# UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

# FORM 10-Q

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

For

 the quarterly period ended April 7, 2004

Commission

 file number: 333-98301

# BUFFETS, INC.

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|(State or other jurisdiction of |  | (IRS Employer      
|incorporation or organization)  |  | Identification No.)





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|(Address of principal executive offices) | (Zip Code)

Registrants
telephone number, including area code: (651) 994-8608

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 checkmark whether the
registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

YES [   ] NO [X]

The number of shares of Buffets,
Inc.s common stock outstanding as of May 12, 2004 was 100.

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# BUFFETS, INC.TABLE OF CONTENTS

|                                 |  | 
|-------------------------------- |  | 
|Part I.    Financial Information |  | 
|                                 |  | 
|Item 1.                          |  | 
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|Item 2.                          |  | 
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|Item 3.                          |  | 
|                                 |  | 
|Item 4.                          |  | 
|                                 |  | 
|Part II.  Other Information      |  | 
|                                 |  | 
|Item 5.                          |  | 
|                                 |  | 
|Item 6.                          |  | 

2

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# PART I.     FINANCIAL INFORMATION

# ITEM 1.     FINANCIAL STATEMENTS

# BUFFETS, INC. AND
SUBSIDIARIES

# CONDENSED CONSOLIDATED
BALANCE SHEETS

|                                                         | July 2, | April 7,
|-------------------------------------------------------- | ------- | --------
|
|
|
|
|CURRENT ASSETS:                                          |         |         
|Unrestricted cash and cash equivalents                   |         |         
|Restricted cash and cash equivalents                     |         |         
|Receivables                                              |         |         
|Inventories                                              |         |         
|Prepaid expenses and other current assets                |         |         
|Assets held for sale                                     |         |         
|Deferred income taxes                                    |         |         
|                                                         |         |         
|Total current assets                                     |         |         
|PROPERTY AND EQUIPMENT, net                              |         |         
|GOODWILL                                                 |         |         
|DEFERRED INCOME TAXES                                    |         |         
|OTHER ASSETS, net                                        |         |         
|                                                         |         |         
|Total assets                                             |         |         
|                                                         |         |         
|LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT)           |         |         
|CURRENT LIABILITIES:                                     |         |         
|Accounts payable                                         |         |         
|Accrued liabilities                                      |         |         
|Income taxes payable                                     |         |         
|Current maturities of long-term debt                     |         |         
|                                                         |         |         
|Total current liabilities                                |         |         
|LONG-TERM DEBT, net of current maturities                |         |         
|DEFERRED LEASE OBLIGATIONS                               |         |         
|OTHER LONG-TERM LIABILITIES                              |         |         
|                                                         |         |         
|Total liabilities                                        |         |         
|SHAREHOLDER'S EQUITY (DEFICIT):                          |         |         
|Common stock; $.01 par value, 100 shares authorized; 100 |         |         
|shares issued and outstanding                            |         |         
|Retained earnings (accumulated deficit)                  |         |         
|                                                         |         |         
|Total shareholder's equity (deficit)                     |         |         
|                                                         |         |         
|Total liabilities and shareholder's equity (deficit)     |         |         
|                                                         |         |         

The

 accompanying notes are an integral part of these condensed consolidated financial statements.

3

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# BUFFETS, INC. AND
SUBSIDIARIES

# CONDENSED CONSOLIDATED
INCOME STATEMENTS

|                                               | Sixteen Weeks Ended | Forty Weeks Ended
|---------------------------------------------- | ------------------- | -----------------
|
|
|
|
|
|RESTAURANT SALES                               |                     |                  
|RESTAURANT COSTS:                              |                     |                  
|Food                                           |                     |                  
|Labor                                          |                     |                  
|Direct and occupancy                           |                     |                  
|                                               |                     |                  
|Total restaurant costs                         |                     |                  
|ADVERTISING EXPENSES                           |                     |                  
|GENERAL AND ADMINISTRATIVE EXPENSES            |                     |                  
|LOSS ON SALE AND LEASEBACK TRANSACTION         |                     |                  
|                                               |                     |                  
|OPERATING INCOME                               |                     |                  
|INTEREST EXPENSE                               |                     |                  
|INTEREST INCOME                                |                     |                  
|OTHER INCOME                                   |                     |                  
|LOSS RELATED TO BANK REFINANCING               |                     |                  
|LOSS RELATED TO EARLY EXTINGUISHMENT OF   DEBT |                     |                  
|                                               |                     |                  
|INCOME BEFORE INCOME TAXES                     |                     |                  
|INCOME TAX EXPENSE (BENEFIT)                   |                     |                  
|                                               |                     |                  
|Net income                                     |                     |                  
|                                               |                     |                  

The

 accompanying notes are an integral part of these condensed consolidated financial statements.

4

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# BUFFETS, INC. AND
SUBSIDIARIES

# CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS

|                                                            | Forty Weeks Ended
|----------------------------------------------------------- | -----------------
|
|
|
|
|OPERATING ACTIVITIES:                                       |                  
|Net income                                                  |                  
|Adjustments to reconcile net income to net cash             |                  
|provided by operating activities:                           |                  
|Depreciation and amortization                               |                  
|Amortization of debt issuance cost                          |                  
|Write-off of debt issuance cost related to bank refinancing |                  
|Loss related to early extinguishment of debt                |                  
|Deferred income taxes                                       |                  
|Accretion of original issue discount                        |                  
|Impairment of assets                                        |                  
|Loss on disposal of assets                                  |                  
|Loss on sale and leaseback transaction                      |                  
|Changes in assets and liabilities:                          |                  
|Receivables                                                 |                  
|Inventories                                                 |                  
|Prepaid expenses and other current assets                   |                  
|Accounts payable                                            |                  
|Accrued and other liabilities                               |                  
|Income taxes payable                                        |                  
|                                                            |                  
|Net cash provided by operating activities                   |                  
|                                                            |                  
|INVESTING ACTIVITIES:                                       |                  
|Proceeds from sale and leaseback transaction                |                  
|Purchase of fixed assets                                    |                  
|Acquisition of 20% minority interest in Tahoe Joe's Inc     |                  
|Proceeds from sale of other assets                          |                  
|                                                            |                  
|Net cash provided by (used in) investing activities         |                  
|FINANCING ACTIVITIES:                                       |                  
|Repayment of Credit Facility                                |                  
|Proceeds from Credit Facility                               |                  
|Early extinguishment of debt                                |                  
|Capital distribution                                        |                  
|Debt issuance cost                                          |                  
|                                                            |                  
|Net cash provided by (used in) financing activities         |                  
|                                                            |                  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                     |                  
|CASH AND CASH EQUIVALENTS, beginning of period              |                  
|                                                            |                  
|CASH AND CASH EQUIVALENTS, end of period                    |                  
|                                                            |                  
|SUPPLEMENTAL CASH FLOW INFORMATION:                         |                  
|Cash paid during the period for--                           |                  
|Interest (net of capitalized interest of $247 and $207)     |                  
|                                                            |                  
|Income taxes                                                |                  
|                                                            |                  

The

 accompanying notes are an integral part of these condensed consolidated financial statements.

5

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# BUFFETS, INC. AND
SUBSIDIARIES

# NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

# (Unaudited)

# 1.  Nature of Organization

Company Background

Buffets
Holdings, Inc. (Buffets Holdings), a Delaware corporation, was formed to acquire 100
percent of the common stock of Buffets, Inc. and its subsidiaries (the Company) in a
buyout from public shareholders in October 2000.

In
December 2002, the Company filed a registration statement with the Securities and Exchange
Commission to effect the exchange of $230.0 million of outstanding 111⁄4% senior
subordinated notes which were issued in June 2002 for registered 111⁄4% senior
subordinated notes due 2010.

On
February 20, 2004, the Company entered into an amended and restated senior credit facility
(the Credit Facility) to refinance its existing debt and to make a distribution to Buffets
Holdings. The Company used $230.0 million in proceeds from term loan borrowings under the
amended Credit Facility to refinance $166.8 million in outstanding term loan indebtedness
under the predecessor Credit Facility, establish a $34.7 million restricted cash
collateral account to repurchase outstanding 111⁄4% senior subordinated notes, make a
$19.7 million distribution to Buffets Holdings, pay $2.7 million in transaction fees
related to the refinancing transaction, pay $1.1 million in accrued term loan interest and
use $5.0 million for general corporate purposes. The amended Credit Facility allows the
Company to use up to $50.0 million in cash, comprised of the restricted cash collateral
proceeds and unrestricted cash on hand, toward the repurchase of its outstanding
111⁄4% senior subordinated notes. Any unused portion of the restricted cash
collateral account must be applied within 180 days to repay indebtedness under the term
loan portion of the amended Credit Facility. As of April 7, 2004, the Company had expended
$16.5 million to redeem $14.3 million of senior subordinated notes at an average price of
111.4% and had $33.5 million of restricted cash and cash equivalents for further
repurchases. The Company recognized a $4.2 million write-off of debt issuance cost as a
loss related to the bank refinancing and a $2.7 million loss related to the early
extinguishment of debt.

Description of Business

The
Company owns and operates a chain of restaurants under the names of Old Country Buffet,
Country Buffet, HomeTown Buffet, Grannys Buffet, Country Roadhouse Buffet &
Grill, Tahoe Joes Famous Steakhouse, and Soup N Salad Unlimited in the United
States. The Company operates principally in the midscale family dining industry segment.
The Company operated 361 company-owned restaurants (353 buffet restaurants and eight Tahoe
Joes Famous Steakhouse Restaurants) and franchised 20 restaurants as of April 7,
2004.

Interim Financial
Information

In
the opinion of management, the accompanying unaudited condensed consolidated financial
statements contain all necessary adjustments, which are of a normal recurring nature, to
present fairly the Companys financial position and the results of its operations and
cash flows for the periods presented, in conformity with accounting principles generally
accepted in the United States of America and with the regulations of the Securities and
Exchange Commission (SEC). Certain information and footnote disclosures,
normally included in accordance with accounting principles generally accepted in the
United States of America, have been condensed or omitted pursuant to such SEC rules and
regulations. Operating results for the sixteen-week and forty-week periods ended April 7,
2004 are not necessarily indicative of results that may be expected for the year ending
June 30, 2004.

6

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The
balance sheet as of July 2, 2003 has been derived from the audited financial statements at
that date but does not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete financial
statements.

These
unaudited condensed consolidated financial statements should be read in conjunction with
the financial statements and the related notes contained in the Companys Form 10-K
filed with the Securities and Exchange Commission on September 30, 2003 and with
Managements Discussion and Analysis of Financial Condition and Results of Operations
appearing on pages 10 through 17 of this report.

Principles of
Consolidation

The
consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany transactions have been eliminated in
consolidation.

Fiscal Year

The
Companys fiscal year is comprised of fifty-two or fifty-three weeks divided into
four fiscal quarters of twelve, twelve, sixteen, and twelve or thirteen weeks. There are
52 weeks in the Companys 2004 fiscal year.

Reclassifications

Certain amounts shown in the
prior-period condensed consolidated financial statements have been reclassified to conform
with the current period condensed consolidated financial statement presentation. These
reclassifications had no effect on net income or shareholders equity (deficit) as
previously presented.

# 2.  Recent Accounting
Pronouncements

In
January 2003, the Financial Accounting Standards Board (FASB) issued FASB Interpretation
No. (FIN) 46, Consolidation of Variable Interest Entities, an Interpretation of ARB
51. The primary objectives of FIN 46 are to provide guidance on the identification
of entities for which control is achieved through means other than through voting rights
(variable interest entities, or VIEs) and how to determine when and which business
enterprise should consolidate the VIE (the primary beneficiary). In December 2003, the
FASB issued FIN 46 (R), Consolidation of Variable Interest Entities, which
represents a revision to FIN 46. The provisions of FIN 46 (R) are effective for interests
in VIEs as of the first interim, or annual, period ending after December 15, 2003. In
addition, FIN 46 (R) requires that both the primary beneficiary and all other enterprises
with a significant variable interest make additional disclosure in filings issued after
January 31, 2003. The Company adopted FIN 46 (R) as of December 17, 2003 and its adoption
had no impact on the Companys consolidated results of operations, financial position
or cash flow.

In
May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity. SFAS No. 150 modifies the
accounting for certain financial instruments that, under previous guidance, issuers could
account for as equity. SFAS No. 150 requires that those instruments be classified as
liabilities in statements of financial position. Most of the guidance in SFAS No. 150 is
effective for all financial instruments entered into or modified after May 31, 2003, or
otherwise is effective at the beginning of the first interim period beginning after June
15, 2003. The Company adopted SFAS No. 150 as of July 3, 2003 and its adoption had no
impact on the Companys consolidated results of operations, financial position or
cash flow.

# 3.  Other Assets

Other
assets consist principally of debt issuance costs, notes receivable and other intangibles
net of accumulated amortization of $1.3 million as of July 2, 2003 and $2.3 million as of
April 7, 2004. Debt issuance costs are the costs incurred to enter into the Credit
Facility and issue the senior subordinated notes. Debt issuance costs are being amortized
over the terms of the related financing arrangements using the effective interest method.
Other intangibles include trademarks, franchise fees and liquor licenses. Trademarks and
franchise fees are being amortized on a straight-line basis over 10 years. Liquor licenses
are no longer amortized, as they were determined to have indefinite lives upon the
adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets. Notes receivable represent the long-term portion of notes that
arose from the sale of certain restaurant facilities. Long-term and short-term notes
receivable collectively totaled $3.4 million as of July 2, 2003 and $3.2 million as of
April 7, 2004. The notes receivable have due dates between 2004 and 2010.

7

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The
gross carrying amount and accumulated amortization of each major class of other intangible
assets were as follows (in thousands):

|                       | Franchise fees | Trademarks | Liquor licenses | Total |  |   |     |  
|---------------------- | -------------- | ---------- | --------------- | ----- |  | - | --- | -
|
|
|
|BALANCE, July 2, 2003  |                |            | $               | 69    |  | $ | (44 | )
|FY 2004 Activity:      |                |           
|Additions              |                |            |                 | --    |  |   | --  |  
|Amortization           |                |            |                 | --    |  |   | (8  | )
|                       |                |            |                 |       |  |   |     |  
|BALANCE, April 7, 2004 |                |            | $               | 69    |  | $ | (52 | )
|                       |                |            |                 |       |  |   |     |  

# 4.  Long-Term Debt

As
of April 7, 2004, long-term debt outstanding was as follows (in thousands):

|                                                                  | 
|----------------------------------------------------------------- | 
|Credit facility:                                                  | 
|Revolver                                                          | 
|Term loan, interest at LIBOR plus 3.50%, due                      | 
|quarterly  through June 28, 2009 (interest rate at 4.6%)          | 
|                                                                  | 
|Total credit facility                                             | 
|Senior subordinated notes, interest at 11.25%, due July 15, 2010, | 
|net of discount of $6,944                                         | 
|                                                                  | 
|Total long term debt                                              | 
|Less-- current maturities                                         | 
|                                                                  | 
|                                                                  | 
|                                                                  | 

Credit Facility

On February
20, 2004, the Company amended and restated its Credit Facility. The amended and restated
Credit Facility provides for total borrowings of up to $310,000,000, including (i) a
$230,000,000 term loan, (ii) a $30,000,000 revolving credit facility, (iii) a $20,000,000
letter of credit facility, and (iv) a $30,000,000 synthetic letter of credit facility. The
terms of the Credit Facility permit the Company to borrow, subject to availability and
certain conditions, incremental term loans or to issue additional notes in an aggregate
amount up to $25,000,000. The borrowings under the term loan facility bear interest, at
the Companys option, at either adjusted LIBOR plus 3.50% or at an alternate base
rate plus 2.50%, subject to a leverage-based pricing grid. The term loan and the synthetic
letter of credit facility mature on June 28, 2009, while the revolving facility and the
letter of credit facilities mature on June 28, 2007. The borrowings due under the term
loan are payable in equal quarterly installments in an annual amount equal to 1% of the
term loan during each of the first four and a half years of the loan, with the remaining
balance payable due in equal quarterly installments during the last year of the loan. The
Credit Facility is fully and unconditionally guaranteed by Buffets Holdings, which has no
independent assets or operations, and is secured by substantially all of the
Companys assets. Availability under the Credit Facility depends upon our continued
compliance with certain covenants and financial ratios including leverage, interest
coverage and fixed charge coverage as specifically defined in the Credit Facility. The
Company was in compliance with all financial ratio covenants of the Credit Facility as of
April 7, 2004. The financial ratio covenant requirements increase over time, however, as
set forth in the senior credit agreement.

8

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As
of April 7, 2004, the Company had $35.1 million in outstanding letters of credit, which
expire through March 24, 2005. As of April 7, 2004, the total borrowing availability under
the revolving credit facility was $30.0 million and the total borrowing capacity under the
letter of credit facilities was $14.9 million.

The
Company has the option of tying its borrowings to LIBOR or a base rate when calculating
the interest rate for the term loan. The base rate is the greater of Credit Suisse First
Bostons prime rate, or the federal funds effective rate plus one-half of 1 percent.

11 1/4% Senior
Subordinated Notes

On
June 28, 2002, the Company issued 111⁄4% senior subordinated notes in the principal
amount of $230.0 million due July 15, 2010 at 96.181%. Interest is payable semi-annually
on January 15 and July 15 of each year through July 15, 2010. Except in the event of an
initial public offering, the Company is not entitled to redeem the notes at its option
prior to July 15, 2006. The redemption price during the first twelve-month period
following July 15, 2006 is 105.625%. The redemption price declines by 1.875% per year
until July 15, 2009, at which point there is no redemption price premium. In the event of
an initial public offering prior to July 15, 2006, the Company may redeem up to 35% of the
aggregate principal amount of the notes at a redemption price of 111.25%. In addition, in
the event of an initial public offering by either the Company or Buffets Holdings, Inc.
prior to July 15, 2005, the Company is required to offer to purchase up to an aggregate
principal amount of the notes as may be purchased with funds equal in amount to 50% of the
net cash proceeds from that initial public offering at a price of 111.25% of the
outstanding principal amount of the notes, plus any accrued and unpaid interest to the
date of repurchase, provided, however, that, in no event will the Company be required to
make an offer to purchase more than $80.5 million aggregate principal amount of the notes.
Furthermore, in the event of a change in control, as defined in the indenture governing
those notes, the holders of the notes may require the Company to repurchase the notes at a
purchase price of 101% of the outstanding principal amount plus accrued and unpaid
interest.

# 5.  Sale and Leaseback
Transaction

On
December 19, 2003, the Company entered into a sale and leaseback by which the Company
transferred its leasehold interests and leasehold improvements with respect to a
restaurant to a third party for net proceeds of $2.7 million. The Company simultaneously
entered into a long-term lease for that restaurant with an aggregate initial annual rent
of approximately $0.3 million. The net proceeds of this sale and leaseback exceeded the
book value of the leasehold assets resulting in a deferred gain of approximately $0.3
million. The deferred gain will be accreted over the 20-year life of the lease.

The
Company does not have any continuing involvement with the sale and leaseback location.
This lease is accounted for as an operating lease.

# 6.  Subsequent Event

On May 12, 2004, Buffets Holdings, announced it has priced an offering of 13 7/8% senior discount notes due 2010
in a Rule 144A offering.  The gross proceeds from the offering are expected to be approximately $75 million.

Buffets Holdings intends to
use the cash proceeds from the offering of the senior discount notes to redeem Buffets Holdings' series B junior subordinated notes due 2011, make a distribution to stockholders
of Buffets Holdings and pay transaction fees and expenses.  The offering of senior discount notes is expected to close
during May 2004.

The securities
offered will not be registered under the Securities Act and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration requirements of the Securities Act.

9

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

You
should read the following discussion in conjunction with our condensed consolidated
financial statements and related notes included elsewhere in this report. Unless the
context indicates or requires otherwise, (i) the terms Buffets,
we, our and Company refer to Buffets, Inc. and its
subsidiaries and (ii) the terms parent company and Buffets
Holdings refer to Buffets Holdings, Inc., our sole shareholder. Some of the
statements in the following discussion are forward-looking statements.  See Forward-Looking
Statements and Risk Factors.

# General

As
of April 7, 2004, we operated 361 company-owned restaurant locations in 35 states
comprised of 353 buffet restaurants and eight Tahoe Joes Famous Steakhouse®
restaurants. The buffet restaurants are principally operated under the Old Country
Buffet® or HomeTown Buffet® brands. We also franchise 20 buffet restaurants in
seven states.

We
were founded in 1983 to develop buffet-style restaurants under the name Old Country
Buffet. In October 1985, we completed our initial public offering and were listed on the
Nasdaq National Market. In October 2000, Buffets was acquired by Buffets Holdings, a
company organized by Caxton-Iseman Capital, Inc., in a buyout from public shareholders.

Certain
elements of our cost structure are fixed in nature, particularly over the short term.
Accordingly, changes in marginal sales volume can have a more significant impact on our
profitability than for a business possessing a more variable cost structure.

During
the past two quarters, we have had positive same-store sales. We believe this improvement
is due to the upturn in the economy and our rollout of new menu offerings. We expect
same-store restaurant sales to continue to be positive in the next quarter compared with
the comparable prior year period, but believe that future sales performance will continue
to be significantly influenced by general economic conditions.

Our
fiscal year is comprised of 52 or 53 weeks divided into four fiscal quarters of 12, 12, 16
and 12 or 13 weeks.

The
following is a description of the line items from our income statements:

| |  |  | We recognize as restaurant sales the proceeds from the sale of food and beverages at our
company-owned restaurants at the time of such sale. We recognize the proceeds from the
sale of gift certificates/cards when the gift certificates/cards are redeemed at our
restaurants. Until redemption, the unearned revenue from the sale of gift
certificates/cards is included in accrued liabilities on our balance sheet. We recognize
franchise income, representing royalty fees, as other income based on the sales reported
at our franchisees restaurants.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Restaurant costs reflect only direct restaurant operating costs, including food, labor and
direct and occupancy costs. Labor costs include compensation and benefits for both hourly
and restaurant management employees. Direct and occupancy costs consist primarily of costs
of supplies, maintenance, utilities, rent, real estate taxes, insurance, depreciation and
amortization.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Advertising expenses reflect all advertising and promotional costs.
| | - |  | -------------------------------------------------------------------

10

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| |  |  | General and administrative expenses reflect all costs, other than marketing expenses, not
directly related to the operation of restaurants. These expenses consist primarily of
corporate compensation and overhead, district and regional management compensation and
related management expenses and the costs of recruiting, training and supervising
restaurant management personnel.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Loss on sale and leaseback transaction reflects transaction costs and impairment losses
associated with the sale and leaseback of the leasehold interests and leasehold
improvements with respect to 27 restaurants completed on December 11, 2002.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Interest expense reflects interest costs associated with our debt, amortization of debt
issuance cost and accretion of original issuance discount on our senior subordinated
notes.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Interest income reflects interest earned on our short-term investments.
| | - |  | -----------------------------------------------------------------------

| |  |  | Other income primarily reflects franchise fees earned, less minority interest associated
with our Tahoe Joes Inc. subsidiary during fiscal 2003.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Loss related to bank refinancing reflects the write-off of debt issuance cost in
connection with the amendment and restatement of our senior credit agreement on February
20, 2004.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Loss related to the early extinguishment of debt reflects the costs associated with
redeeming a portion of our 111⁄4% senior subordinated notes prior to maturity during fiscal 2004.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | Income tax expense (benefit) reflects the current and deferred tax provision (benefit)
determined in accordance with the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Critical Accounting
Policies

Our
condensed consolidated financial statements have been prepared in accordance with
accounting policies generally accepted in the United States of America. The preparation of
our consolidated financial statements requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and assumptions, including those related to
recoverability of long-lived assets, revenue recognition and goodwill. We base our
estimates and assumptions on historical experience and on various other factors that are
believed to be reasonable at the time the estimates and assumptions are made. Actual
results may differ from these estimates and assumptions under different circumstances or
conditions.

We
believe the following critical accounting policies affect managements significant
estimates and assumptions used in the preparation of our condensed consolidated financial
statements.

Recoverability of
Long-Lived Assets

We
periodically evaluate long-lived assets and goodwill related to those assets for
impairment whenever events or changes in circumstances indicate the carrying value amount
of an asset or group of assets may not be recoverable. We consider a history of operating
losses and the other factors described to be its primary indicator of potential
impairment. Assets are grouped and evaluated for impairment at the lowest level for which
there are identifiable cash flows, namely individual restaurants. A restaurant is deemed
to be impaired if a forecast of undiscounted future operating cash flows directly related
to the restaurant, including disposal value, if any, are less than its carrying amount. If
a restaurant is determined to be impaired, the loss is measured as the amount by which the
carrying amount of the restaurant exceeds its fair value. Fair value is based on quoted
market prices in active markets, if available. If quoted market prices are not available,
an estimate of fair value is based on the best information available, including prices for
similar assets or the results of valuation techniques such as discounted estimated future
cash flows as if the decision to continue to use the impaired restaurant was a new
investment decision. We generally measure fair value by discounting estimated future cash
flows. Considerable management judgment is necessary to estimate discounted future cash
flows. Accordingly, actual results could vary significantly from such estimates. There
were no impairment charges during the 40 weeks ended April 7, 2004. We expensed
approximately $0.3 million during the 16 weeks ended April 9, 2003 and approximately $1.4
million during the 40 weeks ended April 9, 2003 relating to the impairment of long-lived
assets associated with 1 and 14 restaurants, respectively. This amount was partially
offset by an approximate $0.8 million reduction in lease obligation accrual assumptions in
accrued store closing costs, based on receiving greater than planned sublease and other
cash receipts. In addition, we also recognized approximately $5.4 million in impairments
on 15 restaurants as part of the loss on the sale and leaseback transaction completed on
December 11, 2002.

11

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Goodwill and Other
Intangible Assets

Goodwill
represents the excess of our acquisition cost over the fair market value of the net assets
acquired. We amortized that goodwill on a straight-line basis over a 30-year life through
the end of the fiscal year ended January 2, 2002. However, on January 3, 2002, we began
applying the new rules on accounting for goodwill and other intangible assets issued by
the Financial Accounting Standards Board in SFAS No. 142 Goodwill and Other
Intangible Assets. There were no impairments to goodwill and other intangible assets
identified for the first 40 weeks of 2004 or 2003.

# Results of Operations

The
following discussion reflects our historical results for the 16-week and 40-week periods
ended April 7, 2004 and April 9, 2003.

Our
future results may not be consistent with our historical results. Most notably, our fiscal
2003 results included the operating results for 13 Original Roadhouse Grill restaurants
that were sold in June 2003, as well as the impact of a sale and leaseback transaction
with respect to 27 restaurants completed in December 2002. Our fiscal 2004 results
included the impact of amending and restating our senior credit agreement, redeeming
approximately $14.3 million of 111/4% senior subordinated notes due 2010 and a
sale and leaseback transaction with respect to one restaurant completed in December 2003.
The following discussion should be read in conjunction with our condensed consolidated
financial statements and related notes included elsewhere in this report.

For the 16 Weeks Ended April 7,
2004 Compared to the 16 Weeks Ended April 9, 2003

The
following table sets forth our results of operations based on the percentage relationship
of the items listed to our restaurant sales during the periods shown:

|                                             | 16 Weeks | 16 Weeks |  
|-------------------------------------------- | -------- | -------- | -
|
|
|
|                                             |          |          |  
|Restaurant sales                             |          |          | $
|Restaurant costs                             |          |          |  
|Advertising expenses                         |          |          |  
|General and administrative expenses          |          |          |  
|                                             |          |          |  
|Operating income                             |          |          |  
|Interest expense                             |          |          |  
|Interest income                              |          |          |  
|Other income                                 |          |          |  
|Loss related to bank refinancing             |          |          |  
|Loss related to early extinguishment of debt |          |          |  
|                                             |          |          |  
|Income before income taxes                   |          |          |  
|Income tax expense (benefit)                 |          |          |  
|                                             |          |          |  
|Net income                                   |          |          | $
|                                             |          |          |  

12

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Restaurant
Sales. Restaurant sales for the 16 weeks ended April 7, 2004 decreased $6.1 million,
or 2.1%, compared with the 16 weeks ended April 9, 2003. The decline in sales for the
quarter ended April 7, 2004 versus the prior year period was primarily attributable to the
closure of 14 buffet restaurants and the sale of 13 Original Roadhouse Grill restaurants,
partially offset by the opening of 3 units, over the past year. Average weekly sales for
the third quarter of fiscal 2004 of $49,659 were 4.2% higher than the comparable prior
year periods average weekly sales. Same-store sales for the third quarter of fiscal
2004 increased by 4.4% compared to the comparable prior year period, reflecting a 0.5%
improvement in guest traffic and a 3.9% increase in average check. The increase in average
check was comprised of approximately a 2.2% price increase and a 1.7% average check
increase due to a reduction in free promotional and employee meals. We currently expect
same-store sales for the fourth quarter of fiscal 2004 (the 12-week period ending June 30,
2004) to increase by approximately 1% to 3% versus the comparable period in fiscal 2003.

Restaurant
Costs. Restaurant costs for the third quarter of fiscal 2004 decreased by 200 basis
points as a percentage of sales compared with the comparable prior year period. Food costs
as a percentage of sales increased 40 basis points primarily due to our expanded and
enriched menu offerings. Labor costs as a percentage of sales were 180 basis points lower
than those experienced in the comparable quarter in the prior year, primarily due to a
reduction in our restaurant management staffing levels substantially effected during the
third quarter of fiscal 2003 and the improved productivity of our hourly employees. Direct
and occupancy costs as a percentage of sales decreased by 60 basis points versus the
comparable quarter in the prior year. This decrease was primarily attributable to a
reduction in repair and maintenance expense, a decrease in general liability reserve
provisions and an adjustment to our gift certificate liability for non-escheatable
property. We currently expect that restaurant costs will remain stable as a percentage of
sales during the fourth quarter of fiscal 2004, as compared to those experienced in the
most recently completed quarter.

Advertising
Expenses. Advertising costs increased 10 basis points as a percentage of sales during
the third quarter of fiscal 2004 versus the comparable quarter in the prior year.
Approximately 63% of our buffet restaurants received television-advertising support in the
third quarter of 2004 compared with 62% during the comparable quarter in 2003. We expect
advertising costs as a percentage of sales to be approximately 30 basis points higher in
the fourth quarter of this year than those experienced in the third quarter of 2004 due to
expanded advertising activity associated with our barbecue-theme promotion commencing in
May 2004.

General
and Administrative Expenses.General and administrative expenses as a percentage of
sales increased 30 basis points during the third quarter of 2004 as compared to the 16
weeks ended April 9, 2003. This increase was largely due to increases in the provision for
401K match and bonus expense compared with the prior year period. We expect general and
administrative expenses during the fourth quarter of fiscal 2004, as a percentage of
sales, to be approximately 30 basis points lower than general and administrative expenses
in the third quarter of fiscal 2004.

Interest
Expense. Interest expense decreased 0.2% as a percentage of sales during the third
quarter of fiscal 2004 versus the comparable prior year period primarily due to lower
weighted average outstanding debt balances.

Loss
Related to Bank Refinancing. On February 20, 2004, we entered into an amended and
restated Credit Facility. In connection with this bank refinancing, we wrote off $4.2
million of debt issuance cost related to the predecessor Credit Facility.

Loss
Related to the Early Extinguishment of Debt. We repurchased $14.3 million of
111⁄4% senior subordinated notes due in 2010 at an average price of 111.4%. We
recognized the difference between the premium purchase price and the discounted carrying
value of the senior subordinated notes, as well as an associated write-off of debt
issuance cost, as a loss related to the early extinguishment of debt.

Income
Tax Expense (Benefit). The Company recorded a tax benefit of $182,000 for the 16 week period ended
April 7, 2004, in order to adjust the fiscal year-to-date effective tax rate to 30.7%.  The nominal net income
for the period (due to the losses related to bank refinancing and early extinguishment of debt discussed
above), combined with relatively stable tax credits, caused the Company to lower its estimated effective
tax rate during the 16 week period ended April 7, 2004.

13

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For the 40 Weeks Ended April 7,
2004 Compared to the 40 Weeks Ended April 9, 2003

The
following table sets forth our results of operations based on the percentage relationship
of the items listed to our restaurant sales during the periods shown:

|                                             | 40 Weeks | 40 Weeks |  
|-------------------------------------------- | -------- | -------- | -
|
|
|
|                                             |          |          |  
|Restaurant sales                             |          |          | $
|Restaurant costs                             |          |          |  
|Advertising expenses                         |          |          |  
|General and administrative expenses          |          |          |  
|Loss on sales and leaseback transaction      |          |          |  
|                                             |          |          |  
|Operating income                             |          |          |  
|Interest expense                             |          |          |  
|Interest income                              |          |          |  
|Other income                                 |          |          |  
|Loss related to bank refinancing             |          |          |  
|Loss related to early extinguishment of debt |          |          |  
|                                             |          |          |  
|Income before income taxes                   |          |          |  
|Income tax expense                           |          |          |  
|                                             |          |          |  
|Net income                                   |          |          | $
|                                             |          |          |  

Restaurant
Sales. Restaurant sales for the 40 weeks ended April 7, 2004 decreased $31.9 million,
or 4.3%, compared with the 40 weeks ended April 9, 2003. This decline in sales was
primarily attributable to the closure of 14 buffet restaurants and the sale of 13 Original
Roadhouse Grill restaurants, partially offset by the opening of 3 units, over the past
year. Average weekly sales for the first 40 weeks of fiscal 2004 of $49,395 were 2.5%
higher than those for the comparable prior year period. Same-store sales for the first 40
weeks of fiscal 2004 increased by 1.8% compared to the comparable prior year period,
reflecting a 1.2% decline in guest traffic offset by a 3.0% increase in average check. The
increase in average check was comprised of approximately a 1.9% price increase and a 1.1%
average check increase due to a reduction in free promotional and employee meals.

Restaurant
Costs. Restaurant costs for the first 40 weeks of fiscal 2004 decreased by 30 basis
points as a percentage of sales compared with the comparable prior year period. Food cost
as a percentage of sales increased 100 basis points primarily due to our expanded and
enriched menu offerings. Labor costs as a percentage of sales were 130 basis points lower
than those experienced in the comparable prior year period, primarily due to a reduction
in our restaurant management staffing levels substantially effected during the third
quarter of fiscal 2003 and the improved productivity of our hourly employees. Direct and
occupancy costs as a percentage of sales were flat versus the comparable prior year
period.

Advertising
Expenses. Advertising costs decreased 0.2% as a percentage of sales during the first
40 weeks of fiscal 2004 versus the comparable prior year period primarily due to a more
targeted advertising campaign.

General
and Administrative Expenses. General and administrative expenses as a percentage of
sales decreased 10 basis points during the first 40 weeks of 2004 as compared to the 40
weeks ended April 9, 2003. This reduction was primarily due to a decrease in professional
fees and a workforce reduction of approximately 70 non-store employees largely effected
during the third quarter of fiscal 2003, largely offset by an increase in the provision
for 401K match and an increase in bonus expense.

Interest
Expense. Interest expense decreased 0.3% as a percentage of sales during the first 40
weeks of fiscal 2004 versus the comparable prior year period primarily due to lower
weighted average outstanding debt balances.

14

---

Loss
on Sale and Leaseback Transaction. On December 11, 2002, we entered into a sale and
leaseback transaction whereby we transferred our leasehold interests and leasehold
improvements with respect to 27 restaurants to a third party for net proceeds of $22.6
million. We simultaneously entered into long-term leases for those restaurants with an
aggregate initial annual rent of approximately $3.2 million. In connection with this sale
and leaseback, we recorded a loss of $5.4 million primarily to reflect the impairment of
certain of the properties for which the net proceeds were less than the book value of the
leasehold assets. In addition, the net proceeds for certain of the properties were greater
than the book value of the leasehold assets resulting in a deferred gain of $3.3 million.
The deferred gain will be accreted over the life of the respective restaurant leases,
ranging from 17 to 25 years.

On
December 19, 2003, we entered into a sale and leaseback by which we transferred our
leasehold interests and leasehold improvements with respect to a restaurant to a third
party for net proceeds of $2.7 million. We simultaneously entered into a long-term lease
for that restaurant with an aggregate initial annual rent of approximately $0.3 million.
The net proceeds of this sale and leaseback exceeded the book value of the leasehold
assets resulting in a deferred gain of approximately $0.3 million, which will be accreted
over the 20-year life of the lease.

Loss
Related to Bank Refinancing. On February 20, 2004, we entered into an amended and
restated Credit Facility. In connection with this bank refinancing, we wrote off $4.2
million of debt issuance cost related to the predecessor Credit Facility.

Loss
Related to the Early Extinguishment of Debt. We repurchased $14.3 million of
111⁄4% senior subordinated notes due in 2010 at an average price of 111.4%. The
difference between the premium purchase price and the discounted carrying value of the
senior subordinated notes, as well as the associated write-off of debt issuance cost, was
recognized as a loss related to the early extinguishment of debt.

# Liquidity and Capital
Resources

Cash
flows generated from operating activities provide us with a significant source of
liquidity. Because most of our sales are for cash or credit with settlement within a few
days and most vendors are paid on terms ranging from 14 to 35 days, we operate on a
significant working capital deficit. In addition to cash flows from operations, revolving
credit loans and swing-line loans are available to us under our Credit Facility. Letters
of credit issued under the revolving loan facility or the letter of credit facility are
also available to us to support payment obligations.

Historically,
our capital requirements have been for the development and construction of new
restaurants, restaurant refurbishment and the installation of new information systems. We
expect these requirements to continue in the foreseeable future.

Net
cash provided by operating activities was $34.3 million for the 40 weeks ended April 7,
2004 and $43.4 million for the 40 weeks ended April 9, 2003. Net cash provided by
operating activities exceeded net income for the first 40 weeks of fiscal 2004 principally
due to the effect of depreciation and amortization. Net cash provided by operating
activities exceeded net income for the first 40 weeks of fiscal 2003 primarily due to the
effect of depreciation and amortization, a loss on the sale and leaseback transaction and
an increase in accounts payable, partially offset by a decrease in accrued and other
liabilities. The decrease in cash provided by operating activities between the first 40
weeks of 2004 and 2003 was largely attributable to the timing of interest payments on our
term loans and senior subordinated debt and the timing of payments on our accounts
payable.

Net
cash used in investment activities was $23.4 million for the 40 weeks ended April 7, 2004
compared with net cash provided by investment activities of $2.3 million for the 40 weeks
ended April 9, 2003. The majority of the change was attributable to the completion of a
sale and leaseback of our leasehold interests and our leasehold improvements with respect
to 27 restaurants on December 11, 2002 for net proceeds of $22.6 million. Capital
expenditures in fiscal 2004 were largely comprised of re-image expenditures for
approximately 50 restaurants, while capital expenditures in fiscal 2003 were primarily
comprised of new store outlays.

15

---

Net
cash provided by financing activities totaled $17.6 million for the first 40 weeks of
fiscal 2004 compared with net cash used in financing activities of $44.8 million for the
comparable prior year period. On February 20, 2004, we entered into an amended and
restated Credit Facility. We used $230.0 million in proceeds from term loan borrowings
under the amended and restated Credit Facility to refinance $166.8 million in outstanding
term loan indebtedness under the predecessor Credit Facility, establish a $34.7 million
restricted cash collateral account to repurchase outstanding 111⁄4% senior
subordinated notes, make a $19.7 million distribution to Buffets Holdings, pay $2.7
million in transaction fees related to the refinancing transaction, pay $1.1 million in
accrued term loan interest and use $5.0 million for general corporate purposes. The
amended Credit Facility allows us to use up to $50.0 million in cash, comprised of a
combination of the restricted cash collateral proceeds and unrestricted cash on hand,
toward the repurchase of our outstanding 111⁄4% senior subordinated notes. Any unused
portion of the restricted cash collateral account must be applied within 180 days to repay
indebtedness under the term loan portion of the amended Credit Facility. As of April 7,
2004, we had expended $16.5 million to redeem $14.3 million of senior subordinated notes
at an average price of 111.4% and had $33.5 million of restricted cash and cash
equivalents for further repurchases. The Company recognized $4.2 million in a write-off of
debt issuance cost as a loss related to the bank refinancing and $2.7 million as a loss
related to the early extinguishment of debt. Financing activities consisted primarily of
accelerated repayments of debt in fiscal 2003.

The
amended Credit Facility provides for total borrowings of up to $310,000,000, including (i)
a $230,000,000 term loan, (ii) a $30,000,000 revolving credit facility, (iii) a
$20,000,000 letter of credit facility, and (iv) a $30,000,000 synthetic letter of credit
facility. The terms of the Credit Facility permit the Company to borrow, subject to
availability and certain conditions, incremental term loans or to issue additional notes
in an aggregate amount up to $25,000,000. The borrowings under the term loan facility bear
interest, at our option, at either adjusted LIBOR plus 3.50% or at an alternate base rate
plus 2.50%, subject to a leverage-based pricing grid. The term loan and the synthetic
letter of credit facility mature on June 28, 2009, while the revolving facility and the
letter of credit facilities mature on June 28, 2007. The borrowings due under the term
loan are payable in equal quarterly installments in an annual amount equal to 1% of the
term loan during each of the first four and a half years of the loan, with the remaining
balance payable due in equal quarterly installments during the last year of the loan. The
Credit Facility is fully and unconditionally guaranteed by Buffets Holdings, which has no
independent assets or operations, and is secured by substantially all of the
Companys assets. Availability under the Credit Facility depends upon our continued
compliance with certain covenants and financial ratios including leverage, interest
coverage and fixed charge coverage as specifically defined in the agreement. The Company
was in compliance with all financial ratio covenants of the Credit Facility as of April 7,
2004. The financial ratio covenant requirements increase over time, however, as set forth
in the agreement.

As
of April 7, 2004, we had $35.1 million in outstanding letters of credit, which expire
through March 24, 2005. As of April 7, 2004, the total borrowing availability under the
revolving credit facility was $30.0 million and the total borrowing capacity under the
letter of credit facilities was $14.9 million.

On
June 28, 2002, we issued $230.0 million aggregate principal amount of our 111⁄4%
senior subordinated notes due July 15, 2010 at 96.181%. Interest is payable semi-annually
on January 15 and July 15 of each year. Except in the event of an initial public offering,
we are not entitled to redeem the notes prior to July 15, 2006, after which we can choose
to redeem some or all of the notes at specified redemption prices. The indenture governing
the notes contains covenants limiting our ability to (1) incur additional indebtedness,
(2) make restricted payments, (3) create restrictions on the payment of dividends, (4)
sell assets or capital stock of subsidiaries, (5) engage in transactions with affiliates,
(6) sell or issue capital stock of subsidiaries, and (7) consolidate, merge or transfer
assets. The payment of principal, premium and interest on the notes is fully and
unconditionally guaranteed, jointly and severally, by all of our wholly-owned
subsidiaries.

16

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During
the fourth quarter of fiscal 2004, we do not plan to open any new restaurants, but plan to spend approximately
$5 million on capital expenditures.  Of that total, we will spend approximately $2 million on construction of
new restaurants, principally for leasehold improvements. We also anticipate spending
approximately $2 million in remodeling and improvement costs for existing
facilities and an additional $1 million for corporate and system investments. The Company plans to open
eight to ten new restaurants in its 2005 fiscal year.

On May 12, 2004, Buffets Holdings, announced it has priced an offering of 13 7/8% senior discount notes
due 2010 in a Rule 144A offering.  The gross proceeds from the offering are expected to be approximately $75 million.

Buffets Holdings
intends to use the cash proceeds from the offering of the senior discount notes to redeem Buffets Holdings'
series B junior subordinated notes due 2011, make a distribution to stockholders
of Buffets Holdings and pay transaction fees and expenses.  The offering of senior discount notes is expected to close
during May 2004.

The securities
offered will not be registered under the Securities Act and may not be offered or sold in the United States
absent registration or an applicable exemption from the registration requirements of the Securities Act.

We
are not aware of any other event or trend that would potentially affect our capital
requirements or liquidity. For the next twelve months, we believe that cash flow from
operations, landlord contributions, credits received from trade suppliers and available
borrowing capacity will be adequate to finance our development plans, on-going operations
and debt service obligations.

# Seasonality and
Quarterly Fluctuations

Our
sales are seasonal, with a lower percentage of annual sales occurring in most of our
current market areas during the winter months. Our restaurant sales may also be affected
by unusual weather patterns, major world events or matters of public interest that compete
for customers attention. Generally, restaurant sales per unit are lower in the
winter months, our third fiscal quarter ending in April of each year. The impact of these
reduced average weekly sales are mitigated in our quarterly data presentations through the
inclusion of 16 weeks in the quarter ending in April of each year, compared to only 12 or
13 weeks in each of the other fiscal quarters.

# Forward-Looking
Statements and Risk Factors

The
statements contained in this report which are not historical facts are forward-looking
statements that are subject to risks and uncertainties that could cause actual results to
differ materially from those set forth in, or implied by, forward-looking statements. We
have tried, whenever possible, to identify these forward-looking statements using words
such as projects, anticipates, believes,
estimates, expects, plans, intends, and
similar expressions. Similarly, statements herein that describe our business strategy,
outlook, objectives, plans, intentions or goals are also forward-looking statements. The
risks and uncertainties involving forward-looking statements include, but are not limited
to, general business and economic conditions, negative publicity, the impact of
competition, the seasonality of our business, adverse weather conditions, future commodity
prices, fuel and utility costs, labor costs, employment and environmental laws,
governmental regulations, and inflation. For a detailed discussion of risks and
uncertainties that may cause our future performance to differ from that projected in the
forward-looking statements, please refer to the Risk Factors/Forward-Looking
Statements section contained in Buffets Form 10-K filed with the Securities
and Exchange Commission on September 30, 2003. All forward-looking statements speak only
as of the date of this report. All subsequent written and oral forward-looking statements
attributable to us or any person acting on our behalf are qualified by the cautionary
statements in this section. We undertake no obligation to update or publicly release any
revisions to forward-looking statements to reflect events, circumstances or changes in
expectations after the date of this report.

17

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# ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest
Rate Risks. We have interest rate exposure relating to the variable portion of our
long-term obligations. Our 111⁄4% senior subordinated notes are fixed and the
interest rates on the term loans under our senior credit facility are variable. A 1%
change in interest rates on our variable rate debt would have resulted in our interest
expense fluctuating by approximately $0.9 million for the 40 weeks ended April 7, 2004.
Our interest rate risk is mitigated, in part, by an interest rate cap purchased on
November 25, 2002 with a notional value of $15 million and a 5% LIBOR strike price that
expires on June 30, 2004.

Food
Commodity Risks. Many of the food products purchased by us are affected by commodity
pricing and are, therefore, subject to price volatility caused by weather, production
problems, delivery difficulties and other factors that are outside our control. To control
this risk in part, we have fixed price purchase commitments with terms of one year or less
for some key food and supplies from vendors who supply our national food distributor. In
addition, we believe that substantially all of our food and supplies are available from
several sources, which helps to control food commodity risks. We believe we have the
ability to increase menu prices, or vary the menu items offered, if needed, in response to
food product price increases within the range that has been experienced historically. To
compensate for a hypothetical price increase of 10% for food and beverages, we would need
to increase menu prices by an average of approximately 3%. Our average menu price
increases were approximately 2% for the 40 weeks ended April 7, 2004. Accordingly, we
believe that a hypothetical 10% increase in food product costs would not have a material
effect on our operating results.

# ITEM 4.     CONTROLS AND
PROCEDURES

Disclosure
Controls and Procedures. We maintain disclosure controls and procedures that are
designed to ensure that information required to be disclosed in our Exchange Act reports
is recorded, processed, summarized and reported within the time periods specified in the
Securities and Exchange Commissions rules and regulations, and that the information
is accumulated and communicated to our management, including our chief executive officer
and chief financial officer, as appropriate, to allow timely decisions regarding required
disclosures based closely on the definition of disclosure controls and
procedures in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934.

We
carried out an evaluation, under the supervision and with the participation of our
management, including our chief executive officer and our chief financial officer of the
effectiveness of the design and operation of our disclosure controls and procedures as of
April 7, 2004. Based on this evaluation, we concluded that our disclosure controls and
procedures were effective as of such date.

Changes
in Internal Control Over Financial Reporting. During the 16 weeks ended April 7, 2004,
there were no changes in our internal control over financial reporting (as defined in
Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934) that have materially
affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

It
should be noted that any system of controls, however well designed and operated, can
provide only reasonable, and not absolute, assurance that the objectives of the system
will be met. In addition, the design of any control system is based in part upon certain
assumptions about the likelihood of future events. Because of these and other inherent
limitations of control systems, there is only reasonable assurance that our controls will
succeed in achieving the stated goals under all potential future conditions.

18

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# PART II.    OTHER
INFORMATION

# ITEM 5.     OTHER INFORMATION

We
are not required to file reports with the Securities and Exchange Commission pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, but are filing
this Quarterly Report on Form 10-Q on a voluntary basis. Accordingly, we are not an
issuer as defined in Section 2(a)(7) of the Sarbanes-Oxley Act of 2002.

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

(a)       

 Exhibits

| | 4.1 | Fourth Supplemental Indenture, dated as of February 20, 2004 among Buffets Holdings, Inc., Buffets, Inc.,
and U.S. Bank National Association, as trustee.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.1 | Amendment Agreement, dated as of February 20, 2004,
to the Credit Agreement dated as of July 28, 2002, among Buffets, Inc., Buffets Holdings, Inc., the Subsidiaries
named therein, the Lenders named therein and Credit Suisse First Boston, as Administrative Agent and Collateral Agent.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 10.2 | Amended and Restated Management and Fee Agreement,
dated as of February 20, 2004, by and among Buffets, Inc. and CxCIC LLC.
| | ---- | ---------------------------------------------------------------------------------------------------------------------------

| | 31.1 | Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer.
| | ---- | ------------------------------------------------------------------------

| | 31.2. | Sarbanes-Oxley Act Section 302 Certification of Chief Financial Officer.
| | ----- | ------------------------------------------------------------------------

(b)       
Reports on Form 8-K

| | 1. | On January 12, 2004, we furnished a current report on Form 8-K (Items 7 and 12) announcing
a call to discuss operating results for the first two quarters of fiscal 2004 and report same store sales trends for the second quarter.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 2. | On January 27, 2004, we furnished a current report on Form 8-K (Items 5 and 7) announcing
a proposed offering of senior discount notes in a Rule 144A offering by Buffets Holdings, Inc., our parent.  In connection with this offering,
we announced our intention to enter into an amended senior secured credit facility.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 3. | On January 27, 2004, we furnished a current report on Form 8-K (Items 7 and 12) announcing
second quarter results for fiscal 2004 and reporting same store sales guidance for the third quarter of 2004.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | 4. | On February 13, 2004, we furnished a current report on Form 8-K (Items 5 and 7) announcing
the cancellation of a proposed offering of senior discount notes by Buffets Holdings, Inc., our parent.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

19

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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.

|                     | 
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|Date:   May 12, 2004 | 
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