1.80%      1.71%       1.64%      1.68%
</TABLE>
         
         







                                       10
         
<PAGE>   11

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

         RESULTS OF OPERATIONS (CONTD.)
         Total sales for the thirteen weeks ended March 30, 1997 increased 6.2%
         and amounted to $431.4 million compared to $406.2 million for the like
         period in 1996. Total sales for the twenty-six weeks year to date ended
         March 30, 1997 increased 6.1% and amounted to $864.8 million compared
         to $815.0 million for the same period in 1996. Like store sales
         increased 6.2% for the quarter and increased 6.1% for the year to date
         period. The Company operated 110 supermarkets at March 30, 1997 and at
         March 24, 1996. The increase in sales in the first and second quarters
         of 1997 compared to the like periods of 1996 is due to many factors,
         including the very favorable customer response to the Company's 60th
         Anniversary Marketing Program, slight improvements in the Southern
         California economy and favorable customer response to the Company's
         1996 merchandising expansion and upgrading program which included
         expanded product offerings in the deli, bakery, frozen foods and dairy
         departments and the continuing introduction of fresh cut flowers and
         prepackaged vegetables into 83 of the Company's 110 supermarkets.

         Gross profits for the thirteen weeks ended March 30, 1997, amounted to
         $97.7 million or 22.64% of sales compared to $93.6 million or 23.03% of
         sales in the same period of the prior year. During the quarter ended
         Marci 30, 1997, the Company continued to introduce higher gross margin
         products into its supermarkets, such as prepackaged gourmet vegetables
         and fresh cut flowers. For the twenty-six week year to date period,
         gross profits increased to $198.5 million or 22.96% of sales compared
         to $185.8 million or 22.80% of sales in the prior year. The increase in
         gross profits for the year to date period is due to increased
         efficiencies in the Company's warehousing and transportation
         departments and the introduction of higher gross margin products, such
         as prepackaged gourmet vegetables and fresh cut flowers and a decrease
         in competitive activity when compared to the prior year.

         Operating expenses include selling, general and administrative
         expenses, depreciation and amortization expenses and consulting fees.
         For the thirteen weeks ended March 30, 1997, selling, general and
         administrative expenses amounted to $82.1 million or 19.02% of sales
         compared to $77.8 million or 19.16% of sales for the like period of the
         prior year. For the year to date period, selling, general and
         administrative expenses amounted to $167.2 million or 19.33% of sales
         compared to $155.6 million or 19.09% of sales for the like period of
         the prior year. The increase in selling, general and administrative
         expenses in 1997 when compared to 1996 is due to the incremental costs
         and expenses incurred to operate at the higher level of sales, the
         increase in net rent expenses from the sale and leaseback of five
         supermarkets in January 1996 and an additional four supermarkets in
         October 1996, and the suspension of employer contributions to an
         over-funded collective bargaining benefits trust in the first and
         second quarters of fiscal 1996.






                                       11

<PAGE>   12

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

         RESULTS OF OPERATIONS (CONTD.) 
         Selling, general and administrative expenses in fiscal 1997 include
         increases in rent expenses, net of reductions in depreciation expenses,
         from the sale and leaseback of five supermarkets in January 1996 and an
         additional four supermarkets in October 1996 of approximately $580,000
         in the first quarter of fiscal 1997 and approximately $400,000 in the
         second quarter of fiscal 1997. Selling, general and administrative
         expenses for the thirteen and twenty-six weeks ended March 24, 1996
         reflect reductions in expenses for employer contributions to a
         collective bargaining benefits trust of $2.5 million for the quarter
         and $3.8 million year to date. Such collective bargaining health care
         benefits trust was over-funded and employer monthly contributions to
         the trust were suspended for the months of December 1995 and January
         1996.

         Depreciation and amortization expenses amounted to $3.3 million and
         $6.6 million for the second quarter and year to date periods ended
         March 30, 1997, respectively. Depreciation and amortization expense
         amounted to $3.1 million and $6.2 million for the quarter and year to
         date periods of the prior year. Depreciation and amortization includes
         amortization of a prepaid five-year covenant not to compete between the
         Company and Craig which became effective as of March 8, 1994.

         In conjunction with the March 1994 Recapitalization Transaction, the
         Company entered into a five-year consulting and covenant not to compete
         agreement (the "Consulting Agreement") with Craig Corporation. The
         Consulting Agreement provided for a prepayment of $5.0 million, which
         is amortized to expense over the five-year term of the covenant not to
         compete. The Consulting Agreement also provides for annual consulting
         payments of $1.5 million, paid quarterly in arrears. The requirement to
         make annual consulting payments may, at the election of the Company, be
         terminated if the Company redeems the 10.5% Series B Preferred Stock
         prior to the expiration date of the Consulting Agreement. Accordingly,
         amortization of the prepaid covenant not to compete amounted to
         $250,000 and $500,000, respectively, for the thirteen and twenty-six
         weeks ended March 30, 1997 and March 24, 1996 and is included in
         depreciation and amortization expense. Additionally, annual consulting
         fees paid or accrued to the benefit of Craig amounted to $375,000 for
         the thirteen weeks and $750,000, for the twenty-six weeks ended March
         30, 1997 and March 24, 1996, respectively.

         Operating profits for the second quarter of 1997 amounted to $12.0
         million or 2.78% of sales, compared to $12.3 million or 3.02% of sales
         in the second quarter of 1996. Operating profits for the twenty-six
         weeks year to date ended March 30, 1997, amounted to $24.1 million or
         2.78% of sales, compared to $23.3 million or 2.86% of sales for the
         like period in 1996.

         Interest expense amounted to $5.0 million for the second quarters of
         1997 and 1996. For the year to date periods of 1997 and 1996, interest
         expense amounted to $10.0 million. Interest expense in the second
         quarter and year to date periods of 1997 and 1996, includes
         amortization of $295,000 and $590,000, respectively, from fees and
         expenses incurred to acquire debt.





                                       12



<PAGE>   13

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

         RESULTS OF OPERATIONS (CONTD.)
         Income before income taxes amounted to $7.4 million and $7.3 million
         for the second quarters of 1997 and 1996, respectively, and amounted to
         $14.5 million and $13.3 million for the year to date periods of 1997
         and 1996, respectively.

         Net income for the second quarters of 1997 and 1996 amounted to $4.4
         million or 1.01% of sales and $4.3 million or 1.07% of sales,
         respectively, and for the year to date periods for 1997 and 1996,
         amounted to $8.5 million or .99% of sales and $7.9 million or .97% of
         sales, respectively.

         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, all of which was available at March 30, 1997, and a $25.0
         million standby letter of credit facility, of which $11.3 million was
         available at March 30, 1997, maintained qursuant to its worker's
         compensation and general liability self-insurance requirements. The
         Bank Credit Agreement expires on June 1, 1998.

         Working capital amounted to $74.4 million at March 30, 1997 and $63.5
         million at September 29, 1996 and the Company's current ratios were
         1.66:1, and 1.50:1, respectively. Fluctuations in working capital and
         current ratios are not unusual in the industry.

         The net cash used by operating activities for the twenty-six weeks
         ended March 30, 1997 amounted to $3.8 million and consisted of
         reductions in accounts payable net of decreases in inventories, 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 March 30, 1997,
         the Company's investment in inventories and related accounts payable
         are reflected at more traditional balances. 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.

         Net cash provided by investing activities for the twenty-six weeks
         ended March 30, 1997, amounted to $3.8 million compared to $9.9 million
         in fiscal 1996. The difference in net cash 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 additional investment in Santee Dairies. Capital
         expenditures for the twenty-six week periods amounted to $7.2 million
         in 1997 compared to $8.7 million in 1996. During





                                       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 twenty-six weeks ended March 30, 1997, the Company remodeled seven
         supermarkets. Capital expenditures for fiscal 1997 were financed from
         cash provided by the October 1996 sale and leaseback transaction.
         Capital expenditures for fiscal 1997 are estimated to be approximately
         $25.0 million and will include expenditures incurred to construct two
         new supermarkets which are estimated to open in early fiscal 1998.

         In October 1996, 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 will be deferred and amortized into income over the initial
         term of the leases. As a result of the additional rent expenses, net of
         reductions in depreciation expense, due on the four supermarkets,
         operating expenses for the 52-week 1997 fiscal year will increase by
         approximately $1.2 million.

         In November 1996 and for approximately $200,000, the Company increased
         its ownership in Santee to 50%. Santee provides the Company with a
         significant amount of the fluid milk products offered for sale in the
         Company's supermarkets. Additionally, during the first quarter of
         fiscal 1997, the Company acquired approximately $4.8 million worth of
         the Preferred Stock of Santee. Hughes Supermarkets, located in
         Irwindale, California, retained a 50% ownership in Santee and acquired
         a like amount of the Preferred Stock of Santee. Santee 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 the
         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 will, for the foreseeable future, provide the Company's
         supermarkets with a supply of high quality fluid milk and other dairy
         products.

         Net cash used by financing activities amounted to $4.2 million and
         $871,000 for 1997 and 1996, respectively, and consisted of payments on
         the Company's capitalized lease obligations and the accretion or
         payment of dividends on the Company's 10.5% Series B Preferred Stock.
         Such preferred stock dividends are due quarterly and the requirement to
         make such dividend payments on the Company's preferred stock commenced
         in March 1996. At the request of the holder of the Series B Preferred
         Stock the Company will defer dividend payments on the Preferred Stock
         until approximately July 15, 1997. Accordingly, the Company has
         deferred dividend payments on the Series B Preferred Stock and as of
         March 30, 1997, dividends of $2.0 million have been accrued and remain
         unpaid. The Company has adequate cash on hand to pay such dividends.





                                       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 Company is subject to certain covenants associated with its 11%
         Senior Notes due 2001 and covenants included in the Bank Credit
         Agreement between a bank and Stater Bros. Markets, a wholly owned
         subsidiary of the Company. As of March 30, 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 Company believes that cash flow from operations and proceeds from
         borrowings, including lease financings, and funds available under the
         short-term revolving credit facility will be adequate to meet the
         Company's currently identifiable working capital requirements.

         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, all of which was available at March 30,
         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 March 30, 1997, approximately $11.3 million of the
         LC Facility was available to the Company. The Bank Credit Agreement
         expires on June 1, 1998.

         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.

         As of March 30, 1997, for purposes of the Bank Facilities, Stater Bros.
         Markets was in compliance with all restrictive covenants and had (i) a
         current ratio of 1.76:1, (ii) tangible net worth and debt subordinated
         to the Bank of $199.7 million; (iii) a ratio of total liabilities to
         tangible net worth and debt subordinated to the Bank of 0.63:1 and (iv)
         a fixed charge coverage ratio (as defined in the Bank Facilities) of
         1.48:1. If for any reason Stater Bros.




                                       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 BANK FACILITIES (CONTD.) 
         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 PREFERRED STOCK CONVERSION
         In March 1994, the Company acquired, for $14.7 million, an option to
         purchase all, but not less than all, shares of the Common Stock held by
         Craig for a cash purchase price of $60.0 million plus an adjustment
         factor equal to 8.833% per annum from March 8, 1994 to March 8, 1996,
         compounded annually and $69,365,000 thereafter.

         The Option Agreement also included an option available to the Company
         to convert the Company's 50,000 shares of Common Stock held by Craig
         Corporation into 693,650 shares of 10.5% Series B Preferred Stock on or
         before March 8, 1996.

         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 is redeemable by the Company in whole but not
         in part for $69.4 million plus accrued and unpaid dividends. The
         holders of the Series B Preferred Stock can, beginning in the year
         2009, cause the Company to redeem such Preferred Stock. Dividends on
         the Preferred Stock will be paid quarterly in arrears at the rate of
         10.5% per annum through September 2002, and beginning in October 2002,
         will increase to 12% per annum and will increase by 100 basis points
         per year thereafter to a maximum rate of 15% per annum.

           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 for four years in September 1994. Management
         believes it has good relations with its employees.




                                       16

<PAGE>   17

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

         RECENT ACCOUNTING STANDARDS
         The Financial Accounting Standards Board has issued Statement of
         Financial Accounting Standards No. 121, "Accounting for the Impairment
         of Long-Lived Assets and for Long-Lived Assets to be Disposed of" (SFAS
         121), which the Company adopted at the beginning of fiscal year 1997.
         Management believes that the adoption of SFAS 121 will not have a
         material adverse effect on the Company's financial position or its
         results of operations for fiscal 1997. 

         CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE
         PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 
         Certain statements contained in this report are forward looking
         statements. Such forward looking statements are subject to risks,
         uncertainties and other factors which could cause actual results to
         differ materially from future results expressed or implied. Potential
         uncertainties and risks include, but are not limited to, changes in the
         economic environment in the Company's market areas and changes in the
         competitive environment. Due to risks and uncertainties, actual results
         may differ from any future performance discussed in the Company's
         filings with the Securities and Exchange Commission.



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 routine
         legal actions and claims will not have a material adverse effect on the
         Company's consolidated financial position.

         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 Annual Report on Form
         10-K for the fiscal year ended September 29, 1996.

ITEM 2.  CHANGES IN SECURITIES

         At the request of the holder of the 10.5% Cumulative Series B Preferred
         Stock the Company will defer dividend payments on the Preferred Stock
         until approximately July 15, 1997. Accordingly, the Company has
         deferred dividend payments on the Series B Preferred Stock and as of
         March 30, 1997, $2.0 million of dividends on the 10.5% Cumulative
         Series B Preferred Stock have been accrued and remain unpaid.







                                       17
<PAGE>   18


                           STATER BROS. HOLDINGS INC.
                                 MARCH 30, 1997

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:

                  EXHIBIT NO.          DESCRIPTION

                    11                 Calculation of Earnings Per Common Share

                    27                 Financial Data Schedule

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











                                       18



<PAGE>   19

                           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:  May 12, 1997                 /s/      Jack H. Brown
                                             ----------------------
                                             Jack H. Brown
                                             Chairman of the Board, President,
                                             and Chief Executive Officer



          Date:  May 12, 1997                /s/      Dennis N. Beal
                                             -----------------------
                                             Dennis N. Beal
                                             Vice President, Finance and
                                             Chief Financial Officer
                                             (Chief Accounting Officer)

















                                       19