<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 10, 2002
                      ----------------------------------------------------------

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 .......

      As of December 20, 2002, 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 10, 2002      NOVEMBER 4, 2001
                                       -----------------      ----------------
<S>                                    <C>                    <C>
Revenues ..........................      $ 19,617,000           $ 20,418,000

Cost of sales:

 Food, paper and beverage .........         6,245,000              6,134,000
 Labor and benefits ...............         5,190,000              5,107,000
Restaurant operating expenses .....         5,055,000              5,284,000
Depreciation and amortization .....           811,000                893,000
General and administrative expenses         1,348,000              1,210,000
Loss on restaurant assets .........           125,000                 81,000
                                         ------------           ------------
Operating income ..................           843,000              1,709,000
Interest Expense:
 Bank Debt and Notes Payable ......        (1,136,000)            (1,157,000)
 Capital Leases ...................           (14,000)               (16,000)
Other income and expense, net .....            24,000                 25,000
                                         ------------           ------------
Income (loss) before income taxes .          (283,000)               561,000
Provision for income taxes ........             1,000                  9,000
                                         ------------           ------------
Net income (loss) .................      $   (284,000)          $    552,000
                                         ============           ============
Basic and diluted net income (loss)
 Per common share .................      $       (.10)          $        .20
                                         ============           ============
Basic weighted average number of
 shares outstanding ...............         2,718,441              2,795,524
Diluted weighted average number of
 Shares outstanding ...............         2,718,441              2,797,635
</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 10, 2002      NOVEMBER 4, 2001
                                       -----------------      ----------------
<S>                                    <C>                    <C>
Revenues ..........................      $ 59,124,000           $ 58,964,000

Cost of sales:
 Food, paper and beverage .........        18,432,000             17,982,000
 Labor and benefits ...............        15,811,000             15,162,000
Restaurant operating expenses .....        14,946,000             15,122,000
Depreciation and amortization .....         2,361,000              2,667,000
General and administrative expenses         4,054,000              3,517,000
Loss on restaurant assets .........           193,000                112,000
                                         ------------           ------------
Operating income ..................         3,327,000              4,402,000
Interest Expense:
 Bank debt and notes payable ......        (3,391,000)            (3,526,000)
 Capital leases ...................           (42,000)               (49,000)
Other income and expense, net .....           118,000                105,000
                                         ------------           ------------
Income before income taxes ........            12,000                932,000
Provision for income taxes ........             6,000                 10,000
                                         ------------           ------------
Net income ........................      $      6,000           $    922,000
                                         ============           ============
Basic and diluted net income
 per common share .................      $       --             $        .32
                                         ============           ============
Basic weighted average number of
 shares outstanding ...............         2,720,926              2,882,442
Diluted weighted average number of
 shares outstanding ...............         2,731,158              2,883,776
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       3
<PAGE>
                              MORGAN'S FOODS, INC.

                           CONSOLIDATED BALANCE SHEETS

                                   (UNAUDITED)

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


<TABLE>
<CAPTION>
                                                         NOVEMBER 10, 2002          MARCH 3, 2002
                                                         -----------------          -------------
<S>                                                      <C>                      <C>
ASSETS
 Current assets:
  Cash and equivalents................................    $      5,742,000        $       7,441,000
  Receivables.........................................             118,000                  232,000
  Inventories.........................................             549,000                  520,000
  Prepaid expenses....................................             723,000                  301,000
                                                          ----------------        -----------------
                                                                 7,132,000                8,494,000
 Property and equipment:
  Land................................................          11,001,000               10,801,000
  Buildings and improvements..........................          18,653,000               17,949,000
  Property under capital leases.......................           1,006,000                1,006,000
  Leasehold improvements..............................           7,476,000                7,483,000
  Equipment, furniture and fixtures...................          18,540,000               18,105,000
  Construction in progress............................             333,000                  108,000
                                                          ----------------        -----------------
                                                                57,009,000               55,452,000
  Less accumulated depreciation and amortization......          19,316,000               17,304,000
                                                          ----------------        -----------------
                                                                37,693,000               38,148,000
 Other assets.........................................           1,341,000                1,521,000
 Franchise agreements.................................           2,081,000                2,119,000
 Deferred taxes.......................................             600,000                  600,000
 Goodwill.............................................           9,371,000                9,371,000
                                                          ----------------        -----------------
                                                          $     58,218,000        $      60,253,000
                                                          ================        =================
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
 Current liabilities:
    Current maturities of long-term debt..............    $      2,544,000        $       2,331,000
    Current maturities of capital lease obligations ..             113,000                  105,000
    Accounts payable..................................           3,588,000                3,761,000
    Accrued liabilities...............................           3,316,000                3,609,000
                                                          ----------------        -----------------
                                                                 9,561,000                9,806,000
  Long-term debt .....................................          46,806,000               48,563,000
  Long-term capital lease obligations ................             463,000                  544,000
  Other long-term liabilities ........................           1,612,000                1,537,000

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 and 241,564 shares, respectively............            (284,000)                (251,000)
Capital in excess of stated value.....................          28,829,000               28,829,000
Accumulated deficiency................................         (28,799,000)             (28,805,000)
                                                          ----------------        -----------------
Total shareholders' deficiency........................            (224,000)                (197,000)
                                                          ----------------        -----------------
                                                          $     58,218,000        $      60,253,000
                                                          ================        =================
</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     DEFICIENCY      DEFICIENCY
                                ---------   ------------    -------    ------------    ------------    ------------    ------------
<S>                             <C>         <C>            <C>         <C>             <C>             <C>             <C>
Balance, February 25, 2001 .    2,969,405   $     30,000    (31,833)   $    (76,000)   $ 28,875,000    $(29,407,000)   $   (578,000)

Net income .................         --             --         --              --              --           602,000         602,000

Issue of treasury shares for
 401(k) contributions ......         --             --       31,833          76,000         (46,000)           --            30,000

Purchase of common shares ..         --             --     (241,564)       (251,000)           --              --          (251,000)
                                ---------   ------------   --------    ------------    ------------    ------------    ------------

Balance, March 3, 2002 .....    2,969,405         30,000   (241,564)       (251,000)     28,829,000     (28,805,000)       (197,000)

Net income .................         --             --         --              --              --             6,000           6,000

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

Balance November 10, 2002 ..    2,969,405   $     30,000   (250,964)   $   (284,000)   $ 28,829,000    $(28,799,000)   $   (224,000)
                                =========   ============   ========    ============    ============    ============    ============
</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 10, 2002    NOVEMBER 4, 2001
                                                      -----------------    ----------------
<S>                                                   <C>                  <C>
Cash flows from operating activities:
    Net income ....................................      $     6,000         $   922,000
    Adjustments to reconcile to net cash
      provided by operating activities:
       Depreciation and amortization ..............        2,361,000           2,667,000
       Amortization of deferred financing costs ...           97,000              98,000
       Amortization of supply agreement advances ..         (499,000)           (124,000)
       Funding from supply agreements .............          664,000              52,000
       Loss on restaurant assets ..................          193,000             112,000
       Change in assets and liabilities:
        Decrease in receivables ...................          114,000              29,000
        Increase in inventories ...................          (29,000)            (33,000)
        Increase in prepaid expenses ..............         (422,000)           (124,000)
        Decrease (increase) in other assets .......           43,000             (16,000)
        Increase (decrease) in accounts payable ...         (173,000)             91,000
        Decrease in accrued liabilities ...........         (555,000)           (286,000)
                                                         -----------         -----------
    Net cash provided by operating activities .....        1,800,000           3,388,000
                                                         -----------         -----------
Cash flows from investing activities:
    Capital expenditures ..........................       (1,849,000)           (583,000)
    Purchase of franchise agreements ..............             --               (10,000)
                                                         -----------         -----------
    Net cash used in investing activities .........       (1,849,000)           (593,000)
                                                         -----------         -----------
Cash flows from financing activities:
    Proceeds from issuance of long-term debt
     Net of financing costs .......................             --                36,000
    Principal payments on long-term debt ..........       (1,544,000)         (1,536,000)
    Principal payments on capital lease obligations          (73,000)            (66,000)
    Purchase of treasury shares ...................          (33,000)           (171,000)
                                                         -----------         -----------
    Net cash used by financing activities .........       (1,650,000)         (1,737,000)
                                                         -----------         -----------
    Net change in cash and equivalents ............       (1,699,000)          1,058,000
    Cash and equivalents, beginning balance .......        7,441,000           5,840,000
                                                         -----------         -----------
    Cash and equivalents, ending balance ..........      $ 5,742,000         $ 6,898,000
                                                         ===========         ===========
</TABLE>


                 SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.


                                       6
<PAGE>
                              Morgan's Foods, Inc.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              QUARTERS ENDED NOVEMBER 10, 2002 AND NOVEMBER 4, 2001
                                   (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 3, 2002.
Certain prior year amounts have been reclassified to conform to the current year
presentation.

NOTE 2. INCOME PER COMMON SHARE

      Basic net income per common share is computed by dividing net income by
the weighted average number of common shares outstanding during the period.
Diluted net income 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 per common share, the Company has
utilized the treasury stock method.

NOTE 3. NEW ACCOUNTING STANDARDS.

      In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 141, Business
Combinations. SFAS No. 141 requires that the purchase method of accounting be
used for all business combinations initiated after June 30, 2001. As specified
therein, intangible assets acquired that are obtained through contractual or
legal right, or are capable of being separately sold, transferred, licensed,
rented or exchanged are recognized as assets apart from goodwill. SFAS No. 141
is effective for all acquisitions subsequent to June 30, 2001. At the beginning
of fiscal 2003, the Company reclassified amounts previously reported as acquired
franchise rights into goodwill for all periods presented as the amounts do not
meet the criteria set forth in SFAS No. 141 for recognition apart from goodwill.

      In June 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 changes the accounting for goodwill and certain intangible
assets from an amortization method to an impairment only approach. Goodwill and
intangibles with indefinite lives are no longer subject to amortization, but are
subject to at least an annual assessment for impairment by applying a fair value
based test. The Company implemented SFAS No. 142 for its fiscal 2003 year
beginning March 4, 2002. SFAS No. 142 allows up to six months from the date of
adoption to perform the transitional goodwill impairment test which requires the
comparison of the fair value of each reporting unit to its carrying value (using
amounts measured as of the beginning of the year of adoption) to determine
whether there is an indicated transitional goodwill impairment. The Company
performed the transitional goodwill impairment test and determined that as of
March 4, 2002 the fair value of each reporting unit was greater than its
carrying value.


                                       7
<PAGE>
<TABLE>
<CAPTION>
                                                              INTANGIBLE ASSETS
                           -----------------------------------------------------------------------------------
                                  As of November 10, 2002                        As of March 3, 2002
                           ---------------------------------------       -------------------------------------
                            Gross Carrying           Accumulated          Gross Carrying          Accumulated
                                Amount              Amortization              Amount             Amortization
                           ----------------       ----------------       ----------------      ---------------
<S>                        <C>                    <C>                    <C>                   <C>
Franchise Agreements       $      2,551,000       $       (470,000)      $      2,514,000      $      (395,000)
Goodwill                         10,763,000             (1,392,000)            10,763,000           (1,392,000)
                           ----------------       ----------------       ----------------      ---------------
Total                      $     13,314,000       $     (1,862,000)      $     13,277,000      $    (1,787,000)
                           ================       ================       ================      ===============
</TABLE>


      The Company's intangible asset amortization expense relating to its
franchise agreements for the thirty-six weeks ended November 10, 2002 was
$78,000. Intangible assets relating to franchise agreements continue to be
amortized on a straight-line basis over the remaining term of each franchise
agreement, all of which were originally 20 years. The estimated intangible
amortization expense for each of the next five years is $125,000.

      The following table reports the comparative impact of the adoption of SFAS
No. 142 on the reported results of operations.

<TABLE>
<CAPTION>
                                                    Quarter Ended               Thirty-Six Weeks Ended
                                          Nov. 10, 2002      Nov. 4, 2001    Nov. 10, 2002    Nov. 4, 2001
                                          -------------      ------------    -------------    -------------
<S>                                       <C>                <C>             <C>              <C>
Reported net income (loss) ..........      $  (284,000)      $   552,000        $6,000        $     922,000
  Add Back:  Goodwill amortization ..               --           124,000            --              373,000
                                           -----------       -----------        ------        -------------
  Adjusted net income (loss) ........      $  (284,000)      $   676,000        $6,000        $   1,295,000
                                           ===========       ===========        ======        =============

Basic and diluted earnings per share:

  Reported net income (loss) ........      $      (.10)      $       .20        $   --        $         .32
  Goodwill amortization .............               --               .04            --                  .13
                                           -----------       -----------        ------        -------------
  Adjusted net income (loss) ........      $      (.10)      $       .24        $   --        $         .45
                                           ===========       ===========        ======        =============
</TABLE>


      In June 2001, the 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 intends to adopt the provisions of SFAS No. 143 beginning in
fiscal 2004. The adoption of SFAS No. 143 is not expected to have a material
impact on the Company's consolidated financial position or results of
operations.

      In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets. SFAS No. 144 supersedes SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and the accounting and reporting provisions of
Accounting Principles Board Opinion ("APB") No. 30, Reporting the Results of
Operations - Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business (as previously defined in that opinion).
SFAS No. 144 requires that one accounting model be used for long-lived assets to
be disposed of by sale, whether previously held and used or newly acquired and
broadens the presentation of discontinued operations to include more disposal
transactions than were included under the previous standards. The Company
adopted SFAS No. 144 beginning in fiscal 2003, as required; however, adoption of
the statement did not have a material impact on its consolidated financial
position or results of operations.


                                       8
<PAGE>
      SFAS No. 145 which was issued in April 2002 rescinds and amends several
authoritative pronouncements, and makes certain technical corrections and
clarifications. SFAS No. 145 requires that gains or losses from debt
extinguishments that are part of recurring operations no longer be reported as
extraordinary items. SFAS No. 145 also requires certain lease modifications that
have economic effects similar to sale-leaseback transactions to be accounted for
as sale-leasebacks. The various provisions of SFAS No. 145 have effective dates
through the first quarter of fiscal year 2004. Currently effective provisions
did not have a material effect on the Company's financial position or results of
operations, and the Company is in the process of evaluating the impact of
provisions with future effective dates.

      In June 2002, the FASB issued SFAS No. 146 Accounting for Costs Associated
with Exit or Disposal Activities. SFAS No. 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized and measured
initially at fair value only when the liability is incurred. SFAS 146 is
effective for activity initiated after December 31, 2002. The Company is in the
process of evaluating the impact of this statement on its financial statements
and will adopt the provision of this statement for any exit or disposal activity
that occurs in the fourth quarter of fiscal 2003 or later.

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 20, 2002, 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. 10, 2002       NOV. 4, 2001          NOV. 10, 2002       NOV. 4, 2001
                                               -------------       ------------          -------------       ------------
<S>                                            <C>                 <C>                   <C>                 <C>
Cost of sales:
  Food, paper and beverage...............         31.8%               30.0%                 31.2%               30.5%
  Labor and benefits.....................         26.5%               25.0%                 26.7%               25.7%
Restaurant operating expenses............         25.8%               25.9%                 25.3%               25.7%
Depreciation and amortization............          4.1%                4.4%                  4.0%                4.5%
General and administrative expenses......          6.9%                5.9%                  6.9%                6.0%
Operating income.........................          4.3%                8.4%                  5.6%                7.5%
</TABLE>


                                       9
<PAGE>
      Revenues. Revenues for the quarter ended November 10, 2002 were
$19,617,000 compared to $20,418,000 for the quarter ended November 4, 2001. This
decrease of $801,000 was due mainly to a 4.6% decrease in comparable restaurant
revenues. The decrease in comparable restaurant revenues was primarily the
result of ineffective product promotions by the franchisors during the quarter.
Revenues for the thirty-six weeks ended November 10, 2002 were $59,124,000
compared to $58,964,000 for the thirty-six weeks ended November 4, 2001. This
increase of $160,000 was primarily due to the image enhancement of two locations
and the addition of the A&W concept to a KFC restaurant which was offset by the
Company's removal of the Taco Bell concept from 2 KFC restaurants and a .1%
decrease in comparable restaurant revenues.

      Costs of Sales - Food, Paper and Beverages. Food, paper and beverage costs
for the third quarter increased as a percentage of revenue from 30.0% in fiscal
2002 to 31.8% in fiscal 2003. This increase was primarily the result of product
promotions during the third quarter of fiscal 2003 having a higher food cost
than those which were promoted during the third quarter of fiscal 2002. These
increases in food, paper and beverage cost percentages were partially offset by
the effect of the amortization of a new supply agreement advance as a reduction
of food, paper and beverage cost of sales. Food, paper and beverage costs for
the thirty-six weeks ended November 10, 2002 increased to 31.2% of revenue
compared to 30.5% 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 10, 2002 to 26.5% compared
to 25.0% for the year earlier quarter. The increase was primarily due to higher
workers compensation costs and higher wages due to an increasingly competitive
labor market in the Company's market areas as well as lower average restaurant
volumes in the current year quarter. Labor and benefits for the thirty-six weeks
ended November 10, 2002 increased as a percentage of revenue to 26.7% from 25.7%
in the year earlier period primarily due to higher workers compensation costs
and higher wages due to an increasingly competitive labor market in the
Company's market areas.

      Restaurant Operating Expenses. Restaurant operating expenses decreased as
a percentage of revenue to 25.8% in the third quarter of fiscal 2003 compared to
25.9% in the third quarter of fiscal 2002. This improvement was the result of
lower utility costs and the removal of home delivery services from the remaining
restaurants which offered it. Restaurant operating expenses for the thirty-six
weeks ended November 10, 2002 decreased to 25.3% of revenue compared to 25.7% in
the prior year period for the reason discussed above.

      Depreciation and Amortization. Depreciation and amortization decreased to
$811,000 in the current year third quarter from $893,000 in the prior year third
quarter. This decrease was due to the implementation of SFAS No. 142 whereby
goodwill is no longer amortized. Depreciation and amortization for the
thirty-six weeks ended November 10, 2002 decreased to $2,361,000 from $2,667,000
for the year earlier period for the reason discussed above.

      General and Administrative Expenses. General and administrative expenses
increased to $1,348,000 in the third quarter of fiscal 2003 from $1,210,000 in
the third quarter of fiscal 2002. The increase of $138,000 was mainly the result
of increased workers compensation and medical costs, increased insurance costs,
increased employee placement costs and current year salary increases as well as
other minor fluctuations. General and administrative expenses for the thirty-six
weeks ended November 10, 2002 increased to $4,054,000 from $3,517,000 in the
prior year period. The increase of $537,000 was due to the reasons discussed
above.

      Loss on Restaurant Assets. The loss on restaurant assets increased from
$81,000 in the third quarter of fiscal 2002 to $125,000 in the third quarter of
fiscal 2003 as a result of an increase in the reserve for the costs necessary to
dispose of previously closed restaurants in the current year quarter. The loss
on restaurant assets for


                                       10
<PAGE>
the thirty-six weeks ended November 10, 2002 increased to $193,000 from $112,000
in the year earlier period for the reason discussed above.

      Operating Income. Operating income in the third quarter of fiscal 2003
decreased to $843,000 or 4.3% of revenues compared to $1,709,000 or 8.4% of
revenues for the third quarter of fiscal 2002. Operating income for the
thirty-six weeks ended November 10, 2002 decreased to $3,327,000 or 5.6% of
revenues compared to $4,402,000 or 7.5% of revenues for the year earlier period.
These decreases were primarily the result of higher food cost product
promotions, increased workers compensation and medical expenses, increased
insurance costs, increased employee placement costs and increased labor costs
which were partially offset by the implementation of SFAS No. 142 whereby
goodwill is no longer amortized.

      Interest Expense. Interest expense on bank debt decreased to $1,136,000 in
the third quarter of fiscal 2003 from $1,157,000 in the third quarter of fiscal
2002 due to lower debt balances during the fiscal 2003 quarter. Interest expense
on bank debt for the thirty-six weeks ended November 10, 2002 decreased to
$3,391,000 from $3,526,000 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 was substantially unchanged in the third
quarter and first thirty-six weeks of fiscal 2003 compared to the comparable
periods in 2002.


      Provision for Income Taxes. The provision for income taxes was
substantially unchanged in the third quarter and first thirty-six weeks of
fiscal 2003 compared to the comparable periods in 2002. The low effective tax
rates result from tax net operating loss carryforwards.

      Liquidity and Capital Resources. Cash flow activity for the thirty-six
weeks of fiscal 2003 and fiscal 2002 is presented in the Consolidated Statements
of Cash Flows. Cash provided by operating activities was $1,800,000 for the
thirty-six weeks ended November 10, 2002. The Company paid scheduled long-term
bank and capitalized lease debt of $1,617,000 in the first thirty-six weeks of
fiscal 2003.

      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.

      Certain of 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 on certain of its loans
as measured at each of the Company's fiscal year ends. At March 3, 2002, the
Company was in compliance with the consolidated ratio of 1.2 to 1.0 applicable
to all of its loans. The Company was not in compliance with the 1.4 to 1.0 unit
level ratio on certain of its restaurants. The Company obtained a waiver of
these violations covering the interim periods of fiscal 2003 from the applicable
lender. Compliance is measured annually and if the Company is not in compliance
with the minimum coverage ratios and other terms and conditions of the
agreements by the end of fiscal 2003 it expects to be able to obtain amendments
or waivers of any covenants which are not met. In the past, the Company has been
required to pay a fee to obtain a waiver and may be required to do so in the
future.

      The Company is currently not in full compliance with the American Stock
Exchange financial condition guidelines for continued listing. Specifically, the
Company fell under the guidelines in Section 1003(a)(i) with shareholders'
equity of less than $2,000,000 and losses from continuing operations and/or net
losses in two of its


                                       11
<PAGE>
three most recent fiscal years; Section 1003(a)(ii) with shareholder's equity of
less than $4,000,000 and losses from continuing operations and/or net losses in
three out of its four most recent fiscal years; and Section 1003(a)(iii) with
shareholder's equity of less than $6,000,000 and losses from continuing
operations and/or net losses in its five most recent fiscal years.

      On April 22, 2002 the Company submitted a plan to the staff at the
American Stock Exchange indicating how it would regain compliance with the
continued listing standards. Subsequent to the original notice on March 15, 2002
the Company regained compliance with item 1003(a)(iii) by reporting, on May 31,
2002, a profit for the fiscal year ended March 3, 2002. The Company's plan was
accepted by the Exchange on June 7, 2002 and the Company's listing has been
continued under an extension.

      The Exchange will continue to monitor the Company's performance
periodically and any failure to meet the operating plan which was accepted by
the Exchange could result in the commencement of delisting proceedings.

      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.

ITEM 4. CONTROLS AND PROCEDURES.

      The Company's management is responsible for the preparation, integrity and
objectivity of the consolidated financial statements and other information
presented in this report. The financial statements of the Company have been
prepared in accordance with generally accepted accounting principles and reflect
certain estimates and adjustments by management. The Company's management
maintains a system of internal accounting controls and disclosure controls and
procedures which management believes provide reasonable assurance that
transactions are properly recorded and the Company's assets are protected from
loss or unauthorized use.

      The integrity of the accounting and disclosure systems are based on
written policies and procedures, the careful selection and training of qualified
financial personnel and direct management review. The Company's disclosure
control systems and procedures are designed to ensure timely collection and
evaluation of information subject to disclosure, to ensure the selection of
appropriate accounting policies, and to ensure compliance with the Company's
accounting policies and procedures. The Audit Committee is composed solely of
independent directors and meets periodically with the independent auditors and
management to discuss accounting and financial reporting matters. The
independent auditors have direct and private access to the Audit Committee.

      In November 2002, an evaluation was carried out under the supervision and
with the participation of the Company's management, including the Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the disclosure controls and procedures (as defined in
Rule 13a-14(c) under the Securities Exchange Act of 1934). Based upon that
evaluation, the Chief Executive Officer and the Chief Financial Officer
concluded that the design and operation of these disclosure controls and
procedures are effective. 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 their evaluation and there were no corrective
actions with regard to significant deficiencies or material weaknesses.


                                       12
<PAGE>
                              MORGAN'S FOODS, INC.
                                INDEX TO EXHIBITS

Exhibit

<TABLE>
<CAPTION>
Number      Exhibit Description
------      -------------------
<S>         <C>
99.1        Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
            2002 Leonard R. Stein-Sapir, Chairman of the Board and Chief
            Executive Officer

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


                                       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, 2002                By: /s/ Kenneth L. Hignett
       -----------------                    ------------------------------------
                                            Kenneth L. Hignett
                                            Senior Vice President,
                                            Chief Financial Officer & Secretary


                                       14
<PAGE>
                                 CERTIFICATIONS

I, Leonard R. Stein-Sapir, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Morgan's Foods,
      Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

Date: December 23, 2002
                                               /s/ Leonard R. Stein-Sapir
                                               ---------------------------------
                                                   Leonard R. Stein-Sapir
                                                   Chairman of the Board,
                                                   Chief Executive Officer


I, Kenneth L. Hignett, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Morgan's Foods,
      Inc.;

2.    Based on my knowledge, this quarterly report does not contain any untrue
      statement of a material fact or omit to state a material fact necessary to
      make the statements made, in light of the circumstances under which such
      statements were made, not misleading with respect to the period covered by
      this quarterly report;

3.    Based on my knowledge, the financial statements, and other financial
      information included in this quarterly report, fairly present in all
      material respects the financial condition, results of operations and cash
      flows of the registrant as of, and for, the periods presented in this
      quarterly report;

Date: December 23, 2002
                                               /s/ Kenneth L. Hignett
                                               ---------------------------------
                                                   Kenneth L. Hignett,
                                                   Senior Vice President,
                                                   Chief Financial Officer &
                                                   Secretary


                                       15