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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-K
                                ---------------

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<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2000
                                       OR

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
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                         COMMISSION FILE NUMBER: 0-6054

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

                               STAR BUFFET, INC.

             (Exact Name of Registrant as Specified in its Charter)

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<S>                                            <C>
               DELAWARE                                     84-1430786
    (State or Other Jurisdiction of            (I.R.S. Employer Identification No.)
    Incorporation or Organization)

  420 LAWNDALE DRIVE, SALT LAKE CITY,                         84115
                 UTAH                                       (Zip Code)
    (Address of Principal Executive
               Offices)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (801) 463-5500

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

                             (TITLE OF EACH CLASS):
                                  COMMON STOCK
                                $.001 PAR VALUE

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

    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 check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /.

    The aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 17, 2000, was $4,297,000.

    The number of shares outstanding of the registrant's common stock was
2,950,000 shares as of April 17, 2000.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the registrant's Proxy Statement for the 2000 Annual Meeting of
Stockholders, which will be filed with the Securities and Exchange Commission
within 120 days after January 31, 2000, are incorporated by reference into Part
III of this Report.

    The Exhibit Index is contained in Part IV herein on Page E-1.

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                      STAR BUFFET, INC., AND SUBSIDIARIES
                      INDEX TO ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED JANUARY 31, 2000

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                                            PART I

ITEM 1.                 BUSINESS....................................................      1

ITEM 2.                 PROPERTIES..................................................     12

ITEM 3.                 LEGAL PROCEEDINGS...........................................     13

ITEM 4.                 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.........     13

                                           PART II

ITEM 5.                 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                        STOCKHOLDER MATTERS.........................................     14

ITEM 6.                 SELECTED FINANCIAL DATA.....................................     14

ITEM 7.                 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                        AND RESULTS OF OPERATIONS...................................     16

ITEM 8.                 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................     20

ITEM 9.                 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                        AND FINANCIAL DISCLOSURE....................................     20

                                           PART III

ITEM 10.                DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT..........     20

ITEM 11.                EXECUTIVE COMPENSATION......................................     20

ITEM 12.                SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
                        MANAGEMENT..................................................     20

ITEM 13.                CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............     20

                                           PART IV

ITEM 14.                EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
                        8-K.........................................................     21
</TABLE>

                                       i
<PAGE>
                                     PART I

ITEM 1. BUSINESS

OVERVIEW

    Star Buffet, Inc., a Delaware corporation ("Star" and collectively with its
subsidiaries, the "Company") is engaged in the restaurant industry. As of
January 31, 2000, the Company owned and operated 17 BuddyFreddys restaurants, 16
franchised HomeTown Buffet restaurants, 11 franchised JB's restaurants, six JJ
North's Grand Buffet restaurants, two North's Star Buffet restaurants, two
Holiday House restaurants and two Mexican-themed restaurants operated under the
Casa Bonita name. As of January 31, 2000, two of the 17 BuddyFreddys restaurants
were closed, one for remodeling and one due to road construction. The Company's
restaurants are located in nine western states, Oklahoma and Florida and are
focused upon providing customers with a wide variety of fresh, high quality food
at moderate prices primarily in the buffet format.

    The Company was formed on July 28, 1997 as a wholly-owned subsidiary of CKE
Restaurants, Inc. ("CKE"). On September 30, 1997 the Company completed an
initial public offering (the "Initial Public Offering") of 3,000,000 shares of
its common stock at an Initial Public Offering price of $12.00 per share. Of the
3,000,000 shares of common stock sold in the Initial Public Offering, 2,400,000
shares were sold by the company and 600,000 shares were sold by CKE. On October
7, 1997, the underwriters exercised their over-allotment option and acquired an
additional 450,000 shares of common stock from the Company. The Initial Public
Offering generated total net proceeds to the Company of $30.8 million after
commissions and offering expenses, a portion of the proceeds were used to pay a
dividend to CKE and to repay indebtedness assumed in connection with the
acquisition of restaurants.

CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

    This report on Form 10-K contains forward looking statements, which are
subject to known and unknown risks, uncertainties and other factors which may
cause the actual results, performance, or achievements of the Company 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: general economic and business conditions; the
impact of competitive products and pricing; success of operating initiatives;
advertising and promotional efforts; adverse publicity; changes in business
strategy or development plans; quality of management; availability, terms and
deployment of capital; changes in prevailing interest rates and the availability
of financing; food, labor, and employee benefits costs; changes in, or the
failure to comply with, government regulations; weather conditions; construction
schedules; implementation of the Company's acquisition and strategic alliance
strategy; the effect of the Company's accounting polices and other risks
detailed in the Company's Prospectus dated September 24, 1997 and other filings
with the Securities and Exchange Commission.

RECENT DEVELOPMENTS

    On February 24, 1998, the Company acquired twelve JB's Restaurants from JB's
Restaurants, Inc., a wholly-owned subsidiary of CKE, for $4,265,000, subject to
adjustments. At the time of acquisition, the Company prepaid royalty fees for
one year in the amount of $485,000. The Company continues to operate 11
restaurants under a franchise agreement with JB's Family Restaurants, Inc, which
is a wholly-owned subsidiary of Santa Barbara Restaurant Group, Inc. During
fiscal 1999, the Company completed three conversions of JB's restaurants to
North's Star Buffet restaurants--the Company's small-format buffet concept. In
February 1999, two of the three restaurants were closed because of unacceptable
margins. During fiscal 2000, these two closed restaurants were converted back to
JB's Restaurants.

    On April 1, 1998, as part of the Company's plan to expand its presence in
Florida, the Company acquired two family-dining restaurants which operate under
the brand name of BuddyFreddys. The

                                       1
<PAGE>
purchase price was approximately $1.6 million, subject to adjustments. These
restaurants, which the Company believes have very strong brand recognition in
central Florida, were acquired to serve as a platform for additional restaurant
acquisitions in that state. Subsequent to the purchase of BuddyFreddys, the
Company acquired additional restaurants for conversion to the BuddyFreddys
concept. Seven conversions to the BuddyFreddys concept occurred as of the end of
fiscal 1999. As part of the plan to expand its presence in Florida, the Company
purchased three Holiday House restaurants in January 1999. Holiday House is a
30-year-old small-format buffet brand. The regional brand is strong in central
Florida. During fiscal 2000, the Company acquired and remodeled four additional
restaurants. One Holiday House restaurant was converted to the BuddyFreddys
concept during the second quarter. Additionally, one restaurant was in the
conversion process at the end of the fiscal year. Another was closed due to road
construction. The Company anticipates that it will continue to expand the
BuddyFreddys concept in the Florida market by acquiring additional units after
the operating margins of this division improve to acceptable levels.

    On September 10, 1998, the Company entered into a stock repurchase
authorized by its Board of Directors to purchase two million shares of the
Company's Common Stock held by CKE Restaurants, Inc. ("CKE") for a purchase
price of $5 million in cash and a $7.5 million 90 day promissory note secured by
treasury stock. The Company's Board of Directors also authorized the repurchase
of up to an additional 500,000 shares of the Company's Common Stock to be
effected in the open market, in private transactions or through alternative
repurchase transactions approved by the Board of Directors. During the third
quarter of fiscal 1999, the Company completed the purchase of two million shares
from CKE and in the fourth quarter of fiscal 1999 repurchased 500,000 additional
shares in the open market. On December 7, 1999, the Company announced that its
Board of Directors again authorized the repurchase of up to an additional
500,000 shares of the Company's Common Stock to be effected in the open market,
in private transactions or through alternative repurchase transactions approved
by the Board of Directors. As of April 17, 2000, no additional shares have been
purchased.

    On October 23, 1998, the Company entered into a $20 million syndicated bank
financing agreement led by BankBoston, N.A. The credit facility consists of a
$13 million, 5-year loan (the "Term Loan Facility") and a $7 million, 5-year
revolving credit facility (the "Revolving Credit Facility"). The Term Loan
Facility refinanced existing indebtedness and provided capital for the
repurchase of Star Buffet common stock and acquisitions. The Term Loan Facility
balance was $11,275,000 as of January 31, 2000. Principal payments under the
Term Loan Facility are due in quarterly installments, beginning November 1999
and continuing until the final maturity in October 2003. Borrowings under the
Revolving Credit Facility are being utilized for the Company's new unit
development and working capital needs. All outstanding amounts under the
Revolving Credit Facility will become due in October 2003. The Revolving Credit
Facility balance was $5.7 million on January 31, 2000. As of April 17, 2000, the
Term Loan Facility balance was $10,650,000 and the Revolving Credit Facility
balance was $4,350,000.

    On February 16, 2000, the Company moved from the Nasdaq National Market to
the Nasdaq Smallcap Market effective February 17, 2000. The move was due to
noncompliance regarding the minimum market value of public float.

BUSINESS

    The Company's strategic objective is to become a leading operator of
regional buffet restaurant brands through the acquisition of established
regional concepts and subsequent development of additional restaurants within
existing or new markets. The Company believes that certain elements of its
business

                                       2
<PAGE>
strategy can be used successfully to improve the financial performance of its
recent and future acquisitions. Key elements of the Company's business strategy
as are follows:

    CUSTOMER FOCUS.  The Company believes that its ability to deliver high
quality food to customers with superior service in clean and friendly
environments has been central to its success at improving customer perceptions
and sales at its buffet restaurants. The key elements of management's focus
include:

    - HIGH QUALITY FOOD.  The Company seeks to differentiate itself by providing
      higher quality and better tasting food than its competitors. In addition,
      each brand maintains its own unique recipes that cater to regional taste
      profiles of its customers. Management limits the number of items prepared
      each day and frequently rotates selected specialty items to maintain
      customer interest while ensuring that the Company's signature items are
      offered at the highest possible quality.

    - SUPERIOR SERVICE.  The Company provides a level of customer service which
      it believes has helped it establish a higher level of customer
      satisfaction than its competitors. Restaurant managers are encouraged to
      visit each customer's table during meal periods to ensure guest
      satisfaction. To help insure superior service levels, the Company utilizes
      a number of methods to monitor guest satisfaction including independent
      mystery shopper survey and a formalized customer comment card program.

    - CLEAN AND FRIENDLY ENVIRONMENT.  The Company strives to offer a pleasant,
      customer friendly environment at its restaurants by providing attractive,
      updated restaurant decors and by emphasizing cleanliness in all areas of
      its operations. Further, through regular maintenance, the Company seeks to
      enhance the customer dining experience by keeping its restaurants clean
      and pleasant.

    MANAGEMENT PRACTICES.  The Company's management team has implemented a
series of management practices that have improved the operations of acquired
restaurants. The key elements of these management practices are:

    - PERFORMANCE MEASUREMENTS.  The Company has developed food, labor and
      customer service management practices and reporting mechanisms that allow
      management to effectively monitor restaurant-level operations, benchmark
      restaurant performance statistics and communicate best-practices across
      its restaurant operations. Through the use of its restaurant-level
      incentive and bonus programs oriented toward motivating employees, as well
      as its traditional recognition programs, the Company seeks to motivate its
      employees and foster an environment where employees are encouraged to
      share their ideas and cost saving suggestions with management.

    - COST CONTROL.  The Company has been able to maintain a lean corporate
      management structure by expanding the number of restaurants supervised by
      field managers, having corporate personnel oversee multiple administrative
      functions and appropriate outsourcing of certain functions when cost
      effective. The Company's corporate infrastructure provides purchasing,
      information systems, finance, accounting and payroll so that restaurant
      managers can focus on restaurant operations and guest satisfaction.

    - BRAND IDENTITY.  The Company's strategy is to separately manage each of
      its restaurant brands to create a unique presence in the marketplace.
      Although each of the companies' and its brands is positioned somewhat
      differently in the market, the Company utilizes many of the same marketing
      techniques such as local store marketing representatives, radio
      advertising and promotional mailers to increase customer awareness and
      loyalty.

GROWTH STRATEGY

    The Company's strategic objective is to become a leading operator of
regional buffet restaurant brands through (i) acquisitions of existing buffet
restaurant chains which management believes can benefit from the Company's
management practices, (ii) the acquisitions of exiting restaurant properties
that can

                                       3
<PAGE>
be converted to buffet brands operated or under development by the Company and
(iii) minority investments in or strategic alliances with other restaurant
chains. The Company's growth strategy is designed to capitalize on the
opportunities management perceives in the fragmented buffet segment of the
restaurant industry.

    ACQUISITION STRATEGY.  Management believes that the Company will be able to
capitalize on the successful attributes of acquired buffet chains while
increasing their focus on operations, customer service and quality. Management
believes that a number of acquisition opportunities exist due to the
fragmentation of the buffet, cafeteria and grill-buffet segments of the
restaurant industry, which are comprised of a substantial number of regional
chains. The Company believes that many of these regional chains are privately
owned and may be available for acquisition because they lack the financial and
operational structure to compete with larger regional and national chains.
Following acquisition, management intends to integrate and improve the
operations and profitability of the acquired units through the implementation of
the following key strategies:

    - ENHANCE FOOD QUALITY AND SERVICE LEVELS.  Management believes that, due to
      the limited capital and management resources of many regional chains, such
      restaurants often offer poor food quality and an insufficient level of
      customer service. Management intends to increase the chains' customer
      focus and utilize the management practices which have proven successful at
      other Star Buffet, Inc. restaurants.

    - IMPLEMENT OPERATIONAL COST CONTROLS AND MANAGEMENT INCENTIVE
      STRUCTURES.  Management believes that the management practices which have
      successfully lowered food, labor and other operating costs at other Star
      Buffet, Inc. restaurants can be implemented in other regional buffet
      chains. In addition, the Company believes that its management incentive
      programs can increase the customer service and profitability of acquired
      restaurants.

    - INTRODUCE STANDARDIZED MARKETING PROGRAMS.  Management believes that
      selected increases in marketing expenditures can create meaningful
      improvements in restaurant sales and profitability. Management intends to
      increase the utilization of a variety of standardized marketing programs
      and apply them to newly acquired restaurants.

    RESTAURANT CONVERSIONS.  In recent years, a number of chains in the family
dining and budget steakhouse segments of the restaurant industry have
experienced operational difficulties and declining performance. Management
believes that these difficulties are the result of increasing competition for
these concepts from the rapid growth of lower priced casual dining chains and
casual steakhouses which offer superior product quality and service at only
moderately higher prices. Many of these family dining restaurants and budget
steakhouses occupy desirable locations and provide opportunities to acquire
desirable restaurant locations at attractive prices. Management believes that
these locations can be acquired and converted at lower prices or leased at rates
lower than those available when compared to the cost of new construction.

    MINORITY INVESTMENTS AND STRATEGIC ALLIANCES.  Management intends to seek
minority investments in or strategic alliances with other restaurant chains.
Management believes that minority investments can provide an attractive
investment opportunity for the Company and may lower the acquisition cost of
such chains should the Company ultimately seek to acquire those chains.
Management believes that strategic alliances can be an excellent corporate
arrangement to facilitate (i) more productive use of under-performing restaurant
properties at lower cost and less risk than outright acquisition and
(ii) reduce corporate overhead or improve purchasing economies.

                                       4
<PAGE>
HOMETOWN BUFFET RESTAURANTS

    GENERAL.  The Company, through its subsidiary HTB Restaurants, Inc. ("HTB")
has a franchise agreement with HomeTown Buffet, Inc., a wholly-owned subsidiary
of Buffets, Inc., under which HTB operates HomeTown Buffet restaurants in
Arizona, Colorado, New Mexico, Utah and Wyoming.

    HTB entered into a franchise agreement for each location which requires
among other items, the payment of a continuing royalty fee. The royalty fee is
based on the aggregate gross sales of all the Company's HomeTown Buffet
restaurants. Each of the franchise agreements has a 20-year term (with two
five-year renewal options). HTB provides weekly sales reports to the HomeTown
franchisor as well as periodic and annual financial statements. HTB is obligated
to operate its Hometown Buffet restaurants in compliance with the franchisor's
requirements.

    The franchisor may terminate a franchise agreement for a number of reasons,
including the failure to pay royalty fees when due, failure to comply with
applicable laws or repeated failure to comply with one or more requirements of
the franchise agreement. Many state franchise laws limit the ability of a
franchisor to terminate or refuse to renew a franchise. Generally, a franchisor
may terminate a franchise agreement only if the franchisee violates a material
and substantial provision of the agreement and fails to remedy the violation
within a specified period.

    CONCEPT AND MENU.  HomeTown Buffet restaurants are located both in shopping
"strip centers" and as freestanding restaurants. HTB's typical restaurant format
is approximately 10,200 square feet with seating for approximately 375
customers. The restaurant design is based upon standardized construction plans,
with modifications made for each particular site. The restaurants offer fixed
price lunch, dinner and breakfast menus that entitle each customer to unlimited
servings of all menu items and beverages. The average check price is
approximately $6.15. The restaurants offer reduced prices to children under age
12 and to senior citizens.

    OPERATIONS.  The HomeTown Buffet restaurants are supervised directly by a
Vice President of HomeTown Buffet Operations, who reports to the Company's
President. Each HomeTown Buffet restaurant has a general manager and at least
three co-managers or assistant managers. Managers are required to attend formal
training sessions in management and operations of the restaurant. In addition,
each restaurant manager is required to comply with specific franchisor-provided
guidelines to assure uniformity of operations and consistent high quality of
products. The Company has a performance based incentive program covering its
general and assistant managers in addition to a competitive base salary.

    Individual restaurants typically employ between 70 and 110 non-management
hourly employees (made up of a mix of part-time and full-time workers),
depending on restaurant size and traffic.

CASA BONITA

    CONCEPT AND MENU.  The Company's two Casa Bonita restaurants are located in
Denver, Colorado and Tulsa, Oklahoma and contain 52,000 and 26,000 square feet,
respectively. The restaurants are designed to recreate the atmosphere of a
Mexican village at night. The restaurants also feature entertainment daily,
including strolling mariachis, authentic Mexican dancers, magicians, games and
cliff divers. The restaurants' entertainment, combined with high quality,
authentic Mexican food, is designed to attract a diverse customer base,
including tourists and local customers. In addition to typical Mexican menu
offerings, these restaurants feature all-you-can-eat dinners which offer
customers unlimited servings of selected menu items.

    The Company focuses on three primary target audiences in its advertising and
promotional programs for its Casa Bonita restaurants: (i) local customers; (ii)
tourists; and (iii) groups and parties. The Company markets aggressively to
attract tourists by placing advertisements in local tourist and special event
guides and by otherwise promoting each Casa Bonita restaurant as a local
attraction. With its large dining areas

                                       5
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and private rooms, the Company also promotes Casa Bonita as an ideal setting for
banquets, private parties and other group events.

NORTH'S STAR DIVISION

    GENERAL.  The North's Star Division consists of six JJ North's Grand Buffet
restaurants and two North's Star Buffet restaurants. The Company's six JJ
North's Grand Buffet Restaurants are located in Idaho (3), Washington (2), and
Oregon (1). The restaurants are approximately 6,500 to 9,000 square feet and
seat approximately 210 to 320 customers. The Company's two North's Star Buffet
restaurants are located in Utah and Arizona. The restaurants are approximately
4,800 to 9,000 square feet and seat approximately 150 to 320 customers.

    CONCEPT AND MENU.  Both JJ North's Grand Buffet and North's Star Buffet
restaurants offer fixed price lunch, dinner and weekend breakfast menus that
entitle each customer to unlimited servings of all menu items and beverages.
Prices are approximately $5.59 for lunch and approximately $7.99 for dinner, and
may vary depending on restaurant location. The average check for JJ North's
Grand Buffet is $6.10. The average check in North's Star Buffet is $5.90. The
restaurants offer reduced prices to children under age 12 and to senior
citizens.

    Both JJ North's Grand Buffet and North's Star Buffet restaurants seek to
differentiate themselves from other buffet and cafeteria restaurants by the
quality and variety of their food offerings. The restaurants feature a "scatter
bar" buffet system with separate food islands in an "all-you-can-eat" format.
Menus emphasize traditional American "home cooking" and include soups, salads,
entrees, vegetables, non-alcoholic beverages and desserts. Customers can choose
from multiple entree choices, including fried and baked chicken and fish, roast
beef, turkey and ham. Additional entrees, such as lasagna, barbecued ribs and
other regional or seasonal dishes, are featured on particular days of the week.
In addition to entrees, each meal period includes freshly-prepared soups,
assorted vegetable and potato dishes, hot bread and an extensive salad bar.
Dessert selections include pudding, assorted cobblers, cakes, cookies and soft-
serve frozen dairy desserts and various sundae toppings.

    OPERATIONS.  The North's Star Division restaurants are supervised by a Vice
President of Operations who reports to the Company's President. Each restaurant
has a general manager and up to three assistant managers and typically employs
between 40 and 100 hourly employees (made up of a mix of part-time and full-time
workers) depending on restaurant size and traffic.

FLORIDA BUFFETS DIVISION

    GENERAL.  The Company, through several transactions, has acquired nineteen
properties in Florida which currently operate under the brand names BuddyFreddys
Country Buffet (15), BuddyFreddys (2) and Holiday House (2). Two of the 15
BuddyFreddys Country Buffet restaurants are closed, one for remodeling and one
due to road construction, and are expected to open in the second quarter of
fiscal year 2001. BuddyFreddys restaurants average approximately 10,000 square
feet with seating for approximately 350 guests. Holiday House restaurants
average approximately 5,500 square feet with seating for approximately 170
guests.

    CONCEPT AND MENU.  The 15 BuddyFreddys Country Buffet restaurants offer a
buffet menu specializing in local dishes and southern-style cooking. Each
location also offers a small gift shop selling a variety of BuddyFreddys
apparel, snacks and specialty merchandise. The two BuddyFreddys differ from
BuddyFreddys Country Buffets in that they offer a full a la carte menu in
addition to the "all-you-can-eat" buffet. The two Holiday House restaurants also
operate in a buffet format and specialize in offering the customer a wide
variety of meat entrees including ham, roast beef, turkey and its signature leg
of lamb. The average check price for BuddyFreddys and Holiday House is
approximately $6.60.

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    OPERATIONS.  The Florida restaurants are supervised by two Area Directors
who report to a Vice President of Operations who, in turn, reports to the
Company's President. Each restaurant has a general manager and up to four
assistant managers. Each restaurant employs between 50 and 100 hourly employees
(made up of a mix of part-time and full-time workers) depending on restaurant
size and traffic.

JB'S RESTAURANTS

    GENERAL.  The Company, through its subsidiary Summit Family Restaurants,
Inc. ("Summit") has a franchise agreement with JB's Family Restaurants, Inc., a
wholly-owned subsidiary of Santa Barbara Restaurant Group, Inc., under which
Summit, as a franchisee, currently operates 11 JB's Restaurants in Arizona,
Montana, New Mexico, Utah and Wyoming. Summit has entered into a franchise
agreement for each location which requires among other items, the payment of a
continuing royalty fee.

    CONCEPT AND MENU.  JB's Restaurants offer a variety of breakfast, lunch and
dinner selections at moderate prices. The breakfast menu features an
"all-you-can-eat" breakfast buffet along with other traditional breakfast fare.
The lunch and dinner menu has a variety of sandwiches as well as steak, chicken,
pasta and seafood entrees. All JB's Restaurants offer an "all-you-can-eat" soup
and salad bar during the lunch and dinner. With the exception of the breakfast
buffet and the "all-you-can-eat" soup and salad bar, all entrees are cooked to
order and served by a wait staff. The average check is approximately $5.90.

    OPERATIONS.  The JB's Restaurants are supervised by a Vice President of
Operations who reports to the Company's President. Each restaurant has a general
manager and at least two assistant managers. Each restaurant employs between 20
and 50 hourly employees (made up of a mix of part-time and full-time workers)
depending on restaurant size and traffic.

LICENSES, TRADEMARKS AND SERVICE MARKS

    The Company has purchased the trademarks and service marks for JJ North's
Grand Buffet, Casa Bonita, BuddyFreddys and Holiday House and has entered into a
license agreement with CKE for use of the "Star" name and design. The Company
utilizes the marks JB's Restaurant and HomeTown Buffet pursuant to various
franchise agreements.

SEASONALITY

    The Company's business is somewhat seasonal in nature with the first and
second fiscal quarters being the highest volume periods. The Company's lowest
volume periods typically occur during the third and fourth fiscal quarters.

EMPLOYEES

    As of April 17, 1999, the Company employed approximately 3,200 persons, of
whom approximately 3,025 were restaurant employees, and approximately 175 were
restaurant management, supervisory and corporate personnel. Restaurant employees
include both full-time and part-time workers paid on an hourly basis. No Company
employees are covered by collective bargaining agreements. The Company believes
that its relations with its employees are generally good.

                                       7
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DIRECTORS AND EXECUTIVE OFFICERS

    The following table sets forth certain information regarding the Company's
directors and executive officers:

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<CAPTION>
NAME                                          AGE      POSITION
----                                        --------   --------
<S>                                         <C>        <C>
Robert E. Wheaton.........................     48      Chief Executive Officer, President and
                                                       Chairman
Ronald E. Dowdy...........................     43      Group Controller, Treasurer and Secretary
Jack M. Lloyd.............................     49      Director
Thomas G. Schadt..........................     58      Director
Phillip "Buddy" Johnson...................     47      Director
Craig B. Wheaton..........................     42      Director
</TABLE>

    ROBERT E. WHEATON has served as the Chief Executive Officer and President
and as a director of the Company since its formation in July 1997. Mr. Wheaton
has been Chairman of the Board since September 1998. Mr. Wheaton served as
Executive Vice President of CKE from January 1996 through January 1999. From
April 1995 to January 1996, he served as Vice President and Chief Financial
Officer of Denny's Inc., a subsidiary of Flagstar Corporation. From 1991 to
1995, Mr. Wheaton served as President and Chief Executive Officer, and from 1989
to 1991 as Vice President and Chief Financial Officer of The Bekins Company.

    RONALD E. DOWDY has served as the Group Controller since June 1998 and as
Treasurer and Secretary since February 1999. Mr. Dowdy served as Controller to
Holiday House Corporation for nineteen years prior to joining Star Buffet.

    THOMAS G. SCHADT has served as a director of the Company since the
completion of the Company's initial public offering in September 1997.
Mr. Schadt has been the Chief Executive Officer of a privately-held beverage
distribution company, Bear Creek, L.L.C., since 1995. From 1976 to 1994, he held
several positions with PepsiCo, Inc., most recently, Vice President of Food
Service.

    JACK M. LLOYD has served as a director of the Company since the completion
of the Company's initial public offering in September 1997. Mr. Lloyd has served
as Chairman of the Board of DenAmerica Corp. since July 9, 1996 and as
President, Chief Executive Officer and a director of DenAmerica Corp. since
March 29, 1996. Mr. Lloyd served as Chairman of the Board and Chief Executive
Officer of Denwest Restaurant Corp. ("DRC") from 1987 until the March 1996
merger of DRC and DenAmerica and as President of DRC from 1987 until
November 1994. Mr. Lloyd engaged in commercial and residential real estate
development and property management as President of First Federated Investment
Corporation during the early and mid-1980's. Mr. Lloyd also currently serves as
a director of Action Performance Companies, Inc. DenAmerica Corp. changed its
name to Phoenix Restaurant Group on June 29, 1999.

    PHILLIP "BUDDY" JOHNSON has served as a Director of the Company since
February 1999 and as President of the BuddyFreddys Division since it was
acquired in April 1998. From 1980 until 1998, he was the founding Chairman and
CEO of BuddyFreddys Enterprises. From 1991 to 1996, Mr. Johnson served as
Republican floor leader in the Florida House of Representatives. Mr. Johnson
also served on the executive committee of The Foundation for Florida's Future, a
non-profit corporation established in 1995 by Jeb Bush.

    CRAIG B. WHEATON has served as a director of the Company since
February 1999. Mr. Wheaton is a partner in the law firm Kilpatrick Stockton LLP.
His main areas of practice include employee benefits, executive compensation and
general corporate law. Mr. Wheaton received his B.A. degree, with honors, from
the University of Virginia and his J.D. degree from Wake Forest University. Mr.
Wheaton was a member of the Tax Council of the North Carolina Bar Association
Section on Taxation ('93-'98) and chair of its Employee Benefits Committee
('95-'97). He is a member and former president of the Triangle

                                       8
<PAGE>
Benefits Forum. He is a member of the Southern Employee Benefits Conference, the
Employee Benefits Committee of the American Bar Association's Section of
Taxation, the National Pension Assistance Project's National Lawyers Network,
and the National Association of Stock Plan Professionals. Mr. Wheaton is the
brother of Robert E. Wheaton, the Company's Chairman, President and Chief
Executive Officer.

BUSINESS RISKS

    GROWTH VIA ACQUISITIONS.  The Company intends to pursue a strategy of
moderate growth, primarily through acquisitions. The success of this strategy
will depend in part on the ability of the Company to acquire additional buffet
restaurants or to convert acquired sites into buffet restaurants, both within
existing and new markets. The success of the Company's growth strategy is
dependent upon numerous factors, many of which are beyond the Company's control,
including the availability of suitable acquisition opportunities, the
availability of appropriate financing and general economic conditions. The
Company must compete with other restaurant operators for acquisition
opportunities and with other restaurant operators, retail stores, companies and
developers for desirable site locations. Many of these entities have
substantially greater financial and other resources than the Company. There can
be no assurance that the Company will be able to identify, negotiate and
consummate acquisitions of additional buffet restaurants or that acquired
restaurants or converted restaurants can be operated profitably and successfully
integrated into the Company's operations. Many of its acquired restaurants will
be located in geographic markets in which the Company has limited or no
operating experience. In addition, the Company's acquisition strategy includes
the identification of companies or properties that are viewed as underperforming
by the Company. This element of the Company's strategy increases the risks
involved with the Company's acquisitions.

    Acquisitions involve a number of special risks that could adversely affect
the Company's business, results of operations and financial condition, including
the diversion of management's attention, the assimilation of the operations and
personnel of the acquired restaurants, the amortization of acquired intangible
assets and the potential loss of key employees. In particular, the failure to
maintain adequate operating and financial control systems or unexpected
difficulties encountered during expansion could materially and adversely affect
the Company's business, financial condition and results of operations. There can
be no assurance that any acquisition will not materially and adversely affect
the Company or that any such acquisition will enhance the Company's business.
The Company is unable to predict the likelihood of any additional acquisitions
being proposed or completed in the near future. If the Company determines to
make any significant acquisition, the Company may be required to sell additional
equity or debt securities or obtain additional credit facilities. The sale of
additional equity or convertible debt securities could result in additional
dilution to the Company's stockholders. There can be no assurance that adequate
equity or debt financing would be available to the Company for any such
acquisitions.

    From February 1998 to January 2000, the Company has acquired 32 restaurants
in seven states, including 19 units in Florida. As a result of the acquisitions,
the Company is more complex and diverse, and the integration of the recent
acquisitions has presented difficult challenges for the Company's management due
to the increased time and resources required in management effort. In order to
improve profitability, the Company will need to successfully integrate and
streamline restaurant functions. There can be no assurance that integration will
be successfully accomplished. The difficulties of such integration have been
increased by the necessity of coordinating geographically separate
organizations. The integration of certain operations following the acquisitions
required the dedication of management resources which has temporarily distracted
attention from the day-to-day business of the Company. The failure to
effectively integrate the operations of the Company or to improve the results of
operations of the acquired restaurants could have a material adverse effect on
the Company's business, financial condition and results of operations.

                                       9
<PAGE>
    DEPENDENCE UPON AND RESTRICTIONS RESULTING FROM FRANCHISORS.  The Company
owns and operates 27 out of its 56 restaurants pursuant to the terms of
franchise agreements. The Company operates its 16 HomeTown Buffet Restaurants
through its wholly-owned subsidiary, HTB Restaurants, Inc., which is a party to
a Franchise Agreement with the HomeTown Franchisor for each such restaurant. The
Company operates its 11 JB's Restaurants through its wholly-owned subsidiary,
Summit, which is a party to a Franchise Agreement with JB's Family
Restaurant, Inc. ("JB's") for each such restaurant. The performance of the
Company's HomeTown Buffet restaurant operations and JB's restaurant operations
is directly related to the success of the HomeTown Buffet restaurant system and
the JB's restaurant system, respectively, including the management and financial
condition of HomeTown and JB's as well as restaurants operated by HomeTown and
JB's and their respective franchisees. The inability of such restaurants to
compete effectively would have a material adverse effect on the Company's
operations. The success of the Company's HomeTown Buffet and JB's restaurants
depends in part on the effectiveness of the HomeTown Franchisor's and JB's
marketing efforts, new product development programs, quality assurance and other
operational systems over which the Company has no control. For example, adverse
publicity involving HomeTown, JB's or one or more HomeTown Buffet or JB's
restaurants operated by the franchisors or their other franchisees could have a
material adverse effect on the Company's business, financial condition and
results of operations.

    The Company's operations with respect to its HomeTown and JB's restaurants
are subject to certain restrictions imposed by policies and procedures of
HomeTown or JB's as in effect from time to time. These restrictions limit the
Company's ability to modify the menu items and decor of its restaurants and may
have the effect of limiting the Company's ability to pursue its business plan.
Furthermore, the Franchise Agreement with the HomeTown franchisor imposes
substantial restrictions on the Company's ability to operate certain restaurant
formats and to open additional restaurants in certain geographical areas.

    FLUCTUATIONS IN QUARTERLY RESULTS.  The Company has in the past experienced,
and expects to continue to experience, significant fluctuations in restaurant
revenues and results of operations from quarter to quarter. In particular, the
Company's quarterly results can vary as a result of acquisitions, costs incurred
to integrate newly acquired entities, and seasonal patterns. A large number of
the Company's restaurants are located in areas which are susceptible to severe
winter weather conditions or tropical storm patterns which may have a negative
impact on customer traffic and restaurant revenues. Accordingly, the Company
believes that period-to-period comparisons of its operating results are not
necessarily meaningful and that such comparisons cannot be relied upon as
indicators of future performance. There can be no assurance that future seasonal
and quarterly fluctuations will not have a material adverse effect on the
Company's business, results of operation and financial condition.

    COMPETITION.  The restaurant industry is highly competitive. The Company
competes on the basis of the quality and value of food products offered, price,
service, location, ambiance and overall dining experience. The Company's
competitors include a large and diverse group of restaurant chains and
individually owned restaurants, including chains and individually owned
restaurants that use a buffet format. The number of buffet restaurants with
operations generally similar to the Company's has grown considerably in the last
several years and the Company believes competition among buffet-style
restaurants is increasing. As the Company and its principal competitors expand
operations in various geographic areas, competition, including competition among
buffet-style restaurants, can be expected to intensify. Such intensified
competition could increase the Company's operating costs or adversely affect its
revenues. A number of competitors have been in existence longer than the Company
and have substantially greater financial, marketing and other resources and
wider geographical diversity than does the Company. In addition, the restaurant
industry has few noneconomic barriers to entry and is affected by changes in
consumer tastes, national, regional and local economic conditions and market
trends. The Company's significant investment in, and long term commitment to,
each of its restaurant sites limits its ability to respond quickly or
effectively to changes in local competitive conditions or other changes that
could affect the Company's operations.

                                       10
<PAGE>
    RESTAURANT INDUSTRY.  Food service businesses are often affected by changes
in consumer tastes, national, regional and local economic conditions and
demographic trends. The performance of individual restaurants may be adversely
affected by factors such as traffic patterns, demographic considerations and the
type, number and location of competing restaurants. Multi-unit food service
businesses such as the Company's can also be materially and adversely affected
by publicity resulting from poor food quality, illness, injury or other health
concerns or operating issues stemming from one restaurant or a limited number of
restaurants. Dependence on frequent deliveries of fresh produce and groceries
subjects food service businesses such as the Company's to the risk that
shortages or interruptions in supply, caused by adverse weather or other
conditions, could adversely affect the availability, quality and cost of
ingredients. The Company's profitability is highly sensitive to increases in
food, labor and other operating costs that cannot always be passed on to its
guests in the form of higher prices or otherwise compensated for. In addition,
unfavorable trends or developments concerning factors such as inflation,
increased food, labor and employee benefits costs (including increases in hourly
wage and unemployment tax rates), increases in the number and locations of
competing buffet-style restaurants, regional weather conditions and the
availability of experienced management and hourly employees may also adversely
affect the food service industry in general and the Company's business,
financial condition and results of operations in particular. Changes in economic
conditions affecting the Company's guests could reduce traffic in some or all of
the Company's restaurants or impose practical limits on pricing, either of which
could have a material adverse effect on the Company's business, financial
condition and results of operations. The success of the Company will depend in
part on the ability of the Company's management to anticipate, identify and
respond to changing conditions. There can be no assurance that management will
be successful in this regard.

    DEPENDENCE ON KEY PERSONNEL.  The Company believes that its success will
depend in part on the services of its key executives, including Robert E.
Wheaton, Chairman of the Board, President and Chief Executive Officer. The
Company does not maintain any key man life insurance. The loss of the services
of Mr. Wheaton could have a material adverse effect upon the Company's business,
financial condition and results of operations, and there can be no assurance
that a qualified replacement would be available in a timely manner if at all.
The Company's continued growth will also depend in part on its ability to
attract and retain additional skilled management personnel.

    GOVERNMENT REGULATION.  The restaurant industry is subject to federal, state
and local government regulations, including those relating to the preparation
and sale of food and building and zoning requirements. In addition, the Company
is subject to laws governing its relationship with employees, including minimum
wage requirements, overtime, working and safety conditions and citizenship
requirements. The failure to obtain or retain food licenses or an increase in
the minimum wage rate, employee benefit costs or other costs associated with
employees, could have a material adverse effect on the Company's business,
financial condition and results of operations. Many of the Company's employees
are paid hourly rates based upon the federal and state minimum wage laws. Recent
legislation increasing the minimum wage has resulted in higher labor costs to
the Company.

    EFFECT OF CERTAIN CHARTER AND BYLAW PROVISIONS.  Certain provisions of the
Company's Certificate of Incorporation and Bylaws may have the effect of making
it more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of the Company. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of the Company's Common Stock. The Company's Certificate of Incorporation
allows the Company to issue up to 1,500,000 shares of currently undesignated
Preferred Stock, to determine the powers, preferences and rights and the
qualifications, limitations or restrictions granted to or imposed on any
unissued series of that Preferred Stock, and to fix the number of shares
constituting any such series and the designation of such series, without any
vote or future action by the stockholders. The Preferred Stock could be issued
with voting, liquidation, dividend and other rights superior to the rights of
the Common Stock. The Certificate of Incorporation also eliminates the ability
of stockholders to call special meetings. The Company's Bylaws require advance

                                       11
<PAGE>
notice to nominate a director or take certain other actions. Such provisions may
make it more difficult for stockholders to take certain corporate actions and
could have the effect of delaying or preventing a change in control of the
Company. In addition, the Company has not elected to be excluded from the
provisions of Section 203 of the Delaware General Corporation Law, which imposes
certain limitations on transactions between a corporation and "interested"
stockholders, as defined in such provisions.

    POSSIBLE VOLATILITY OF STOCK PRICE.  The stock market has from time to time
experienced significant price and volume fluctuations that are unrelated to the
operating performance of particular companies. These broad market fluctuations
may adversely affect the market price of the Company's Common Stock. Factors
such as fluctuations in the Company's operating results, failure of such
operating results to meet the expectations of stock market analysts and
investors, changes in stock market analyst recommendations regarding the
Company, its competitors and other companies in the restaurant industry, as well
as changes in general economic or market conditions and changes in the
restaurant industry may have a significant adverse effect on the market price of
the Common Stock.

ITEM 2. PROPERTIES

    The Company's corporate headquarters are located in Salt Lake City, Utah,
and other executive offices are located in Scottsdale, Arizona.

    The Company's restaurants are primarily freestanding locations. As of
January 31, 2000 most of the Company's restaurant facilities were leased. The
leases expire on dates ranging from 2000 to 2014 with the majority of the leases
providing for renewal options. All leases provide for specified periodic rental
payments, and most call for additional rent based upon revenue volume. Most
leases require the Company to maintain the property and pay for the cost of
insurance and taxes.

    The following is a summary of the Company's restaurant properties as of
January 31, 2000:

<TABLE>
<CAPTION>
                                                 HOMETOWN      CASA     NORTH'S    FLORIDA
                                                  BUFFET      BONITA      STAR     BUFFETS      JB'S      TOTAL
                                                 ---------   --------   --------   --------   --------   --------
<S>                                              <C>         <C>        <C>        <C>        <C>        <C>
Owned..........................................      --         --          1          4          3          8
Leased.........................................      16          2          7         15          8         48
</TABLE>

    As of January 31, 2000, the Company's restaurants are located in the
following states:

<TABLE>
<CAPTION>
                                                                      NUMBER OF RESTAURANTS
                                                 ----------------------------------------------------------------
                                                 HOMETOWN      CASA     NORTH'S    FLORIDA
STATE                                             BUFFET      BONITA      STAR     BUFFETS      JB'S      TOTAL
-----                                            ---------   --------   --------   --------   --------   --------
<S>                                              <C>         <C>        <C>        <C>        <C>        <C>
Arizona........................................       8         --          1         --          1         10
Colorado.......................................       2          1         --         --         --          3
Florida........................................      --         --         --         19         --         19
Idaho..........................................      --         --          3         --         --          3
Montana........................................      --         --         --         --          4          4
New Mexico.....................................       2         --         --         --          1          3
Oklahoma.......................................      --          1         --         --         --          1
Oregon.........................................      --         --          1         --         --          1
Utah...........................................       3         --          1         --          4          8
Washington.....................................      --         --          2         --         --          2
Wyoming........................................       1         --         --         --          1          2
                                                    ---        ---        ---        ---        ---        ---
  Total........................................      16          2          8         19         11         56
                                                    ===        ===        ===        ===        ===        ===
</TABLE>

                                       12
<PAGE>
ITEM 3. LEGAL PROCEEDINGS

    On November 12, 1998, North's Restaurants, Inc. ("North's") filed a Demand
for Arbitration against the Company with the American Arbitration Association,
Irvine, California (District No. 949-251-9840), alleging breach of contract in
connection with the Company's failure to perform under a Business Services
Agreement between North's and the Company dated July 24, 1997. On June 22, 1999,
the parties agreed to dismiss the Arbitration Proceeding without prejudice since
the issues related to the Business Service Agreement are being litigated in the
Utah action described below.

    On November 25, 1998, the Company filed an action against North's
Restaurants, Inc. ("North's") in the United States District Court, District of
Utah, Case No. 2-98-CV-893, seeking damages for breach of a promissory note and
an Amended and Restated Credit Agreement (collectively, the "Credit Agreements")
in the amount of $3,570,935. On December 31, 1998, North's filed an answer to
the Company's Complaint, denying generally the allegations, and filed
counterclaims against the Company alleging (i) the Company fraudulently induced
North's to enter into various agreements with the Company relating to the
Company's acquisition of seven JJ North's Grand Buffet Restaurants and an option
to acquire nine additional restaurants operated by North's and (ii) the Company
has breached the Business Services Agreement. The Company plans to pursue
vigorously its claims against North's and to vigorously defend the counterclaims
asserted by North's. The litigation is continuing.

    HTB Restaurants, Inc. ("HTB") holds 16 franchises for HomeTown Buffet
restaurants. The franchisor, HomeTown Buffet Restaurants, Inc. ("HomeTown"), has
asserted that the Company breached its franchise agreements by using proprietary
information of the franchisor to open the Company's North's Star Buffet
restaurants and issued a Notice of Termination of the 16 franchise agreements on
July 21, 1998. The Company denied any breach and demanded arbitration to contest
the Notice of Termination. In a sixteen page Award, the arbitrator ruled that
HomeTown was not entitled to terminate the franchise agreements. The arbitrator
concluded that the claimed bases for termination set forth in the July 1998
Notice were either not proved by HomeTown or were not a violation of the
franchise agreements. The arbitrator, however, found that the franchise
agreements placed strict requirements upon HTB to protect HomeTown's proprietary
information and to prevent its disclosure, and that there was evidence that
HomeTown information had been disclosed. Accordingly, the arbitrator awarded
HomeTown damages in the amount of $250,000 and directed HTB to pay all
administrative fees and expenses of the American Arbitration Association
incurred by both parties, as well as all fees and expenses of the Arbitrator.
The Award enjoins HTB and any of its officers, agents, or employees from using
HomeTown information in any other similar restaurant business as authorized
under the franchise agreements. The Award is a full settlement of all claims
submitted to the arbitration.

    The Company is from time to time the subject of complaints or litigation
from customers alleging injury on properties operated by the Company, illness or
other food quality, health or operational concerns. Adverse publicity resulting
from such allegations may materially adversely affect the Company and its
restaurants, regardless of whether such allegations are valid or whether the
Company is liable. The Company also is the subject of complaints or allegations
from employees from time to time. The Company believes that the lawsuits, claims
and other legal matters to which it has become subject in the course of its
business are not material to the Company's business, financial condition or
results of operations, but an existing or future lawsuit or claim could result
in an adverse decision against the Company that could have a material adverse
effect on the Company's business, financial condition and results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

    None.

                                       13
<PAGE>
                                    PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
  MATTERS

    The Company's Common Stock which began trading on September 30, 1997 after
the completion of the Company's Initial Public Offering, is listed on the NASDAQ
smallcap market under the symbol "STRZ". As of April 17, 2000, there were
approximately 550 record holders of the Company's Common Stock. The following
table sets forth the high and low bid quotations for the Common Stock, as
reported by NASDAQ.

<TABLE>
<CAPTION>
                                                 2000                           1999                            1998
                                      ---------------------------   -----------------------------   -----------------------------
FISCAL YEAR                               HIGH           LOW            HIGH             LOW            HIGH             LOW
-----------                           ------------   ------------   -------------   -------------   -------------   -------------
<S>                                   <C>            <C>            <C>             <C>             <C>             <C>
First Quarter.......................  $ 6 1/8        $ 4            $ 17 1/4        $ 11 7/8          --              --
Second Quarter......................    6 15/16        4 7/8          15 7/8           6 7/8          --              --
Third Quarter.......................    5 1/2          3 1/16          8 3/8           3 5/8        $ 16 1/2        $ 13 1/4
Fourth Quarter......................    4 5/8          3 3/16          7 5/16          5 3/8          13 5/8          11 3/8
</TABLE>

    In connection with the Company's Initial Public Offering, the Company
declared and paid a cash dividend of $9.3 million to CKE. Other than this
dividend, the Company has never declared or paid dividends on its Common Stock.
The Company expects future earnings, if any, will be retained to finance the
operation and expansion of the Company's business and, accordingly, does not
intend to declare or pay any cash dividends on the Common Stock in the
foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

    The selected financial information and other data presented below should be
read in conjunction with the "Consolidated Financial Statements", and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Form 10-K. The operating results for the
53-week period ended January 31, 2000 included 53 weeks of operations for the
Company's 16 franchised HomeTown Buffet restaurants, nine franchised JB's
restaurants, six JJ North's Grand Buffet restaurants, five BuddyFreddys Country
Buffet restaurants, two BuddyFreddys restaurants, two North's Star Buffet
restaurants, two Casa Bonita restaurants and two Holiday House restaurants. The
results also included 3 weeks of operations for 2 North's Star Buffet
restaurants that were converted back to JB's Restaurants operating for 28 and 13
weeks respectively in fiscal 2000; 17 weeks of operations for one Holiday House
that was converted to a BuddyFreddys Country Buffet restaurant operating for 34
weeks; and 46, 45, 40, 32, 25, 21 and 14 weeks respectively for seven
BuddyFreddys Country Buffet restaurants. In addition, two restaurants were
closed at the end of the fiscal year--one due to impassable road construction,
the other is a recent acquisition awaiting conversion to a BuddyFreddys Country
Buffet restaurant. During the first period of fiscal 2001, an additional closed
restaurant was acquired and will be converted to a BuddyFreddys Country Buffet
restaurant.

    The operating results for the 52-week period ended January 25, 1999 included
52 weeks of operations for the Company's 16 franchised HomeTown Buffet
restaurants, two Casa Bonita restaurants and six JJ North's Grand Buffet
restaurants. The results also included 48 weeks of operations for the nine
franchised JB's Restaurants operated by the Company; 50 weeks for three Stacey's
Buffets that were converted to BuddyFreddys Country Buffet; 48 weeks for two
Maggies Buffets that were converted; 43 weeks for two BuddyFreddys; 8 weeks for
one BuddyFreddys Country Buffet; 3 weeks of operations for one BuddyFreddys
Country Buffet; 50 weeks for one North's Star Buffet; 48 weeks for one North's
Star Buffet; 36 weeks for one North's Star Buffet; 31 weeks for one North's Star
Buffet; 24 weeks for one North's Star Buffet; and 3 weeks for three Holiday
House restaurants.

    The operating results for the 30-week period ending July 15, 1996, and the
52-week periods ending December 18, 1995 and December 19, 1994 include only the
results of operations of HTB Restaurants, Inc., an operator of franchised
HomeTown Buffet restaurants, and are referred to herein as the

                                       14
<PAGE>
Predecessor Company or Predecessor. Summit Family Restaurants Inc. and its
wholly-owned subsidiary HTB was acquired by CKE on July 15, 1996 (the "Summit
Acquisition"). Operating statement data for periods beginning after July 15,
1996 are herein referred to as the Successor Company or Successor. The operating
statement data for the 28-weeks ending January 27, 1997 include the results of
operations of 16 franchised HomeTown Buffet restaurants and the results of
operations of the two Casa Bonita restaurants from October 1, 1996, (the date of
the Casa Bonita acquisition). The 52-week period ended January 26, 1998 includes
the results of operations of 16 franchised HomeTown Buffet restaurants, two Casa
Bonita restaurants and seven JJ North's Grand Buffet Restaurants operated by the
Company from September 30, 1997, (the date of JJ North's acquisition).

                            SELECTED FINANCIAL DATA
          (IN THOUSANDS EXCEPT PER SHARE AMOUNTS AND RESTAURANT DATA)

<TABLE>
                                                       SUCCESSOR COMPANY                        PREDECESSOR COMPANY
                                     -----------------------------------------------------   -------------------------
                                     FIFTY-THREE   FIFTY-TWO     FIFTY-TWO     TWENTY-EIGHT   THIRTY       FIFTY-TWO
                                     WEEKS ENDED   WEEKS ENDED   WEEKS ENDED   WEEKS ENDED   WEEKS ENDED   WEEKS ENDED
                                     JAN. 31,      JAN. 25,      JAN. 26,      JAN. 27,      JULY 15,      DEC. 18,
                                       2000          1999          1998          1997          1996          1995
                                     -----------   -----------   -----------   -----------   -----------   -----------
<S>                                  <C>           <C>           <C>           <C>           <C>           <C>
CONSOLIDATED STATEMENTS OF EARNINGS
  DATA:
Total revenues.....................    $99,066       $85,409       $54,659       $23,632       $23,207       $36,741
Costs and expenses:
  Food costs.......................     32,644        28,578        18,024         8,371         8,569        13,769
  Labor costs......................     33,650        27,983        17,301         7,565         6,810        10,878
  Occupancy and other expenses.....     20,434        17,806        10,829         4,732         5,030         8,954
  General and administrative.......      5,148         4,272         2,291         1,062         1,193         1,666
  Depreciation and amortization....      3,733         3,048         2,109           988           914         1,232
                                       -------       -------       -------       -------       -------       -------
    Total costs and expenses.......     95,609        81,687        50,554        22,718        22,516        36,499
                                       -------       -------       -------       -------       -------       -------
Income from operations.............      3,457         3,722         4,105           914           691           242
Interest expense...................     (1,419)         (597)         (200)         (106)         (145)         (192)
Other Income.......................        213           933           593            --            --            --
                                       -------       -------       -------       -------       -------       -------
Income before income taxes.........      2,251         4,058         4,498           808           546            50
Income taxes.......................        826         1,623         1,799           338           216            22
                                       -------       -------       -------       -------       -------       -------
Net Income.........................    $ 1,425       $ 2,435       $ 2,699       $   470       $   330       $    28
                                       =======       =======       =======       =======       =======       =======
Net Income per common share--
  diluted..........................    $  0.48       $  0.53       $  0.76       $  0.18
                                       =======       =======       =======       =======
Weighted average shares
  outstanding--diluted.............      2,950         4,601         3,528         2,600

BALANCE SHEET DATA:
Total assets.......................    $49,000       $44,159       $40,969       $16,783                     $16,283
Total debt including current
  portion..........................     18,948        17,303         2,368         2,609                      11,150
Stockholders' equity...............    $20,038       $19,363       $32,537       $ 9,742                     $ 1,806

OTHER DATA:
Operating units (1)
  HomeTown Buffet..................         16            16            16            16            16            16
  Casa Bonita......................          2             2             2             2            --            --
  North's Star Division............          8            11             7            --            --            --
  Florida Buffets Division.........         17            12            --            --            --            --
  JB's Restaurants.................         11             9            --            --            --            --
  Non-Operating....................          2             2            --            --            --            --
                                       -------       -------       -------       -------       -------       -------
Total..............................         56            52            25            18            16            16
                                       =======       =======       =======       =======       =======       =======
</TABLE>

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

(1) At the end of the respective periods.

                                       15
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    The following Management's Discussion and Analysis should be read in
conjunction with the condensed combined financial statements, and the notes
thereto, presented elsewhere in this Form 10-K. The operating results for the
53-week period ended January 31, 2000 ("fiscal 2000") included 53 weeks of
operations for the Company's 16 franchised HomeTown Buffet restaurants, nine
franchised JB's restaurants, six JJ North's Grand Buffet restaurants, five
BuddyFreddys Country Buffet restaurants, two BuddyFreddys restaurants, two
North's Star Buffet restaurants, two Casa Bonita restaurants and two Holiday
House restaurants. The results also included 3 weeks of operations for 2 North's
Star Buffet restaurants that were converted back to JB's Restaurants operating
for 28 and 13 weeks respectively in fiscal 2000; 17 weeks of operations for one
Holiday House that was converted to a BuddyFreddys Country Buffet restaurant
operating for 34 weeks; and 46, 45, 40, 32, 25, 21 and 14 weeks respectively for
seven BuddyFreddys Country Buffet restaurants.

    The operating results for the 52-week period ended January 25, 1999 ("fiscal
1999") included 52 weeks of operations for the Company's 16 franchised HomeTown
Buffet restaurants, two Casa Bonita restaurants and six JJ North's Grand Buffet
restaurants operated by the Company (one store was converted to a North's Star
Buffet restaurant). The results also included 48 weeks of operations for the
nine franchised JB's Restaurants operated by the Company; 50 weeks for three
Stacey's Buffets that were converted to BuddyFreddys Country Buffet; 48 weeks
for two Maggies Buffets that were converted; 43 weeks for two BuddyFreddys; 8
weeks for one BuddyFreddys Country Buffet; 3 weeks of operations for one
BuddyFreddys Country Buffet; 50 weeks for one North's Star Buffet; 48 weeks for
one North's Star Buffet; 36 weeks for one North's Star Buffet; 31 weeks for one
North's Star Buffet; 24 weeks for one North's Star Buffet; and 3 weeks for three
Holiday House restaurants.

    The results of operations for the period ended January 26, 1998, ("fiscal
1998") include fifty-two weeks of operations for the Company's sixteen
franchised Hometown Buffet Restaurants, fifty-two weeks of operations for the
Company's two Casa Bonita Restaurants and seventeen weeks of operations for the
seven JJ North's Grand Buffet restaurants operated by the Company.

    The operating results for the twenty-eight weeks ending January 27, 1997
include the results of operations of 16 franchised HomeTown Buffet restaurants
and the results of operations of the two Casa Bonita restaurants from
October 1, 1996, (the date of the Casa Bonita acquisition). The operating
statement data for the thirty weeks ending July 15, 1996 include only the
results of operations of 16 franchised HomeTown Buffet restaurants
Restaurants, Inc., an operator of franchised HomeTown Buffet restaurants.

    Comparability of future periods may also from time to time be affected by
the implementation of the Company's acquisition and strategic alliance
strategies, and the costs associated with integrating new restaurants or under
performing or unprofitable restaurants, if any, acquired or otherwise operated
by the Company may have a material adverse effect on the Company's results of
operations.

                                       16
<PAGE>
RESULTS OF OPERATIONS

    The following table summarizes the Company's results of operations as a
percentage of total revenues for the fifty-two weeks ended January 26, 1998
("fiscal 1998"), fifty-two weeks ended January 25, 1999 ("fiscal 1999") and
fifty-three weeks ended January 31, 2000 ("fiscal 2000").

<TABLE>
<CAPTION>
                                                           FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                           WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                           JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                               2000           1999           1998
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
TOTAL REVENUES...........................................      100.0%         100.0%         100.0%
                                                              ------         ------         ------
Costs and expenses:
  Food costs.............................................       32.9           33.5           33.0
  Labor costs............................................       34.0           32.8           31.6
  Occupancy and other expenses...........................       20.6           20.7           19.8
  General and administrative expenses....................        5.2            5.0            4.2
  Depreciation and amortization..........................        3.8            3.6            3.9
                                                              ------         ------         ------
TOTAL COSTS AND EXPENSES.................................       96.5           95.6           92.5
                                                              ------         ------         ------
INCOME FROM OPERATIONS...................................        3.5            4.4            7.5
  Interest expense.......................................       (1.4)          (0.7)          (0.4)
  Other income...........................................        0.2            1.1            1.1
                                                              ------         ------         ------
  Income before income taxes.............................        2.3            4.8            8.2
INCOME TAX EXPENSE.......................................       (0.8)          (1.9)          (3.3)
                                                              ------         ------         ------
NET INCOME...............................................        1.5%           2.9%           4.9%
                                                              ======         ======         ======
</TABLE>

COMPARISON OF FISCAL 1999 TO FISCAL 2000

    Total revenues increased $13.7 million or 16.0% from $85.4 million in fiscal
1999 to $99.1 million in fiscal 2000. The increase was primarily attributable to
an increase in the number of restaurants open and operating in fiscal 2000 and
an additional week of operating results in fiscal 2000.

    Food costs as a percent of total revenues decreased from 33.5% in fiscal
1999 to 32.9% in fiscal 2000. The decrease is primarily attributable to
improvement in the Florida Division.

    Labor costs as a percent of total revenues increased from 32.8% in fiscal
1999 to 34.0% in fiscal 2000. The increase was primarily attributable to higher
management and benefit costs.

    Occupancy and other expenses as a percent of total revenues decreased from
20.7% in fiscal 1999 to 20.6% in fiscal 2000. The decrease is primarily
attributable to the increase in revenues.

    General and administrative expenses as a percentage of total revenues
increased from 5.0% in fiscal 1999 to 5.2% in fiscal 2000. The increase is
primarily attributable to increases in legal expenses.

    Depreciation and amortization as a percent of total revenues increased from
3.6% in fiscal 1999 to 3.8% in fiscal 2000. The increase is primarily
attributable to the acquisition and conversion of restaurants in Florida.

    Interest expense as a percent of total revenues increased from 0.7% in
fiscal 1999 to 1.4% in fiscal 2000. The increase is primarily attributable to
the Term Loan Facility and Revolving Credit Facility financed by BankBoston,
N.A. as discussed in Item 1.

    Other income as a percent of total revenues decreased from 1.1% in fiscal
1999 to 0.2% in fiscal 2000. The decrease is primarily attributable to the
termination of management contracts with North's Restaurants, Inc.

                                       17
<PAGE>
    Income taxes decreased from 40.0% of earnings before taxes in fiscal 1999 to
36.7% of earnings before taxes in fiscal 2000.

COMPARISON OF FISCAL 1998 TO FISCAL 1999

    Total revenues increased $30.8 million or 56.3% from $54.7 million in fiscal
1998 to $85.4 million in fiscal 1999. The increase was attributable to the
addition of nine JB's Restaurants in fiscal 1999 ($10.0 million), a full year of
JJ North's Grand Buffet restaurants plus four North's Star Buffet restaurants
($8.5 million) and 12 restaurants in Florida ($11.4 million), a 1.5% or $603,000
increase in same store sales at the Company's HomeTown Buffet Restaurants and
various other changes increasing revenues $300,000.

    Food costs as a percent of total revenues increased from 33.0% in fiscal
1998 to 33.5% in fiscal 1999. The increase is primarily attributable to higher
food costs associated with the Florida Buffets Division stores and the North's
Star Buffet restaurants.

    Labor costs as a percent of total revenues increased from 31.6% in fiscal
1998 to 32.8% in fiscal 1999. The increase was primarily attributable to the
addition of the Florida Buffets Division restaurants which operate at a higher
labor cost than the Company's sixteen HomeTown Buffet Restaurants.

    Occupancy and other expenses as a percent of total revenues increased from
19.8% in fiscal 1998 to 20.7% in fiscal 1999. The increase is primarily
attributable to higher supply and utility expenses associated with the Florida
Buffets Division stores.

    General and administrative expenses as a percentage of total revenues
increased from 4.2% in fiscal 1998 to 5.0% in fiscal 1999. The increase is
primarily attributable to higher general and administrative costs resulting from
the reduction and subsequent termination of the Service Agreement with CKE.

    Depreciation and amortization as a percent of total revenues decreased from
3.9% in fiscal 1998 to 3.6% in fiscal 1999. The decrease is primarily
attributable to increased revenues of $30.8 million.

    Interest expense as a percent of total revenues increased from 0.4% in
fiscal 1998 to 0.7% in fiscal 1999. The increase is primarily attributable to
financing of the purchase and retirement of 2.5 million shares of common stock.

    Other income as a percent of total revenues remained the same at 1.1% in
fiscal 1998 and fiscal 1999.

    In fiscal 1998 and in fiscal 1999, income taxes were 40.0% of earnings
before taxes.

                                       18
<PAGE>
                              FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES

    The Company, prior to the reorganization, historically financed operations
through a combination of cash on hand, cash provided from operations and
available borrowings under bank lines of credit. As of January 31, 2000, the
Company had $1,039,000 in cash, and as of January 25, 1999, the Company had
$154,000 in cash and cash equivalents. During fiscal 2000, the Company used
approximately $8.2 million to fund the acquisition of 6 restaurants and fund
capital improvements to existing and acquired restaurants. During fiscal 1999,
the Company used approximately $15.0 million to fund the acquisition of 27
restaurants and fund capital improvements to existing and acquired restaurants.
In addition, the Company used approximately $3.5 million to fund loans related
to acquired restaurants. Also during fiscal 1999, the Company repurchased 2
million shares of its common stock from CKE for a purchase price equal to $5.0
million in cash and a 90 day promissory note in the amount of $7.5 million on
September 10, 1998. The Company used $7.5 million of the proceeds from its bank
financing arrangement with BankBoston, N.A. to discharge all of its obligation
to CKE on the 90 day promissory note.

    Cash provided by operations was approximately $6.9 million for fiscal 2000
and approximately $6.6 million for fiscal 1999.

    The Company intends to modestly expand operations through the acquisition of
regional buffet chains or through the purchase of existing restaurants which
would be converted to one of the Company's existing restaurant concepts. In many
instances, management believes that existing restaurant locations can be
acquired and converted to the Company's prototype at a lower cost. Management
estimates the cost of acquiring and converting leased property to one of the
existing concepts to be approximately $150,000 to $450,000. These costs consist
primarily of exterior and interior appearance modifications, new table, chairs
and food bars and the addition of certain kitchen and food service equipment.
There can be no assurance that the Company will be able to acquire additional
restaurant chains or locations or, if acquired, that these restaurants will have
a positive contribution to the Company's results of operations.

    On October 23, 1998, the Company entered into a $20 million syndicated bank
financing agreement led by FleetBoston Financial Corporation (formerly known as
BankBoston, N.A.). The credit facility consists of a $13 million, 5-year term
loan (the "Term Loan Facility") and a $7 million, 5-year revolving credit
facility (the "Revolving Credit Facility"). The Term Loan Facility refinanced
existing indebtedness and will provide capital for the repurchase of Star Buffet
common stock and acquisitions. The Term Loan Facility balance was $10,650,000 as
of April 17, 2000. Principal payments under the Term Loan Facility are due in
quarterly installments, beginning in November 1999 and continue until the final
maturity in October 2003. Borrowings under the Revolving Credit Facility will be
used for the Company's new unit development and working capital needs. All
outstanding amounts under the Revolving Credit Facility will become due in
October 2003. The Revolving Credit Facility balance was $4,350,000 on April 17,
2000.

    The Company believes that available cash, cash flow from operations and
amounts available under the Term Loan Facility and Revolving Credit Facility
will be sufficient to satisfy its working capital, and capital expenditure
requirements for the foreseeable future. If the Company requires additional
funds to support its working capital requirements or for other purposes, it may
seek to raise such additional funds through public or private equity and/or debt
financing or from other sources. There can be no assurance, however, that
changes in the Company's operating plans, the unavailability of a credit
facility, the acceleration of the Company's expansion plans, lower than
anticipated revenues, increased expenses, potential acquisitions of other events
will not cause the Company to seek additional financing sooner than anticipated.
There can be no assurance that additional financing will be available on
acceptable terms or at all.

                                       19
<PAGE>
IMPACT OF INFLATION

    Management recognizes that inflation has an impact on food, construction,
labor and benefit costs, all of which can significantly affect the Company's
operations. Historically, the Company has been able to pass any associated
higher costs due to these inflationary factors along to its customers because
those factors have impacted nearly all restaurant companies. During fiscal 2000
and fiscal 1999, however, management has emphasized cost controls rather than
price increases, given the competitive pressure within the quick-service
restaurant industry.

NEW ACCOUNTING PRONOUNCEMENT

    In June 1998, the FASB issued SFAS no. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement established standards for
derivative instruments and for hedging activities, and requires that an entity
recognize all derivatives as either assets or liabilities in the balance sheet
and measure those instruments at fair value. The Company has no instruments or
transactions subject to this Statement.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    See the Index included at "Item 14. Exhibits, Financial Statement Schedules
and Reports on Form 8-K."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information pertaining to directors and executive officers of the
registrant is hereby incorporated by reference to the Company's Proxy Statement
to be used in connection with the Company's 2000 Annual Meeting of Stockholders,
to be filed with the Commission within 120 days of January 31, 2000. Information
concerning the current executive officers of the Company is contained in Item 1
of Part I of this Annual Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

    The information pertaining to executive compensation is hereby incorporated
by reference to the Company's Proxy Statement to be used in connection with the
Company's 2000 Annual Meeting of Stockholders, to be filed with the Commission
within 120 days of January 31, 2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information pertaining to security ownership of certain beneficial
owners and management is hereby incorporated by reference to the Company's Proxy
Statement to be used in connection with the Company's 2000 Annual Meeting of
Stockholders, to be filed with the Commission within 120 days of January 31,
2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information pertaining to certain relationships and related transactions
is hereby incorporated by reference to the Company's Proxy Statement to be used
in connection with the Company's 2000 Annual Meeting of Stockholders, to be
filed with the Commission within 120 days of January 31, 2000.

                                       20
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(A)(1) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:

<TABLE>
<CAPTION>
                                                              PAGE NUMBER
                                                              -----------
<S>                                                           <C>
Independent Auditors' Report................................      F-1
Consolidated Balance Sheets--as of January 31, 2000 and
  January 25, 1999..........................................      F-2
Consolidated Statements of Income--for the 53-weeks ended
  January 31, 2000, 52-weeks ended January 25, 1999 and
  52-weeks ended January 26, 1998...........................      F-4
Consolidated Statements of Stockholders' Equity--for the
  53-weeks ended January 31, 2000, 52-weeks ended
  January 25, 1999 and 52-weeks ended January 26, 1998......      F-5
Consolidated Statements of Cash Flows--for the 53-weeks
  ended January 31, 2000, 52-weeks ended January 25, 1999
  and 52-weeks ended January 26, 1998.......................      F-6
Notes to Consolidated Financial Statements..................      F-7
</TABLE>

(A)(2) INDEX TO FINANCIAL STATEMENT SCHEDULES:

       All schedules are omitted since the required information is not present
       in amounts sufficient to require submission of the schedule, or because
       the information required is included in the consolidated financial
       statements or the notes thereto.

(A)(3) EXHIBITS:

       An "Exhibit Index" has been filed as a part of this Form 10-K beginning
       on Page E-1 hereof and is incorporated herein by reference.

 (B) CURRENT REPORTS ON FORM 8-K:

       None.

                                       21
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

The Stockholders and Board of Directors
Star Buffet, Inc.:

    We have audited the accompanying consolidated balance sheets of Star Buffet,
Inc. and subsidiaries as of January 31, 2000 and January 25, 1999, and the
related consolidated statements of income, stockholders' equity and cash flows
for the 53-week period ended January 31, 2000, and the 52-week periods ended
January 25, 1999 and January 26, 1998. These consolidated financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.

    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, the consolidated financial statements present fairly, in all
material aspects, the financial position of Star Buffet, Inc. and subsidiaries
as of January 31, 2000 and January 25, 1999, and the results of their operations
and their cash flows, in conformity with generally accepted accounting
principles.

/s/ KPMG LLP

Salt Lake City, Utah
April 7, 2000

                                      F-1
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              JANUARY 31,    JANUARY 25,
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 1,039,000    $   154,000
  Current portion of notes and other receivables............    2,061,000      3,096,000
  Inventories...............................................    1,050,000        842,000
  Deferred income taxes, net................................      221,000        274,000
  Prepaid expenses..........................................       84,000        159,000
                                                              -----------    -----------
Total current assets:.......................................    4,455,000      4,525,000

Property, buildings and equipment, at cost, less accumulated
  depreciation..............................................   34,367,000     29,490,000
Real property and equipment under capitalized leases, at
  cost, less accumulated amortization.......................    1,792,000      2,100,000
Notes receivable, net of current portion....................    3,494,000      3,491,000
Deposits and other..........................................      262,000        344,000
Goodwill, less accumulated amortization.....................    4,034,000      4,069,000
Other intangible assets, less accumulated amortization......      596,000        773,000
                                                              -----------    -----------
Total assets................................................  $49,000,000    $44,792,000
                                                              ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-2
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              JANUARY 31,    JANUARY 25,
                                                                  2000           1999
                                                              ------------   ------------
<S>                                                           <C>            <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable-trade....................................  $ 5,164,000    $ 4,255,000
  Payroll and related taxes.................................    2,633,000      1,918,000
  Sales and property taxes..................................    1,136,000        869,000
  Rent, licenses and other..................................      549,000        705,000
  Current maturities of obligations under capital leases
    and long-term debt......................................    2,744,000      1,329,000
                                                              -----------    -----------
Total current liabilities...................................   12,226,000      9,076,000

Deferred income taxes, net..................................      532,000        379,000
Capitalized lease obligations, net of current maturities....    1,854,000      2,049,000
Long-term debt, net of current maturities...................   14,350,000     13,925,000
Stockholders' equity:
  Preferred stock, $.001 par value; authorized 1,500,000
    shares; none issued or outstanding......................           --             --
  Common stock, $.001 par value; authorized 18,500,000
    shares; issued and outstanding 2,950,000 shares in 2000
    and 2,950,00 shares in 1999.............................        3,000          3,000
  Additional paid-in capital................................   16,351,000     16,351,000
  Officer's note receivable.................................     (813,000)            --
  Retained earnings.........................................    4,593,000      3,199,000
  Treasury stock, at cost, 15,698 shares in 2000 and 31,000
    shares in 1999..........................................      (96,000)      (190,000)
                                                              -----------    -----------
Total stockholders' equity..................................   20,038,000     19,363,000

Total liabilities and stockholders' equity..................  $49,000,000    $44,792,000
                                                              ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-3
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>
                                                      FIFTY-THREE          FIFTY-TWO           FIFTY-TWO
                                                      WEEKS ENDED         WEEKS ENDED         WEEKS ENDED
                                                   JANUARY 31, 2000    JANUARY 25, 1999    JANUARY 26, 1998
                                                   -----------------   -----------------   -----------------
<S>                                                <C>                 <C>                 <C>
Total revenues...................................     $99,066,000         $85,409,000         $54,659,000
                                                      -----------         -----------         -----------
Costs and expenses
  Food costs.....................................      32,644,000          28,578,000          18,024,000
  Labor costs....................................      33,650,000          27,983,000          17,301,000
  Occupancy and other expenses...................      20,434,000          17,806,000          10,829,000
  General and administrative expenses............       5,148,000           4,272,000           2,291,000
  Depreciation and amortization..................       3,733,000           3,048,000           2,109,000
                                                      -----------         -----------         -----------
Total costs and expenses.........................      95,609,000          81,687,000          50,554,000
                                                      -----------         -----------         -----------
Income from operations...........................       3,457,000           3,722,000           4,105,000
Interest expense.................................      (1,419,000)           (597,000)           (200,000)
Interest income..................................          43,000             666,000             321,000
Other income.....................................         170,000             267,000             272,000
                                                      -----------         -----------         -----------
Income before income taxes.......................       2,251,000           4,058,000           4,498,000
Income tax expense...............................         826,000           1,623,000           1,799,000
                                                      -----------         -----------         -----------
Net income.......................................     $ 1,425,000         $ 2,435,000         $ 2,699,000
                                                      ===========         ===========         ===========
Net income per common share--basic...............     $      0.48         $      0.53         $      0.77
                                                      ===========         ===========         ===========
Weighted average shares outstanding--basic.......       2,950,000           4,601,000           3,515,000
                                                      ===========         ===========         ===========
Net income per common share--diluted.............     $      0.48         $      0.53         $      0.76
                                                      ===========         ===========         ===========
Weighted average shares outstanding--diluted.....       2,950,000           4,601,000           3,528,000
                                                      ===========         ===========         ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-4
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                    COMMON STOCK         ADDITIONAL    OFFICER'S                                  TOTAL
                                ---------------------     PAID-IN         NOTE       RETAINED     TREASURY    SHAREHOLDERS'
                                  SHARES      AMOUNT      CAPITAL      RECEIVABLE    EARNINGS       STOCK        EQUITY
                                ----------   --------   ------------   ----------   -----------   ---------   -------------
<S>                             <C>          <C>        <C>            <C>          <C>           <C>         <C>
Balance at January 27, 1997...   2,600,000   $ 2,000    $  9,270,000   $      --    $   470,000   $      --   $  9,742,000
Net activity with principal
  stockholder.................          --        --      (8,272,000)         --     (2,405,000)         --    (10,677,000)
Issuance of common stock......   2,850,000     3,000      30,770,000          --             --          --     30,773,000
Net income....................          --        --              --          --      2,699,000          --      2,699,000
                                ----------   -------    ------------   ---------    -----------   ---------   ------------
Balance at January 26, 1998...   5,450,000     5,000      31,768,000          --        764,000          --     32,537,000
Redemption and retirement of
  stock From principal
  stockholder.................  (2,000,000)   (2,000)    (12,498,000)         --             --          --    (12,500,000)
Purchase and retirement of
  stock.......................    (500,000)     (500)     (2,919,000)         --             --          --     (2,919,000)
Purchase of treasury stock....          --        --              --          --             --    (190,000)      (190,000)
Net income....................          --        --              --          --      2,435,000          --      2,435,000
                                ----------   -------    ------------   ---------    -----------   ---------   ------------
Balance at January 25, 1999...   2,950,000     3,000      16,351,000          --      3,199,000    (190,000)    19,363,000
Officer's note receivable.....          --        --              --    (813,000)            --          --       (813,000)
Sale of treasury stock........          --        --              --          --        (31,000)     94,000         63,000
Net income....................          --        --              --          --      1,425,000          --      1,425,000
                                ----------   -------    ------------   ---------    -----------   ---------   ------------
Balance at January 31, 2000...   2,950,000   $ 3,000    $ 16,351,000   $(813,000)   $ 4,593,000   $ (96,000)  $ 20,038,000
                                ==========   =======    ============   =========    ===========   =========   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-5
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                       FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                       WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                       JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                           2000           1999           1998
                                                       ------------   ------------   ------------
<S>                                                    <C>            <C>            <C>
Cash flows from operating activities:
Net income...........................................  $ 1,425,000    $  2,435,000   $  2,699,000
Adjustments to reconcile net income to net cash
  provided by operating activities:
  Depreciation and amortization......................    3,733,000       3,048,000      2,109,000
  Provision for losses on other assets...............           --              --         75,000
  Amortization of loan cost..........................       99,000              --        (78,000)
  Amortization of royalty fee........................       23,000         460,000             --
  Change in operating assets and liabilities:
    Receivables......................................      (89,000)     (1,280,000)      (393,000)
    Inventories......................................     (208,000)       (349,000)      (109,000)
    Prepaid expenses.................................       52,000        (414,000)      (154,000)
    Deposits.........................................      (57,000)        576,000        183,000
    Deferred income taxes............................      206,000         422,000       (331,000)
    Accounts payable-trade...........................      909,000       2,043,000        (14,000)
    Other accrued liabilities........................      826,000        (360,000)     1,377,000
                                                       -----------    ------------   ------------
Net cash provided by operating activities............    6,919,000       6,581,000      5,364,000
Cash flows used in investing activities:
  Increase (decrease) in notes receivable............    1,121,000      (3,468,000)    (3,400,000)
  Deposits on future acquisitions....................           --              --     (1,936,000)
  Acquisition of property, buildings and equipment...   (8,156,000)    (14,979,000)    (5,562,000)
  Deferred organization and franchise costs..........           --              --        (67,000)
  Purchase of short-term investments.................      (27,000)             --        180,000
  Loans to officers..................................     (813,000)             --             --
                                                       -----------    ------------   ------------
Net cash used in investing activities................   (7,875,000)    (18,447,000)   (10,785,000)
Cash flows from financing activities:
  Proceeds from issuance of common stock.............           --              --     30,773,000
  Payments to extinguish debt........................   (4,300,000)     (8,424,000)            --
  Proceeds from issuance of long-term debt...........    6,500,000      14,500,000             --
  Capitalized loan costs.............................      (33,000)       (437,000)            --
  Redemption of common stock.........................           --      (7,919,000)            --
  Sale of treasury stock.............................       63,000              --             --
  Purchase of treasury stock.........................           --        (190,000)            --
  Net activity with principle shareholder............           --              --    (10,677,000)
  Principal payment on capital leases................     (389,000)       (297,000)      (241,000)
                                                       -----------    ------------   ------------
Net cash provided by (used in) financing
  activities.........................................    1,841,000      (2,767,000)    19,855,000
                                                       -----------    ------------   ------------
Net increase (decrease) in cash and cash
  equivalents........................................      885,000     (14,633,000)    14,434,000
Cash and cash equivalents at beginning of period.....      154,000      14,787,000        353,000
                                                       -----------    ------------   ------------
Cash and cash equivalents at end of period...........  $ 1,039,000    $    154,000   $ 14,787,000
                                                       ===========    ============   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                      F-6
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    A summary of certain significant accounting policies not disclosed elsewhere
in the footnotes to the consolidated financial statements is set forth below.

BASIS OF PRESENTATION

    The accompanying consolidated financial statements include the accounts for
Star Buffet, Inc., together with its direct and indirect wholly owned
subsidiaries Summit Family Restaurants Inc. ("Summit"), HTB Restaurants, Inc.
("HTB"), Northstar Buffet, Inc. ("NSBI") and Star Buffet Management, Inc.
("SBMI") (collectively the "Company"). The accompanying financial statements
include the results of operations and assets and liabilities directly related to
the Company's operations. Certain estimates, assumptions and allocations were
made in preparing such financial statements.

ORGANIZATION AND NATURE OF OPERATIONS

    The Company was formed by CKE Restaurants, Inc. ("CKE") in July 1997 in
connection with the reorganization of CKE's buffet-style restaurant business.
Pursuant to a contribution agreement among the Company and CKE and certain
respective subsidiaries, CKE transferred to Summit the net assets of its two
Casa Bonita Mexican theme restaurants, and Summit transferred substantially all
of its assets and liabilities (primarily those relating to the JB's Restaurant
system and Galaxy Diner restaurants, but excluding 16 HomeTown Buffet
restaurants operated by HTB) to a newly formed subsidiary of CKE. All of the
parties to the foregoing transactions (the "Formation Transactions") were, upon
completion thereof, direct or indirect wholly owned subsidiaries of CKE, and
such Formation Transactions were accounted for as a reorganization among
companies under common control. Furthermore, the results of operations include
seven JJ North's Grand Buffet Restaurants operated by the Company only from
September 30, 1997 (the date of acquisition by the Company). In connection with
the transfer of assets the Company has recorded a $600,000 receivable from CKE
for monies owed for liabilities assumed at the transfer date. The receivable,
previously in cash and cash equivalents, has been reclassified to the other
receivables for all presented periods.

    The operating results for the 53-week period ended January 31, 2000 included
53 weeks of operations for the Company's 16 franchised HomeTown Buffet
restaurants, nine franchised JB's restaurants, six JJ North's Grand Buffet
restaurants, five BuddyFreddys Country Buffet restaurants, two BuddyFreddys
restaurants, two North's Star Buffet restaurants, two Casa Bonita restaurants
and two Holiday House restaurants. The results also included 3 weeks of
operations for 2 North's Star Buffet restaurants that were converted back to
JB's Restaurants operating for 28 and 13 weeks respectively in fiscal 2000; 17
weeks of operations for one Holiday House that was converted to a BuddyFreddys
Country Buffet restaurant operating for 34 weeks; and 46, 45, 40, 32, 25, 21 and
14 weeks respectively for seven BuddyFreddys Country Buffet restaurants. In
addition, two restaurants were closed at the end of the fiscal year--one due to
road construction, the other is a recent acquisition awaiting conversion to a
BuddyFreddys Country Buffet restaurant. During the first period of fiscal 2001,
an additional closed restaurant was acquired and will be converted to a
BuddyFreddys Country Buffet restaurant.

    The operating results for the 52-week period ended January 25, 1999 include
52 weeks of operations for the 16 franchised HomeTown Buffet restaurants, two
Casa Bonita restaurants and six JJ North's Grand Buffet restaurants. The results
also include 48 weeks of operations for nine franchised JB's Restaurants; 50
weeks for three Staceys Buffets that were converted to BuddyFreddys Country
Buffet; 48 weeks for two Maggies Buffets that were converted to BuddyFreddys
Country Buffet; 43 weeks for two BuddyFreddys; 8

                                      F-7
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
weeks for one BuddyFreddys Country Buffet; 3 weeks of operations for one
BuddyFreddys Country Buffet; 50 weeks for one North's Star Buffet; 48 weeks for
one North's Star Buffet; 36 weeks for one North's Star Buffet; 31 weeks for one
North's Star Buffet; 24 weeks for one North's Star Buffet; and 3 weeks for three
Holiday House restaurants.

    The operating results for the fifty-two week period ended January 26, 1998,
include 52 weeks of operations for the Company's 16 franchised HomeTown Buffet
restaurants, 52 weeks of operations for the Company's two Casa Bonita
restaurants and 16 weeks of operations for the seven JJ North's Grand Buffet
restaurants operated by the Company.

FISCAL YEAR

    The Company utilizes a 52/53 week fiscal year which ends on the last Monday
in January. The first quarter of each year contains 16 weeks while the other
three quarters each contain 12 weeks.

CASH EQUIVALENTS

    For purposes of reporting cash flows, highly liquid investments purchased
with original maturities of three months or less are considered cash
equivalents. The carrying amounts reported in the consolidated balance sheets
for these instruments approximate their fair value.

SHORT-TERM INVESTMENTS

    Short-term investments (consisting primarily of certificates of deposits,
with original maturities of greater than three months) are held-to-maturity
securities and, accordingly, have been stated at cost.

INVENTORIES

    Inventories consist of food, beverage, gift shop items and restaurant
supplies and are valued at cost, determined by the first-in, first-out method.

PROPERTY AND EQUIPMENT

    Property and equipment and real property under capitalized leases are
carried at cost, less accumulated depreciation and amortization. Depreciation
and amortization are provided using the straight-line method over the following
useful lives: buildings and leasehold improvements--lesser of lease life or 40
years; furniture, fixtures and equipment--five to eight years; capitalized
leases--lesser of lease life or 20 years. Lease renewal option periods are
included in determining leasehold improvement useful lives when, in management's
opinion, such renewal options will be exercised.

    Repairs and maintenance are charged to operations as incurred. Remodeling
costs are generally capitalized.

GOODWILL

    Goodwill represents costs in excess of fair value of net assets acquired and
is amortized on the straight-line basis over 40 years. The Company periodically
reviews goodwill for recoverability in connection with its review of impairment
of long-lived assets.

                                      F-8
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    Accumulated amortization of goodwill totaled $203,000 at January 31, 2000
and $93,000 at January 25, 1999.

OTHER INTANGIBLE ASSETS

    Other intangible assets are comprised of franchise fees and loan costs.
Franchise fees are amortized using the straight-line method over the remaining
terms of the franchise agreements, which range typically from eight to
16 years. Loan costs are amortized using the straight-line method over 5 years.

    Accumulated amortization of these other intangible assets totaled $283,000
at January 31, 2000 and $161,000 at January 25, 1999.

IMPAIRMENT OF LONG-LIVED ASSETS

    The Company determines that an impairment write down is necessary for
locations whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an asset to
future net cash flows expected to be generated by the asset. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceed the fair value of the
assets. In fiscal 1999 the Company determined a $72,000 impairment write down
was necessary for one location in the North's Star segment. The write down is
included in depreciation and amortization for fiscal 1999 in the consolidated
statement of income.

PRE-OPENING COSTS

    In April 1998, the AICPA issued Statement of Position 98-5, "Reporting on
the Costs of Start-Up Activities" ("SOP 98-5"). SOP 98-5 requires that costs
incurred during a start-up activity (including organization costs) be expensed
as incurred and is effective for fiscal years beginning after December 31, 1998.
The Company adopted SOP 98-5 effective January 27, 1998. There were no
capitalized pre-opening costs as of January 26, 1998. During fiscal 1999, the
Company incurred approximately $1,000,000 of pre-opening costs which were
expensed.

GENERAL AND ADMINISTRATIVE EXPENSES

    General and administrative expenses include certain expenses directly
related to the Company and other corporate overhead. Allocations of expenses
were made by Summit to HTB prior to September 22, 1997 and by CKE to Star Buffet
after September 22, 1997 for certain corporate services and overhead incurred by
the Company. Total corporate allocations included in general and administrative
expenses in the accompanying consolidated statements of income amounted to
approximately $0, $274,000 and $437,000 for the 53 week period ended
January 31, 2000 and for the 52 week periods ended January 25, 1999 and
January 26, 1998, respectively. These allocations were based on, among other
things, percentage of revenues, number of stores, number of employees or the
amount of capital expenditures in relation to the total of the respective
amounts of Summit on a combined basis. Allocations are made on a basis that
management of the Company believes to be reasonable; however, such allocations
are not necessarily indicative of the expenses which might have been incurred by
the Company had they operated on a stand-alone basis. In connection with the
initial public offering (described in Note 2), the Company and CKE entered into
a CKE Service Agreement pursuant to which CKE was to provide the Company with a

                                      F-9
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
number of corporate support services. Such services consisted of accounting and
finance, administration, marketing, real estate and purchasing. In August of
1998, the Company began to provide certain of these services internally. In
February of 1999, the CKE Service Agreement was terminated.

    The following amounts were paid to CKE for services, $0 for the 53 weeks
ended January 31, 2000, $274,000 for the 52 weeks ended January 25, 1999 and
$437,000 for the 52 weeks ended January 26, 1998.

INCOME TAXES

    The Company accounts for income taxes using the asset and liability method.
Under this method, income tax assets and liabilities are recognized using
enacted tax rates for the expected future tax consequences attributable to
temporary differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. A change in tax
rates is recognized in income in the period that includes the enactment date.

ADVERTISING EXPENSES

    Advertising costs are charged to operations as incurred. Amounts charged to
operations totaled $2,210,000, $1,965,000 and $708,000, for the 53 week period
ended January 31, 2000, and the 52 week periods ended January 25, 1999 and
January 26, 1998, respectively.

USE OF ESTIMATES

    Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these consolidated financial
statements in conformity with generally accepted accounting principles. Actual
results could differ from those estimates.

EARNINGS PER SHARE

    Basic earnings per share are computed by dividing net income by the weighted
average number of common shares outstanding. Diluted earnings per share assumes
the exercise of stock options using the treasury stock method, if dilutive. The
following is a reconciliation of the numerators and denominators used to
calculated diluted earnings per share:

<TABLE>
<CAPTION>
                                                           FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                           WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                           JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                               2000           1999           1998
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
Weighted average common shares outstanding...............   2,950,000      4,601,000      3,515,000
Dilutive effect of stock options.........................          --             --         13,000
                                                            ---------      ---------      ---------
Common shares assuming dilution..........................   2,950,000      4,601,000      3,528,000
                                                            =========      =========      =========
</TABLE>

    Average shares used in the fifty-three weeks ended January 31, 2000,
fifty-two weeks ended January 25, 1999 and the fifty-two weeks ended
January 26, 1998 diluted earnings per share computations exclude stock options
to purchase 743,000 shares, 500,000 shares and 608,000 shares of common stock,
respectively, due to their antidilutive effect.

                                      F-10
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SEGMENT REPORTING

    In fiscal 1999, the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of an Enterprise and Related
Information" ("SFAS 131"). SFAS 131 established standards for reporting
information about operating segments. The Company's reportable segments are
based on brand similarities.

COMPREHENSIVE INCOME

    In fiscal 1999, the Company adopted Statement of Financial Accounting
Standard No. 130, "Reporting Comprehensive Income" ("SFAS 130"). This statement
established rules for the reporting of comprehensive income and its components.
The adoption of SFAS 130 did not impact the Company's consolidated financial
statements or related disclosures as the Company does not have any components of
other comprehensive income. Therefore, comprehensive income equaled net income
for all periods represented.

STOCK-BASED COMPENSATION

    The Company uses the intrinsic value method prescribed by Accounting
Principles Board (APB) Opinion No. 25 when recognizing expense for employee
stock compensation plans. As such, compensation is only recognized on the date
of grant when the current market price of the stock exceeds the exercise price.

RECLASSIFICATIONS

    Certain amounts in fiscal 1999 and 1998 have been reclassified to conform
with fiscal 2000 presentation.

NOTE 2--INITIAL PUBLIC OFFERING

    On September 30, 1997, the Company completed an initial public offering (the
"IPO") of 3,000,000 shares of Common Stock at an IPO price of $12.00 per share.
Of the 3,000,000 share offering, 2,400,000 shares were sold by the Company and
600,000 shares were sold by CKE. On October 7, 1997, the underwriters exercised
their over-allotment option and acquired an additional 450,000 shares of Common
Stock. The IPO generated total net proceeds to the Company of $30.8 million
after commissions and offering expenses.

USE OF PROCEEDS

    Of the net proceeds received from the IPO, the Company paid to CKE $10.7
million, which included a dividend of $9.3 million. These payments in effect
reimbursed CKE for its equity in HomeTown Buffet and Casa Bonita at the date of
the IPO. The remaining proceeds were loaned to North's Restaurants, Inc. for
$3.6 million, acquisition of restaurants $11.9 million, acquisition of
furniture, fixtures, and equipment $2.4 million, and real estate loans on two
BuddyFreddys properties--BuddyFreddys Brandon, LTD. for $1.1 million at 10.0%
interest for one year and BuddyFreddys Plant City, LTD. for $1.3 million at
10.0% interest for one year. The BuddyFreddys Brandon, LTD real estate loan was
paid off in April 1999, and the BuddyFreddys Plant City, LTD real estate loan
was converted when the Company acquired the property in January 1999.

                                      F-11
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3--ACQUISITIONS

    Concurrent with the IPO, the Company acquired six JJ North's Grand Buffet
Restaurants from North's Restaurants, Inc., ("North's"), and completed a
management agreement for a seventh restaurant. The total cash consideration paid
to North's was approximately $4.5 million for the seven restaurants resulting in
$1.3 million of goodwill. The acquisition was accounted for as a purchase. On
January 12, 1999, the management agreement was terminated and the seventh
restaurant was acquired. In connection with the North's acquisition, the Company
has provided a $3.0 million term loan and a $750,000 line of credit to North's.
The term loan and line of credit are secured by North's remaining restaurants
and bear interest at 8.0% (See note 15).

    On February 13, 1998, the Company acquired the leasehold interests of three
restaurants located in Florida for $1,004,000. The Company accounted for the
acquisition as a purchase. In addition, the Company acquired leasehold interests
of two restaurants in Florida for a purchase price of $463,000. The Company
accounted for the acquisition as a purchase.

    On February 24, 1998, the Company acquired twelve JB's Restaurants from JB's
Restaurants, Inc., a wholly-owned subsidiary of CKE, for $4,265,000, subject to
adjustment. At the time of acquisition, the Company prepaid royalty fees for one
year in the amount of $485,000. The Company accounted for the acquisition as a
purchase. During fiscal 1999, the Company completed three conversions of JB's
restaurants to North's Star Buffet restaurants--the Company's small-format
buffet concept. In February 1999, two of the three restaurants were closed due
to their failure to meet performance expectations and were converted back to
JB's Restaurants. The Company operates the eleven restaurants under a franchise
agreement with JB's Family Restaurants, Inc., a wholly-owned subsidiary of Santa
Barbara Restaurant Group, Inc.

    On April 1, 1998, the Company acquired two family-dining restaurants located
in Florida which operate under the brand name of BuddyFreddys. The purchase
price was $1.6 million, subject to adjustments. The Company accounted for the
acquisition as a purchase.

    In January 1999, the Company completed the Holiday House transaction
acquiring three Holiday House restaurants in Florida for a purchase price of
$1,166,000. The Company accounted for the acquisition as a purchase.

    The total goodwill recognized in connection with the acquisitions in fiscal
1999 was $2,839,000.

NOTE 4--NOTES RECEIVABLE

    Notes receivable at January 31, 2000 consists of the following:

<TABLE>
<CAPTION>
                                                 JANUARY 31, 2000    JANUARY 25, 1999
                                                 -----------------   -----------------
<S>                                              <C>                 <C>
Notes receivable from North's
  Restaurants, Inc.............................     $3,494,000          $3,491,000
Note receivable from BuddyFreddys of
  Brandon, Ltd.................................             --           1,124,000
                                                    ----------          ----------
                                                     3,494,000           4,615,000
Less current portion...........................             --           1,124,000
                                                    ----------          ----------
                                                    $3,494,000          $3,491,000
                                                    ==========          ==========
</TABLE>

                                      F-12
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4--NOTES RECEIVABLE (CONTINUED)

    The receivable from North's Restaurants, Inc. includes $3,123,000 for the
term note and $371,000 on the line of credit that was converted to a note
receivable as a result of a dispute with North's Restaurants, Inc. No line of
credit was available as of January 31, 2000. The $3.0 million note receivable
stipulates that interest accruing on the loan will be added to the note balance
for the first six months. Interest on the aggregate balance was to be payable
monthly with monthly principal payments beginning November 1, 1999. The interest
on the line of credit was to be payable monthly for the first six months with
principal and interest payments due monthly thereafter until the line was
repaid. Management has stopped accruing the interest pending resolution of the
dispute with North's Restaurants, Inc. (See Note 15). The unrecognized accrued
interest was $446,470 at January 31, 2000.

    The note receivable from BuddyFreddys of Brandon, Ltd. was secured by real
estate and included interest at 10 percent. It was paid in full in April of
1999.

NOTE 5--PROPERTY AND EQUIPMENT AND REAL PROPERTY UNDER CAPITALIZED LEASES

    The components of property and equipment and real property under capitalized
leases are as follows:

<TABLE>
<CAPTION>
                                                 JANUARY 31, 2000    JANUARY 25, 1999
                                                 -----------------   -----------------
<S>                                              <C>                 <C>
Property and equipment:
  Furniture, fixtures and equipment............    $ 15,659,000         $13,076,000
  Land.........................................       3,374,000           2,382,000
  Buildings and leasehold improvements.........      26,030,000          21,602,000
                                                   ------------         -----------
                                                     45,063,000          37,060,000

  Less accumulated depreciation and
    amortization...............................     (10,696,000)         (7,570,000)
                                                   ------------         -----------
                                                   $ 34,367,000         $29,490,000
                                                   ============         ===========

Real property and equipment under capitalized
  leases.......................................    $  3,193,000         $ 3,193,000
  Less accumulated amortization................      (1,401,000)         (1,093,000)
                                                   ------------         -----------
                                                   $  1,792,000         $ 2,100,000
                                                   ============         ===========
</TABLE>

NOTE 6--LONG-TERM DEBT

    On October 23, 1998, the Company entered into a $20 million syndicated bank
financing agreement led by BankBoston, N.A. The credit facility consists of a
$13 million, 5-year term loan (the "Term Loan Facility") and a $7 million,
5-year revolving credit facility (the "Revolving Credit Facility"). The Term
Loan Facility refinanced existing indebtedness and provided capital for the
repurchase of Star Buffet common stock and acquisitions. The Term Loan Facility
balance was $11,275,000 as of January 31, 2000. Principal payments under the
Term Loan Facility are due in quarterly installments, which began in November
1999 and will continue until the final maturity in October 2003, with interest
at the Bank's Base Rate plus 0.00% to 0.75%, or the Eurodollar Rate plus 1.25%
to 2.00% at the Company's option. Borrowings under the Revolving Credit Facility
bear interest at approximately 7.5% to 8.5% and will be used for the Company's
new unit development and working capital needs. All outstanding amounts under
the Revolving Credit

                                      F-13
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6--LONG-TERM DEBT (CONTINUED)
Facility become due in October 2003. The Revolving Credit Facility balance was
$5.7 million on January 31, 2000. The secured Term Loan Facility and Revolving
Credit Facility are collateralized by tangible and intangible personal property
of the Company and require the Company to maintain specified minimum levels of
net worth, limit the amount of capital expenditures, and meet other financial
covenants. The Revolving Credit Facility includes an annual commitment fee of
$30,000 per year plus a percentage of .375% to 0.50% of any unused balance.

    Long term debt matures in fiscal years ending after January 31, 2000 as
follows:

<TABLE>
<CAPTION>
FISCAL YEAR
-----------
<S>                          <C>
2001.......................    2,625,000
2002.......................    3,125,000
2003.......................    3,625,000
2004.......................    7,600,000
                             -----------
Total......................  $16,975,000
                             ===========
</TABLE>

NOTE 7--LEASES

    The Company occupies certain restaurants under long-term leases expiring at
various dates through 2014. Most restaurant leases have renewal options for
terms of 5 to 20 years, and substantially all require payment of real estate
taxes and insurance. Certain leases require the rent to be the greater of a
stipulated minimum rent or a specified percentage of sales.

    Minimum lease payments for all leases and the present value of net minimum
lease payments for capital leases as of January 31, 2000 are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR                                            CAPITAL      OPERATING
-----------                                           ----------   -----------
<S>                                                   <C>          <C>
2001................................................     272,000     4,344,000
2002................................................     272,000     4,082,000
2003................................................     272,000     4,036,000
2004................................................     248,000     3,806,000
2005................................................     235,000     3,618,000
Thereafter..........................................   1,812,000    17,662,000
                                                      ----------   -----------
  Total minimum lease payments:.....................   3,111,000   $37,548,000
                                                                   ===========
Less amount representing interest:..................   1,138,000
                                                      ----------
Present value of minimum lease payments:............   1,973,000
Less current portion................................     119,000
                                                      ----------
Capital lease obligation excluding current
  portion...........................................  $1,854,000
                                                      ==========
</TABLE>

                                      F-14
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7--LEASES (CONTINUED)
    Aggregate rents under noncancelable operating leases during fiscal 2000,
1999 and 1998 are as follows:

<TABLE>
<CAPTION>
                                                           FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                           WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                           JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                               2000           1999           1998
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
Minimum rentals..........................................   $4,473,000     $3,995,000     $2,779,000
Contingent rentals.......................................      273,000        281,000        114,000
                                                            ----------     ----------     ----------
                                                            $4,746,000     $4,276,000     $2,893,000
                                                            ==========     ==========     ==========
</TABLE>

NOTE 8--INCOME TAXES

    Income tax expense (benefit) is comprised of the following:

<TABLE>
<CAPTION>
                                                           FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                           WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                           JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                               2000           1999           1998
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
Current:
  Federal................................................    $516,000      $1,009,000     $1,643,000
  State..................................................     104,000         192,000        440,000
                                                             --------      ----------     ----------
                                                              620,000       1,201,000      2,083,000
Deferred:
  Federal................................................     175,000         354,000       (238,000)
  State..................................................      31,000          68,000        (46,000)
                                                             --------      ----------     ----------
                                                              206,000         422,000       (284,000)
                                                             --------      ----------     ----------
                                                             $826,000      $1,623,000     $1,799,000
                                                             ========      ==========     ==========
</TABLE>

    A reconciliation of income tax expense at the federal statutory rate to the
Company's provision for taxes on income is as follows:

<TABLE>
<CAPTION>
                                                           FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                           WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                           JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                               2000           1999           1998
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
Income taxes at statutory rate...........................    $766,000      $1,380,000     $1,529,000
State income taxes.......................................      90,000         172,000        273,000
Other....................................................     (30,000)         79,000        (11,000)
Change in valuation allowance............................          --          (8,000)         8,000
                                                             --------      ----------     ----------
                                                             $826,000      $1,623,000     $1,799,000
                                                             ========      ==========     ==========
</TABLE>

                                      F-15
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8--INCOME TAXES (CONTINUED)
    Temporary differences give rise to a significant amount of deferred tax
assets and liabilities as set forth below:

<TABLE>
<CAPTION>
                                                      FIFTY-THREE     FIFTY-TWO
                                                      WEEKS ENDED    WEEKS ENDED
                                                      JANUARY 31,    JANUARY 25,
                                                          2000           1999
                                                      ------------   ------------
<S>                                                   <C>            <C>
Deferred tax assets:
  Leases............................................  $   745,000     $  778,000
  Reserves..........................................      115,000        136,000
  Accrued Vacation..................................      106,000        109,000
  Other.............................................           --         29,000
                                                      -----------     ----------
    Total deferred tax assets.......................      966,000      1,052,000
                                                      -----------     ----------
Deferred tax liabilities:
  Depreciation and amortization.....................   (1,159,000)      (991,000)
  Other.............................................     (118,000)      (166,000)
                                                      -----------     ----------
    Total deferred tax liabilities..................   (1,277,000)    (1,157,000)
                                                      -----------     ----------
Net deferred tax liabilities........................  $  (311,000)    $ (105,000)
                                                      ===========     ==========
</TABLE>

    While there can be no assurance that the Company will generate any earnings
or any specific level of earnings in the future years, management believes it is
more likely than not that the Company will realize the majority of the benefit
of the existing total deferred tax assets at January 31, 2000 based on the
Company's current and future pre-tax earnings.

NOTE 9--SEGMENT AND RELATED REPORTING

    The Company has five reportable operating segments: HomeTown Buffet, Casa
Bonita, North's Star, Florida Buffets Division and JB's Restaurants. The
Company's reportable segments are based on brand similarities.

    The HomeTown Buffet segment includes the Company's 16 franchised HomeTown
Buffet restaurants. The Casa Bonita segment includes two Casa Bonita
restaurants. The North's Star segment includes six JJ North's Grand Buffet
restaurants and two North's Star Buffet Restaurants. The Florida Buffets
Division includes two BuddyFreddys restaurants, 15 BuddyFreddys Country Buffet
restaurants and two Holiday House restaurants. The JB's Restaurants segment
includes the Company's 11 franchised JB's Restaurants.

    The accounting policies of the reportable segments are the same as those
described in Note 1. The Company evaluates the performance of its operating
segments based on income before income taxes.

    Summarized financial information concerning the Company's reportable
segments is shown in the following table. The other assets presented in the
consolidated balance sheet and not in the reportable

                                      F-16
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9--SEGMENT AND RELATED REPORTING (CONTINUED)
segments relate to the Company as a whole, and not individual segments. Also
certain incomes and expenses in the consolidated statements of income are not
included in the reportable segments.

<TABLE>
<CAPTION>
                                  HOMETOWN     CASA     NORTH'S    FLORIDA
53 WEEKS ENDED JANUARY 31, 2000    BUFFET     BONITA      STAR      BUFFET      JB'S      OTHER      TOTAL
-------------------------------   --------   --------   --------   --------   --------   --------   --------
                                                            (DOLLARS IN THOUSANDS)
<S>                               <C>        <C>        <C>        <C>        <C>        <C>        <C>
Revenues......................    $42,854    $11,618    $11,334    $22,506    $10,754    $    --    $99,066
Interest income...............         --         --          7         --         --         36         43
Interest expense..............       (176)        --         (5)       (11)       (10)    (1,217)    (1,419)
Deprecation & amortization....      1,717        161        449      1,044        257        105      3,733
Income before income taxes....      4,653      1,932        (19)      (553)       559     (4,321)     2,251
Total assets..................     14,130      2,024      8,799     16,771      5,597      1,679     49,000

52 WEEKS ENDED JANUARY 25, 1999
  ----------------------------
Revenues......................    $41,039    $11,835    $11,207    $11,350    $ 9,978    $    --    $85,409
Interest income...............         --         --        197        146         --        323        666
Interest expense..............       (192)        --         (7)       (39)       (11)      (348)      (597)
Deprecation & amortization....      1,811        133        639        171        201         93      3,048
Income before income taxes....      4,261      2,190        304     (1,369)       559     (1,885)     4,058
Total assets..................     14,075      1,673     11,617     12,475      3,233      1,719     44,792

52 WEEKS ENDED JANUARY 26, 1998
  ----------------------------
Revenues......................    $40,435    $11,570    $ 2,654    $    --    $    --    $    --    $54,659
Interest income...............         --         --         83         --         --        238        321
Interest expense..............       (200)        --         --         --         --         --       (200)
Deprecation & amortization....      1,711        305         93         --         --         --      2,109
Income before income taxes....      2,326      1,975        261         --         --        (64)     4,498
Total assets..................     13,877      1,932      8,857         --         --     16,303     40,969
</TABLE>

NOTE 10--STOCKHOLDERS EQUITY

COMMON STOCK

    Holders of Common Stock are entitled to one vote per share on all matters to
be voted upon by the stockholders and do not have cumulative voting rights.
Subject to preferences that may be applicable to the holders of outstanding
shares of Preferred Stock, if any, at the time holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the Board of Directors out of funds legally available therefor. In
the event of a liquidation, dissolution or winding up of the Company, the
holders of Common Stock shall be entitled to assets of the Company remaining
after payment of the Company's liabilities and the liquidation preference, if
any, of any outstanding Preferred Stock. All outstanding shares of Common Stock,
are, and the shares of Common Stock offered by the Company hereby will be, when
issued and paid for, fully paid and nonassessable. Holders of Common Stock have
no preemptive, subscription, redemption or conversion rights. The rights,
preferences and privileges of holders of Common Stock are subject to, and may be
adversely affected by, the rights of the holders of shares of any series of
Preferred Stock which the Company may designate and issue in the future.

                                      F-17
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10--STOCKHOLDERS EQUITY (CONTINUED)

PREFERRED STOCK

    The Board of Directors has the authority, without further vote or action by
the stockholders, to provide for the issuance of up to 1,500,000 shares of
Preferred Stock from time to time in one or more series with such designations,
rights, preferences and privileges and limitations on the Board of Directors may
determine, including the consideration received therefor. The Board of Directors
also will have the authority to determine the number of shares comprising each
series, dividend rates, redemption provisions, liquidation preferences, sinking
fund provisions, conversion rights and voting rights without approval by the
holders of Common Stock. Although it is not possible to state the effect that
any issuance of Preferred Stock might have on the rights of holders of Common
Stock, the issuance of Preferred Stock may have one or more of the following
effects: (i) to restrict the payment of dividends on the Common Stock, (ii) to
dilute the voting power and equity interests of holders of Common Stock,
(iii) to prevent holders of Common Stock from participating in any distribution
of the Company's assets upon liquidation until any liquidation preferences
granted to holders of Preferred Stock are satisfied, or (iv) to require approval
by the holders of Preferred Stock for certain matters such as amendments to the
Company's Certificate of Incorporation or any reorganization, consolidation,
merger or other similar transaction involving the Company. As a result, the
issuance of Preferred Stock may, under certain circumstances, have the effect of
delaying, discouraging or preventing bids for the Common Stock at a premium over
the market price thereof, or a change in control of the Company, and could have
a material adverse effect on the market price for the Common Stock.

OFFICER'S NOTE RECEIVABLE

    In connection with the Company's employment contract with Mr. Robert E.
Wheaton, the Company's President and Chief Executive Officer, the Company has
agreed to provide Mr. Wheaton loans solely for the purchase of the Company's
common stock. The loans are secured and bear interest at the prevailing rate set
forth in the Company's credit facility with BankBoston. The current rate is
approximately eight percent. The loans totaled $813,000 as of January 31, 2000.

COMMON STOCK REPURCHASE

    During fiscal 1999, the Company purchased and retired 2,000,000 shares of
common stock acquired from CKE and 500,000 shares acquired on the open market
for $12,500,000 and $2,919,000, respectively. The Company purchased 31,000
shares of treasury stock in the open market for $190,000. On December 7, 1999,
the Company's Board of Directors authorized the repurchase of up to an
additional 500,000 shares of the Company's Common Stock to be effected in the
open market, in private transactions or through alternative repurchase
transactions approved by the Board of Directors. As of April 17, 2000, no
additional shares have been purchased.

NOTE 11--EMPLOYEE BENEFIT PLANS

401(K) PLAN

    Beginning in May 1998, the Company has a 401(k) plan available to certain
employees who have attained age 21, work 30 hours or more per week, and have met
certain minimum service requirements. The plan allows participants to allocate
up to 15% of their annual compensation before taxes for investment in several
investment alternatives. The Company incurred approximately $41,000 in costs for
fiscal 2000 and approximately $18,000 in costs for fiscal 1999.

                                      F-18
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--EMPLOYEE BENEFIT PLANS (CONTINUED)
1997 EMPLOYEE STOCK PURCHASE PLAN

    The Company's Employee Stock Purchase Plan (the "Purchase Plan"), was
adopted by the Board of Directors on January 15, 1998, covering 750,000 shares
of Common Stock. The Purchase Plan provides participants with incentives to
acquire a proprietary interest in, and continue to provide services to, the
Company. The Company incurred approximately $12,000 in costs for fiscal 2000 and
$0 in fiscal 1999.

    Employees are eligible to participate if they (i) are employed on an hourly
basis as a restaurant employee for at least 30 hours per week and if they have
been employed by the Company since September 30, 1997 or for at least one year;
(ii) are employed on an hourly basis as a non-restaurant employee for at least
30 hours per week and have been so employed continuously during the preceding 90
days; or (iii) are exempt from the overtime and minimum wage requirements under
federal and state laws and have been so employed by the Company continuously
during the preceding 90 days. The Purchase Plan permits eligible employees to
purchase common stock through payroll deductions, which range from 3% to 10% of
the employee's base earnings as defined in the Purchase Plan. The price of stock
purchased under the Purchase Plan shall be at the then current fair market
value. Each participant who remains an employee of the Company for at least one
year after the end of a particular quarterly offering period shall receive, on
the one-year anniversary date of the end of such offering period, a matching
contribution from the Company totaling one-half of a participating Officer's or
Director's contribution, and one-third of other participant's contributions.
Employees may withdraw from the Purchase Plan, effective at the end of a
quarterly offering period, by delivering a notice to the Company no later than
the 15th day prior to the end of such quarterly offering period, and
participation ends automatically on termination of employment. The Board of
Directors may at any time amend or terminate the Purchase Plan, and upon such
termination, each participant is entitled to receive the funds in such
participant's account which have not been used to purchase Common Stock but
shall not be entitled to any future matching contribution.

1997 STOCK INCENTIVE PLAN

    In fiscal year 1998, the Company adopted the 1997 Stock Incentive Plan (the
"1997 Plan"), which grants options to purchase 750,000 shares of Common Stock.
The 1997 Plan provides for "incentive stock options," within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
non-statutory options to directors, officers, employees and consultants of the
Company, except that incentive stock options may not be granted to non-employee
directors or consultants. The 1997 Plan provides participants with incentives
which will encourage them to acquire a proprietary interest in, and continue to
provide services to, the Company. The Board of Directors has sole discretion and
authority, consistent with the provisions of the 1997 Plan, to determine which
eligible participants will receive options, time when options will be granted,
terms of options granted and number of shares which will be subject to options
granted under the 1997 Plan.

                                      F-19
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--EMPLOYEE BENEFIT PLANS (CONTINUED)
    A summary of the status of the Company's stock options is presented below
(shares in thousands):

<TABLE>
<CAPTION>
                                                                FIFTY-TWO                FIFTY-TWO
                                                               WEEKS ENDED              WEEKS ENDED
                                                             JANUARY 31, 2000         JANUARY 25, 1999
                                                          ----------------------   ----------------------
                                                                     WGTD. AVG.               WGTD. AVG.
                                                           SHARES    EXER. PRICE    SHARES    EXER. PRICE
                                                          --------   -----------   --------   -----------
<S>                                                       <C>        <C>           <C>        <C>
Outstanding at beginning of year........................    500        $12.00         608       $12.00
Granted.................................................    243          5.00          --        12.00
Cancelled...............................................     --            --        (108)       12.00
                                                            ---        ------        ----       ------
Outstanding at end of year..............................    743          9.71         500        12.00
                                                            ===        ======        ====       ======
Options exercisable at year end.........................    626         10.59         339        12.00
                                                            ===        ======        ====       ======
</TABLE>

    The Company applies the intrinsic value method in accounting for its Plan
and, accordingly, no compensation cost has been recognized for stock options in
the financial statements. Had the Company determined compensation cost based on
the fair value method at the grant date for its stock options, the Company's net
income and earnings per share would have been reduced to the pro forma amounts
indicated below:

<TABLE>
<CAPTION>
                                                           FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                           WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                           JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                               2000           1999           1998
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
Net income as reported...................................   $1,425,000     $2,435,000     $2,699,000
  Earnings per share--basic as reported..................          .48            .53            .77
  Earnings per share--diluted as reported................          .48            .53            .76
Pro forma net income.....................................    1,004,000      1,874,000      2,285,000
  Earnings per share--basic as reported..................          .34            .41            .65
  Earnings per share--diluted as reported................          .34            .41            .65
</TABLE>

    For purposes of the preceding pro forma disclosures, the fair value of each
stock option has been estimated on the date of grant using the Black-Scholes
option-pricing model with the following assumptions: no projected annual
dividends, expected volatility of 15%, a risk free interest rate of 5.98% for
grants in fiscal 2000 and 5.83% for grants in fiscal 1998 and an expected life
of five years for grants in fiscal 2000 and three years for grants in fiscal
1998.

    Since the pro forma compensation expense for stock-based compensation plans
is recognized over a three year vesting period, the foregoing pro forma
reductions in the Company's net income are not representative of anticipated
amounts in future years.

    The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options that do not have vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's stock options have characteristics significantly different
from those of traded options and because changes in the subjective input
assumptions can materially affect the value of an estimate, in

                                      F-20
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 11--EMPLOYEE BENEFIT PLANS (CONTINUED)
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

NOTE 12--SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

<TABLE>
<CAPTION>
                                                           FIFTY-THREE     FIFTY-TWO      FIFTY-TWO
                                                           WEEKS ENDED    WEEKS ENDED    WEEKS ENDED
                                                           JANUARY 31,    JANUARY 25,    JANUARY 26,
                                                               2000           1999           1998
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
Cash paid for income taxes...............................   $   60,000     $2,270,000     $1,020,000
Cash paid for interest...................................    1,450,000        407,000             --

Non-cash investing and financing activities are as
  follows:
  Transfer of current assets and current liabilities to
    primary stockholder..................................   $       --     $       --     $  335,000
  Use of deposit to buy out operating equipment leases...           --             --        375,000
  Exchange of receivables for three restaurants..........           --      1,004,000             --
  Acquisition of BuddyFreddys assets.....................           --      1,200,000             --
  Acquisition of 2,000,000 shares of common stock........           --      7,500,000             --
  Acquisition of Holiday House assets....................           --        166,000             --
  Use of deposit to buy assets...........................           --        912,000             --
  Exchange of note receivable for real estate............           --      1,328,000             --
  Exchange of deposit for note payable...................      166,000             --             --
</TABLE>

NOTE 13--FAIR VALUE OF FINANCIAL INSTRUMENTS

    The carrying amount of the Company's cash and cash equivalents, accounts
receivable, accounts payable and accrued expenses approximates fair value
because of the short maturity of these instruments.

    The carrying amount of the Company's notes receivable, long-term debt and
capital lease obligations approximates fair value and is based on discounted
cash flows using market rates at the balance sheet date. The use of discounted
cash flows can be significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. The derived fair values
estimates cannot be substantiated by comparison to independent markets and, in
many cases, could not be realized in immediate settlement of the instrument.

NOTE 14--RELATED PARTY TRANSACTION

    The Company has entered into an agreement with a company whose chief
executive officer is a member of the Company's Board of Directors. Under the
agreement, the Company operates three of the related party's restaurants as
BuddyFreddys Country Buffet restaurants. Revenues and expenses of the
restaurants are included in the Company's financial statements. The Company and
the related party divide income and losses based on an agreed upon formula.
Included in notes and other receivables is $397,000 due from the related party
as a result of the agreement.

                                      F-21
<PAGE>
                       STAR BUFFET, INC. AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15--COMMITMENTS AND CONTINGENCIES

    The Company is engaged in ordinary and routine litigation incidental to its
business. Management does not anticipate that any resolution will require
payments that will have a material effect on the Company's consolidated
statements of operations or financial position or liquidity.

    On November 12, 1998, North's Restaurants, Inc. ("North's") filed a Demand
for Arbitration against the Company with the American Arbitration Association,
Irvine, California (District No. 949-251-9840), alleging breach of contract in
connection with the Company's failure to perform under a Business Services
Agreement between North's and the Company dated July 24, 1997. On June 22, 1999,
the parties agreed to dismiss the Arbitration Proceeding without prejudice since
the issues related to the Business Service Agreement are being litigated in the
Utah action described below.

    On November 25, 1998, the Company filed an action against North's
Restaurants, Inc. ("North's") in the United States District Court, District of
Utah, Case No. 2-98-CV-893, seeking damages for breach of a promissory note and
an Amended and Restated Credit Agreement (collectively, the "Credit Agreements")
in the amount of $3,570,935. On December 31, 1998, North's filed an answer to
the Company's Complaint, denying generally the allegations, and filed
counterclaims against the Company alleging (i) the Company fraudulently induced
North's to enter into various agreements with the Company relating to the
Company's acquisition of seven JJ North's Grand Buffet Restaurants and an option
to acquire nine additional restaurants operated by North's and (ii) the Company
has breached the Business Services Agreement. The Company plans to pursue
vigorously its claims against North's and to vigorously defend the counterclaims
asserted by North's. The litigation is continuing and is not yet scheduled for
trial.

                                      F-22
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of l934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

<TABLE>
<S>                                                    <C>  <C>
                                                       STAR BUFFET, INC.(Registrant)

May 1, 2000                                            By:            /s/ ROBERT E. WHEATON
                                                            -----------------------------------------
                                                                        Robert E. Wheaton
                                                              PRESIDENT AND CHIEF EXECUTIVE OFFICER
                                                                  (PRINCIPAL EXECUTIVE OFFICER)
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of l934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                   TITLE                    DATE
                      ---------                                   -----                    ----
<C>                                                    <S>                          <C>
                /s/ ROBERT E. WHEATON                  President and Chief
     -------------------------------------------         Executive Officer and         May 1, 2000
                  Robert E. Wheaton                      Director

                 /s/ RONALD E. DOWDY
     -------------------------------------------       Group Controller, Treasurer    April 27, 2000
                   Ronald E. Dowdy                       and Secretary

                  /s/ JACK M. LLOYD
     -------------------------------------------       Director                        May 1, 2000
                    Jack M. Lloyd

                /s/ THOMAS G. SCHADT
     -------------------------------------------       Director                       April 28, 2000
                  Thomas G. Schadt

              /s/ PHILLIP BUDDY JOHNSON
     -------------------------------------------       Director                       April 30, 2000
               Phillip "Buddy" Johnson

                /s/ CRAIG B. WHEATON
     -------------------------------------------       Director                       April 30, 2000
                  Craig B. Wheaton
</TABLE>

                                      II-1
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO.             DESCRIPTION
-----------             -----------
<S>                     <C>
 3.1                    Certificate of Incorporation*
 3.2                    Bylaws, as amended on September 22, 1997*
 4.1                    Form of Common Stock Certificate**
 10.1                   Star Buffet, Inc. 1997 Stock Incentive Plan (the 1997
                        Plan)**
 10.2                   Form of Stock Option Agreement for the 1997 Plan**
 10.3                   Form of Indemnification Agreement**
 10.4                   Management Services Agreement with CKE**
 10.5                   Form Of Franchise Agreement with HomeTown Buffet, Inc.**
 10.6                   Asset Purchase Agreement with North's Restaurants, Inc.
                        dated July 24, 1997**
 10.6.1                 Amendment No. 1 to Asset Purchase Agreement dated as of
                        September 30, 1997 (incorporated by reference to the
                        Company's filing on Form 8-K on October 17, 1997)
 10.6.2                 Amended and Restated Credit Agreement dated as of
                        September 30, 1997 between the Company and North's
                        Restaurants, Inc. (incorporated by reference to the
                        Company's filing on Form 8-K on October 17, 1997)
 10.7                   Form of Credit Agreement with Stacey's Buffet, Inc.*
 10.8                   Form of Contribution Agreement among CKE Restaurants, Inc.,
                        Summit Family Restaurants Inc. and the Company*
 10.9                   Form of Bill of Sale and Assumption Agreement between Summit
                        Family Restaurants Inc. and Taco Bueno Restaurants, Inc.
                        (formerly known as Casa Bonita Incorporated)*
 10.11                  Form of Bill of Sale and Assumption Agreement between Summit
                        Family Restaurants Inc. and JB's Restaurants, Inc.*
 10.12                  License Agreement with CKE (incorporated by reference to the
                        Company's filing on Form 10-K on April 24, 1998)
 10.13                  Settlement Agreement with HomeTown Buffet, Inc.
                        (incorporated by reference to the Company's filing on Form
                        10-K on April 24, 1998)
 10.14                  Asset Purchase Agreement among Summit Family Restaurants
                        Inc. and JB's Family Restaurants, Inc., dated February 10,
                        1998 (incorporated by reference to the Company's filing on
                        Form 8-K on March 9, 1998)
 10.15                  Stock Repurchase Agreement between Star Buffet, Inc. and CKE
                        Restaurants, Inc., dated September 10, 1998 (incorporated by
                        reference to the Company's filing on Form 10-K on
                        September 28, 1998)
 10.16                  Credit Agreement (Portions of this Exhibit are omitted and
                        were filed separately with the Secretary of the Commission
                        pursuant to the Company's application for confidential
                        treatment under Rule 24b-2 of the Exchange Act.)
                        (incorporated by reference to the Company's filing on
                        Form 10-Q on December 17, 1998)
 11.0                   Computation of Earnings Per Share Income
 21.1                   List of Subsidiaries*
 23.4                   Consent of KPMG LLP
 27.1                   Financial Data Schedules (included only with electronic
                        filing)
</TABLE>

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

*   Previously filed as an exhibit to the Registration Statement on Form S-1,
    Amendment No. 1 (Registration No. 333- 32249).

**  Previously filed as an exhibit to the Registration Statement on Form S-1,
    Amendment No. 2 (Registration No. 333- 32249).

                                      E-1