SECURITIES AND EXCHANGE COMMISSION
                                
                     WASHINGTON, D.C. 20549
                                
                            FORM 10-Q
                                
                                
                                
        QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                 SECURITIES EXCHANGE ACT OF 1934
                                
                                
 For Quarter Ended June 30, 1997 Commission File Number 33-68958
                             
              Specialty Foods Acquisition Corporation
                                
     (Exact name of registrant as specified in its charter)
                                
                                
         State of Delaware                 75-2488183
    (State or otherjurisdiction         (I.R.S. Employer
  of incorporation or organization)     Identification No.)


25 Tri-State International Office Center, Suite 250, Lincolnshire, IL 60069
 (Address of principal executive offices)                          (Zip Code)

  Registrant's telephone number, including area code (847) 267-1001
                                
                                
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
and (2) has been subject to such filing requirements for the past
90 days.

                       Yes      X       No
                                
                                
                                

The number of shares outstanding of the Registrant's common stock
as of July 31, 1997 was 63,129,990 shares of common stock.

                                
                                
    SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
                                
                                
                              INDEX
                                
                                
                                
PART I - FINANCIAL INFORMATION                        Page No.

     ITEM 1. FINANCIAL STATEMENTS

     Condensed Consolidated Balance Sheets
        as of June 30, 1997 and December 31, 1996         3

     Condensed Consolidated Statements of Operations for
        the three- and six-month periods
        ended June 30, 1997 and 1996                      4

     Condensed Consolidated Statements of Cash Flows for
        the six-month periods
        ended June 30, 1997 and 1996                      5

     Notes to Financial Statements                      6-8

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
          FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-11

PART II - OTHER INFORMATION                              12

SIGNATURE                                                12



This Report on Form 10-Q contains forward-looking statements
within the meaning of the federal securities laws which reflect
the Company's expectations and are based on currently available
information.  Actual results, performance, achievements or other
information may vary materially from such statements and are
subject to future known and unknown risks, uncertainties and
events, including, among other factors, weather, economic and
market conditions, cost and availability of raw materials,
competitive activities and other business conditions.

                                
                 PART I - FINANCIAL INFORMATION
                                
ITEM 1.   FINANCIAL INFORMATION
                                
    SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
                                
              Condensed Consolidated Balance Sheets
                                
                        ($ In thousands)
                                
                                
                                              June 30,         December 31,
                                               1997                1996
                                               ----                ----
                 Assets                     (unaudited)      
Current assets:                                     
  Cash and cash equivalents                 $   2,561           $  37,509
  Accounts receivable, net                     41,943              32,368
  Inventories                                 123,395             123,391
  Net assets of discontinued operations         3,101              66,434
  Other current assets                         24,149              27,405
                                              -------             -------      
          Total current assets                195,149             287,107
                                                    
Property, plant, and equipment, net           269,015             256,529
Intangible assets, net                         23,719              24,109
Other noncurrent assets                        37,559              37,067
                                              -------             -------      
          Total assets                      $ 525,442           $ 604,812
                                              =======             =======

  Liabilities and Stockholders' Equity                   

Current liabilities:                                
  Current maturities of long-term debt      $   3,308           $   4,049
  Accounts payable                            103,280             118,692
  Accrued expenses                             95,176             106,631
                                              -------             -------
          Total current liabilities           201,764             229,372
                                                    
Long-term debt                              1,160,762           1,177,018
Other noncurrent liabilities                   36,643              37,945
                                              -------             ------- 
          Total liabilities                 1,399,169           1,444,335
                                                    
Redeemable preferred stock                     19,500                   -
                                                    
Stockholders' equity                         (893,227)           (839,523)
                                              -------             -------
          Total liabilities and 
             stockholders' equity           $ 525,442           $ 604,812
                                              =======             =======

See accompanying notes to consolidated financial statements.
                                
<TABLE>
<CAPTION> 
    SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES
                                
         Condensed Consolidated Statements of Operations
                                
                           (Unaudited)
               ($ In thousands, except share data)


                             Three months ended June 30,  Six months ended June 30,
                             ---------------------------  -------------------------
                                  1997        1996            1997         1996
<S>                                 <C>         <C>             <C>         <C>
Net sales                            $ 380,309   $ 399,957       $ 765,435   $ 780,526
Cost of sales                          264,538     289,086         544,738     568,424
                                       -------     -------         -------     -------
          Gross profit                 115,771     110,871         220,697     212,102
                                                                    
Operating expenses:                                                
   Selling, distribution, general                                      
     and administrative                 94,932      96,324         192,724     191,272
   Amortization of intangibles             746       3,096           1,180       6,251
                                       -------     -------         -------     -------
     Total operating expenses           95,678      99,420         193,904     197,523
                                                                
     Operating profit                   20,093      11,451          26,793      14,579
                                                                    
Other expenses:                                                    
   Interest expense                     33,811      33,933          67,299      67,050
   Other (income) expense, net           2,380       2,748           4,665      (5,257)
                                       -------     -------         -------     -------
     Loss before income taxes          (16,098)    (25,230)        (45,171)    (47,214)
                                                                    
Provision for income taxes                 213       2,051             433       2,532
                                       -------     -------         -------     -------
     Loss from continuing operations   (16,311)    (27,281)        (45,604)    (49,746)
                                                                    
Discontinued operations:                                           
     Net income (loss)                    (905)      3,715          (3,811)      2,178
     Loss on disposal, net              (6,485)          -          (4,030)          -
                                       -------     -------         -------     -------
                                        (7,390)      3,715          (7,841)      2,178
                                                                  
      Net loss                       $ (23,701)  $ (23,566)       $(53,445)  $ (47,568)
                                       =======      ======          ======      ======
                                                                    
Earnings (loss) per share:                                         
   From continuing operations        $    (.26)  $    (.43)      $    (.72)  $    (.78)
   From discontinued operations           (.12)        .06            (.13)        .03
                                       -------     -------         -------     -------
   Net loss                          $    (.38)       (.37)           (.85)        (.75)
                                       -------     -------         -------     -------
   Weighted average shares outstading   63,130      63,478          63,204      63,795
                                       =======     =======         =======     =======
</TABLE>

See accompanying notes to condensed financial statements.


       SPECIALTY FOODS ACQUISITION CORPORATION AND SUBSIDIARIES

          Condensed Consolidated Statements of Cash Flows

                            (Unaudited)
                         ($ In thousands)


                                                    Six months ended June 30,
                                                 ----------------------------
                                                       1997           1996
                                                       ----           ----
Cash flows from operating activities:
 Loss from continuing operations                 $  (45,604)     $  (49,746)
 Adjustments to reconcile to net cash
 from continuing operating activities
   Depreciation and amortization                     17,406          24,063
   Debt issuance cost amortization                    3,060           3,651
   Accretion of interest                             21,120          18,887
   Changes in operating assets and 
     liabilities, net of affects from 
     businesses acquired or sold                    (32,805)        (25,645)
                                                    -------         -------
          Net cash used by                        
            continuing operations                   (36,823)        (28,790)
                                                  
Cash flows from investing activities:
 Proceeds from divestitures of businesses            50,595               -
 Capital expenditures                               (30,348)        (27,564)
 Property related insurance proceeds                      -          15,000
 Proceeds from sale-leaseback of equipment                -          17,941
 Other                                                 (298)          2,762
                                                    -------         -------
          Net cash provided by                    
            investing activities                     19,949           8,139
                                                  
Cash flows from financing activities:
 Increase (decrease) in revolving credit            (35,500)          6,600
 Issuance of preferred stock and warrants            19,500               -
 Payments on long-term debt                          (2,074)         (1,491)
 Other                                                    -          (5,985)
                                                    -------         -------
          Net cash used by                        
            financing activities                    (18,074)           (876)
                                                  
Decrease in cash and cash equivalents               (34,948)        (21,527)
Cash - beginning of period                           37,509          17,332
                                                    -------         -------
Cash - end of period                              $   2,561       $  (4,195)
                                                    =======         =======

See accompanying notes to condensed financial statements.

   
               NOTES TO CONDENSED FINANCIAL STATEMENTS   
               ($ In thousands, except per share data)   


NOTE 1 - Interim Financial Information

In the opinion of management, the accompanying unaudited interim
condensed financial information of Specialty Foods Acquisition
Corporation (SFAC) and its subsidiaries (collectively, the
Company) contains all adjustments, consisting only of those of a
recurring nature, necessary to present fairly the Company's
financial position and results of operations.  All significant
intercompany accounts, transactions and profits have been
eliminated.

These financial statements are for interim periods and do not
include all information normally provided in annual financial
statements and should be read in conjunction with the financial
statements of the Company for the year ended December 31, 1996
included in the annual report filed on Form 10-K.  The results of
operations for interim periods are not necessarily indicative of
the results that may be expected for the full year.

Certain amounts in the 1996 financial statements have been
reclassified to conform to the manner in which the 1997 financial
statements have been presented.


NOTE 2 - Inventories

The components of inventories are as follows:

                                          June 30,       December 31,
                                           1997             1996
                                           ----             ----          

        Raw materials and packaging     $  18,772        $  20,942
        Work in progress                   57,185           54,676
        Finished goods                     45,215           46,782
        Other                               2,223              991
                                          -------          -------
                                        $ 123,395        $ 123,391
                                          =======          =======    


Inventories are stated at the lower of cost or market.  Cost is
determined principally by the first-in first-out ("FIFO") method.


NOTE 3 - Discontinued Operations

Discontinued operations consist of the following businesses:

Bloch and Guggenheimer, Inc.  (B&G)/Burns & Ricker, Inc. (B&R) -
Pickle, pepper, and specialty snack food businesses operated
under common management.  The sale of the combined business of
B&R/B&G was completed on December 27, 1996.

Gai's Seattle French Baking Company (Gai's) - A restaurant and
institutional bakery operation serving the northwestern United
States.  The sale of Gai's was completed on February 24, 1997.

San Francisco French Bread (SFFB) - A sourdough hearth bread
operation located in California.  The sale of SFFB was completed
on March 31, 1997.

A restaurant and institutional bakery operated by Metz
located in Illinois.  The sale of this bakery is expected to
close in the third quarter of 1997.

These divestitures have been reported as discontinued operations
in the accompanying financial statements in accordance with
Accounting Principles Board Opinion No. 30.  Operating results
for these businesses, including revenues of $58,861 and $193,878
for the six months ended June 30, 1997 and 1996, respectively,
have been classified as discontinued operations in the
Consolidated Statement of Operations.  No interest expense has
been allocated to discontinued operations.

The net loss on disposal of discontinued operations for the six
months ended June 30, 1997 consisted of the gain realized on the
sale of Gai's, an adjustment to the previously estimated loss on
the disposal of SFFB, and the estimated loss on disposal of the
Illinois bakery.  Remaining retained liabilities from
discontinued operations are $1,258 and are included with accrued
liabilities at June 30, 1997.


NOTE 4 - Insurance Claim

In January 1996, a Stella cheese processing plant in Lena,
Wisconsin was substantially destroyed by fire.  The Company
rebuilt the plant and resumed production during the fourth
quarter of 1996.  A final proof of loss detailing the claim was
filed with the Company's insurance carriers during the quarter
ended March 31, 1997.  The claim was finally settled with the
Company's insurance carriers in July 1997.  Included in other
current assets as of June 30, 1997 is $13.3 million which
represents the remaining claim balance collected following the
July 1997 settlement.


NOTE 5 - Related Party Transactions

In June 1997, pursuant to an agreement among the Company, Acadia
Partners LLP, Haas Wheat Advisory Partners Incorporated and
Keystone, Inc. (the signing shareholders), the signing
shareholders purchased a total of 19,500 units of equity for an
aggregate purchase price of $19,500.  Each unit is comprised of
one share of cumulative preferred stock of the Company and one
warrant to purchase 395.1 shares of common stock of the Company,
at an exercise price of $0.02 per share.

The shares of preferred stock are in the aggregate face amount of
$19.5 million and are entitled to an annual dividend rate of 16%.
Presently, no dividends can be declared or paid since such
declaration or payment would cause or result in a default of
outstanding debt instruments of the Company.  The preferred stock
is cumulative, non-convertible, non-participating and non-
redeemable by the holder or the Company prior to August 16, 2006.
Thereafter, any holder or the Company may redeem all or a portion
of the preferred stock provided that such redemption would not
cause or result in a default in any outstanding debt instrument
of the Company or its subsidiaries at such time.


NOTE 6- Earnings Per Share

In February 1997, the Financial Accounting Standards Board
adopted the Statement of Financial Accounting Standards No. 128,
"Earnings Per Share".  The Statement is effective for financial
statements issued for periods ending after December 15, 1997 and
specifies new standards for the computation and presentation of
earnings per share.  The Company's adoption of this standard will
result in the dual presentation of "basic" and "diluted" earnings
per share on the face of the Company's income statement.  Diluted
earnings per share calculated using the new standard is not
expected to materially differ from primary earnings per share
previously presented.


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


Potential Sale of Business

In a press release issued July 29, 1997, the Company announced
that it had retained an investment banking firm to advise it in
connection with the potential sale of its Stella Foods
subsidiary.  The Company expects to reach a final decision
regarding the potential divestiture by year-end.  Stella sales
account for approximately 45 percent of the Company's 1997
revenues.  If the divestiture is carried out, the Company intends
to use a portion of the proceeds from a sale of Stella to reduce
outstanding indebtedness with the balance to be used for
acquisitions in the Company's Bakery Operations.  Given the preliminary
nature of this divestiture effort, there can be no assurance that the 
Company will elect to complete this divestiture and the Company cannot
estimate the time frame in which any such sale would be completed.

Seasonality

The Company's businesses are moderately seasonal with lower
sales, operating profit, and cash flows generally occurring in
the first quarter of the year.  This seasonality is due primarily
to higher bread sales in the summer months and higher cheese
sales in the fall and winter holiday season.


Results of Operations

COMPARISON OF SECOND QUARTER 1997 TO SECOND QUARTER 1996

Consolidated net sales from continuing operations decreased 5% to
$380 million in 1997 compared to $400 million in 1996.  Excluding
the impact of a divested plant and business line, net sales
decreased by $14 million (3%) during the same period.  Net sales
of the Bakery Operations decreased $5 million (3%) to $166
million in 1997.  The decrease was primarily due to the loss of
the sales from operations that were divested in August 1996, and
volume shortfalls.  These decreases were partially offset by
price increases taken to partially recover increased ingredient
and operating costs and higher cafe sales at Boudin Bakeries.
Net sales of the Cheese and Meat Operations, consisting of Stella
and H&M Food Systems Company, decreased $15 million (6%) to $214
million. Net sales at H&M increased $7 million (17%) due to
improved sales volume and favorable commodity prices.  Net sales
at Stella decreased $22 million (12%) primarily due to market
driven price decreases on its formula priced products reflecting
a decrease in the cost of milk in 1997.

The Company's gross profit margin increased to 30.4% in 1997 from
27.7% in 1996 primarily due to higher margins on fixed price
products in both Cheese and Bakery Operations as a result of
lower commodity costs offset by tighter margins on market priced
products in the Company's Cheese Operations.

Selling, distribution, and general and administrative expenses
decreased $1 million in 1997 to $95 million.  This decrease
principally related to lower costs at the Company's headquarters
unit, partially offset by contractual wage and fringe benefit
increases in the Cheese and Bakery Operations.

Other (income) expense, net was $2 million of expense in 1997
compared to $3 million in 1996 and consists principally of
discount expense on the Company's accounts receivable facility.

As a result of the above factors, net loss from continuing
operations decreased to $16 million in 1997 compared to $27
million in 1996.

The Company reports minimal state income tax and no federal
income tax due to its net operating loss position for tax
purposes.


SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE
30, 1996

Consolidated net sales from continuing operations decreased 2% to
$765 million in 1997 compared to $780 million in 1996.  Excluding
the impact of a divested plant and business line, net sales
increased by $1 million during the same period.  Net sales of the
Bakery Operations decreased $8 million (2%) to $319 million in
1997.  The decrease was primarily due to the loss of sales from
an operation that was divested in August, 1996, partially offset
by price increases taken to partially recover increased
ingredient and operating costs and higher cafe sales at Boudin
Bakeries.  Net sales of the Cheese and Meat Operations,
consisting of Stella and H&M, decreased $7 million (2%) to $446
million. Net sales at H&M increased $16 million (20%) due to
improved sales volume and favorable commodity prices.  Net sales
at Stella decreased $23 million (6%) primarily due to market
driven price decreases on its formula priced products reflecting
a decrease in the cost of milk in 1997.

The Company's gross profit margin increased to 28.8% in 1997 from
27.1% in 1996 primarily due to favorable commodity price impacts,
partially offset by increased rental expense incurred as a result
of sale leaseback transactions involving equipment at several of
the Company's facilities.

Selling, distribution, and general and administrative expenses
increased $1 million (1%) in 1997 to $193 million primarily due
to contractual wage and fringe benefit increases offset by a
reduction in general and administrative expense principally
related to lower costs at the Company's headquarters unit.

Other (income) expense, net was $5 million of expense in 1997
compared to $5 million of income in 1996.  The net other income
in 1996 results primarily from the excess of replacement cost
over book value and lost operating profit included in the
insurance claim related to the Stella fire.

As a result of the above factors, net loss from continuing
operations decreased to $46 million in 1997 compared to $50
million in 1996.

The Company reports minimal state income tax and no federal
income tax due to its net operating loss position for tax
purposes.


Liquidity and Capital Resources

Net cash used in operating activities totaled $37 million.  The
decrease in net cash used in operating activities in 1997 was
primarily attributable to the net increase in the Company's
working capital accounts.   Working capital requirements have
increased in 1997 primarily as a result of the lower accounts
payable levels resulting from the Company's effort to normalize
relations with suppliers, increased accounts receivable resulting
from reduced levels of  financings through the Company's accounts
receivable facility, and a reduction of accrued liabilities.  In
1996, cash used by operating activities of $29 million was
principally driven by the Company's aggressive working capital
management, and substantially offset by lower operating profit
and cash expenditures resulting from the Stella fire that had not
yet been recovered from the Company's insurance carriers.

Net cash provided by investing activities totaled $20 million in
1997.  The activity in 1997 was primarily attributable to the net
proceeds from the sale of SFFB and Gai's, offset by increased
capital expenditures.  In 1996 net cash provided by investing
activities of $8 million resulted from the proceeds from the sale-
leaseback of equipment and property related proceeds from
Stella's insurance claim, offset by capital expenditures.

Net cash used in financing activities amounted to $18 million in
1997 principally due to a decrease in revolving credit
borrowings, partially offset by the issuance of preferred stock.
In 1996, cash used by financing activities of $1 million
reflected the impact of normal payments on long-term debt,
payments of debt issuance costs and the repurchase from former
executives of the Company of senior secured debentures and common
stock, offset by increased revolving credit borrowings.

Based upon the above, the net decrease in cash in 1997 and 1996
was $35 million and $22 million, respectively.

As of June 30, 1997, the Company had a cash balance of $3
million.  Additionally, the Company had borrowed $43 million
under its $125 million Revolving Credit Facility on such date.
Outstanding letters of credit also reduced available funds under
the facility by $19 million at that time.  Management believes
that these funds along with operating cash flows, asset sales,
and the receipt of the remaining $13 million of insurance
proceeds in July 1997 should be adequate to fund the Company's
short term obligations, although there can be no assurances that
cash flow will be adequate to meet such obligations.
Additionally, the Company will also consider refinancing and
additional asset sales to address future liquidity and capital
structure issues.  For example, the Company recently announced
that it had retained an investment banking firm to advise it in
connection with a potential sale of its Stella Foods subsidiary.
In any case, the Company expects that by the year 2000 it will be
required to refinance a significant portion of its indebtedness.
Other than a potential reduction of indebtedness upon a sale of
Stella, the Company has no current refinancing plans.


Forward-Looking Statements

Certain statements in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" constitute
"forward-looking statements" within the meaning of the federal
securities laws which reflect the Company's expectations and are
based on currently available information.  Actual results,
performance, achievements or other information may vary
materially from such statements and are subject to future known
and unknown risks, uncertainties and events, including, among
other factors, weather, economic and market conditions, cost and
availability of raw materials, competitive activities or other
business conditions.


PART II - OTHER INFORMATION

Item 4:  Submission of Matters to a Vote of Security Holders

The annual meeting of the stockholders of the Company was held on
May 15, 1997 in Rosemont, Illinois.  The stockholders of the
Company took the following actions at the annual meeting:

1.   The stockholders elected the following directors of the
     Company to serve for the term expiring on the date of the
     next annual meeting or until their respective successors are
     duly elected and qualified:
     Messrs. Thomas J. Baldwin, Lawrence S. Benjamin, J. Taylor
     Crandall, Charles J. Delaney, Daniel L. Doctoroff, Robert B.
     Haas, Jerry M. Meyer, Andrew J. Nathanson, David G.
     Offensend, Anthony P. Scotto and Douglas D. Wheat.  An
     aggregate of 52,607,390 shares were cast in favor of the
     election of each of the directors: none were cast against.

2.   The stockholders ratified and approved the Executive
     Employment Agreement among the Company, SFC and Lawrence S.
     Benjamin, the President and Chief Executive Officer of the
     Company and SFC.  An aggregate of 52,607,390 shares were
     cast in favor of such action; none were cast against.

3.   The stockholders ratified and approved the Executive
     Employment Agreement among the Company, SFC and Robert L.
     Fishbune, the Vice President and Chief Financial Officer of
     the Company and SFC.  An aggregate of 52,607,390 shares were
     cast in favor of such action; none were cast against.

4.   The stockholders ratified and approved the Executive
     Employment Agreement among the Company, SFC and Robert B.
     Aiken, the Vice President and General Counsel of the Company
     and SFC.  An aggregate of 52,607,390 shares were cast in
     favor of such action; none were cast against.

5.   The stockholders ratified and approved the appointment of
     KPMG Peat Marwick LLP as the Company's independent auditors
     for the Company's 1997 fiscal year.  An aggregate of
     52,607,390 shares were cast in favor of the action: none
     were cast against.

On May 20, 1997, holders of a majority of the issued and
outstanding common stock of the Company executed a Written
Consent of Stockholders of the Company approving an amendment to
the Certificate of Incorporation of the Company to (i) increase
the aggregate number of shares which the Company shall have
authority to issue from 100,000,000 shares to 100,019,500 shares
and (ii) establish a class of preferred stock, par value
$1,000.00 per share, as Series A Preferred Stock.


Item 6:  Exhibits and Reports on Form 8-K

(a)  See Exhibit Index filed herewith.

(b)  The Company did not file a report on Form 8-K during the
second quarter of 1997.



SIGNATURE


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.


SPECIALTY FOODS ACQUISITION CORPORATION
(Registrant)


                                   By:


Date:  August 14, 1997             /s/ Robert L. Fishbune
                                   ----------------------
                                   Robert L. Fishbune
                                   Vice President and
                                     Chief Financial Officer



EXHIBIT INDEX


Exhibit
Number                       Description of Document

3.1*            Amended and Restated Certificate of Incorporation of SFAC

10.93*          Equity Investment Agreement dated as of May 13, 1997 
                by and among the Company, Acadia Partners L.P., Haas Wheat
                Advisory Partners Incorporated and Keystone,
                Inc.

27*             Financial Data Schedule

___________


*Filed Herewith.