<PAGE>   1


                       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 7, 1999
                    ------------------------------------------------------------

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 22, 1999, the issuer had 2,910,839 shares of common stock
outstanding.


                                       1
<PAGE>   2

                          PART I FINANCIAL INFORMATION

Item 1. Financial Statements.


                              Morgan's Foods, Inc.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                                        Quarter Ended
                                              ----------------------------------
                                              November 7, 1999  November 8, 1998
                                              ----------------  ----------------

Revenues ....................................    $ 20,274,000      $  8,318,000
Cost of sales:
 Food, paper and beverage ...................       6,153,000         2,810,000
 Labor and benefits .........................       5,229,000         2,015,000
Restaurant operating expenses ...............       5,509,000         2,014,000
Depreciation and amortization ...............         820,000           319,000
General and administrative expenses .........       1,082,000           643,000
                                                 ------------      ------------

Operating income ............................       1,481,000           517,000

Interest expense:
 Bank debt and notes payable ................      (1,025,000)         (236,000)
 Capital leases .............................         (24,000)          (19,000)

Loss on disposal of restaurant assets .......         (51,000)                -

Other income ................................          35,000            27,000
                                                 ------------      ------------

Income from continuing operations
 before provision for income taxes ..........         416,000           289,000

Provision for income taxes ..................           3,000             7,000
                                                 ------------      ------------

Income from continuing operations ...........         413,000           282,000

Loss from discontinued operations
 net of income tax (Note 3) .................               -          (414,000)
                                                 ------------      ------------

Net income (loss) ...........................    $    413,000      $   (132,000)
                                                 ============      ============

Earnings (loss) per common share (Note 4):
 Continuing operations ......................    $        .14      $        .10
 Discontinued operations ....................               -              (.15)
                                                 ------------      ------------
 Net income .................................    $        .14      $       (.05)
                                                 ============      ============

Weighted average number of shares outstanding       2,910,839         2,910,839


                 See notes to consolidated financial statements.



                                       2
<PAGE>   3

                          PART I FINANCIAL INFORMATION

Item 1.  Financial Statements.


                              Morgan's Foods, Inc.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

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

                                                    Thirty-Six Weeks Ended
                                              ----------------------------------
                                              November 7, 1999  November 8, 1998
                                              ----------------  ----------------

Revenues ....................................   $ 42,186,000      $ 23,060,000
Cost of sales:
 Food, paper and beverage ...................     12,691,000         7,308,000
 Labor and benefits .........................     10,708,000         5,430,000
Restaurant operating expenses ...............     11,263,000         5,794,000
Depreciation and amortization ...............      1,638,000           972,000
General and administrative expenses .........      2,749,000         1,881,000
                                                ------------      ------------

Operating income ............................      3,137,000         1,675,000

Interest expense:
 Bank debt and notes payable ................     (1,918,000)         (630,000)
 Capital leases .............................        (60,000)          (65,000)

Gain (loss) on disposal of restaurant assets        (130,000)           (8,000)

Other Income ................................         60,000            59,000
                                                ------------      ------------

Income from continuing operations
 before provision for income taxes ..........      1,089,000         1,031,000

Provision for income taxes ..................          2,000            18,000
                                                ------------      ------------

Income from continuing operations ...........      1,087,000         1,013,000

Loss from discontinued operations
 Net of income tax (Note 3) .................       (629,000)       (1,081,000)
                                                ------------      ------------

Net income (loss) ...........................   $    458,000      $    (68,000)
                                                ============      ============

Earnings (loss) per common share: (Note 4)
 Continuing operations ......................   $        .37      $        .35
 Discontinued operations ....................           (.21)             (.37)
                                                ------------      ------------
 Net Income .................................   $        .16      $       (.02)
                                                ------------      ============

Weighted average number of shares outstanding      2,910,839         2,910,839


                 See notes to consolidated financial statements.


                                       3
<PAGE>   4

                              Morgan's Foods, Inc.

                           CONSOLIDATED BALANCE SHEETS

                                   (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                      November 7, 1999     February 28, 1999
                                                      ----------------     -----------------
<S>                                                     <C>                  <C>
Assets
 Current assets:
  Cash and equivalents .........................        $  6,277,000         $  2,655,000
  Receivables ..................................              24,000               38,000
  Inventories ..................................             688,000              332,000
  Prepaid expenses .............................              70,000              218,000
  Assets held for sale (Note 3) ................           3,231,000                    -
                                                        ------------         ------------
                                                          10,290,000            3,243,000
 Property and equipment: (Note 2)
  Land .........................................          10,629,000            3,379,000
  Buildings and improvements ...................          16,220,000            9,433,000
  Property under capital leases ................           1,268,000            5,089,000
  Leasehold improvements .......................           6,602,000            3,578,000
  Equipment, furniture and fixtures ............          15,738,000            9,915,000
  Construction in progress .....................           1,212,000              344,000
                                                        ------------         ------------
                                                          51,669,000           31,738,000
  Less accumulated depreciation and amortization          11,393,000           13,346,000
                                                        ------------         ------------
                                                          40,276,000           18,392,000
 Other assets ..................................           1,765,000            1,167,000
 Franchise agreements ..........................           2,230,000              609,000
 Deferred taxes ................................             600,000              600,000
 Acquired franchise rights .....................          10,166,000                    -
                                                        ------------         ------------
                                                        $ 65,327,000         $ 24,011,000
                                                        ============         ============
LIABILITIES AND SHAREHOLDERS' EQUITY
 Current liabilities:
    Current maturities of long-term debt .......        $  1,600,000         $    577,000
    Current maturities of capital lease
      obligations (Note 3) .....................           3,831,000              453,000
    Accounts payable ...........................           4,873,000            2,066,000
    Accrued liabilities ........................           3,698,000            2,329,000
                                                        ------------         ------------
                                                          14,002,000            5,425,000
  Long-term debt ...............................          48,846,000           13,094,000
  Long-term capital lease obligations ..........             773,000            4,244,000

SHAREHOLDERS' EQUITY
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 - 58,566 shares ................            (139,000)            (139,000)
Capital in excess of stated value ..............          28,875,000           28,875,000
Accumulated deficit ............................         (27,060,000)         (27,518,000)
                                                        ------------         ------------
Total shareholders' equity .....................           1,706,000            1,248,000
                                                        ------------         ------------
                                                        $ 65,327,000         $ 24,011,000
                                                        ============         ============
</TABLE>


                 See notes to consolidated financial statements.



                                       4
<PAGE>   5




                              Morgan's Foods, Inc.

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                                   (unaudited)


<TABLE>
<CAPTION>

                                     Common Shares            Treasury Shares         Capital in                       Total
                                 --------------------      ---------------------      excess of      Accumulated    Shareholders'
                                   Shares      Amount       Shares       Amount      stated value      Deficit         Equity
                                 ---------    -------      -------     ---------     ------------    -----------    -------------

<S>                              <C>          <C>          <C>         <C>           <C>            <C>              <C>
Balance, March 1, 1998 ......    2,969,405    $30,000      (58,566)    $(139,000)    $28,875,000    $(26,510,000)    $ 2,256,000

Net loss ....................            -          -            -             -               -      (1,008,000)     (1,008,000)
                                 ---------    -------      -------     ---------     -----------    ------------     -----------

Balance, February 28, 1999...    2,969,405    $30,000      (58,566)    $(139,000)    $28,875,000     (27,518,000)    $ 1,248,000

Net income ..................            -          -            -             -               -         458,000         458,000
                                 ---------    -------      -------     ---------     -----------    ------------     -----------

Balance, November 15, 1999...    2,969,405    $30,000      (58,566)    $(139,000)    $28,875,000    $(27,060,000)    $ 1,706,000
                                 =========    =======      =======     =========     ===========    ============     ===========
</TABLE>


                 See notes to consolidated financial statements




                                       5
<PAGE>   6

                              Morgan's Foods, Inc.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (unaudited)

<TABLE>
<CAPTION>
                                                        Thirty-six weeks ended
                                                 ----------------------------------
                                                 November 7, 1999  November 8, 1998
                                                 ----------------  ----------------

<S>                                                <C>              <C>
Cash flows from operating activities:
    Net income ................................    $    458,000     $    (68,000)
 Adjustments to reconcile net income
  to net cash provided by operating activities:
  Depreciation and amortization ...............       1,638,000        1,359,000
  Loss on disposal of restaurant assets .......         130,000            8,000
   Change in assets and liabilities:
    Decrease (increase) in receivables ........          14,000          (12,000)
    Increase in inventories ...................        (356,000)          (6,000)
    Decrease in prepaid expenses ..............         148,000           57,000
    Increase in other assets ..................      (1,226,000)        (180,000)
    Increase (decrease) in accounts payable ...       2,807,000         (133,000)
    Increase in accrued expenses ..............       2,670,000          300,000
                                                   ------------     ------------
 Net cash provided by operating activities ....       6,283,000        1,325,000
                                                   ------------     ------------

Cash flows from investing activities:
 Capital expenditures .........................     (26,952,000)      (3,488,000)
   Purchase of franchise agreements and
    acquired franchise rights .................     (11,960,000)        (142,000)
   Sale of property and equipment .............           4,000                -
   Proceeds from sale and maturity
    of marketable securities ..................               -          102,000
                                                   ------------     ------------

 Net cash used in investing activities ........     (38,908,000)      (3,528,000)
                                                   ------------     ------------

Cash flows from financing activities:
 Proceeds from financing for property and
  equipment and franchise agreements ..........      37,410,000        3,257,000
 Principal payments on long-term debt .........        (635,000)        (397,000)
 Principal payments on capital
  lease obligations ...........................        (528,000)        (361,000)
                                                   ------------     ------------

Net cash provided by financing activities .....      36,247,000        2,499,000
                                                   ------------     ------------
Net change in cash and equivalents ............       3,622,000          296,000
Cash and equivalents, beginning balance .......       2,655,000        2,316,000
                                                   ------------     ------------

Cash and equivalents, ending balance ..........    $  6,277,000     $  2,612,000
                                                   ============     ============
Noncash investing and financing activities:
   Capital leases .............................    $    435,000     $          -
                                                   ============     ============
</TABLE>


                 See notes to consolidated financial statements.



                                       6
<PAGE>   7


                              Morgan's Foods, Inc.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              QUARTERS ENDED NOVEMBER 7, 1999 AND NOVEMBER 8, 1998


NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         The interim consolidated financial statements of Morgan's Foods, Inc.
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. 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 February 28, 1999. Certain prior year amounts have been restated to
conform to the current year presentation.

NOTE 2. ACQUISITION OF KFC AND TACO BELL RESTAURANTS

         On July 14, 1999 Morgan's Restaurants of Pennsylvania, Inc., Morgan's
Restaurants of Ohio, Inc., Morgan's Restaurants of West Virginia, Inc. and
Morgan's Foods of Missouri, Inc., all wholly owned subsidiaries of Morgan's
Foods, Inc., acquired the assets of fifty-four (54) existing KFC and Taco Bell
restaurants and the land and building of a non-operating KFC restaurant from
various subsidiaries of Tricon Global Restaurants, Inc. for cash in the amount
of $33,740,000. Although the transaction was essentially complete as of the
closing date, the assets of 5 of the locations were not transferred to the
Company due to various documentation deficiencies. The Company assumed all
incidents of ownership through a Management Services Agreement ("MSA") for each
location. Locations operated under MSA's covered $200,000 of land, $500,000 of
buildings, $135,000 of leasehold improvements, $350,000 of equipment, $100,000
of franchise agreements and $985,000 of acquired franchise rights included in
the acquisition price. Each MSA requires the transfer of the property to the
Company upon the correction of the stated deficiency. One of the MSA locations
was transferred to the Company during the second quarter of fiscal 2000, three
were completed during the third quarter of fiscal 2000 and the final MSA
location was completed on December 7, 1999 during the fourth quarter of fiscal
2000.

         The preliminary allocation of the purchase price, which does not
include assets related to the one location operated under an MSA as of the end
of the third quarter of fiscal 2000, is as follows:

                           Land                             $  6,950,000
                           Buildings                           6,475,000
                           Leasehold Improvements              3,405,000
                           Equipment                           4,450,000
                           Franchise Agreements                1,590,000
                           Acquired Franchise Rights          10,250,000
                                                            ------------
                                Total                       $ 33,120,000
                                                            ============

       The following unaudited pro forma results for the twelve and thirty-six
weeks ended November 7,1999 and November 8, 1998, were developed assuming that
all of the acquired units previously described, including the one unit operated
under an MSA, had been acquired at the beginning of the respective periods. The
unaudited pro forma data shown below is not necessarily indicative of the
consolidated results that would have occurred had the


                                       7
<PAGE>   8

acquisition taken place at the beginning of the respective periods nor are they
necessarily indicative of results that may occur in the future.

<TABLE>
<CAPTION>
                                                     PRO FORMA RESULTS (UNAUDITED)
                                              (DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
                                            TWELVE WEEKS ENDED         THIRTY-SIX WEEKS ENDED
                                NOVEMBER 7, 1999  NOVEMBER 8, 1998  NOVEMBER 7, 1999  NOVEMBER 8, 1998
                                ----------------  ----------------  ----------------  ----------------
<S>                                 <C>              <C>              <C>              <C>
Total revenue                       $ 20,274         $ 20,257         $ 61,235         $ 53,827
Net income (loss) from
  continuing operations                  413             (220)          (1,294)            (617)
Net income (loss) per share
  from continuing operations             .14             (.08)            (.44)            (.21)
</TABLE>


NOTE 3. DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE

         On December 9, 1999 the Company sold four of the remaining five former
East Side Mario's restaurant locations, to Steak & Ale, a division of Metromedia
Restaurant Group, and is marketing the remaining location, which it recently
closed, with the expectation of selling this location early in calendar year
2000. The cash received as a result of this transaction of $3,850,000 was used
to pay off the capital lease obligations and other expenses of the transaction.
Certain assets of the East Side Mario's operations are shown in the Consolidated
Balance Sheet as "Assets held for sale". The results of operations of the
discontinued segment are shown in the Consolidated Statements of Operations as
"Loss from discontinued operations" and there is no tax effect of the loss. The
Company believes there will not be significant gain or loss on disposal of the
remaining assets. The East Side Mario's restaurants formerly operated by the
Company began in March 1993 and encompassed six locations by April 1995.
Comparable restaurant revenues for the East Side Mario's segment have declined
since fiscal 1996 and the restaurant concept was not appropriately supported by
the franchisor. The assets being held for sale and the related capitalized lease
obligations have been classified as current assets and current liabilities
respectively.

         The Consolidated Balance Sheets at November 7, 1999 and February 28,
1999, include assets and liabilities related to the East Side Mario's
restaurants, which are being accounted for as a discontinued operation, the
details of which are listed below:

<TABLE>
<CAPTION>
                                           NOVEMBER 7, 1999      FEBRUARY 28, 1999
                                           ----------------      -----------------
<S>                                           <C>                   <C>
Current assets                                $   139,000           $   125,000
Assets held for sale                            3,230,000                     -
Property and equipment, net                             -             3,771,000
Other assets                                            -               579,000
                                              -----------           -----------
       Total assets                             3,369,000             4,475,000
Current liabilities                             4,599,000             1,345,000
Capital lease obligations                               -             3,821,000
                                              -----------           -----------
       Net assets                             $(1,230,000)          $  (691,000)
                                              ===========           ===========
</TABLE>



                                       8
<PAGE>   9


       The results of operations for the East Side Mario's segment, reported
separately as a loss from discontinued operations in the Consolidated Statement
of Operations, are as follows:

<TABLE>
<CAPTION>
                                             12 WEEKS ENDED                       36 WEEKS ENDED
                                   NOVEMBER 7, 1999    NOVEMBER 8, 1998   NOVEMBER 7, 1999    NOVEMBER 8, 1998
                                   ----------------    ----------------   ----------------    ----------------

<S>                                      <C>               <C>                <C>                <C>
Gross sales                              1,404,000         1,654,000          4,496,000          5,578,000
                                         =========        ==========         ==========         ==========
Loss from operations
    of  discontinued
    East Side Mario's restaurants                -          (414,000)          (629,000)        (1,081,000)
                                         =========        ==========         ==========         ==========
</TABLE>

NOTE 4. 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. Since the
average share price during the periods presented was below the exercise price of
any outstanding stock options, the calculation of diluted net income (loss) per
common share does not include the effect of the assumed exercise of outstanding
options, as its effect would be anti-dilutive.

NOTE 5. STOCK OPTION PLANS

         On April 2, 1999, the Board of Directors of the Company approved a
Nonqualified Stock Option Plan for Executives and Managers. Under the plan
145,500 shares were reserved for the grant of options. Options for the 145,500
shares were granted to executives and managers of the Company on April 2, 1999
by the Stock Option Committee at an exercise price of $4 1/8. As of November 7,
1999 the closing price of the Company's stock was $3 1/2 per share. The plan
provides that the options are exercisable after a waiting period of 6 months and
that each option expires 10 years after its date of issue.

         The Nonqualified Stock Option Plan for Executives and Managers provides
for grants to eligible participants of nonqualified stock options only. The
exercise price for any option awarded under the Plan is required to be not less
than 100% of the fair market value of the shares on the date that the option is
granted. Options are granted by the Stock Option Committee of the Company.

         At the Company's annual meeting on June 25, 1999 the shareholders
approved the Key Employees Nonqualified Stock Option Plan. This plan allows the
granting of options covering 291,000 shares of stock and has essentially the
same provisions as the Nonqualified Stock Option Plan for Executives and
Managers which was discussed above.






                                       9
<PAGE>   10



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

         DESCRIPTION OF BUSINESS. Morgan's Foods, Inc. ("the Company") operates
through wholly-owned subsidiaries Kentucky Fried Chicken ("KFC") restaurants
under franchises from KFC Corporation and Taco Bell restaurants under franchises
from Taco Bell Corporation. As of December 22, 1999, the Company operates 93 KFC
restaurants, 13 of which also offer Taco Bell products, and 12 Taco Bell
restaurants. The Company formerly operated five East Side Mario's restaurants, a
business segment which the Company had previously chosen to discontinue (see
Note 3). The Company's fiscal year is a 52 - 53 week year ending on the Sunday
nearest the last day of February.

         REVENUES. Revenues for the quarter ended November 7, 1999 were
$20,274,000 compared to $8,318,000 for the quarter ended November 8, 1998. This
increase of $11,956,000 was due to the combination of several factors. First,
approximately $10,837,000 of sales in the third quarter of fiscal 2000 was added
by the acquisition, from Tricon Global Restaurants, Inc., of the 54 KFC and Taco
Bell restaurants described in Note 2. Additionally, $1,397,000 of revenue is
attributable to six KFC restaurants which were acquired from other franchisees
and three which were newly built since the third quarter of fiscal 1999,
partially offset by the closing of one KFC restaurant which resulted in a
decrease of $34,000. The remainder of the change in sales was caused by a
comparable sales decline in the KFC's of 2.0% which resulted in a decrease in
revenues of $244,000. The decline in comparable restaurant revenues was the
result of several very effective product promotions in the prior year quarter.
Revenues for the 36 weeks ended November 7, 1999 were $42,186,000 compared to
$23,060,000 for the 36 weeks ended November 8, 1998. This increase was
attributable to $15,301,000 of revenues generated by the 54 restaurants acquired
from Tricon as well as $4,492,000 in revenues contributed by eight acquired and
three newly built KFC restaurants in the current year period. In addition, the
closing of one KFC restaurant caused a decrease in revenue of $247,000 and
revenues in the comparable KFC restaurants decreased by 2.2% resulting in a
decrease of $420,000 in revenues.

         COSTS OF SALES - FOOD, PAPER AND BEVERAGES. Food, paper and beverage
costs for the fiscal 2000 third quarter decreased as a percentage of revenue
from 33.8% in fiscal 1999 to 30.4%. This decrease was primarily the result of
lower chicken prices during the fiscal 2000 third quarter as well as the
addition of substantial Taco Bell revenues to the Company, through the
acquisition of 12 Taco Bell restaurants and 12 KFC/Taco Bell `2 in 1'
restaurants discussed earlier, which typically have a lower cost of sales
percentage than KFC restaurants. Food, paper and beverage costs for the
thirty-six weeks ended November 7, 1999 decreased to 30.1% of revenue compared
to 31.7% 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 7, 1999 to 25.8% compared
to 24.2% for the year earlier quarter. The increase was primarily due to higher
labor costs in the newly acquired restaurants caused by the reorganization and
training necessary to assimilate the new restaurants into the operations of the
Company. Labor and benefits increased as a percentage of revenue for the
thirty-six weeks ended November 7, 1999 to 25.4% from 23.6% in the year earlier
period for the reasons mentioned above.

         RESTAURANT OPERATING EXPENSES. Restaurant operating expenses increased
as a percentage of revenue to 27.2% in fiscal 2000 compared to 24.2% in fiscal
1999. This was caused by increased advertising expenses as a result of the
introduction of five new sandwiches during the fiscal 2000 third quarter and
also the newly acquired restaurants having a higher local advertising co-op
expense than the Company's average for its existing restaurants. Restaurant
operating expenses for the thirty-six weeks ended November 7, 1999 increased to
26.7% of revenue compared to 25.1% of revenue in the comparable


                                       10
<PAGE>   11

year earlier period. The increase was caused by one-time expenditures during the
first quarter of fiscal 2000 to prepare for the acquisition of the 54
restaurants discussed earlier as well as costs related to the Star Wars
promotion conducted during the second quarter of fiscal 2000, and also for the
reasons mentioned above.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the
fiscal 2000 third quarter increased to $820,000 compared to $319,000 in fiscal
1999. The increase is primarily due to the addition of the KFC and Taco Bell
restaurants discussed above. Depreciation and amortization for the thirty-six
weeks ended November 7, 1999 increased to $1,638,000 from $972,000 for the year
earlier period for the reasons discussed above.

         GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses for the third quarter of fiscal 2000 were $1,082,000 or 5.3% compared
to $643,000 or 7.7% in the third quarter of fiscal 1999. The increase is
primarily due to factors associated with the acquisition of 54 KFC and Taco Bell
restaurants. First, the acquisition required the addition of a Director of
Operations and six market managers along with related training and support
personnel causing field general & administrative expenses to increase by
approximately $99,000 compared to the prior year. Secondly, the addition of
accounting, administrative and computer support personnel resulted in an
increase of approximately $248,000 in fiscal 2000 third quarter expenses
compared to the year earlier period. General and administrative expenses for the
thirty-six weeks ended November 7, 1999 increased to $2,749,000 or 6.5% compared
to $1,881,000 or 8.2% for the year earlier period for the reasons discussed
above.

         OPERATING INCOME. Operating income in the third quarter of fiscal 1999
increased to $1,481,000 or 7.3% compared to $517,000 or 6.2% for the third
quarter of fiscal 1998. This increase was primarily the result of the
acquisition of 54 KFC and Taco Bell restaurants discussed above. Operating
income for the thirty-six weeks ended November 7, 1999 increased to $3,137,000
or 7.4% from $1,675,000 or 7.3% in the year earlier period for the reasons
discussed above.

         INTEREST EXPENSE. Interest expense on bank debt increased to $1,025,000
in the third quarter of fiscal 2000 from $236,000 in fiscal 1999 due to higher
debt balances during the fiscal 2000 quarter necessary to fund the acquisition
and construction of restaurants during the past year. Interest expense for the
thirty-six weeks ended November 7, 1999 increased to $1,918,000 from $630,000 in
the comparable year earlier period for the same reason discussed above. Interest
expense on capitalized leases was substantially unchanged from the prior year
third quarter and for the thirty-six weeks.

         LOSS ON DISPOSAL OF RESTAURANT ASSETS. The loss on disposal of
restaurant assets of $51,000 and $130,000 in the third quarter of fiscal 2000
and the thirty-six weeks ended November 7, 1999, respectively, is a result of
assets disposed of during the image enhancement and relocation of three KFC
restaurants.

         OTHER INCOME. Other income for the quarter and thirty-six weeks ended
was substantially unchanged from the prior year second quarter and thirty-six
weeks ended November 7, 1999.

         PROVISION FOR INCOME TAXES. The provision for income taxes was $3,000
for the quarter ended November 7, 1999 compared to $7,000 in the prior year
quarter. For the thirty-six weeks ended November 7, 1999 the provision for
income taxes was $2,000 compared to $18,000 in the prior year quarter. These
decreases were caused by tax refunds received in the current year period.

         LIQUIDITY AND CAPITAL RESOURCES. Cash flow activity for the thirty-six
weeks of fiscal 2000 and fiscal 1999 is presented in the Consolidated Statements
of Cash Flows. Cash provided by operating activities was $6,283,000 for the
thirty-six weeks ended November 7, 1999. The Company paid scheduled long-term
bank and capitalized


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<PAGE>   12

lease debt of $1,163,000 in the first three quarters of fiscal 2000 and received
financing of $37,410,000 to fund the acquisitions of 54 KFC and Taco Bell
restaurants from Tricon Global Restaurants and six KFC restaurants from other
franchisees and to complete the building of three new KFC's and the relocation
of two others.

         The KFC operations of the Company have historically provided sufficient
cash flow to service the Company's debt, refurbish and upgrade KFC restaurant
properties and cover administrative overhead. Management believes that operating
cash flow will provide sufficient capital to continue to operate and maintain
the KFC and Taco Bell restaurants, service the Company's debt and support
required corporate expenses. In addition to the Company's operating cash flow,
management believes that additional financing, including long term leases of
build-to-suit restaurants and development lines of credit can be obtained for
use in the acquisition of new KFC and Taco Bell properties and refurbishment of
existing ones.

         The Company has previously installed the newest version of its
accounting software package and a recent version of the network operating system
at the Home Office, both of which are year 2000 compliant. The KFC restaurants
acquired from Tricon contain point of sale devices which are not year 2000
compliant and the Company is in the process of replacing them. Management
believes that this will be completed before the end of 1999 and that it has no
significant year 2000 operating exposure in its critical core systems. The
Company has one major supplier upon which it relies for food and related
restaurant supplies and which is using a computerized ordering system. This
supplier has represented in writing that they will be year 2000 compliant before
the end of the year. Items disclosed herein constitute "Y2000 Readiness
Disclosures" under the Year 2000 Information and Readiness Disclosure Act.

         OTHER. The Company is currently not in full compliance with the
American Stock Exchange financial condition guidelines for continued listing.
Specifically, the guidelines indicate that any company with shareholders' equity
less than $4,000,000 and losses in 3 of its last 4 fiscal years may be
considered for delisting. This condition has been reviewed with representatives
of the American Stock Exchange who indicated that the Company's performance will
continue to be monitored by the Exchange.

         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.

                            PART II OTHER INFORMATION

ITEM 6.  EXHIBITS & REPORTS ON FORM 8-KA

         (a) Exhibit 27 - Financial Data Schedule
         (b) A report on Form 8-KA was filed on September 27, 1999 to report the
             acquisition of the KFC and Taco Bell restaurants from Tricon Global
             Restaurants, Inc.



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                                   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 22, 1999           By /s/   Kenneth L. Hignett:
        -----------------              ------------------------------------
                                        Kenneth L. Hignett
                                        Senior Vice President,
                                        Chief Financial Officer & Secretary




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