<PAGE>




                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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



For the period ended           November 9, 2003
                      ---------------------------------------------------------

Commission file number             0-3833
                       --------------------------------------------------------

                              Morgan's Foods, Inc.
-------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


Ohio                                                          34-0562210
-------------------------------------------------------------------------------
(State or other jurisdiction of                            (I.R.S. Employer
 incorporation or organization)                         Identification Number)

  24200 Chagrin Boulevard, Suite 126, Beachwood,                 Ohio 44122
-------------------------------------------------------------------------------
   (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:         (216) 360-7500
                                                    ---------------------------

-------------------------------------------------------------------------------
              (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 preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                               Yes ...X...     No .......

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule (2b-2 of the act).

                               Yes.......      No...X...

     As of December 19, 2003, the issuer had 2,718,441 shares of common stock
outstanding.


                                       1
<PAGE>



                          PART I FINANCIAL INFORMATION

Item 1.  Financial Statements.

                              Morgan's Foods, Inc.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (unaudited)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                              QUARTER  ENDED
                                                ------------------------------------------
                                                NOVEMBER 9, 2003         NOVEMBER 10, 2002
                                                ----------------         -----------------
<S>                                               <C>                      <C>
Revenues ..................................       $ 19,382,000             $ 19,617,000

Cost of sales:
 Food, paper and beverage .................          5,963,000                6,245,000
 Labor and benefits .......................          5,219,000                5,190,000
Restaurant operating expenses .............          5,065,000                5,055,000
Depreciation and amortization .............            809,000                  811,000
General and administrative expenses .......          1,170,000                1,348,000
Loss on restaurant assets .................             27,000                  125,000
                                                  ------------             ------------
Operating income ..........................          1,129,000                  843,000
Interest Expense:
 Bank debt and notes payable ..............         (1,047,000)              (1,136,000)
 Capital leases ...........................            (11,000)                 (14,000)
Other income and expense, net .............             19,000                   24,000
                                                  ------------             ------------
Income (loss) before income taxes .........             90,000                 (283,000)
Provision for income taxes ................               --                      1,000
                                                  ------------             ------------
Net income (loss) .........................       $     90,000             $   (284,000)
                                                  ============             ============
Basic and diluted net income (loss)
 per common share .........................       $        .03             $       (.10)
                                                  ============             ============

Basic weighted average number of
 shares outstanding .......................          2,718,441                2,718,441
Diluted weighted average number of
 shares outstanding .......................          2,723,984                2,718,441
</TABLE>

                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       2
<PAGE>



                          PART I FINANCIAL INFORMATION

Item 1.  Financial Statements.

                              Morgan's Foods, Inc.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (unaudited)
-------------------------------------------------------------------------------

<Table>
<Caption>
                                                         THIRTY-SIX WEEKS ENDED
                                                 -----------------------------------------
                                                 NOVEMBER 9, 2003        NOVEMBER 10, 2002
                                                 ----------------        -----------------
<S>                                                <C>                      <C>
Revenues ..................................        $ 58,873,000             $ 59,124,000

Cost of sales:
 Food, paper and beverage .................          17,844,000               18,432,000
 Labor and benefits .......................          16,200,000               15,811,000
Restaurant operating expenses .............          15,066,000               14,946,000
Depreciation and amortization .............           2,408,000                2,361,000
General and administrative expenses........           3,859,000                4,054,000
Loss on restaurant Assets .................              74,000                  193,000
                                                   ------------             ------------
Operating income ..........................           3,422,000                3,327,000
Interest Expense:
 Bank debt and notes payable ..............          (3,213,000)              (3,391,000)
 Capital leases ...........................             (34,000)                 (42,000)
Other income and expense, net .............              73,000                  118,000
                                                   ------------             ------------
Income before income taxes ................             248,000                   12,000
Provision for income taxes ................               4,000                    6,000
                                                   ------------             ------------
Net income ................................        $    244,000             $      6,000
                                                   ============             ============
Basic and diluted net income
 per common share .........................        $        .09             $       --
                                                   ============             ============

Basic weighted average number of
 shares outstanding .......................           2,718,441                2,720,926
Diluted weighted average number of
 shares outstanding .......................           2,724,758                2,731,158

</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       3

<PAGE>





                              MORGAN'S FOODS, INC.

                           CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                NOVEMBER 9, 2003           MARCH 2, 2003
                                                                                ----------------           -------------
<S>                                                                              <C>                     <C>
ASSETS
 Current assets:
  Cash and equivalents ...............................................            $  4,338,000             $  4,901,000
  Short term investment ..............................................                 300,000                     --
  Receivables ........................................................                 176,000                  300,000
  Inventories ........................................................                 532,000                  492,000
  Prepaid expenses ...................................................                 525,000                  562,000
                                                                                  ------------             ------------
                                                                                     5,871,000                6,255,000
 Property and equipment:
  Land ...............................................................              10,971,000               10,970,000
  Buildings and improvements .........................................              19,260,000               18,781,000
  Property under capital leases ......................................               1,006,000                1,006,000
  Leasehold improvements .............................................               7,506,000                7,380,000
  Equipment, furniture and fixtures ..................................              18,948,000               18,618,000
  Construction in progress ...........................................                  58,000                   54,000
                                                                                  ------------             ------------
                                                                                    57,749,000               56,809,000
  Less accumulated depreciation and amortization .....................              22,656,000               20,357,000
                                                                                  ------------             ------------
                                                                                    35,093,000               36,452,000
 Other assets ........................................................               1,237,000                1,331,000
 Franchise agreements ................................................               1,935,000                1,982,000
 Deferred taxes ......................................................                 600,000                  600,000
 Goodwill ............................................................               9,405,000                9,405,000
                                                                                  ------------             ------------
                                                                                  $ 54,141,000             $ 56,025,000
                                                                                  ============             ============
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
 Current liabilities:
    Current maturities of long-term debt .............................            $  2,708,000             $  2,603,000
    Current maturities of capital lease obligations ..................                  75,000                  108,000
    Accounts payable .................................................               3,313,000                3,193,000
    Accrued liabilities ..............................................               3,250,000                3,462,000
                                                                                  ------------             ------------
                                                                                     9,346,000                9,366,000
  Long-term debt .....................................................              44,073,000               46,113,000
  Long-term capital lease obligations ................................                 390,000                  436,000
  Other long-term liabilities ........................................               1,510,000                1,532,000


SHAREHOLDERS' DEFICIENCY
Preferred shares, 1,000,000 shares authorized,
  no shares outstanding
Common stock
 Authorized shares - 25,000,000
 Issued shares - 2,969,405 ...........................................                  30,000                   30,000
 Treasury stock - 250,964 shares .....................................                (284,000)                (284,000)
Capital in excess of stated value ....................................              28,829,000               28,829,000
Accumulated deficit ..................................................             (29,753,000)             (29,997,000)
                                                                                  ------------             ------------
Total shareholders' deficiency .......................................              (1,178,000)              (1,422,000)
                                                                                  ------------             ------------
                                                                                  $ 54,141,000             $ 56,025,000
                                                                                  ============             ============
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       4
<PAGE>




                              Morgan's Foods, Inc.

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY

                                   (unaudited)




<TABLE>
<CAPTION>
                                 COMMON SHARES            TREASURY SHARES          CAPITAL IN                          TOTAL
                             ---------------------    ------------------------      EXCESS OF     ACCUMULATED      SHAREHOLDERS'
                              SHARES       AMOUNT      SHARES        AMOUNT       STATED VALUE      DEFICIT         DEFICIENCY
                             ---------    --------    --------     ----------     ------------    ------------     ------------
<S>                         <C>          <C>         <C>          <C>            <C>             <C>              <C>
Balance, March 3, 2002 ..    2,969,405    $ 30,000    (241,564)    $ (251,000)    $ 28,829,000    $(28,805,000)    $   (197,000)

Net loss ................         --          --          --             --               --        (1,192,000)      (1,192,000)

Purchase of common shares         --          --        (9,400)       (33,000)            --              --            (33,000)
                             ---------    --------    --------     ----------     ------------    ------------     ------------

Balance, March 2, 2003 ..    2,969,405      30,000    (250,964)      (284,000)      28,829,000     (29,997,000)      (1,422,000)

Net income ..............         --          --          --             --               --           244,000          244,000
                             ---------    --------    --------     ----------     ------------    ------------     ------------

Balance November 9, 2003     2,969,405    $ 30,000    (250,964)    $ (284,000)    $ 28,829,000    $(29,753,000)    $ (1,178,000)
                             =========    ========    ========     ==========     ============    ============     ============
</TABLE>



                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       5

<PAGE>



                              Morgan's Foods, Inc.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                                    THIRTY-SIX WEEKS ENDED
                                                                          ------------------------------------------
                                                                          NOVEMBER 9, 2003         NOVEMBER 10, 2002
                                                                          ----------------         -----------------
<S>                                                                         <C>                     <C>
Cash flows from operating activities:
    Net income ........................................................      $   244,000             $     6,000
    Adjustments to reconcile to net cash
      provided by operating activities:
       Depreciation and amortization ..................................        2,408,000               2,361,000
       Amortization of deferred financing costs .......................           94,000                  97,000
       Amortization of supply agreement advances ......................         (599,000)               (499,000)
       Funding from supply agreements .................................          647,000                 664,000
       Loss on restaurant assets ......................................           73,000                 193,000
       Change in assets and liabilities:
        Decrease in receivables .......................................          124,000                 114,000
        Increase in inventories .......................................          (40,000)                (29,000)
        Decrease (increase) in prepaid expenses .......................           37,000                (422,000)
        Decrease in other assets ......................................             --                    43,000
        Increase (decrease) in accounts payable .......................          120,000                (173,000)
        Decrease in accrued liabilities ...............................         (346,000)               (555,000)
                                                                             -----------             -----------
    Net cash provided by operating activities .........................        2,762,000               1,800,000
                                                                             -----------             -----------
Cash flows from investing activities:
    Capital expenditures ..............................................         (976,000)             (1,849,000)
    Purchase of short term investment .................................         (300,000)                   --
    Purchase of franchise agreements ..................................          (35,000)                   --
                                                                             -----------             -----------
    Net cash used in investing activities .............................       (1,311,000)             (1,849,000)
                                                                             -----------             -----------
Cash flows from financing activities:
    Principal payments on long-term debt ..............................       (1,935,000)             (1,544,000)
    Principal payments on capital lease obligations ...................          (79,000)                (73,000)
    Purchase of treasury shares .......................................             --                   (33,000)
                                                                             -----------             -----------
    Net cash used by financing activities .............................       (2,014,000)             (1,650,000)
                                                                             -----------             -----------
    Net change in cash and equivalents ................................         (563,000)              1,699,000
    Cash and equivalents, beginning balance ...........................        4,901,000               7,441,000
                                                                             -----------             -----------
    Cash and equivalents, ending balance ..............................      $ 4,338,000             $ 5,742,000
                                                                             ===========             ===========
</Table>


                SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       6
<PAGE>



                              Morgan's Foods, Inc.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              QUARTERS ENDED NOVEMBER 9, 2003 AND NOVEMBER 10, 2002
                                   (unaudited)


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The interim consolidated financial statements of Morgan's Foods, Inc.
("the Company") have been prepared without audit. In the opinion of Company
Management, all adjustments have been included. Unless otherwise disclosed, all
adjustments consist only of normal recurring adjustments necessary for a fair
statement of results of operations for the interim periods. Except as noted in
the notes to the financial statements, these unaudited financial statements have
been prepared using the same accounting principles that were used in preparation
of the Company's annual report on Form 10-K for the year ended March 2, 2003.
Certain prior year amounts have been reclassified to conform to the current year
presentation.

         Short Term Investment. During the first quarter of fiscal 2004, the
Company obtained a letter of credit for $300,000 in favor of one of its vendors.
The letter of credit, which expires February 15, 2004, is secured by a $300,000
certificate of deposit.


NOTE 2.  INCOME (LOSS) PER COMMON SHARE

         Basic net income (loss) per common share is computed by dividing net
income (loss) by the weighted average number of common shares outstanding during
the period. Diluted net income (loss) per common share is based on the combined
weighted average number of shares outstanding, which includes the assumed
exercise, or conversion of options. In computing diluted net income (loss) per
common share, the Company has utilized the treasury stock method. For the
quarter ended November 10, 2002, 286,500 shares were excluded from the
computation of diluted earnings per share due to their antidilutive effect. For
the quarter ended November 9, 2003 and for the 36 weeks ended November 9, 2003
and November 10, 2002, 275,000 shares were excluded from the computation of
diluted earnings per share due to their antidilutive effect.


NOTE 3.  STOCK OPTIONS.

         The Company's outstanding stock options are accounted for using the
intrinsic value method, under which compensation cost is measured as the excess,
if any, of the quoted market price of the stock at the grant date over the
amount an employee must pay to acquire the stock. Had compensation cost for the
options granted been determined based on their fair values at the grant dates in
accordance with the fair value method of Statement of Financial Accounting
Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, the
Company's net income (loss) and earnings (loss) per share would have been
presented at the pro forma amounts indicated below:



                                    7

<PAGE>


<TABLE>
<CAPTION>
                                                    Quarter Ended                  Thirty Weeks Ended
                                             -----------------------------     ----------------------------
                                             Nov. 9, 2003    Nov. 10, 2002     Nov. 9, 2003   Nov. 10, 2002
                                             ------------    -------------     ------------   -------------
<S>                                           <C>             <C>               <C>              <C>
Net income (loss) as reported ..........      $   90,000      $  (284,000)      $   244,000      $6,000
Add (subtract) stock-based compensation
  expense, net of tax:
  - As reported (intrinsic value method)            --               --                --          --
  - Pro forma (fair value method) ......            --               --                --          --
                                              ----------      -----------       -----------      ------
Net income (loss) - pro forma ..........      $   90,000      $  (284,000)      $   244,000      $6,000
                                              ==========      ===========       ===========      ======
Basic and diluted income (loss)
  per common share:
As reported ............................      $         .03   $      (.10)      $       .09        --
Pro forma ..............................      $         .03   $      (.10)      $       .09        --
</TABLE>


NOTE 4.  NEW ACCOUNTING STANDARDS.

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 143, Accounting for Asset Retirement Obligations, which addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and associated asset retirement costs.
The new rules apply to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and/or normal operation of long-lived assets. The Company adopted the provisions
of SFAS No. 143 beginning in fiscal 2004. The adoption of SFAS No. 143 did not
have a material impact on the Company's consolidated financial position or
results of operations.


NOTE 5.  LONG-TERM DEBT

         The Company's debt arrangements require the maintenance of a
consolidated fixed charge coverage ratio of 1.2 to 1 regarding all of its
mortgage loans and individual restaurant coverage ratios between 1.2 and 1.5 to
1 on certain of its loans. As of March 2, 2003, the Company was not in
compliance with the consolidated ratio of 1.2 to 1 or the unit level ratios
relating to $33,346,000 of its debt. The Company has obtained waivers of these
violations from the applicable lenders as of March 2, 2003 and November 9, 2003.
As these waivers continue through the following twelve months, the Company has
classified its debt as long term as of March 2, 2003 and November 9, 2003. All
payments on the Company's debt have been, and continue to be current and
management believes that the Company will continue to be able to service the
debt. The fixed charge coverage ratios are computed based upon financial results
for the preceding twelve months. Based upon financial results for the thirty-six
weeks ended November 9, 2003, management anticipates that the Company may not
achieve certain ratios as of the end of the fiscal year. If the Company does not
comply with debt covenants in the future, and if future waivers are not
obtained, the lenders will have certain remedies available to them which could
include calling of the debt or acceleration of payments. Noncompliance with the
requirements of the Company's mortgage debt, if not waived, could also trigger
cross-default provisions of other debt agreements.


                                       8
<PAGE>



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

         Description of Business. Morgan's Foods, Inc. operates through
wholly-owned subsidiaries KFC restaurants under franchises from KFC Corporation
and Taco Bell restaurants under franchises from Taco Bell Corporation. As of
December 19, 2003, the Company operates 75 KFC restaurants, 7 Taco Bell
restaurants, 16 KFC/Taco Bell "2n1's" under franchises from KFC Corporation and
franchises or licenses from Taco Bell Corporation, 3 Taco Bell/Pizza Hut Express
"2n1's" operated under franchises from Taco Bell Corporation and licenses from
Pizza Hut Corporation, 1 KFC/Pizza Hut Express "2n1" operated under a franchise
from KFC Corporation and a license from Pizza Hut Corporation and 1 KFC/A&W
operated under a franchise from KFC Corporation and a license from A&W
Restaurants, Inc. The Company's fiscal year is a 52 - 53 week year ending on the
Sunday nearest the last day of February.

      SUMMARY OF EXPENSES AND OPERATING INCOME AS A PERCENTAGE OF REVENUES

<TABLE>
<CAPTION>
                                                               QUARTER ENDED                 THIRTY-SIX WEEKS ENDED
                                                       -----------------------------      ----------------------------
                                                       NOV. 9, 2003    NOV. 10, 2002      NOV. 9, 2003   NOV. 10, 2002
                                                       ------------    -------------      ------------   -------------
<S>                                                     <C>             <C>                <C>             <C>
Cost of sales:
  Food, paper and beverage ........................        30.8%           31.8%              30.3%          31.2%
  Labor and benefits ..............................        26.9%           26.5%              27.5%          26.7%
Restaurant operating expenses .....................        26.1%           25.8%              25.6%          25.3%
Depreciation and amortization .....................         4.2%            4.1%               4.1%           4.0%
General and administrative expenses................         6.0%            6.9%               6.6%           6.9%
Operating income ..................................         5.8%            4.3%               5.8%           5.6%
</TABLE>


         Revenues. Revenues for the quarter ended November 9, 2003 were
$19,382,000 compared to $19,617,000 for the quarter ended November 10, 2002.
This decrease of $235,000 was due mainly to a 1.0% decline in comparable
restaurant revenues which was primarily the result of ineffective product
promotions by the KFC franchisor during the quarter. Revenues for the thirty-six
weeks ended November 9, 2003 were $58,873,000 compared to $59,124,000 for the
thirty-six weeks ended November 10, 2002. This decrease of $251,000 was
primarily due to a 0.5% decrease in comparable restaurant revenues for the
reason discussed above.

         Costs of Sales - Food, Paper and Beverages. Food, paper and beverage
costs for the third quarter decreased as a percentage of revenue from 31.8% in
fiscal 2003 to 30.8% in fiscal 2004. This decrease was primarily the result of
product promotions during the third quarter of fiscal 2004 having a lower food
cost than those which were promoted during the third quarter of fiscal 2003 as
well as improved operating efficiencies. Food, paper and beverage costs for the
thirty-six weeks ended November 9, 2003 decreased to 30.3% of revenue compared
to 31.2% in the year earlier period for the reasons discussed above.

         Cost of Sales - Labor and Benefits. Labor and benefits increased as a
percentage of revenue for the quarter ended November 9, 2003 to 26.9% compared
to 26.5% for the year earlier quarter. The increase was primarily due to higher
healthcare costs, higher wages due to an increasingly competitive labor market
in the Company's market areas and lower average restaurant volumes in the
current year quarter which were partially offset by improved operating
efficiencies. Labor and benefits for the thirty-six weeks ended November 9, 2003
increased as a percentage of revenue to 27.5% from 26.7% in the year earlier
period primarily due to the reasons discussed above.


                                       9
<PAGE>



         Restaurant Operating Expenses. Restaurant operating expenses increased
as a percentage of revenue to 26.1% in the third quarter of fiscal 2004 compared
to 25.8% in the third quarter of fiscal 2003. This increase was the result of
higher repair and maintenance expenses which were partially offset by lower
utility costs. Restaurant operating expenses for the thirty-six weeks ended
November 9, 2003 increased to 25.6% of revenue compared to 25.3% in the prior
year period for the reasons discussed above.

         Depreciation and Amortization. Depreciation and amortization was
substantially unchanged at $809,000 in the current year third quarter and
$811,000 in the prior year third quarter and $2,408,000 and $2,361,000 in the
current and prior year 36 weeks.

         General and Administrative Expenses. General and administrative
expenses decreased to $1,170,000 in the third quarter of fiscal 2004 from
$1,348,000 in the third quarter of fiscal 2003. The decrease of $178,000 was
mainly the result of decreased legal and professional, office supply and
telephone expenses. These decreases were the result of negotiated price
decreases as well as reduced usage. General and administrative expenses for the
thirty-six weeks ended November 9, 2003 decreased to $3,859,000 from $4,054,000
in the prior year period. The decrease of $195,000 was mainly due to the reasons
discussed above.

         Loss on Restaurant Assets. The loss on restaurant assets decreased from
$125,000 in the third quarter of fiscal 2003 to $27,000 in the third quarter of
fiscal 2004 reflecting lower charges in the current year quarter for the costs
necessary to dispose of one previously closed restaurant. The loss on restaurant
assets for the thirty-six weeks ended November 9, 2003 decreased to $74,000 from
$193,000 in the year earlier period for the reason discussed above.

         Operating Income. Operating income in the third quarter of fiscal 2004
increased to $1,129,000 or 5.8% of revenues compared to $843,000 or 4.3% of
revenues for the third quarter of fiscal 2003. Operating income for the
thirty-six weeks ended November 9, 2003 increased to $3,422,000 or 5.8% of
revenues compared to $3,327,000 or 5.6% of revenues for the year earlier period.
These increases were primarily the result of lower food cost product promotions,
improved operating efficiencies and negotiated price decreases on telephone
costs and office supplies as well as decreased prices and usage of professional
services which were partially offset by the decreased revenues and increased
healthcare costs.

         Interest Expense. Interest expense on bank debt decreased to $1,047,000
in the third quarter of fiscal 2004 from $1,136,000 in the third quarter of
fiscal 2003 due to lower debt balances during the fiscal 2004 quarter. Interest
expense on bank debt for the thirty-six weeks ended November 9, 2003 decreased
to $3,213,000 from $3,391,000 for the year earlier period for the reason
discussed above. Interest expense on capitalized leases was substantially
unchanged from the prior year third quarter and prior year thirty-six weeks.

         Other Income. Other income decreased to $19,000 from $24,000 and to
$73,000 from $118,000 in the third quarter and first thirty-six weeks,
respectively, of fiscal 2004 compared to the comparable periods in 2003 as a
result of lower interest income due to decreases in both the interest rate
earned and the amount of average cash investments in the first three quarters of
fiscal 2004.

         Provision for Income Taxes. The provision for income taxes was
substantially unchanged in the third quarter and first thirty-six weeks of
fiscal 2004 compared to the comparable periods in 2003. The low effective tax
rates result from tax net operating loss carryforwards.


                                       10
<PAGE>



         Liquidity and Capital Resources. Cash flow activity for the first
thirty-six weeks of fiscal 2004 and fiscal 2003 is presented in the Consolidated
Statements of Cash Flows. Cash provided by operating activities was $2,762,000
for the thirty-six weeks ended November 9, 2003. The Company paid scheduled
long-term bank and capitalized lease debt of $2,014,000 in the first thirty-six
weeks of fiscal 2004.

         The quick service restaurant operations of the Company have
historically provided sufficient cash flow to service the Company's debt,
refurbish and upgrade restaurant properties and cover administrative overhead.
Management believes that operating cash flow will provide sufficient capital to
continue to operate and maintain its restaurants, service the Company's debt and
support required corporate expenses.

         The Company's debt arrangements require the maintenance of a
consolidated fixed charge coverage ratio of 1.2 to 1 regarding all of its
mortgage loans and individual restaurant coverage ratios between 1.2 and 1.5 to
1 on certain of its loans. As of March 2, 2003, the Company was not in
compliance with the consolidated ratio of 1.2 to 1 or the unit level ratios
relating to $33,346,000 of its debt. The Company has obtained waivers of these
violations from the applicable lenders as of March 2, 2003 and November 9, 2003.
As these waivers continue through the following twelve months, the Company has
classified its debt as long term as of March 2, 2003 and November 9, 2003. All
payments on the Company's debt have been, and continue to be current and
management believes that the Company will continue to be able to service the
debt. The fixed charge coverage ratios are computed based upon financial results
for the preceding twelve months. Based upon financial results for the thirty-six
weeks ended November 9, 2003, management anticipates that the Company may not
achieve certain ratios as of the end of the fiscal year. If the Company does not
comply with debt covenants in the future, and if future waivers are not
obtained, the lenders will have certain remedies available to them which could
include calling of the debt or acceleration of payments. Noncompliance with the
requirements of the Company's mortgage debt, if not waived, could also trigger
cross-default provisions of other debt agreements.

         The Company continues to be out of compliance with certain of the
continued listing standards of the American Stock Exchange and was required to
submit a revised business plan to the Exchange indicating how the Company would
achieve compliance with those standards. Specifically, the Company fell under
the guidelines in Section 1003(a)(i) with shareholders' equity of less than
$2,000,000 and has sustained losses from continuing operations and/or net losses
in two of its three most recent fiscal years and Section 1003(a)(ii) with
shareholder's equity of less than $4,000,000 and has sustained losses from
continuing operations and/or net losses in three out of its four most recent
fiscal years.

         On October 1, 2003 the Company submitted its second quarter fiscal 2004
actual results and fiscal 2004 projected results to the staff at the Exchange
indicating how it would regain compliance with the continued listing standards
and received notice from the Exchange on October 27, 2003 that it has accepted
the Company's revised plan. The Exchange has allowed the Company to continue its
plan for compliance until the Exchange has reviewed the financial results for
the period ending November 9, 2003, the end of the Company's third fiscal
quarter, at which time the Exchange will reassess the Company's compliance with
the continued listing standards. During the term of the extension, the Exchange
will monitor the Company's performance and the Company will be required to
report to the Exchange any change in its performance which would be inconsistent
with the plan which was approved by the Exchange on October 27, 2003. Concurrent
with this filing, the Company will provide updated information to the Exchange
including third quarter fiscal 2004 financial results which did not meet the
previously accepted operating plan but which continue to be profitable. The
Company cannot predict the Exchange's response, but the failure to meet the
previously accepted operating plan could result in the commencement of delisting
proceedings. If the Company were delisted, or if its common shares were
suspended from trading, the liquidity of its common shares would likely be
adversely affected.


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<PAGE>



         The Company's market risk exposure is primarily due to possible
fluctuations in interest rates as they relate to future borrowings. The Company
has evaluated the potential effect of a 1.0% increase in these rates on future
capital spending plans and believes that there would be no material effect. The
Company does not enter into derivative financial investments for trading or
speculation purposes. As a result, the Company believes that its market risk
exposure is not material to the Company's financial position, liquidity or
results of operations.

         Commitments. During the first quarter of fiscal year 2004, the Company
obtained a letter of credit for $300,000 in favor of one of its vendors. The
letter of credit which expires February 15, 2004 is secured by a $300,000
certificate of deposit.

         Seasonality. The operations of the Company are affected by seasonal
fluctuations. Historically, the Company's revenues and income have been highest
during the summer months with the fourth fiscal quarter representing the slowest
period. This seasonality is primarily attributable to weather conditions in the
Company's marketplace, which consists of portions of Ohio, Pennsylvania,
Missouri, Illinois, West Virginia and New York.

         Safe Harbor Statements. This document contains "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The
statements include those identified by such words as "may," "will," "expect"
"anticipate," "believe," "plan" and other similar terminology. The
"forward-looking statements" reflect the Company's current expectations and are
based upon data available at the time of the statements. Actual results involve
risks and uncertainties, including both those specific to the Company and
general economic and industry factors. Factors specific to the Company include,
but are not limited to, its debt covenant compliance and its ability to obtain
waivers of any debt covenant violations as well as the listing status of its
common shares with the American Stock Exchange.

         Economic and industry risks and uncertainties include, but are not
limited, to, franchisor promotions, business and economic conditions,
legislation and governmental regulation, competition, success of operating
initiatives and advertising and promotional efforts, volatility of commodity
costs and increases in minimum wage and other operating costs, availability and
cost of land and construction, consumer preferences, spending patterns and
demographic trends.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Information required by this item is included under "Liquidity and
Capital Resources".

ITEM 4.  CONTROLS AND PROCEDURES.

         (a)      Within the 90-day period prior to the filing date of this
                  Quarterly Report on Form 10-Q, the Company, under the
                  supervision, and with the participation, of its management,
                  including its Chief Executive Officer and Chief Financial
                  Officer, performed an evaluation of the Company's disclosure
                  controls and procedures, as contemplated by Securities
                  Exchange Act Rule 13a-15. Based on that evaluation, the
                  Company's Chief Executive Officer and Chief Financial Officer
                  concluded that such disclosure controls and procedures were
                  effective.

         (b)      No significant changes were made in the Company's internal
                  controls or in other factors that could significantly affect
                  these controls subsequent to the date of the evaluation
                  performed pursuant to Securities Exchange Act Rule 13a-15
                  referred to above.



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<PAGE>



                              MORGAN'S FOODS, INC.
                                INDEX TO EXHIBITS


        Exhibit
        Number    Exhibit Description
        -------   -------------------

         31.1     Certification of Leonard R. Stein-Sapir Pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

         31.2     Certification of Kenneth L. Hignett Pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002.

         32.1     Certification Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002 Leonard R. Stein-Sapir, Chairman of the Board and
                  Chief Executive Officer

         32.2     Certification Pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002 Kenneth L. Hignett, Senior Vice President, Chief
                  Financial Officer and Secretary




                                       13

<PAGE>



                                   SIGNATURES


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




                                             Morgan's Foods, Inc.
                                      ---------------------------------
                                                (Registrant)


Dated:   December 23, 2003            By: /s/ Kenneth L. Hignett
         -----------------                -----------------------------
                                          Kenneth L. Hignett
                                          Senior Vice President,
                                          Chief Financial Officer & Secretary



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