<PAGE>   1


                                  FORM 10-Q

                     SECURITIES AND EXCHANGE COMMISSION

                           WASHINGTON, D.C. 20549

     (MARK ONE)

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

         For the quarterly period ended SEPTEMBER 29, 1996

                                     or

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

         For the transition period from         to
                                        -------    ---------

         Commission file number:            0-22422


                            POLLO TROPICAL, INC.
           (Exact name of registrant as specified in its charter)

                 FLORIDA                                     65-0100964
         (State or other jurisdiction of         (IRS Employer Identification
         incorporation or organization)                      Number)

         7300 N. KENDALL DRIVE, 8TH FLOOR, MIAMI, FLORIDA    33156
           (Address of Principal Executive Offices)        (Zip Code)

         Registrant's telephone number, including area code:  305/670-7696



         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 the number of shares outstanding of each of the issuer's 
         classes of common stock, as of November 4, 1996: 8,124,799 shares of 
         common stock, par value $.01.


                                   1 Of 15
<PAGE>   2



                    POLLO TROPICAL, INC. AND SUBSIDIARIES
                             INDEX TO FORM 10-Q
                      QUARTER ENDED SEPTEMBER 29, 1996

<TABLE>
<CAPTION>
                                                                                                         Page

<S>                                                                                                      <C>
Part I - Financial Information

Condensed Consolidated Balance Sheets
  December 31, 1995 and September 29, 1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . .         3

Condensed Consolidated Statements of Income
  Three Months and Nine Months Ended October 1, 1995 and September 29, 1996. . . . . . . . . . . .          4

Condensed Consolidated Statements of Cash Flows
   Nine Months Ended October 1, 1995 and September 29, 1996   . . . . . . . . . . . . . . . . . . .         5

Notes to Condensed Consolidated Financial Statements  . . . . . . . . . . . . . . . . . . . . . . .         6

Management's Discussion and Analysis of Financial
  Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         7


Part II - Other Information

Item 6. Exhibits and Reports on Form 8-K  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        14

Signature Page  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        15

</TABLE>

                                 Page 2 of 15

<PAGE>   3

                    POLLO TROPICAL, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                         December 31,         September 29,
                                                                             1995                  1996
                                                                         ------------         -------------
                                                                                               (Unaudited)
<S>                                                                      <C>                   <C>
                                                ASSETS

  CURRENT ASSETS:
    Cash and cash equivalents   . . . . . . . . . . . . . . . . .        $     691,324         $      16,916
    Inventories   . . . . . . . . . . . . . . . . . . . . . . . .              331,969               339,977
    Prepaid expenses    . . . . . . . . . . . . . . . . . . . . .              470,605               679,137
    Prepaid income taxes    . . . . . . . . . . . . . . . . . . .              152,680               130,169
    Other current assets    . . . . . . . . . . . . . . . . . . .              245,656               221,654
                                                                         -------------         -------------
     Total current assets   . . . . . . . . . . . . . . . . . . .            1,892,234             1,387,853
  PROPERTY AND EQUIPMENT,  net  . . . . . . . . . . . . . . . . .           41,731,694            42,275,973
  DEFERRED RESTAURANT PRE-OPENING COSTS, net  . . . . . . . . . .              406,442               210,094
  INTANGIBLE ASSETS, net  . . . . . . . . . . . . . . . . . . . .              369,899               385,731
  LEASEHOLD ACQUISITION COSTS, net  . . . . . . . . . . . . . . .            1,519,262             1,447,856
  DEPOSITS AND DEFERRED COSTS ON FUTURE                               
     RESTAURANT LOCATIONS   . . . . . . . . . . . . . . . . . . .              127,340                93,969
  OTHER ASSETS  . . . . . . . . . . . . . . . . . . . . . . . . .              777,711               631,657
                                                                         -------------         -------------
                                                                         $  46,824,582         $  46,433,133
                                                                         =============         =============
                            LIABILITIES AND SHAREHOLDERS' EQUITY                               
                                                                                               
  CURRENT LIABILITIES:                                                                         
   Accounts payable . . . . . . . . . . . . . . . . . . . . . . .        $   3,526,265         $   2,966,316
   Accrued liabilities  . . . . . . . . . . . . . . . . . . . . .            1,295,899             1,893,642
   Current maturities of long-term debt   . . . . . . . . . . . .               77,352                82,119
   Accrued restaurant closure expenses  . . . . . . . . . . . . .            1,399,516                    --
                                                                         -------------         -------------
     Total current liabilities  . . . . . . . . . . . . . . . . .            6,299,032             4,942,077
                                                                         -------------         -------------
  LONG-TERM DEBT, net of current maturities   . . . . . . . . . .           11,971,648            11,311,526
                                                                         -------------         -------------  
  DEFERRED RENT . . . . . . . . . . . . . . . . . . . . . . . . .            1,192,909             1,212,224
                                                                         -------------         -------------  
  DEFERRED FRANCHISE FEE INCOME   . . . . . . . . . . . . . . . .              597,500               405,000
                                                                         -------------         -------------   
  DEFERRED INCOME TAXES   . . . . . . . . . . . . . . . . . . . .              804,238             1,118,864
                                                                         -------------         -------------   
  SHAREHOLDERS' EQUITY:                                                                        
   Preferred stock  . . . . . . . . . . . . . . . . . . . . . . .                   --                    --
   Common stock   . . . . . . . . . . . . . . . . . . . . . . . .               80,479                81,498
   Additional paid-in capital   . . . . . . . . . . . . . . . . .           21,545,990            21,706,232
   Retained earnings  . . . . . . . . . . . . . . . . . . . . . .            4,332,786             5,655,712
                                                                         -------------         ------------- 
    Total shareholders' equity  . . . . . . . . . . . . . . . . .           25,959,255            27,443,442
                                                                         -------------         ------------- 
                                                                         $  46,824,582         $  46,433,133
                                                                         =============         ============= 
</TABLE>

    See accompanying notes to condensed consolidated financial statements.



                                 Page 3 of 15

<PAGE>   4

                    POLLO TROPICAL, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                      For the Three Months Ended            For the Nine Months Ended
                                                   --------------------------------      ---------------------------------
                                                     October 1,       September 29,       October 1,          September 29,
                                                        1995              1996               1995                  1996
                                                   ------------       -------------      ------------         ------------
<S>                                                <C>                <C>                <C>                  <C>
  REVENUES:
     Restaurant sales . . . . . . . . . . . .      $ 13,684,324       $ 17,238,169       $ 42,273,738         $ 47,982,414
     Franchise revenues . . . . . . . . . . .           282,321            106,928            459,898              398,915
                                                   ------------       ------------       ------------         ------------
                                                     13,966,645         17,345,097         42,733,636           48,381,329
                                                   ------------       ------------       ------------         ------------
  OPERATING EXPENSES:
    Cost of sales . . . . . . . . . . . . . .         5,014,311          6,832,333         15,186,591           18,206,743
    Restaurant payroll  . . . . . . . . . . .         3,527,591          4,264,993         10,351,109           11,987,119
    Other restaurant operating expenses . . .         2,463,250          3,193,958          7,053,595            9,330,140
    General and administrative  . . . . . . .         1,283,839          1,324,103          3,871,723            4,003,894
    Depreciation and amortization of property
       and equipment  . . . . . . . . . . . .           504,371            584,579          1,474,466            1,668,988
    Amortization of deferred restaurant 
       pre-opening costs  . . . . . . . . . .           265,684            160,861          1,005,909              421,375
    Other amortization  . . . . . . . . . . .            30,053             28,566             85,237               85,096
    Restaurant closure expense, net . . . . .         1,565,108           (174,047)         1,565,108             (174,047)
                                                   ------------       ------------       ------------         ------------
                                                     14,654,207         16,215,346         40,593,738           45,529,308
                                                   ------------       ------------       ------------         ------------
  INCOME (LOSS) FROM OPERATIONS . . . . . . .          (687,562)         1,129,751          2,139,898            2,852,021
                                                   ------------       ------------       ------------         ------------
  OTHER INCOME (EXPENSES):
    Interest, net . . . . . . . . . . . . . .          (192,047)          (254,951)          (624,405)            (749,707)
    Other, net  . . . . . . . . . . . . . . .            10,860              8,442           (139,818)              31,093
                                                   ------------       ------------       ------------         ------------
                                                       (181,187)          (246,509)          (764,223)            (718,614)
                                                   ------------       ------------       ------------         ------------
  INCOME (LOSS) BEFORE INCOME TAXES AND
  EXTRAORDINARY CHARGE  . . . . . . . . . . .          (868,749)           883,242          1,375,675            2,133,407

  PROVISION FOR (BENEFIT FROM) INCOME TAXES .          (326,650)           335,543            517,254              810,481
                                                   ------------       ------------       ------------         ------------

  INCOME (LOSS) BEFORE EXTRAORDINARY CHARGE .          (542,099)           547,699            858,421            1,322,926

  EXTRAORDINARY CHARGE FOR EARLY
  EXTINGUISHMENT OF DEBT, NET OF INCOME TAX
  BENEFIT OF $37,942  . . . . . . . . . . .              62,967                 --             62,967                   --
                                                   ------------       ------------       ------------         ------------
  NET INCOME (LOSS) . . . . . . . . . . . . .      $   (605,066)      $    547,699       $    795,454         $  1,322,926
                                                   ============       ============       ============         ============
  INCOME (LOSS) PER SHARE BEFORE
  EXTRAORDINARY CHARGE  . . . . . . . . . . .      $       (.07)      $        .07       $        .11         $        .16
                                                     
  EXTRAORDINARY CHARGE  . . . . . . . . . . .              (.01)                --               (.01)                  --
                                                   ------------       ------------       ------------         ------------
  NET INCOME (LOSS) PER SHARE . . . . . . . .      $       (.08)      $        .07       $        .10         $        .16 
                                                   ============       ============       ============         ============
  WEIGHTED AVERAGE COMMON
    SHARES OUTSTANDING  . . . . . . . . . . .         8,007,952          8,165,144          8,076,367            8,153,118
                                                   ============       ============       ============         ============
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


                                 Page 4 of 15
<PAGE>   5

               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             For the Nine Months Ended     
                                                                      --------------------------------------
                                                                          October 1,           September 29, 
                                                                            1995                    1996
                                                                      ----------------        --------------
<S>                                                                   <C>                     <C>
  CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income  . . . . . . . . . . . . . . . . . . . . . . . . . .   $        795,454        $    1,322,926
                                                                      ----------------        --------------
    Adjustments to reconcile net income to net cash
      provided by operating activities:
      Depreciation and amortization   . . . . . . . . . . . . . . .          2,565,612             2,175,459
      Loss on disposal of property and equipment  . . . . . . . . .              4,295               167,019
      Restaurant closure expenses, net  . . . . . . . . . . . . . .          1,565,108              (174,047)
      Deferred rent   . . . . . . . . . . . . . . . . . . . . . . .            202,544               147,386
      Amortization of deferred compensation . . . . . . . . . . . .                 --                 5,787
      Deferred income taxes   . . . . . . . . . . . . . . . . . . .           (273,742)              314,626
      Extraordinary charge net of taxes . . . . . . . . . . . . . .             62,967                    --
      Changes in operating assets and liabilities:
        (Increase) decrease in-
          Inventories   . . . . . . . . . . . . . . . . . . . . . .             29,092                (8,008)
          Prepaid expenses  . . . . . . . . . . . . . . . . . . . .             94,753              (208,532)
          Prepaid income taxes  . . . . . . . . . . . . . . . . . .                 --               145,550
          Other current assets  . . . . . . . . . . . . . . . . . .           (244,716)               24,002
          Deferred restaurant pre-opening costs . . . . . . . . . .           (465,187)             (225,027)
          Other assets  . . . . . . . . . . . . . . . . . . . . . .              5,908               186,054
        Increase (decrease) in-
          Accounts payable and accrued liabilities  . . . . . . . .          1,416,970                37,794
          Deferred franchise fee income . . . . . . . . . . . . . .           (113,971)             (192,500)
          Accrued income taxes  . . . . . . . . . . . . . . . . . .            135,996                    --
          Accrued restaurant closure expenses . . . . . . . . . . .                 --               (98,810)
                                                                      ----------------        --------------
          Total adjustments   . . . . . . . . . . . . . . . . . . .          4,985,629             2,296,753
                                                                      ----------------        --------------
          Net cash provided by operating activities   . . . . . . .          5,781,083             3,619,679
                                                                      ----------------        --------------
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Proceeds from sale of property and equipment. . . . . . . . . .          2,575,737                    --
    Capital expenditures  . . . . . . . . . . . . . . . . . . . . .         (4,858,682)           (3,675,016)
    Payment for intangible assets   . . . . . . . . . . . . . . . .           (216,005)              (27,473)
    Payment for leasehold acquisition costs . . . . . . . . . . . .           (261,828)               (2,049)
    (Increase) decrease in deposits and deferred costs on future
      restaurant locations  . . . . . . . . . . . . . . . . . . . .           (288,416)               33,371
                                                                      ----------------        --------------
        Net cash used in investing activities   . . . . . . . . . .         (3,049,194)           (3,671,167)
                                                                      ----------------        --------------
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of long-term debt  . . . . . . . . . . .         16,356,647           191,369,000
    Principal payments on long-term debt  . . . . . . . . . . . . .        (19,094,842)         (192,024,355)
    Proceeds from issuance of common stock  . . . . . . . . . . . .             18,259                32,435
                                                                      ----------------        --------------
        Net cash used in financing activities   . . . . . . . . . .         (2,719,936)             (622,920)
                                                                      ----------------        --------------
        Net increase in cash and cash equivalents   . . . . . . . .             11,953              (674,408)
    Cash and cash equivalents, beginning of period  . . . . . . . .            688,964               691,324
                                                                      ----------------        --------------
    Cash and cash equivalents, end of period  . . . . . . . . . . .   $        700,917        $       16,916
                                                                      ================        ==============

  SUPPLEMENTAL DISCLOSURES OF CASH
    FLOW INFORMATION:
    Cash paid during the period for- 
      Interest, net . . . . . . . . . . . . . . . . . . . . . . . .   $        649,084        $      762,603
                                                                      ================        ==============
      Income taxes  . . . . . . . . . . . . . . . . . . . . . . . .   $        655,000        $      298,285
                                                                      ================        ==============
  Tax benefit from stock options recorded to additional 
    paid-in capital . . . . . . . . . . . . . . . . . . . . . . .     $        181,842        $      123,039
                                                                      ================        ==============
</TABLE>

    See accompanying notes to condensed consolidated financial statements.


                                 Page 5 of 15

<PAGE>   6
                    POLLO TROPICAL, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 29, 1996
                                 (UNAUDITED)

(1)      BASIS OF PRESENTATION

The condensed consolidated balance sheet as of December 31, 1995, which has 
been derived from audited financial statements, and the unaudited interim 
condensed financial statements included herein, have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission.  Certain 
information and note disclosures normally included in annual financial 
statements prepared in accordance with generally accepted accounting principles 
have been condensed or omitted pursuant to those rules and regulations, 
although the Company believes that the disclosures made herein are adequate to 
make the information presented not misleading.  It is suggested that these 
financial statements be read in conjunction with the financial statements and 
the notes thereto included in the Company's Annual Report on Form 10-K (File 
No. 0-22422) for the year ended December 31, 1995.

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting of only normal 
recurring accruals) necessary to present fairly the financial position of the
Company and the results of operations and cash flows for the periods indicated.
Results of operations for the quarter and nine months ended September 29, 1996 
are not necessarily indicative of the results to be expected for the year 
ending December 29, 1996, especially considering the anticipated fourth quarter
charge for the closing of stores discussed further in this filing.

(2)      ACCOUNTING POLICIES

During interim periods the Company follows the accounting policies set forth 
in its consolidated financial statements included in its Annual Report on Form 
10-K (File No.  0-22422).  Reference should be made to such financial statements
for information on such accounting policies and further financial details.

              SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain  statements in this Form 10-Q under "Management's Discussion and 
Analysis of Financial Condition and Results of Operations" constitute "Forward 
Looking Statements" within the meaning of the Private Securities Litigation 
Reform Act of 1955.  Such forward-looking statements involve known and unknown 
risks, uncertainties, and other factors which may cause the actual results, 
performance, or achievements of Pollo Tropical, Inc. stores to be materially 
different from any future results, performance, or achievements expressed or 
implied by such forward-looking statements.  Such factors include, among 
others, the following: competition;  success of operating initiatives; 
advertising and promotional efforts; adverse publicity; acceptance of new 
product offerings; availability, locations, and terms of sites for store 
development and the real estate market conditions in general; changes in 
business strategy or development plans; availability and terms of capital; 
food, labor, and employee benefit costs; changes in government regulations; 
regional weather conditions; and other factors referenced in this Form 10-Q or 
in the Company's Form 10-K for its 1995 fiscal year.


                                 Page 6 of 15
<PAGE>   7

                   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

     The Company pursued an expansion strategy during Fiscal 1995 through the 
first quarter of 1996 opening a total of six stores in three new markets 
(Tampa, Chicago, and New York).  The Company also closed two underperforming 
restaurants in St. Petersburg, Florida, incurring costs for restaurant closure 
expenses in the third quarter of 1995.  In the second quarter ended June 30, 
1996 the Company opened three restaurants in its core markets, and no 
restaurants were opened during the third quarter ended September 29, 1996 
bringing the total Company-owned restaurants operating through the end of the 
quarter to 40.  Since the end of the third quarter the Company changed its 
strategy to focus future expansion of Company-owned restaurants on sites in its 
core markets of South and Central Florida.  As a result of this realignment of
its growth plans, and unsatisfactory sales performance of the restaurants in 
the expansion markets (Tampa, Chicago and New York), the Company plans to 
close the six restaurants in the expansion markets, and anticipates recording 
an after-tax charge in the fourth quarter of approximately $4.0 million, or 
$0.50 per share, as a provision for expenses related to the closing of these 
six restaurants.  As of the date of this filing five of the restaurants have 
been closed. The Company plans to continue a moderate expansion in the core 
Florida markets with four additional planned Company-owned restaurants in 1997.
       
         The Company experienced an increase of 15% in same restaurant sales 
for the quarter ended September 29, 1996.  The Company believes that the trend
of improvement in same restaurant sales is primarily due to the more effective 
implementation in its core markets of its marketing strategies including 
everyday value pricing on selected menu items, separate advertising campaigns 
aimed toward its dual-target audiences, a successful new product launch and 
improved customer service.  The Company anticipates that same restaurant sales
should continue to remain positive through the remainder of 1996. Although 
these marketing strategies and other initiatives were also implemented in the 
expansion markets, the average unit sales volumes in these markets remained 
significantly lower than the average unit sales volumes in the core markets 
during the quarter.  

         The Company's restaurant level margins continue to be adversely 
affected by higher food costs, which during the quarter was partially offset by 
lower relative payroll costs. The five year high in the market price of 
chicken, and the higher cost associated with a new product introduction in the 
third quarter have contributed to the significant increase in overall food 
costs.  The value pricing strategy implemented in the first quarter have 
also contributed to the Company's lower restaurant level margins.

         The Company incurs pre-opening costs in connection with the opening of
 each restaurant.  Pre-opening costs, which include payroll, hiring and 
training expenses, advertising and all other direct operating costs that are 
incurred prior to the opening of a new restaurant, are amortized over the first 
12 months of a restaurant's operation and have decreased as a percentage of 
restaurant sales as a result of the Company's moderation in its level of 
expansion.

         The Company pursued a franchise growth strategy on new area
development agreements in both domestic and foreign markets and in December 
1994, the Company's first franchised restaurant opened. In 1995, five 
additional franchised restaurants were opened, and then in the first half of 
1996 three additional franchised restaurants were opened and one franchised 
restaurant closed.  In the third quarter of 1996, three franchised restaurants 
closed, and two additional franchised restaurants opened. After September 29, 
1996, one additional franchised restaurant opened in Puerto Rico and one 
additional domestic franchised restaurant closed bringing the total franchised 
restaurants to seven through the date of this filing of which six are in 
Puerto Rico and one is a non-traditional restaurant in the Company's core 
market. The Company anticipates the opening of approximately two additional 
franchised restaurants in the Puerto Rico market during the remainder of 
Fiscal 1996. The Company has also changed its franchise growth strategy by 
focusing primarily on new area development agreements with qualified 
franchisees in Latin America and the Caribbean and anticipates continued 
growth in franchise revenues. The Company receives exclusivity fees upon 
signing of area development agreements.  Such fees are recognized as revenue 
when franchised restaurants open or when such agreements terminate.  
Additionally, when franchised restaurants become operational the Company 
receives continuing royalties based on sales.  As the Company does not
control the timing of 


                                 Page 7 of 15
<PAGE>   8

franchise openings and/or terminations of agreements, the recognition of 
franchise revenues cannot be accurately predicted and, therefore, may fluctuate
significantly on a quarter to quarter basis. 


RESULTS OF OPERATIONS

         The following table sets forth for the periods indicated certain 
selected income statement data as a percentage of restaurant sales, except 
general and administrative expenses, which is shown as a percentage of total 
revenues, and certain restaurant data:

<TABLE>
<CAPTION>
                                                             Quarter Ended                       Nine Months Ended
                                                     -------------------------------       -------------------------------
                                                      October 1,        September 29,         October 1,      September 29,
                                                         1995               1996                1995              1996
                                                     -----------        -------------      -------------      -------------
<S>                                                  <C>                <C>                <C>                <C>
  INCOME STATEMENT DATA:
  Operating expenses:
    Cost of sales   . . . . . . . . . . . . . .          36.6%               39.6%              35.9%              37.9%
    Restaurant payroll  . . . . . . . . . . . .          25.8                24.7               24.5               25.0 
    Other restaurant operating expenses   . . .          18.0                18.5               16.7               19.4 
    General and administrative expenses   . . .           9.2                 7.6                9.1                8.3 
    Depreciation and amortization of
       property and equipment   . . . . . . . .           3.7                 3.4                3.5                3.5 
    Amortization of deferred restaurant
       pre-opening costs  . . . . . . . . . . .           1.9                  .9                2.4                 .9 
    Other amortization  . . . . . . . . . . . .            .2                  .2                 .2                 .2 
    Restaurant closure expense, net . . . . . .          11.4                (1.0)               3.7                (.4)
  Income (loss) from operations . . . . . . . .          (5.0)                6.6                5.1                5.9 
  Other expenses  . . . . . . . . . . . . . . .           1.3                 1.4                1.8                1.5 
  Net income (loss) . . . . . . . . . . . . . .          (4.4)%               3.2%               1.9%               2.8%

  RESTAURANT DATA:
  Aggregate restaurant sales increase from
    prior period  . . . . . . . . . . . . . . .            23%                 26%                49%                14%
  Number of restaurants open at end of 
    period  . . . . . . . . . . . . . . . . . .            35                  40                 35                 40

</TABLE>



                                 Page 8 of 15
<PAGE>   9


  QUARTER ENDED SEPTEMBER 29, 1996  COMPARED TO QUARTER ENDED OCTOBER 1,1995

         Restaurant Sales. Restaurant sales for the quarter ended September 29,
1996 increased $3.5 million (26%) to $17.2 million from $13.7 million for the 
comparable quarter of 1995.  This increase was due to an increased number of
restaurants being open during the quarter ended September 29, 1996 as compared 
to the same quarter of the prior year and to a sales increase in restaurants 
open for the entire quarter for both years. During the quarter 40 restaurants
operated for the full quarter compared to 35 operated for full quarter in the 
prior year.  Of the 35 restaurants that were opened for the full quarter in 
1995, two have since been closed.  Same restaurant sales for the quarter 
ended September 29, 1996 increased $2.0 million (15.0%) to $15.0 million from
$13.0 million for the comparable quarter of 1995.  This increase is due to the
continued growth from the new advertising campaigns, the value pricing 
strategy, improved customer service and the substantial success of the 
introduction of the new pork product line. 

         Franchise Revenues.  Franchise revenues generally consists of initial
franchise fees which are recognized when a restaurant opens, continuing
royalties and fees from operating franchised restaurants, and forfeiture of
exclusivity fees when area development agreements are terminated.  Franchise 
revenues for the quarter ended September 29, 1996, decreased to $175,000 from
$282,000.  No franchise revenue was recognized from the realization of 
exclusivity fees for the quarter ended September 29, 1996 compared to $197,000
of exclusivity fees recognized for the quarter ended October 1, 1995 which 
were forfeited by a franchisee who defaulted on an area development agreement.  
Franchise royalties for the quarter ended September 29, 1996 increased $22,000
to $107,000 from $85,000 for the comparable quarter of 1995.

         During the quarter ended September 29, 1996, three franchised 
restaurants were closed, one franchise restaurant was opened in Puerto Rico,
and one domestic franchise restaurant opened in a non-traditional site in 
South Florida.  Between September 29, 1996 and the date of this filing, one 
additional franchise restaurant opened in Puerto Rico and one additional 
franchise restaurant closed which brings the total franchise restaurants in 
operation to seven.

         Cost of Sales. Cost of sales which consists of food, beverage, and 
paper and supply costs, increased 300 basis points to 39.6% for the quarter 
ended September 29, 1996 from 36.6% for the comparable quarter of the prior 
year.  This increase was due to higher relative food cost resulting from 
several factors including the continued higher market prices for chicken, the 
value pricing strategy implemented in the first quarter, the successful launch 
of the new pork product line in the core market at introductory pricing, and 
the lower volume restaurants in the expansion markets which experienced greater 
waste.  The market price for chicken was 13% higher in the third quarter of 
1996 as compared to the same quarter of the prior year.  Management expects 
continued higher prices for chicken, however, in an effort to relieve the
lower margins experienced for the last several quarters, the Company has 
implemented several cost savings programs as well as selective price increases 
on several menu items while maintaining its value pricing strategy on its core 
items. 

         Restaurant Payroll.  Restaurant payroll expense, which consists of 
restaurant management and hourly employee wages, payroll taxes, workers' 
compensation insurance and group health insurance, decreased 110 basis points 
to 24.7% for the quarter ended September 29, 1996 from 25.8% for the same 
period of the prior year.  This decrease was due to higher sales volumes as 
well as increased controls placed on labor scheduling at the unit level.

         Other Restaurant Operating Expenses.  Other restaurant operating 
expenses consist of all restaurant operating costs other than payroll expenses 
and include occupancy costs, utilities and advertising expenses.  These expenses
increased 50 basis points to 18.5% for the quarter ended September 29, 1996 
from 18.0% for the same period of the prior year.  The largest component of 
this change was repairs and maintenance expenses, which increased from $245,000 
to $379,000 and increased as a percentage of restaurant sales to 2.2% from 1.8% 
during the same period of the prior year.  This increase was primarily a 
result of remodeling certain company-owned restaurants.   



                                 Page 9 of 15
<PAGE>   10


         General and Administrative Expenses. General and administrative ("G & 
A") expenses for the quarter ended September 29, 1996 decreased 160 basis 
points to 7.6% from 9.2% for the same period of the prior year.  This decrease 
is primarily due to the fixed cost nature of the general and administrative 
expenses relative to the higher sales volumes experienced during the quarter.  
Management expects that the general and administrative cost should remain lower
as a percentage of sales when compared to the same period of the prior year 
throughout the remainder of 1996.

         Depreciation and Amortization of Property and Equipment. Depreciation 
and amortization of property and equipment decreased 30 basis points to 3.4% 
for the quarter ended September 29, 1996 from 3.7% for the same period of the 
prior year.  This was a result of the fixed cost nature of depreciation and 
amortization of property and equipment relative to the higher sales volumes 
experienced during the quarter.

         Amortization of Deferred Restaurant Pre-Opening Costs. Amortization of 
deferred pre-opening costs decreased 100 basis points to .9% for the quarter 
ended September 29, 1996 as compared to the same period of the prior year from 
1.9% as a percentage of restaurant sales.  During the quarter ended September 
29, 1996, seven restaurants were incurring amortization of deferred pre-opening
restaurant costs compared to 16 restaurants for the quarter ended October 1, 
1995.  This decrease was the result of fewer new restaurants being opened 
during the latest 12 months as compared to the 12 month period ended October 1, 
1995.  The Company anticipates restaurant pre-opening costs as a percentage of 
restaurant sales will decline during the remainder of Fiscal 1996 as compared 
to modest growth in Fiscal 1995.

         Other Amortization.  Other amortization consists of amortization of 
intangibles such as trademarks, prepaid loan costs, organization costs and 
leasehold acquisition costs.  Other amortization remained level at .2% as a 
percentage of restaurant sales for the quarter ended September 29, 1996 as 
compared to the same quarter of the prior year.

         Restaurant Closure Expense.  During the quarter ended October 1, 1995, 
the Company accrued estimated expenses in the amount of $1,565,108 associated 
with the closing of two restaurants which occurred on October 22, 1995.  The
estimated expenses consisted of $1,243,626 in net losses on disposal of fixed 
assets and $321,482 in estimated liabilities associated with termination of 
leases.  During the quarter ended September 29, 1996 the Company finalized the
disposition of the leases of the restaurants closed during the same quarter of
the prior year resulting in a gain of $174,047.  Prior to the date of this 
filing and in conjunction with a change in the strategic focus, the Company 
developed a plan to close the six stores in the expansion markets of Tampa, 
Chicago, and New York.  The Company anticipates an after-tax fourth quarter 
charge of approximately $4.0 million, or $0.50 per share, as a result of 
these closures.

         Other Income (Expenses). The Company incurred interest costs of 
$258,232 during the quarter ended September 29, 1996 which was offset by 
$3,281 in interest income.  During the same quarter of the prior year, the 
Company incurred interest costs of $244,370 of which $47,213 was capitalized 
as construction cost.  Such interest costs was further offset by $5,110 in 
interest income.



                                Page 10 of 15
<PAGE>   11

      NINE MONTHS ENDED SEPTEMBER 29, 1996 COMPARED TO NINE MONTHS ENDED
                               OCTOBER 1, 1995

         Restaurant Sales.   Restaurant sales for the nine months ended 
September 29, 1996 increased $5.7 million (14%) to $48.0 million from $42.3 
million for the comparable quarter of 1995.  This increase was due to an 
increased number of restaurants being open during the nine months ended 
September 29, 1996 as compared to the same period of the prior year and to a 
sales increase in restaurants open for the entire nine months for both years. 
During the nine months, 36 restaurants operated for the full nine months and 33 
operated for the full nine months in the prior year.  Of the 33 restaurants 
that  were opened for the full nine months in 1995, two have since been closed. 
Same restaurant  sales for the nine months ended September 29, 1996 increased
$1.7  million (6.0%)  to $30.3 million from $28.6 million for the comparable
quarter  of 1995.  This increase is due to the continued growth from the new
advertising campaigns, the value pricing strategy, improved customer service
and the  substantial success of the introduction of the new pork product line
in the third quarter.


         Franchise Revenues. Franchise revenues for the nine months ended  
September 29, 1996 decreased $61,000 to $399,000 from $460,000 for the nine 
months ended October 1, 1995.   Franchise revenues generally consists of
initial franchise fees which are  recognized when a restaurant opens,
continuing royalties and fees from  operating franchised restaurants, and
forfeiture of exclusivity fees when area  development agreements are
terminated.  A significant portion of franchise  revenue for the nine months
ended September 29, 1996, as well as for the nine  months ended October 1, 1995
consisted of exclusivity fees which were forfeited  by franchisees who
defaulted on area development agreements.  During the nine  months ended
September 29, 1996 the Company recognized $112,500 of exclusivity fees which
were forfeited by a franchisee that defaulted on an area development agreement
as compared $197,000 for the same period of the prior year.  Franchise
royalties for the nine months ended September 29, 1996 increased $23,000 to
$286,000 from $263,000 for the comparable nine months of 1995.

         During the nine months ended September 29, 1996, four domestic 
franchised restaurants were closed, four franchised restaurants were opened in 
Puerto Rico, one domestic franchise restaurant opened in a non-traditional site
and three area development agreements were terminated. One additional franchise
restaurant in Puerto Rico was opened and one domestic franchise restaurant was 
closed through the date of this filing bringing the total franchise restaurants 
in operation to seven. The Company anticipates the opening of approximately 
two additional  franchised restaurants in Puerto Rico during the remainder 
of Fiscal 1996. 

         Cost of Sales.  Cost of sales which consists of food, beverage, and 
paper and supply costs, increased 200 basis points to 37.9% for the nine months 
ended September 29, 1996 from 35.9% for the comparable nine months of the prior
year. This increase was due to higher relative food cost resulting from several 
factors including the continued higher market prices for chicken, the value 
pricing strategy implemented in the first quarter, the successful launch of the 
new pork product line in the core market at introductory pricing, and the lower 
volume restaurants in the expansion markets which experienced greater waste.  
The market price for chicken was 12% higher during the nine months of 1996 as 
compared to the same period of the prior year.  Management expects continued 
higher prices for chicken, however, in an effort to relieve the lower margins 
experienced for the last several quarters, the Company has implemented several 
cost savings programs as well as selective price increases on several menu 
items while maintaining its value pricing strategy on its core items.  

         Restaurant Payroll.   Restaurant payroll expense, which consists of 
restaurant management and hourly employee wages, payroll taxes, workers' 
compensation insurance and group health insurance, increased 50 basis points to
25.0% for the nine months ended September 29, 1996 from 24.5% for the same 
period of the prior year.  This increase was due primarily to workers' 
compensation insurance being higher for the nine months ended September 29, 
1996 as compared to the same period of the prior year which benefited from 
favorable claim experience.


                                Page 11 of 15
<PAGE>   12


         Other Restaurant Operating Expenses.  Other restaurant operating 
expenses consist of all restaurant operating costs other than payroll expenses 
and include occupancy costs, utilities and advertising expenses.  These expenses
increased 270 basis points to 19.4% for the nine months ended September 29,
1996, from 16.7% for the same period of the prior year.  The largest component
of this change was advertising expense which increased as a percentage of
restaurant sales to 5.0% from 3.8% during the same period of the prior year.
Other restaurant operating expenses also reflect $150,000 incurred in the
conversion of the five Pollo Tropical restaurants to the TropiGrill concept
during the second quarter of 1996. Also, during the second quarter, the Company
replaced menu boards in all of the restaurants to simplify and clarify the
ordering process.  The Company incurred $60,000 of expense for the write-off of
the old menu boards.  The increase in operating expenses  was  also a result of
an increase in occupancy costs of 20  basis points to 4.7% from 4.5%  for the
same period of the prior year.  This increase in occupancy cost was due to a
larger portion of Company-owned restaurants being leased for the nine months
ended September 29, 1996 as compared to the same period of the prior year.  The
increase in other restaurant operating expenses was also a result of an increase
in repairs and maintenance of 20 basis points from the remodeling of certain
company-owned restaurants.

         General and Administrative Expenses.  General and administrative 
("G & A") expenses for the nine months ended September 29, 1996 decreased 80
basis points to 8.3% from 9.1% for the same period of the prior year.  This
decrease is primarily due to the fixed cost nature of the general and
administrative expenses relative to the higher sales volumes experienced during
the nine months.  Management expects the general and administrative cost to
remain lower as a percentage of sales when compared to the same period of the
prior year throughout the remainder of 1996.

         Depreciation and Amortization of Property and Equipment.  Depreciation
and amortization of property and equipment remained level at 3.5% as a
percentage of restaurant sales for the nine months ended September 29, 1996 as
compared to the same nine months of the prior year.

         Amortization of Deferred Restaurant Pre-Opening Costs. Amortization of 
deferred pre-opening costs decreased 150 basis points to .9% for the nine months
ended September 29, 1996 as compared to the same period of the prior year from
2.4% as a percentage of restaurant sales.  This decrease was the result of fewer
new restaurants being opened during the latest 12 months as compared to the 12
month period ended October 1, 1995.  The company anticipates restaurant pre-
opening costs as a percentage of restaurant sales will decline during the
remainder of Fiscal 1996 as compared to modest growth in Fiscal 1995.

         Other Amortization.  Other amortization consists of amortization of 
intangibles such as trademarks, prepaid loan costs, organization costs and
leasehold acquisition costs.  Other amortization remained level at .2% as a
percentage of restaurant sales for the nine months ended September 29, 1996 as
compared to the same nine months of the prior year.

         Restaurant Closure Expense.  During the quarter ended October 1, 1995, 
the Company accrued estimated expenses in the amount of $1,565,108 associated 
with the closing of two restaurants which occurred on October 22, 1995.  The
estimated expenses consisted of $1,243,626 in net losses on disposal of fixed 
assets and $321,482 in estimated liabilities associated with termination of 
leases.  During the quarter ended September 29, 1996 the Company finalized the
disposition of the leases of the restaurants closed during the same quarter of
the prior year resulting in a gain of $174,047.  Prior to the date of this 
filing and in conjunction with a change in the strategic focus, the Company 
developed a plan to close the six stores in the expansion markets of Tampa, 
Chicago, and New York.  The Company anticipates an after-tax fourth quarter 
charge of approximately $4.0 million, or $0.50 per share, as a result of these
closures.

         Other Income (Expenses).  The Company incurred interest costs of 
$800,264 during the nine months ended September 29, 1996 of which $37,661 was
capitalized as construction cost.  Such interest cost was further offset by
$12,896 in interest income.  During the same nine month period of the prior year
the Company incurred interest costs of $784,950 of which $135,866 was
capitalized as construction cost, and was offset by interest income of $24,680.
Other expense for the nine months ended October 1, 1995 included the write-off
of approximately $166,000 of deferred costs associated with the Company's
efforts in obtaining certain private financing.



                                Page 12 of 15
<PAGE>   13

LIQUIDITY AND CAPITAL RESOURCES

         As is customary in the restaurant industry, the Company is able to 
operate with a working capital deficit because its restaurant sales are in cash,
it receives trade credit from its vendors and its operations do not require
significant investment in receivables or inventories.  Historically, the Company
has used the majority of its available capital for the development of new
restaurants.  Consequently, prior to the Initial Public Offering and since the
quarter ended April 3, 1994, the Company has operated with working capital
deficits.

         During the nine months ended September 29, 1996, the Company generated 
an aggregate of $3,619,679 of cash flow from operations.  The Company's
principal capital requirement will continue to be funding the development of new
restaurants. The Company does not anticipate further openings until the first
half of 1997. The Company may either purchase or lease real estate for these
planned restaurants.  The Company may also need capital in 1997 to finalize its
lease and other obligations for the six stores to be closed.  Such amounts can
not be determined at the time of this filing.

         The Company has a line of credit facility from a commercial bank which 
provides for advances of up to $25,000,000; however, the lender has no
obligation to make further advances after July 13, 1998.  The Company has
reduced its amount of cash held in order to reduce interest expense on the
outstanding portion of the credit facility.  As of September 29, 1996, there was
an additional borrowing capacity under the credit line of $13,849,000, and as 
of November 4, 1996 the available borrowing capacity under the line was 
$14,200,000.  

         The Company anticipates that the funds under its existing credit 
facility combined with cash flow from operations will be sufficient to fund its
new restaurant openings and the settlement of obligations for the closing of
restaurants throughout 1997.



                                Page 13 of 15
<PAGE>   14

PART II  OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)    Exhibits

                Exhibit
                No.                  Description
                27.1                 Article 5 of  Regulation S-X
                                     Financial Data Schedule for 
                                     3rd Quarter 10-Q (for SEC use only)

         (b)    During the quarter ended September 29, 1996, the Company did 
                not file any reports on Form 8-K.


All other items under Part II are not applicable.


                                Page 14 of 15
<PAGE>   15

                                  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.

                                                POLLO TROPICAL, INC.



                                                \s\  Larry J. Harris       
                                                --------------------
                                                LARRY J. HARRIS
                                                Chief Executive Officer



                                                \s\ William Carl Drew           
                                                ---------------------
                                                WILLIAM CARL DREW
                                                Chief Financial Officer


DATE:      November 13, 1996




                                Page 15 of 15